[Proceedings in Relation to Trusts, House of Representatives, 1888. Report Number 3,112, pages 69-70.]
Memorandum of agreement, made this first day of November, 1887, between the Standard Oil Company of New York and the following-named persons, partnerships, and corporations, producers of crude petroleum, Thomas W. Phillips and others, whose names will be found in the schedule hereto attached and made part of this agreement, as follows:
Whereas, there has accumulated in past years an excessive stock of crude petroleum, which is deteriorating in quality, and a portion of which each year becomes sediment, valueless for any purpose, and the carrying of which excessive stock requires the expenditure of vast sums annually; and
Whereas, in consequence of the existence of said stock the price of crude petroleum has for the past year been largely below the cost at which the same was produced; now, in order as far as possible to preserve the said stock from further waste, and to conserve the public interest and our own, this agreement witnesseth:
That the Standard Oil Company of New York will set apart at sixty-two cents per barrel, and hold for the use of the above-named producers and those who shall hereafter become parties to this agreement, as hereinafter provided, 5,000,000 barrels of merchantable crude petroleum, of forty-two gallons each, to be sold and disposed of in the manner hereinafter provided. The said 5,000,000 barrels of petroleum to be subject, until sold by the said producers, to the usual assessments, storage charges, and interest upon the same, as also interest on the price of said petroleum, at sixty-two cents per barrel; said assessments, charges, and interest to be added to the price aforesaid.
In consideration of which the above-named producers agree to limit their production of petroleum, that for the year next ensuing from this date, they or any number of them shall, for said year, collectively produce at least 17,500 barrels of crude petroleum less per day than they or any number of them collectively produced per day for the months of July and August, 1887, and that they will use every reasonable endeavour to control their production so that the same shall be in the aggregate 30,000 barrels less per day than it was during the said period of July and August, 1887.
If at the end of three months from the date hereof the said reduction of 17,500 barrels per day shall be attained, to be measured by taking the average production of the above-named producers for the months of December and January next, and comparing the same with their average production for the months of July and August, 1887, a statement of the same being hereto attached and made part of this agreement, then the said 5,000,000 barrels of petroleum shall be delivered as fast as the same shall be sold by, upon the order, and for the account of said producers through their executive committee appointed by agreement between themselves, and hereinafter named, to be paid for with interest and storage as delivered; that the profits aforesaid upon said 5,000,000 barrels of petroleum as sold, in accordance with the provisions of this agreement, shall, by said Standard Oil Company and said producers' executive committee, be deposited with the United States Trust Company in New York City, until the expiration of one year from the date hereof, in trust, in accordance with and subject to the provisions of this agreement; and in case the above-named producers or any number of them shall not have lessened their production 17,500 barrels per day for said year as aforesaid, then all of said profits upon said 5,000,000 barrels of petroleum shall belong and be paid to the Standard Oil Company of New York; and in case the said above-named producers or any number of them collectively shall have lessened their production 17,500 barrels per day for the said year as aforesaid, then the entire profits aforesaid upon the 5,000,000 barrels of petroleum shall be paid to said producers' executive committee, to be by it distributed in accordance with agreements between themselves to such of said producers as have fulfilled the terms of this agreement, and all agreements between themselves relating to such distributions.
The said producers are guaranteed by said Standard Oil Company of New York against loss within said year upon said 5,000,000 barrels of petroleum. The lessening of 17,500 barrels per day above provided shall embrace and include any reduction or lessening of production by producers who shall sign contracts not to use means to increase their production by drilling or otherwise.
Producers may become parties to this agreement within the year the contract is to operate by signing the agreement between producers authorising the executive committee to sign this contract on their behalf, and having their names added hereto as parties by said executive committee.
The following-named persons constitute the executive committee above referred to, to wit:
(Names omitted by consent of the chairman.)
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