which proposes to make the Connally hot-oil law permanent. Our entire membership appears to be unanimous in the conviction that the Government should continue to provide this measure of assistance to the States in the interest and for the protection of the small refiners and producers of our region. PENNSYLVANIA GRADE CRUDE OIL ASSOCIATION, J. E. MOOREHEAD, Executive Secretary. Senator CONNALLY. We also have one from the Detroit Oil Marketers Association, in opposition. They did not ask that it go into the record, but I will put it in anyway. I want to be fair to them. (The telegram referred to is as follows:) DETROIT, MICH., February 15, 1937. CHAIRMAN, SUBCOMMITTEE OF SENATE FINANCE COMMITTEE, Senate Office Building, Washington, D. C.: We request repeal of the Connally hot-oil bill, which gives Federal assistance to control or production of crude oil and defeat of 790 in the Seventy-fifth Congress. DETROIT OIL MARKETERS ASSOCIATION. Senator CONNALLY. At this point I want to put in the record a list of persons whom I invited to this hearing. Some responded and some did not. We had some objections from certain representatives of the Oil Workers' Association; Mr. W. W. Moore, secretary, Union No. 203, Gladewater, Tex.; and Mr. W. B. Smith, secretary-treasurer, East Texas District Council of Oil Workers, Kilgore, Tex.; and a number of others; so we will put that list in the record. We want to be fair in these hearings and give everybody who has views an oppor'tunity to submit them within the limits of our time. (The list referred to is as follows:) INVITED TO APPEAR AT HEARINGS ON HOT-OIL BILL Hon. J. W. Steele, chairman, Federal Tender Board, Kilgore, Tex. Wilmer R. Schuh, president, National Retail Marketers' Association, Milwoukee, Hoch Homer, Corporation Commission of Kansas, Topeka, Kans. Charles F. Roeser, president, Independent Petroleum Association of America, care of Roeser & Pendleton, Inc., Fort Worth, Tex. J. D. Collett, president, General Mid-Continent Oil & Gas Association, care of O'Keefe & Collett, Inc., Fort Worth, Tex. Jake Hamon, president, Mid-Continent Oil & Gas Association of Texas, care of Cox & Hamon, Dallas, Tex. George A. Hill, Jr., president, Houston Oil Co., Houston, Tex. Joe S. Bridwell, president, North Texas Oil & Gas Association, care of J. S. Bridwell & Co., Wichita Falls, Tex. W. W. Moore, secretary, Oil Field Workers' Union 203, Gladewater, Tex. W. B. Hamilton, Wichita Falls, Tex. W. C. Clark, Longview, Tex. D. Harold Byrd, Byrd-Frost Oil Co., Tyler, Tex. Dan Harrison, Houston, Tex. Rade Kangerga, Henderson, Tex. Ray Starnes, president, Lone Star Refining Co., Gladewater, Tex. J. Malcolm Crim, Kilgore, Tex. J. D. Rather, Tyler, Tex. R. W. Fair, Tyler, Tex. Tom Potter, Kilgore, Tex. M. T. Flanagan, Longview, Tex. Freeman W. Burford, president, East Texas Refining Co., Dallas, Tex. W. B. Smith, secretary and treasurer, East Texas District Council of Oil Workers, Kilgore, Tex. Col. Ernest O. Thompson, Railroad Commission of Texas, Austin, Tex. Hon. William McCraw, the attorney general of the State of Texas, Austin, Tex. Senator CONNALLY. I think I will now hear Mr. Hadlick. Do you represent all of these marketers? Mr. HADLICK. I represent the National Oil Marketers' Association; I do not represent all of the marketers. Senator CONNALLY. Are there any marketers present who do not belong to Mr. Hadlick's organization who want to be heard? Mr. DECKER. I represent a separate independent group and I have a prepared brief. Senator CONNALLY. Tell us your name. Mr. DECKER. R. E. Decker, Plymouth Isle, Detroit, representing the Dixie Distributors. Senator CONNALLY. We will give you an opportunity to file your brief later, and if we have time we will hear you, also. Mr. MCCAIN. I represent four associations in Missouri. Senator CONNALLY. What is your name? Mr. MCCAIN. W. R. McCain. Senator CONNALLY. I think we will hear Mr. Hadlick now. Mr. SCHOCK. I represent the Independent Oil Jobbers Association of Pennsylvania. I am on the calendar for tomorrow. Senator CONNALLY. We are going to try to close these hearings today if we possibly can. Mr. SCHOCK. I had a telegram from your chief clerk stating we might be heard today or tomorrow. Senator CONNALLY. I advised the clerk we would prefer these marketers to get together and have a representative. I suppose their views are identical and their interests are pretty much identical. We can give one man more time than we can give four. All right, Mr. Hadlick, tell us who you are, where you live, and what you do. STATEMENT OF PAUL E. HADLICK, WASHINGTON, D. C., SECRETARY AND COUNSEL, NATION OIL MARKETERS' ASSOCIATION Mr. HADLICK. My name is Paul E. Hadlick. I am secretary and counsel of the National Oil Marketers Association. I reside in Washington. This association is an association of independent oil jobbers. It is an organization that has been in existence since the fall of 1933, but was not incorporated until July 1935. Senator CONNALLY. Have you a list of the members of it? Mr. HADLICK. I have a list in the office which I shall be glad to submit. Senator CONNALLY. I hope you will bring that up and let us have it. Subsequently Mr. Hadlick furnished the data requested and some is on file with the committee. Mr. HADLICK. I shall be glad to do so. First, let me state that our organization opposes the passage of the Connally bill, S. 790, for the following brief reasons: First, it proposes to make permanent a piece of emergency legislation originally a part of and designed to be used in connection with the National Industrial Recovery Act. Second, there should be true competition between the States producing oil for the business of the consuming States. Third, the Connally Act, as it has operated, has played into the hands of the major oil companies, giving them practically monopo listic control of the production of oil; thus enabling and bringing about effective control of refinery runs and a false shortage of refined petroleum products. Fourth, the country cannot be half slave and half free; nor can the oil industry be half controlled (at the source) and half competitive (in the marketing branch). Fifth, the independent oil marketers have not enjoyed a free and open market to purchase their supplies since the Federal Governcame into the picture and aided in holding supply of crude oil below market demand. Now to take up these various points and elaborate on them. First, it proposes to make permanent a piece of emergency legislation originally a part of and designed to be used in connection with the National Industrial Recovery Act. Section 9 (c) of the National Industrial Recovery Act (act of June 16, 1933, Public, No. 67, 73d Cong., 1st sess.; C. 90, title I, par. 9; 48 Stat. 200) read as follows: The President is authorized to prohibit the transportation in interstate and foreign commerce of petrolum and the products thereof produced or withdrawn from storage in excess of the amount permitted to be produced or withdrawn from storage by any State law or valid regulation or order prescribed thereunder, by any board, commission, officer, or other duly authorized agency of a State. Any violation of any order of the President issued under the provisions of this subsection shall be punishable by fine of not to exceed $1,000, or imprisonment for not to exceed six months, or both. Early in 1935, before the main issues in connection with the National Industrial Recovery Act had reached the Supreme Court of the United States, the above section was held unconstitutional by that court in the case of Panama Refining Company v. Ryan (293 U. S. 388). Promptly thereafter Congress remedied the defect in the legislation pointed out by the Court and on February 22, 1935, passed the present Connally Act (Public, No. 14, 74th Cong., ch. 18; 49 Stat. pp. 30-35). This act was made to expire on June 16, 1937, very obviously to correspond with the expiration of a 2-year extension of the National Industrial Recovery Act which was then in contemplation. However, the Supreme Court nullified the principal features of the National Industrial Recovery Act in its decision in the case of Schechter v. U. S., 295 U. S. 495. The Congress should then have repealed the Connally Act as it was originally a part of the National Industrial Recovery Act and was subsequently enacted to be an aid to carrying out the purposes of that act. Senator CONNALLY. The court did what, you say; repealed the Connally Act? Mr. HADLICK. No; I say the Court threw out the National Industrial Recovery Act and the Connally Act being part, originally Senator CONNALLY. That was not the Connally Act at all. That was section 9-C of the Industrial Recovery Act. The Connally Act was passed in 1935. Mr. HADLICK. It was part of the original National Industrial Recovery Act. Senator CONNALLY. No, it was not; section 9-C was. I suppose you want to be accurate and fair about it. Mr. HADLICK. I absolutely do, Mr. Senator. Let me go back and read what I said there. After I said the Court, in the Panama Refining Company v. Ryan case threw out 9-C, I said: "Promptly thereafter Congress remedied the defect in the legislation pointed out by the Court and on February 22, 1935, passed the present Connally Act." Senator CONNALLY. All right. Mr. HADLICK. Then I said, "However, the Supreme Court nullified the principal features of the National Industrial Recovery Act in its decision in the case of Schecter v. U. S.", and that Congress should then have repealed the Connally Act, as it was originally a part of the National Industrial Recovery Act and was subsequently enacted to be an aid to carrying out the purposes of that act. Senator CONNALLY. You are wrong; you are not accurate; the Connally Act was passed in 1935. The 9-C was a part of the National Industrial Recovery Act and was not an act of its own, standing alone. The principles are somewhat the same. Mr. HADLICK. I take it you will agree that the Connally Act was passed promptly because 9-C was declared unconstitutional? Senator CONNALLY. Exactly, yes. Mr. HADLICK. Then I see no point in Senator CONNALLY. I regard as pettifoggery the way you try to bring that out. Mr. HADLICK. I do not regard it so, Senator. Senator CONNALLY. Go ahead. Mr. HADLICK. Unless Congress takes affirmative action at this session the present Connally Act will expire on June 16, 1937. It is. submitted that the act should be permitted to expire and not renewed or made permanent. Second, there should be true competition between the States producing oil for the business of the consuming States. Commerce may be likened to a stream of water. In interstate matters the Congress should protect the main channel of the stream, which is competition. It has done so in the past by enactment of the Sherman antitrust law, the Clayton and Federal Trade Commission Acts, and more recently the Robinson-Patman law. These last-named statutes are protections and aids to the main channel of competition; we might liken them to jetties built to protect the channel. But the Connally Act is not a jetty; it is a full-fledged dam that has built a well around the production of oil so that the lower riparian owners, the independent oil marketers, and the consumers have been grievously damaged without compensation. Enactments of Congress should only protect the channel of compe-tition, the stream of commerce, in the oil industry, so as to bring about healthy competition between the States and the companies for their share of the Nation's oil business. Any other procedure, such as the present Connally Act, retards competition and appropriates the property of one group of individuals and companies to another group, and from the group of consuming States to the oil-producing States. Third, the Connally Act as it has operated has played into the hands of the major oil companies, giving them practically monopolistic control of the production of oil; thus enabling and bringing about effective control of refinery runs and a false shortage of refined petroleum products. Someone once said, "teach a parrot to say 'supply and demand' and you have a political economist." Maybe that's harsh treatment for those of that chosen profession, but in the oil industry the loose way in which these words have been used remind me of the analogy. The true facts are that supply has been artificially cut down while demand has been mounting; there has been no free flow of that competition which is necessary to our American system. Through their control of pipe lines together with the aid of the Connally Act the major oil companies today have a virtual monopoly of the production, transportation, and refining of crude oil. İf the Connally Act continues another few years their monopoly will include marketing to such an extent that the assets of the independent marketer will have become exhausted and the oil monopoly will be freed of any semblance of competition in all branches of the industry. Pipe lines are common carriers in law but not in fact. The pipeline leverage alone is almost enough to monopolize this oil business. But add to that the aid and assistance of the Federal Government and no more perfect control of production was ever vested in one group of private companies. Control of pipe lines and control of production naturally gives control over supplies of crude oil to refiners. Consistent drawing on stocks of crude oil in storage, aided in and abetted by the Bureau of Mines of the Department of the Interior, has left the major oil companies in the driver's seat always letting out less than the market demand. Just to make the vicious circle complete, the refiners then combined together to pick up any loose material that might be floating around to create a competitive market. I say they combined and conspired in violation of the anti-trust laws of the United States to bring about the perfect control of the sources of oil supply. And at least two Federal grand juries believe this to be true, for they have returned indictments at Madison, Wis., covering this pool buying and other restraints on trade in the following styled and numbered cases and on the following dates: United States of America v. Standard Oil Co. (Indiana) et al. No. 11296, filed July 28, 1936; United States of America v. Standard Oil Co. (Indiana) et al. No. 11365, filed December 22, 1936. In addition to the above-mentioned indictments the same two Federal grand juries at Madison, Wis., have returned indictments alleging violations of the antitrust laws in the matter of the control of the markets for gasoline in cases styled, numbered, and dated as follows: United States of America v. Socony-Vacuum Oil Co. et al. No. 11342, filed November 6, 1936; United States of America v. Socony-Vacuum Oil Co. et al. No. 11364, filed December 22, 1936. A reading of these indictments will give a clear picture of the manner in which the oil monopoly has exercised control over the oil markets of the Nation. This was made possible originally by virtue of the control of the supply of crude oil at the source through the |