A NORMAL GROWTH

Study for a moment the result of what has been a natural and absolutely normal increase in the value of the company’s possessions.  Many of the pipe-lines were constructed during a period when costs were about 50 per cent. of what they are now.  Great fields of oil lands were purchased as virgin soil, which later yielded an immense output.  Quantities of low-grade crude oil which had been bought by the company when it was believed to be of little value, but which the company hoped eventually to utilize, were greatly increased in value by inventions for refining it and for using the residues formerly considered almost worthless.  Dock property was secured at low prices and made valuable by buildings and development.  Large unimproved tracts of land near the important business centres were acquired.  We brought our industries to these places, made the land useful, and increased the value, not only of our own property, but of the land adjacent to it to many times the original worth.  Wherever we have established businesses in this and other countries we have bought largely of property.  I remember a case where we paid only $1,000 or so an acre for some rough land to be used for such purposes, and, through the improvements we created, the value has gone up 40 or 50 times as much in 35 or 40 years.

Others have had similar increases in the value of their properties, but have enlarged their capitalization correspondingly.  They have escaped the criticism which has been directed against us, who with our old-fashioned and conservative notions have continued without such expansion of capitalization.

There is nothing strange or miraculous in all this; it was all done through this natural law of trade development.  It is what the Astors and many other large landholders did.

If a man starts in business with $1,000 capital and gradually increases his property and investment by retaining in his concern much of his earnings, instead of spending them, and thus accumulates values until his investment is, say, $10,000, it would be folly to base the percentage of his actual profits only on the original $1,000 with which he started.  Here, again, I think the managers of the Standard should be praised, and not blamed.  They have set an example for upbuilding on the most conservative lines, and in a business which has always been, to say the least, hazardous, and to a large degree unavoidably speculative.  Yet no one who has relied upon the ownership of this stock to pay a yearly income has been disappointed, and the stock is held by an increasing number of small holders the country over.

THE MANAGEMENT OF CAPITAL