The History of the Standard Oil Company/Volume 1/Appendix/Number 17
NUMBER 17 (See page 123)
CONTRACT BETWEEN PETROLEUM PRODUCERS' ASSOCIATION AND PETROLEUM REFINERS' ASSOCIATION
[From the Oil City Derrick.]
The contract between the producers and refiners read as follows:
Whereas, The necessities of trade call for co-operation between the producers and refiners of oil, for purposes of mutual protection:
Therefore, We, the undersigned, representing the Petroleum Producers' Association and the Petroleum Refiners' Association, hereby enter into the following articles of agreement, which stipulate as follows:
First.—Each of the two associations hereby agrees to appoint a representative committee, which committee shall meet together weekly, or as often as may be necessary, and at such places as they may determine.
It shall be the duty of these committees (so far as in their power lies) to see that the provisions of this agreement are executed in good faith, and to discharge such duties as are devolved upon them by this agreement, and in general (within the limitation of their authority) to act for the mutual advantage of the trade, whose interests it is the purpose of this agreement to secure.
Second.—The Producers' Association shall appoint a comptroller, who shall have the right to examine the books of the Refiners' Association, and its daily reports so far as they relate to the purchase, sale, and shipments of crude and refined oil, and who, together with the auditor of the Refiners' Association, shall make joint reports daily to both associations.
The Refiners' Association shall appoint a comptroller, who shall have the right to examine the books of the Producers' Association and its agencies, and their daily reports, so far as they relate to the purchase, sale, and shipments of crude and refined oil, and who, together with the secretary of the Producers' Association, shall make joint reports daily to both associations of all sales and shipments.
Third.—Each association agrees that it will keep accurate books of account, which shall show all purchases, sales, and shipments of crude and refined oil, which shall also be open at all reasonable hours to the inspection and examination of the authorised agents of e?ch association, as hereinbefore provided.
Fourth.—The Refiners' Association agrees to admit all existing refiners to membership, and to a participation in the future benefits of the association on equal terms with present members, and the Producers' Association agrees to allow all producers to join its association on the same terms with the present members.
Fifth.—The Producers' Association agrees to sell (through its regular appointed agencies) crude oil exclusively to the Refiners' Association and its members, and the Refiners' Association and its members agree to purchase crude oil exclusively of the Producers' Association or its appointed agents.
Sixth.—The Producers' Association agrees that all producers enjoying the benefits of this contract shall be required to bind themselves to sell their oil exclusively through the Producers' Association.
Seventh.—The Refiners' Association and its members agree that they will not until after sixty (60) days from the date of this contract sell any portion of the crude or refined oil now held by them, except so far as they shall have previously purchased the equivalent of crude oil to take the place of the oil so sold.
They further agree to buy from the Producers' Association daily such quantities of crude oil as the markets of the world may take of them, the same to be determined from time to time by the representative committees herein provided for.
Eighth.—The price of crude oil so purchased and sold to be conditionally five dollars per barrel of forty-two gallons each, at "common points," payment to be made as follows:
When refined oil is sold in New York at twenty-six cents per gallon, no additional amount is to be paid; but for every one cent per gallon of advance in the average price of sales of refined oil in New York, twenty-five cents per barrel shall be added to the price of so much crude oil as shall be the equivalent of refined oil sold at such advance until the price reaches five dollars per barrel. A proportionate addition to the average price of crude oil shall be paid for each fraction of one cent per gallon increase in the average price of sales of refined oil at New York, by members of the Refiners' Association.
The price of refined oil in New York and of crude oil at common points to be adjusted by the representative committee herein provided to be appointed.
Ninth.—The representative committees may at any time, when it may be necessary to do so, reduce the prices of crude and refined oils below the minimum or advance them above the maximum prices above named, the increase and reduction in price and the cash payments on crude oil to be determined by said committees.
Tenth.—Settlements to be made to the end of each calendar month and balances to be paid not later than the fifth of the succeeding month.
Eleventh.—The profits on all crude oil sold for export by members of the Refiners' Association shall be credited to the Producers' Association in the next succeeding regular monthly settlement after delivery of said oil.
Twelfth.—Either association may discontinue this agreement at any time by giving to the president of the other association ten (10) days' notice in writing of its purpose to do so.
Thirteenth.—This agreement to remain in full force and effect for and during the term of five years from this date, unless sooner terminated in the manner provided in section twelve (12) of this agreement.
Fourteenth.—Amendments and alterations may be made at any time by the representative committees, subject to the approval of the respective associations.
In testimony whereof, the Petroleum Producers' Association, by its executive committee, and the Petroleum Refiners' Association, by its president and secretary, have hereunto set their hands this nineteenth day of December, a.d. 1872, in the City of New York.
Petroleum Producers' Association, by C. V. Culver, A. H. Bronson, Samuel Q. Brown, William Parker, B. B. Campbell, Executive Committee.
Petroleum Refiners' Association, by John D. Rockefeller, President.