Mr. BAUCUM. This really does not refer to our present supplier. The statement I have just made was as to a different company who was attempting to secure our business.

Senator CONNALLY. You have no objection to answering Senator Townsend's question as to the name of the company, do you?

Senator TOWNSEND. Do you object to naming the company?
Senator CONNALLY. Go ahead.

Mr. BAUCUM. I filed a copy of that statement with the Interior Department 2 years ago. It was one of the larger companies, a major company. If it is necessary I have no hesitancy in naming the

company.

Senator TowNSEND. I do not want to embarrass you.

Mr. BAUCUM. A summary of the facts as heretofore set out convinces us thoroughly of the monopolistic interests seeking to control and dominate the petroleum industry.

Third. Major oil companies pay to their agents a commission equal to the profit made by jobber. I would clarify this statement. by stating that difference between tank-car-delivered price on gasoline and the price quoted and sold to dealer accounts is practically the same as the agents for major oil companies are paid for delivery of their products at the same time, the agent only has an investment of one or two truck chassis. The major oil companies carry for him all of his stock accounts, allowing him a percentage for waste and evaporation. The jobber must carry the entire investment in his operations, assuming all loss in accounts waste and evaporation. Furthermore since the adoption of the so-called Iowa plan all major oil companies have leased all of their retail outlets, said lease being executed in most of instances to inexperienced operators-operators who have no executive ability-consequently up to the present time do not find it necessary to stick to the published retail price; in fact we are not so dead sure their contracts are just what we are told they are, as we certainly cannot begin to understand why or how they can operate on 1 cent when rental is supposed to be 1 cent.

Furthermore, the leasing of stations not only apparently is a further stroke at the elimination of the independent marketer but also for the purpose of evading chain-store tax; also having in mind the possibility of reenactment of the N. R. A. We who only have a limited number of retail outlets are penalized because of the fact the major oil companies assume no responsibility as to the price gasoline is retailed for; therefore, gentlemen, I feel confident that with this information before you you can readily see the major oil companies making a rapid stride toward their objective, their objective being, in our opinion, to destroy the independent jobbers of these United States and when this is accomplished the consumer of petroleum products will be their victim.

Fourth. In the early spring of 1936 we were called upon by a representative from the United States Attorney General's office, the Honorable Homer S. Cummings, requesting that we deliver to him our contract which was drawn by our present supplier in order that comparison might be made with the contracts in force and effect with other jobbers in the State of Kentucky and elsewhere and, as a result of said investigation, there is no better record for our guidance than that record which has been set up by the Federal grand jury while in session in Madison, Wis.

These gentlemen who served in the capacity of grand jurors were led to believe beyond a reasonable doubt that the major oil companies in these United States were seeking monopoly on the industry. We further wish to cite you to the monopolistic desires in that respect of such monopolistic interests being able to persuade the Procurement Division of the United States Government to bring about what is known as the zoning of each State. That is to say the State of Kentucky was divided into eight zones and it was utterly impossible for any of our independent jobbers to submit bids on the Federal Government's requirement because of the fact our operations did not give complete coverage on each zone. Who is it that would be willing to contend that honest business and taxpayers to this United States Government should be penalized because of their inability to serve on a larger scale?

Fifth. It is our opinion that monopolistic interests are being led to believe that the Government's action in the proposed reenactment of the Connally bill, S. 790, that the violation of the Sherman antitrust law is in order. If and when the Sherman antitrust law is no more feared by capitalistic interests we will cease to have that form of government in which a huge majority of these United States' citizenship believe to reign supreme.

We have no fear of right prevailing when the opposite picture clothed in facts is presented to you; and facts are what we have undertaken to present. You, I am sure, cannot be unmindful of the fact that major and integrated companies which have their producing, refining, and pipe-line interests and, by the act of the Federal Government, have placed them in the position to fix prices to the extent that profit obtained is entirely satisfactory; hence, they do not find it necessary to even expect a profit from the marketing end of the business but rather expect to take a loss in order that the jobber may be eliminated.

In conclusion, gentlemen, permit me to say that I still believe that we have honesty in Government; that those who are empowered with the authority to make our laws to govern the best interests of all of our people are willing to lend a listening ear, willing to hear all phases of any industry; and we, as abiding citizens in this great country, still believe that special privileges should be granted to none and equal rights shall be granted to all.

Senator CONNALLY. In the main your contention is that the price of gasoline at the refinery is too high; you want it cheaper at the refinery, and that the retail price is not high enough?

Mr. BAUCUM. My main contention, Senator, is there should not be anything that would give the monopolistic element the advantage of anyone doing business in the industry.

Senator CONNALLY. You are opposed to conservation laws in general, are you?

Mr. BAUCUM. I am for conservation laws in the respect of eliminating waste but not to the detriment of any group.

Senator CONNALLY. I mean, do you believe in uncontrolled production of oil and let free competition just blow the wells out?

Mr. BAUCUM. I just believe in a law that would protect all in the industry.

Senator CONNALLY. That is a very general statement, and, of course, we are all for that.

Mr. BAUCUM. Yes, sir.

Senator CONNALLY. We all want to do right if you let us say what is right ourselves. But you are not opposed to conservation laws in each State?

Mr. BAUCUM. I am only opposed to a conservation law that would jeopardize the interests of others.

Senator CONNALLY. Do you not think each State should have the right to regulate its own affairs in oil according to its own laws? Mr. BAUCUM. Yes; I undertook to cover that in my statement. Senator CONNALLY. I am asking you, though, now. This is crossexamination. You cannot just tell your story and then quit. Do you, or not, think each State ought to have the right to regulate its own production of natural resources under its own laws? Do you think that?

Mr. BAUCUM. Insomuch as they do not

Senator CONNALLY (interposing). Not insomuch as they do not; but do you think they ought to do it or not? Nobody but the State can determine it. Kentucky cannot determine what Texas will do, and Texas cannot determine what Kentucky will do. I am simply asking you whether you think Kentucky on the one hand-and Kentucky is an oil State-you do not think in Kentucky that Texas ought to tell you what to do, I am sure-and on the other hand, do you not think Texas, depending on their own situation, ought to have the right to regulate any resources, coal like you have in Kentucky, or oil like we have in Texas, and they ought to have the right to control it?

Mr. BAUCUM. I will answer in this way, Senator: So long as it does not jeopardize the interests of others in the end, I do not think so.

Senator CONNALLY. That is no answer at all. In other words, you are willing for Texas to handle it just as long as they handle it like you think they should? That is what you think?

Mr. BAUCUM. I do not propose to know how it should be handled. Senator CONNALLY. You won't subscribe to the doctrine that each State has the right to regulate their own natural resources?

Mr. BAUCUM. No, sir.

Senator CONNALLY. Mr. George Thompson?

Mr. THOMPSON. Mr. Senator, we have joined the brief of the Virginia Association in order to save time.

Senator CONNALLY. Very well. We will be glad to have the Virginia brief. Who represents the Virginia marketers?

STATEMENT OF IRA F. WALTON, COMMITTEE CHAIRMAN, VIRGINIA PETROLEUM JOBBERS' ASSOCIATION, ROANOKE, VA.

Senator CONNALLY. State your name, your business, and where you live.

Mr. WALTON. Ira F. Walton, Roanoke, Va., representing the Virginia Petroleum Jobbers' Association.

Senator CONNALLY. Your name is not on the list?

Mr. WALTON. I am here in the place of Mr. Kirkmyer.
Senator CONNALLY. Mr. Kirkmyer's name is on the list?
Mr. WALTON. Yes, sir. He was unable to attend.

Senator CONNALLY. We will have to limit you to 10 minutes, and if you do not get through you can just file your statement.

Mr. WALTON. If you do not mind, I will just file it with the stenographer and read the attached endorsements.

Senator CONNALLY. All right.

Mr. WALTON. I would like to read those endorsements, Senator. Senator CONNALLY. That will be all right. We will be very glad to have you read the endorsements.

Mr. WALTON. The statement by the Virginia Petroleum Jobbers Association has been endorsed by the South Carolina Oil Jobbers Association, the Georgia Independent Oil Marketers Association, and the North Carolina Independent Oil Jobbers Association.

I think submitting this statement will save some of your time. (The statement of Ira F. Walton, referred to, is as follows:) VIRGINIA PETROLEUM JOBBERS ASSOCIATION, HEADQUARTERS, RICHMOND, VA. Conservation of our crude-oil supply and a stable market are desired by all good businessmen and true Americans, and we cannot criticize too severely the State of Texas in their desire to do this, but if we are going to have true conservation of our crude-oil supply, a natural resource so important to our national life must be guarded, but it should not be guarded for the monopoly group at the expense of the independent jobber, the consumer, and the nonproducting States; and to effect real conservation we suggest as a remedy: Repeal of the import tax on gasoline and crude oil and permit importation of petroleum products up to one-half of our Nation's requirements, thereby reserving domestic supply for our future needs.

We oppose the Connally Act (S. 790), or any act, if it would by application have a tendency to reduce the supply of gasoline to the independent petroleum jobber to such an extent as will permit the establishment of a fictitious price to the independent jobber by the monopoly group, so as to prohibit the independent jobber from marketing at a profit in competition with the supplying company or the monopoly group.

The statement by Mr. Ickes before your committee, we believe, can be exploded in one sentence of less than a dozen words-"Why tax importation of petroleum and its products?" Mr. Ickes draws a very black picture of our Nation starving for a supply of petroleum products in a time of national need, but he had not proposed to relieve this condition by using foreign-produced oil, and which can be delivered to the consumer at a less cost than domestic produced oil and at the same time conserve our crude-oil supply.

Further, in behalf of conservation: Has any thought been given to placing an embargo on the shipment of petroleum and its products from the United States?

The principle of conservation is a big subject and of interest to our entire population.

If we must have control of our petroleum production, allow us to urge that we have control of all divisions of the industry from the well to the consumer, or a complete divorcement of the different divisions of the petroleum industry.

In order to conserve the time of the committee the following representatives of organizations opposed to the passage of S. 790 concur in the brief filed by the Virginia Independent Petroleum Jobbers Association: F. A. Friend, South Carolina Oil Jobbers Association; Howard S. Behr, Georgia Independent Oil Marketers Association; George H. Thompson, North Carolina Independent Oil Jobbers Association.

Senator CONNALLY. In the main, your attitude is the same as some of these other marketers which you have heard testifying?

Mr. WALTON. Yes, sir; we want a living margin for the jobbers. The general trend is, as the last witness on the stand stated, to eliminate the jobber.

Our experience in 1936 in trying to secure a competitive contract led us to believe that, because we could not figure a competitive contract except only at even figures, and if we changed brandsSenator CONNALLY (interposing). What do you mean "even figures?"

Mr. WALTON. All the contracts were based on the same margin; if we changed the brands, we would be penalized one-quarter of a cent. If we held our own plant we would have the advantage of that onequarter of a cent. And I think our margins were reduced from 6.75 down to 6.25. Since that time our margins have been advanced a quarter of a cent.

Senator TOWNSEND. How does the operation of the common law affect that?

Mr. WALTON. The only way, as I see it, that it could affect it is through the monopoly control, so that it does not allow us to go out and get an independent supply. Our company and some others of us happen to handle a major advertised brand, but we have to have the independent supply and source in order to maintain a margin in there. If they cut that down so we cannot get an independent supply and source why then it affects us by the slicing our margin down. Senator CONNALLY. Is it not true that you can buy gasoline in the market just like anybody else, and it is all the same price, is it not, wholesale gasoline, from the refinery?

Mr. WALTON. We tried to buy some gasoline, as you state, in the market, and we were unable to get what we wanted.

Senator CONNALLY. At the prices you wanted it?

Mr. WALTON. As I said before, we could stick to our own plant and be one and a quarter cents better off. But we had been cut in the meantime a half a cent.

Senator CONNALLY. You are talking about the big companies who say to you, "We will sell it to you for 6 cents and you cannot sell it for over 8"; that is what you mean, is it not?

Mr. WALTON. At that time they set the price and our marginal contract was based on that.

Senator CONNALLY. What are you paying now for gasoline in the refinery?

Mr. WALTON. We buy it from a terminal.

Senator CONNALLY. You buy it from a major company, you say? Mr. WALTON. Yes; a major company.

Senator CONNALLY. What do you pay for it?

Mr. WALTON. We pay 62 under what they call a posted rate of price. I believe the contract this year is based on a tank-car or tank-wagon price.

Senator CONNALLY. What is the margin?

Mr. WALTON. Six and one-half cents.

What do you get?

Senator TOWNSEND. Is that fixed in the contract? Does that fix

the price you sell it at?

Mr. WALTON. No, sir; it does not fix the price we sell at.
Senator CONNALLY. What do you mean by the "margin"?

Mr. WALTON. They set the margins from their posted prices at the posts.

Senator CONNALLY. When you buy a gallon of gasoline, don't you know how much you are going to make on it? And what is that margin?