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One result of this is a hard-fought contest with its chief rival, massive Jersey Standard. John Loudon diplomatically insists that "this is not a horse race" — but every oilman knows that it is. The Group still lags behind Jersey Standard (1959 sales: $8.7 billion), but it is fast closing the gap. Its annual report, issued this week, shows that its sales climbed to $7.2 billion from last year's $6.5 billion and its net profits from $444 million to $491 million. While Jersey Standard's sales grew 5½%, the Group's sales grew 9%.
The Two Tycoons. The rivalry between Shell and Jersey is an old Shell game. The first great oil tycoon was Jersey Standard's John D. Rockefeller, but the second was an iron-fisted and energetic Dutchman named Henri (later Sir Henri) Deterding, who joined the Royal Dutch Co. shortly after it was founded in 1890 by Dutch nationals, soon took over as its head.
After Deterding's arrival, Royal Dutch fended off an attempt by Standard to take over the new company. By his skill and daring in finding oil markets, Deterding built Royal Dutch into an integrated operation, invaded country after country in a battle with Jersey Standard. To gain strength, he merged in 1907 with Britain's Shell Transport & Trading Co., Ltd., headed by a Londoner named Marcus Samuel, who had switched from importing to the promising field of oil. The two companies kept their separate identities, but adopted for their common symbol the polished sea shell that Samuel had used as his trademark when he was importing shells to grace the boudoirs of Victorian ladies. To assure Dutch control, an agreement was made that four of the seven managing directors be Dutch.*
After the U.S. Government broke up Standard's U.S. monopoly in 1911, Deterding invaded the U.S. market. He set up the Shell companies that later became Shell Oil, got the oil they needed when Shell discovered California's rich Signal Hill field. (Today Shell Oil, headed by President H.S.M. Burns, a Scotsman, is the most powerful of all Shell's subsidiaries; last week it reported 1959 sales of $1.8 billion, up 9% from last year.) After Deterding set up his U.S. plants, he made a shrewd peace treaty with Jersey Standard. Anxious to consolidate his gains and disturbed by the worldwide price wars of the 20s, he persuaded Jersey and British Petroleum (then Anglo-Iranian Oil) to join him in the famous "AsIs" cartel agreement that carved out worldwide markets and quotas. Before he retired in 1937, he had built Royal Dutch/Shell into a billion-dollar business.
During World War II, the Group was probably the hardest hit of any oil company. Bombers battered its European installations, U-boats sank its tankers. The Group got another blow when the U.S. Government forced Jersey Standard to drop all cartel agreements in 1942, thus dissolving the As-Is agreement at a time when the Group's market positions were left badly exposed. But at war's end, it rebuilt its damaged installations so fast that Jersey Standard had little chance to cut deeply into the Group's markets. At first it financed most of its expansion from its own earnings and resources, but turned to world markets as it grew bigger to make it easier to raise cash. Not until 1954 was the Group listed on the New York Stock Exchange.