Mr. HADLICK. I think your question is a little unfair, Senator. Senator CONNALLY. Just say "no", if it is not right; just say "yes" or "no." If that is not true, say "no." Mr. HADLICK. Will you read the question? (Question read by the reporter.) Mr. HADLICK. No. Senator CONNALLY. You do not want it shipped all over the United States; do you, or not? Mr. HADLICK. It is pretty hard to answer that question, Senator; you are trying to deal with only one law Senator CONNALLY. That is all we have jurisdiction of and that is all you appeared here on. Mr. HADLICK. I am looking at the picture from the marketing end only. Senator CONNALLY. You are looking at this whole problem through your own little slit, representing your group, and your complaint is that under the operation of these laws you are kicking because the effect of the law is you are not making enough money? Mr. HADLICK. It is not a free market. Senator CONNALLY. Why is it not a free market; can you not buy gasoline and oil in Texas just like anybody else? Mr. HADLICK. I doubt if I can. Senator CONNALLY. Do you know? Mr. HADLICK. I know it is tremendously difficult to find supplies in Texas, principally due to the pool-buying operations of the major oil companies, made easy by these statutes. Senator CONNALLY. Where do they buy it, the major companies? Mr. HADLICK. At the Gulf. Senator CONNALLY. If you paid the same price you could buy it, could you not? Mr. HADLICK. I am talking about the pool buying, the violation of the antitrust laws in buying gasoline at the Gulf and picking it up in cargo lots before it has a chance to get on the market. Senator CONNALLY. Is there not a posted price in Texas and other producing States for crude-oil prices and everything else? Mr. HADLICK. I am told there is a posted price; it is reported as such. Senator CONNALLY. You know something about the oil business, do you not? Mr. HADLICK. Marketing; yes. Senator CONNALLY. Is there not a regular market for oil just like there is for bacon or beans or calico or what not? Mr. HADLICK. No; suppose I want to buy 10,000 barrels today in Texas, how would I ship it in tank cars; how could I ship that over the pipe line? Senator CONNALLY. I do not know whether you have a pipe line to your office or not. Mr. HADLICK. Could I ship it in a pipe line from East Texas to the Gulf? Senator CONNALLY. I suppose you can; other people do. The pipe line is a common carrier and would take anybody's oil that is tendered to it. Mr. HADLICK. The pipe lines are common carriers in law, Senator, but they are not in fact. They place the amount that you must tender at such a high figure that it makes it impossible. Senator CONNALLY. It makes what impossible? Mr. HADLICK. To use the pipe line as a common carrier in fact. Senator CONNALLY. That is news to me, because our railroad commission has control of it, and a law has been passed making the pipe lines common carriers. I thought they had to carry anybody's oil who was willing to pay for the carriage; of course, they make them pay for it. You testify in the main that the antitrust condition in the industry caused by the Connally Act and I think you used this language, "controlling the supply through controlling the production." There is nothing in the Connally Act that has anything to do with how much oil any State may produce, is there? Mr. HADLICK. Mr. Chairman, can I say this in answering your question: We much view the Federal control by the various things we see, not only your act Senator CONNALLY. You are a lawyer and a pretty shrewd oneMr. HADLICK. I thank you, but I do not agree. Senator CONNALLY. Now, you know whether you can answer the question or not. Is there anything in the Connally Act against which you are appearing that says how much or how little oil a State can produce? Mr. HADLICK. No. Senator CONNALLY. Certainly not. So your statement that the Connally Act controlled the amount of production in producing areas is not true, is it? Mr. HADLICK. My statement is made in connection with other statements, Senator, to the effect we must approach these things from what we see. We see the Connally Act, the Interstate Compact Act, the issuance of figures by the Bureau of Mines, and an import tax on imported oil. They are all control measures. I pointed out to you the testimony of the principal code committee, showing those are features the major oil companies wanted. It gives them absolute leverage over the crude oil matter. The price is raised by the major oil companies. We are in the marketing end. Our oil marketers pray that Standard will raise the price so we will have a margin to work on, just like the oil producer prays the major crude-oil producers will raise the price of crude. We are victims of integrated competition. Senator CONNALLY. That is something we are not responsible for, the organization of these companies; we have to take them as we find them. But your complaint is you cannot buy gasoline and oil at a figure you can make a profit; that is the gist of your complaint? Mr. HADLICK. Yes. Senator CONNALLY. If they would sell gasoline a little cheaper at the refinery and let you sell it a little higher there would be nothing wrong with the Connally law, would there? Mr. HADLICK. The objections might be just the same to leaving the control-we perhaps might not voice objection for the same reason the crude producer is not now; because he is making a profit, although at one time some of them did object. Senator CONNALLY. If you could buy gasoline at the refinery cheaper and if you could sell it to your customers in your area higher, you would be satisfied? Mr. HADLICK. That is right. In other words, we are pleading for our existence. I submitted in my brief a form of law, and I recommend that in all seriousness that you cannot go on taking care of one group of people in the United States and breaking another group. If you are going to save the oil industry, let us save all of them, not only the producer but the marketer. Senator CONNALLY. Do you believe in absolute Federal control instead of State? Mr. HADLICK. No. Senator CONNALLY. You do not favor Federal control of the whole industry to the State control within every State? Mr. ĦADLICK. If you are going to go on with the Connally Act I say you have to pass something to disintegrate the major oil companies. Senator CONNALLY. You are getting away from the question. You are very shrewd. Mr. HADLICK. Thank you for the compliment. Senator CONNALLY. Do you favor absolute Federal control by one director all over the United States? Mr. HADLICK. No. Senator CONNALLY. Then, there is no other way to control it except for each State to regulate production, is there? Mr. HADLICK. That is right, speaking of production, but I would like to talk about my marketers. Senator CONNALLY. But this act does not deal with marketing, but purely with the transportation of oil. Mr. HADLICK. But it affects marketing. Senator CONNALLY. You do favor each State regulating its own production of oil? Mr. HADLICK. Yes; if I may add the statement, to prevent waste. Senator CONNALLY. We assume the State knows what it is doing in controlling production and that it regulates waste. After the State regulates the production and carrying out the theory of preventing waste, and passes its laws and regulations, do you think they should be enforced? Mr. HADLICK. By the State. Senator CONNALLY. You do not believe in the Federal Government aiding the State? Mr. HADLICK. No, sir. Senator CONNALLY. You do not? Mr. HADLICK. No, sir. Senator CONNALLY. Then, if the State should try to regulate internally, and the regulations and laws should be defied by those who produce in violation of them and ship in interstate commerce to States over which it has no jurisdiction, do you think that should be permitted? Mr. HADLICK. Yes or no? Senator CONNALLY. Let me qualify it and say "then." Mr. HADLICK. Again I say I cannot dissect the Connally Act from these other acts. Senator CONNALLY. Then you should not be before the committee. That is all we are considering. I do not want to be rough with you, but we have no jurisdiction over any other legislation except this act. The only question is, Shall this act be retained or shall we let it die? I am trying to get your reasons why you think it should die, and I am asking you if you think that oil produced in violation of State law, hot oil, probably pumped off a neighbor's land, should be permitted free shipment in interstate commerce. You know whether you favor that or not. Mr. HADLICK. Yes; because I favor freedom of commerce. Senator CONNALLY. Is there anything else you want to say? Senator CONNALLY. We will hear you as long as you care to be heard. Mr. HADLICK. I thank you. Senator CONNALLY. Mr. Hadlick, I want to ask you one other question, if you do not mind. I want to direct your attention to section 4 of this act. Now, under section 4 there, the Oil Administrator, Secretary Ickes, has power to lift these restraints under certain conditions, has he not? Read that over. Mr. HADLICK. Yes; apparently so. Senator CONNALLY. Have you taken it up with him at any time? Mr. HADLICK. No, sir. Senator CONNALLY. In other words, under section 4, anyone in the industry who has a complaint, as to those conditions may take it up and make representations and have a hearing, I assume. Has your association ever taken any action of that kind? Mr. HADLICK. No, sir. Senator CONNALLY. All right; thank you. Is Mr. Schock here? Mr. SCHOCK. Yes, sir. Senator CONNALLY. All right, Mr. Schock; tell us who you are and all about yourself. STATEMENT OF CLARENCE SCHOCK, MOUNT JOY, PA., REPRESENTING THE INDEPENDENT PETROLEUM JOBBERS ASSOCIATION OF PENNSYLVANIA Mr. SCHOCK. Mr. Chairman, my name is Clarence Schock, and I reside at Mount Joy, Pa. I am here representing the Independent Petroleum Jobbers Association of Pennsylvania. As to my competency, I will say that the business in which I am interested originated in a small way in 1876. I have been associated with it since 1886, and during all that time we have operated as independent jobbers. I am appearing here today, as stated, as a representative of the Independent Petroleum Jobbers Association of Pennsylvania in the interest of its members. Senate bill no. 790, introduced by Senator Connally, of Texas, proposes to amend the Connally hot-oil law, making it permanent instead of allowing it to expire by limitation on June 30, 1937. Many interests are involved in this proposal. Chiefly, there is the interest of the oil industry and the public interest. The interest of the oil industry involves the interest of the oil producer, the interest of the oil refiner, and the interest of the oil marketer. The public interest involves the cost to the consumer and the question of national defense and safety. The interest of the refiner and I refer to the refiners who are not producers-is to get a price on crude oil which will give him a fair opportunity to compete with such refiners as are producers of crude oil. The interest of the marketer is to get a fair margin on which to operate and earn a fair profit. So far as the interest of the oil industry is concerned, I am speaking on behalf of the oil marketer and particularly the independent oil jobber. Under the existing Connally hot-oil law, the State compacts, the approval thereof by Congress, and the cooperation of the Interior Department, the producers of crude oil are working in perfect concord, and we have a monopolistic control of both supply and price more complete and powerful than ever has occurred in the past 50 years. There is no genuine open tank-car market. There is no genuine open-cargo market. All is artificially controlled. The supply and price of petroleum has been more or less controlled ever since the days of the Oil Trust, but never has that control been so complete as it is today. Today it is impossible for the oil jobber to buy gasoline in the open tank-car market and be able to earn a profit on the basis of such cost. It is necessary for the jobber to go to the major integrated supplier and secure a contract which will give him a cost on gasoline lower than the posted open market tank-car price. In bygone days there was always a posted spot market for gasoline at which tank cars of gasoline could be purchased by anyone normally entitled to tank-car price. Today this price is purely artificial and is intended to compel the purchaser to secure a contract with the major oil companies, with the result that today unbranded gasoline is quoted at a higher price than the advertised branded merchandise. In ordinary commercial practice in general lines of merchandise unbranded commodities of the same quality are quoted and sold at a lower price than advertised branded merchandise, presumably and properly to cover cost of advertising. In the oil business it is different, because of monopolistic control. This control is so complete at present that many large independent purchasers of petroleum who have local customers who prefer to give to them their business find themselves discouraged when seeking a new source of supply, indicating that there is some agreement between suppliers which keeps suppliers from entering into active competition at any price. Platt's Oilgram, under date of February 8, 1937, indicates the present price of 6 cents per gallon for 65 octane and above gasoline f. o. b. Gulf ports. Transportation rate for moving gasoline from Gulf ports to Atlantic seaboard under same date is 0.90 cent per gallon, which makes the delivered most of a gasoline to the cargo buyer purchasing on the present spot market 6.90 cents per gallon. The average tank-car price at New York, Philadelphia, and Baltimore on February 8 was 7.08 cents per gallon, allowing a cargo marketer only 0.18 cent per gallon margin. It is easily seen that it is impossible at this margin to operate a cargo terminal, supply tank cars, sales expense, and so forth, on this small margin. This price was the spot price on unbranded gasoline. Retail prices in eastern Pennsylvania and Delaware on the same date ranged from 72 cents per gallon to 10 cents per gallon, with an average freight |