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I think, as Mr. Feagin has stated to you, it would be most desirable if this could have special study.
Senator Couzens introduced a resolution in the Senate, and I believe that if the Senate should have a special study made of this whole gas situation we would not have any trouble in getting a bill under which the public interest would be well taken care of and the pipe lines properly regulated.
The CHAIRMAN. Have you looked into the bill that is in the House, subtitle III?
Mr. GALLAGHER. Yes, sir. The CHAIRMAN. That is for the regulation of pipe lines. Mr. GALLAGHER. That is for the regulation of pipe lines; but, Mr. Chairman, that bill does not fit the situation in one iota. In fact, if you will read the bill you will find that that is the case. I am not finding fault with the authors. I suppose the bill was drawn in a hurry. There was not any investigation made of this business by the Senate or by the House. They had no background on which to base the writing of a natural-gas bill; and I am led to believe, by reading the bill, that it was hurriedly drawn, because in some parts of it it mentions kilowatt-hours and a few other things which, to a poor naturalgas man who has not been very well educated, does not mean anything.
We would be glad to discuss in detail title III with any committee, as we have already done, to some extent, in the House. We did not discuss it fully, because we thought that that was going to be taken up after title I, but we did discuss it to a considerable extent, and it is in the House record.
The next page shows a pipe line that runs from the Monroe gas fields down to Baton Rouge and New Orleans. That line was built from the Monroe fields by our company, to Baton Rouge, largely because we had a large refinery at Baton Rouge, La.
Senator Minton. Do they tax you down there?
Mr. GALLAGHER. I prefer that you do not get me into a discussion of that question.
The next page shows a pipe line which runs from the northern Pennsylvania fields up to Syracuse, Auburn, and through that dis
ct. The next page shows the Mississippi River Fuel Corporation, which has a pipe line running from Louisiana to St. Louis.
There has been something said about the St. Louis situation, and I would like to mention that because I do not think it is entirely understood. This line was laid in 1929. It is approximately 450 miles from the Monroe field to St. Louis, and it was laid into the St. Louis district for the purpose of supplying the industrial market. At the time we went in there an attempt was made to deal with the local distributing company and we were unable to make a deal for the distribution of natural gas in the St. Louis district, with the local distributing companies. They had somewhat the same problem that Detroit has to a minor extent. They had a large coke oven plant which was supplying gas to the local company, and they were selling the coke in that district. Coal was being bought in southern Illinois, and in view of investments in this plant and their other manufacturing plant we were unable to make any headway with them.
I believe some of the St. Louis people have been here in Washington talking about the desirability of getting a Government line to run to St. Louis to take care of them because they could not have natural gas. Right at this time there is a hearing on before the Public Service Commission of Missouri for the purpose of determining the feasibility of having a local company supply natural gas to that territory
This line that runs to St. Louis has a capacity of about 100 million feet. At the time it was laid there seemingly was a demand for about 125 million feet for industries in and around St. Louis. However, the depression came on shortly after that, and the line bas never been up over about 70 to 75 millions. There is an additional capacity over what is being used of 25 million in the line, and it has not been used because of the fact that the industrial business has not been running, at intervals, at the load factor it had when we laid the line in there, and part of that gas is sold as dump gas during the slack period. Some 50 million or 60 million or 65 million feet can be made available by taking off some of the industrial business; and if it is their desire to have that done, this company will enter into a contract with the local distributing companies there to furnish gas for the city of St. Louis.
I mention that because that is probably of recent origin and may not be known here.
Going back to the Mississippi River line just for a moment, that line was built by the people who own the gas in the Monroe gas field, which included the Standard Oil Co. of New Jersey, the Columbia Carbon Co., the United Gas Co. and, at the time it was laid, the Palmer interests who had gas in that district, and several other companies. That is just one line that was built to a market to find an outlet for the gas that was in that field, and it was built by the people who had the gas. That line never would have been built, in my judgment, by outside interests. As a matter of fact, these people have had to supervise this line ever since it was built because of the industrial business dropping off. It has never been able to earn its bond retirements, and they have come from the people who originally built the line. However, I am satisfied that in time the line will come back and it will be a desirable venture.
That brings me to a point, if I can just bring it in at this time, with reference to carbon-black companies. Before the House committee there was some talk about what carbon-black companies do and whether they are desirable or not.
We have no interest at all in any carbon-black company. Carbon black is made out of gas by turning raw gas against plates, and then the carbon is scraped off. The largest part of the carbon is used in making the treads of tires, to make them hard and tough. There is a very large demand for it for that purpose. Another demand is for black ink and for paints and things of that sort.
When a gas field is first opened up and there is no market for that gas, carbon-black plants usually build and supply carbon black from those districts. As a market is made for the gas, that is more valuable, because the carbon-black market is not a particularly valuable market, the pipe lines are very desirous, in order to enter such a market, to make arrangements with them to shut the carbon-black plants down, because those plants use a certain amount of gas every day, 365 days a year, and put a heavy drain on the field.
So the pipe
lines try to make a deal with the carbon people who have considerable acreage, to go into the pipe-line venture, to make a better-priced market for the gas, and after that is secured, they generally move on into some other district. That is the reason that the Columbia Carbon Co. was in this particular line, and the reason it was in the Chicago line. It had quite a lot of properties in the Texas Panhandle.
The next situation, if you are interested in it, is the Colorado Interstate, a similar line which takes gas from the Texas Panhandle to Denver.
I realize that it is getting near to closing time, and I do not want to take up too much of your time, but I would like to reiterate the point I made a few moments ago, that we are not fighting regulation, as far as our company is concerned. We realize that Congress has a perfect right to regulate interstate lines, and if they find upon investigation that it ought to be done, we will join-of course, we will have to join-but I mean that we are not fighting that sort of a bill.
This bill, under the present conditions, would force our company to sell, as I see it-I will not say “sell”—but to distribute stock to the stockholders of the Standard Oil Co. of New Jersey prior to October 1, 1935, for the reason that it brings the oil company business in under the holding company situation if it has any interest in utility companies; and under this bill I do not believe an oil company would function, because it would have to get permission from the Securities Commission to do all the things which they now do relative to making contracts between outside people, intercompany contracts. I doubt whether you could make a contract to sell gasoline to an outsider, that is, an actual contract, without having it approved, under this bill.
Of course it was never the intention to do that. I think there is not any question, if you have time to give consideration to the history of this business, that the oil companies are necessary in this business if you are going to develop any more markets for the gas. You would get a few holding companies in of other types; but, after all, the oil companies are the ones that are producing the gas, and in order to get any money out of it and to get some money back for the money they spent in trying to find fields, I think it is to the public interest that they be not precluded from doing this kind of business, because if you are going to have any long lines or any more lines out of the Texas Panhandle, from my own point of view I do not see who else is going to do it, Mr. Chairman.
Thank you, very much.
(The brief referred to and submitted by the witness is here printed in full, at the end of the proceedings.)
The CHAIRMAN. Mr. J. R. Munce, vice president, Arkansas Natural Gas Corporation Shreveport, La., has asked permission to have his brief made a part of the record, and that may be done.
(The brief submitted by J. R. Munce, vice president, Arkansas Natural Gas Corporation, Shreveport, La., is here printed in full at the end of the proceedings.)
The CHAIRMAN. I understand, Mr. Chandler, that you are going to conclude your statement in 15 minutes? Mr. CHANDLER. I will try to.
STATEMENT OF GEORGE B. CHANDLER, EXECUTIVE SECRETARY,
OHIO CHAMBER OF COMMERCE, COLUMBUS, OHIO Mr. CHANDLER. My name is George B. Chandler. I am the executive secretary and I speak by the authority of the Ohio Chamber of Commerce, which is the largest business organization in Ohio and the oldest State chamber of commerce in the United States. It consists of 78 local chambers of commerce, including the great chambers of Cleveland, Cincinnati, Toledo, Columbus, Akron, and Dayton, and 4,269 individual corporate and representative members. We represent several billion dollars of active capital—which we trust will not be held against us.
I am told that I am speaking on the time allotted to the public utilities and was advised to apply to them for a place on the opposition program. I do not represent utilities, although I would by no means be ashamed to do so. Be their mistakes what they may have been, they have far exceeded in efficiency and integrity of purpose the Government that is pursuing them
The CHAIRMAN. Do you mean to say there is no integrity in your Government?
Mr. CHANDLER. I mean to say that the objective of this bill, in my opinion, is not wholly the regulation of utilities.
The CHAIRMAN. I do not catch your statement.
Mr. CHANDLER. I say, the objectives of this bill, in our opinion, are not wholly the regulation of holding companies and public utilities. We have a strong feeling that it is a spearhead of a broader movement, to be followed by public ownership of railroads, and a great deal of expansion. We may be wrong, but that is our view.
The CHAIRMAN. I can say to you that you are wrong, as usual.
Mr. CHANDLER. As usual? Well, that is uncalled for. I think I will let the statement stand.
The CHAIRMAN. I am perfectly willing to let it stand.
Mr. CHANDLER. And if and when the nationalization of utilities aimed at under this bill is effected, the atuses of the past have not been a marker to what they will be in the years to come.
The CHAIRMAN. Why do you say the nationalization" of them in this bill?
Mr. CHANDLER. We believe it is inevitable under the terms of this bill, in the course of a few years; and that is the general opinion.
The Chairman. That may be the general opinion because of the propaganda that has been put out by some of the utility people, which is just as false as a lot of other propaganda that has been put out and which has been circulated by some of the chambers of commerce which, I am sorry to say, are to some extent controlled by some of the utilities.
Mr. CHANDLER. Do I understand that you claim that the Ohio Chamber of Commerce is so controlled?
The CHAIRMAN. I do not know anything about that. I am assuming that it is a good deal the same as a lot of other chambers of commerce that have been dominated to a large extent by some of these utilities. But proceed with your statement.
Mr. CHANDLER. I will be glad to. But I represent all elasses of business. It is ostrich policy for Washington to assume that nobody is against this bill but the utilities. True there are only about 5,000,
000 holders of utility securities in the country, but there are approximately 30,000,000 holders of listed securities in the Nation affecting over 15,000,000 families; about 63,000,000 bank accounts, about 64,000,000 insurance policies. Congress and the administration cannot open a general assault on business without a kick-back, and to brand those citizens who attend hearings, write letters and send telegrams to Washington "propagandists”, using the term in an opprobrious sense, is an insult to the American people, and an assault upon the right of petition guaranteed by the Constitution of the United States.
The CHAIRMAN. Nobody objects to sending it here, but we do know that practically all of the letters that have come to the various Members of the Senate and of the committee have been as the result of requests of the utility people themselves to send the letters here, and likewise by their going out and having their employees make a houseto-house canvass, in some instances, to get letters written here. If you had seen the letters that have come in here you would know that they were propaganda letters, because most of them have been in the identical language.
Mr. CHANDLER. They had a right to do that.
Mr. CHANDLER. And at least they are paying for the propaganda themselves and not having it paid for out of public funds voted by the taxpayers.
The CHAIRMAN. I disagree with you there. It is being charged up to the people of the country who use gas and electricity, and it will be written into the expenses of the utility companies.
Mr. CHANDLER. That is not tenable. Rates are not based on that at all.
The CHAIRMAN. Oh, yes; they are. If you know anything about rates you will know they are based upon the expenses of the company.
Mr. CHANDLER. That is not tenable. They are based upon an engineering estimate of the cost of the property. We go into it in great thoroughness in Ohio.
The Chairman. Not just the cost of the property, by any manner of means. Rates are supposedly based upon cost of the property, but they are likewise based upon the expenses of the company.
Mr. CHANDLER. They are certainly not paid for out of public funds.
We come to you representing the first State to be carved out of the great Northwest Territory and to be admitted to the American Union. It has furnished several Presidents to this Republic. Among the States it stands fourth in population and wealth, fourth in value of manufactured products, third in wages paid in manufacture, and fifth in annual retail sales. It has built up a great civilization between Lake Erie and the Ohio River, with its more than 40 colleges and its long line of distinguished men. It has always been loyal to this Union, loyal to the Federal Government.
Ohio protests against the invasion of its rights contained in the Wheeler-Rayburn holding company bill and considers the language in section 217
The CHAIRMAN. Do you think you speak for the State of Ohio? Mr. CHANDLER. For the great business interests of the State of Ohio.