Here is an example of one of the ways in which we achieved certain economies and gained real advantage.  Fires are always to be reckoned with in oil refining and storage, as we learned by dear experience, but in having our plants distributed all over the country the unit of risk and possible loss was minimized.  No one fire could ruin us, and we were able thus to establish a system of insuring ourselves.  Our reserve fund which provided for this insurance could not be wiped out all at once, as might be the case with a concern having its plants together or near each other.  Then we studied and perfected our organization to prevent fires, improving our appliances and plans year after year until the profit on this insurance feature became a very considerable item in the Standard earnings.

It can easily be seen that this saving in insurance, and minimizing the loss by fire affected the profits, not only in refining, but touched many other associated enterprises:  the manufacture of by-products, the tanks and steamers, the pumping-stations, etc.

We devoted ourselves exclusively to the oil business and its products.  The company never went into outside ventures, but kept to the enormous task of perfecting its own organization.  We educated our own men; we trained many of them from boyhood; we strove to keep them loyal by providing them full scope for their ability; they were given opportunities to buy stock, and the company itself helped them to finance their purchases.  Not only here in America, but all over the world, our young men were given chances to advance themselves, and the sons of the old partners were welcomed to the councils and responsibilities of the administration.  I may say that the company has been in all its history, and I am sure it is at present, a most happy association of busy people.

I have been asked if my advice is not often sought by the present managers.  I can say that if it were sought it would be gladly given.  But the fact is that since I retired it has been very little required.  I am still a large stockholder, indeed I have increased my holdings in the company’s stock since I relinquished any part in its management.

WHY THE STANDARD PAYS LARGE DIVIDENDS

Let me explain what many people, perhaps, fully appreciate, but some, I am sure, do not.  The Standard pays four dividends a year:  the first in March, which is the result of the busiest season of the whole twelvemonth, because more oil is consumed in winter than at other seasons, and three other dividends later, at about evenly divided periods.  Now, these dividends run up to 40 per cent. on the capital stock of $100,000,000, but that does not mean that the profit is 40 per cent. on the capital invested.  As a matter of fact, it represents the results of the savings and surplus gained through all the thirty-five or forty years of the workings of the companies.  The capital stock could be raised several hundred per cent. without a penny of over-capitalization or “water”; the actual value is there.  If this increase had been made, the rate would represent a moderate dividend-paying power of about 6 to 8 per cent.