In 1935, Sinclair marketed in most states, but much of this territory was unprofitable. The war-time abandonment of marginal facilities inspired a huge geographical retrenchment. By 1949, five southern states had been abandoned and deep cuts had been made in sparsely settled areas. More than 900 service stations and 230 bulk plants were sacrificed, at a loss of 168 million gallons of annual sales. This shrinkage was overcome by the erection of 600 new stations a year in the mushrooming suburbias and on strategic highways, serviced by 35 economical terminals along product pipelines. Farm business--slightly more profitable and less prone to price wars--was cultivated by elaborate promotional movies shown at rural fairs and gatherings.

The headlong reconversion to peace was given no breather by the national economy. Civilian demand actually jumped 20 percent over war-time volume. But the post-war inflation caught Sinclair's expansion program. From pre-war prices, pipeline construction was up $6,000 a mile. A refinery unit built for $5 million in 1940 now required an $8.5 million outlay. Deep well drilling costs doubled. Consequently, the capital expenditures for the five-year period--1946-1950--actually totaled $421,342,000. In addition, employees received an 18 percent pay raise and many benefits. But the average retail gasoline price of 25.88 cents a gallon--up six cents from 1941 at the service station--left less profit than before. During this period, increased profits were chiefly the result of soaring sales volume.

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