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Origins of the Texas Railroad Commission's Power to Control Production of Petroleum: Regulatory Strategies in the 1920s

Published online by Cambridge University Press:  14 October 2011

William R. Childs
William R. Childs
Affiliation:
The Ohio State University
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Extract

The “Railroad Commission of Texas” conjures up visions of oil and gas and power politics and perhaps the question, What does “railroad” have to do with petroleum? The Railroad Commission (RCT) also brings to mind modern America between 1930 and the 1970s, when the Texas agency controlled from 35 to 45 percent of the oil and gas produced in the United States. These images come from cultural myths of the Lone Star State, from Americans' fascination with conspiracies, and, most telling, from the lack of historical analyses of the commission, its staff, and its regulatory strategies. The prevailing views of the commission are unfortunate ones, for they not only neglect the agency's regulation of railroads, natural-gas utilities, and buses and trucks but also skew the understanding of how the state commission came to regulate petroleum in the first place, how it devised policies for doing so, and how it legitimized itself and defended that legitimacy under the weight of the East Texas crisis between 1930 and 1935.

Type
Articles
Information
Journal of Policy History , Volume 2 , Issue 4 , October 1990 , pp. 353 - 387
Copyright
Copyright © The Pennsylvania State University, University Park, PA. 1990

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References

Notes

1. Research for this article was funded in part by a 1988 NEH Summer Stipend and the Ohio State University. Individuals who offered helpful suggestions on earlier drafts include Mansel Blackford, Ed Constant, Michael Green, Austin Kerr, Diana Olien, Edwin Perkins, and two anonymous readers for JPH.

2. For one example of the view that the RCT controlled world oil prices, see Vietor, Richard H. K., Energy Policy in America Since 1945: A Study of Business-Government Relations (Cambridge, 1984), 6CrossRefGoogle Scholar, 22–23, 193. Only one book exists on the RCT, and it covers only a few selected petroleum topics from 1930 to the 1970s: Prindle, David F., Petroleum Politics and the Texas Railroad Commission (Austin, 1981).Google Scholar

3. McCraw, Thomas K., “Introduction: The Intellectual Odyssey of Alfred D. Chandler, Jr.,” in McCraw, , ed., The Essential Alfred Chandler: Essays Toward a Historical Theory of Big Business (Boston, 1988), 17Google Scholar: “As with Strategy and Structure, the argument [in The Visible Hand (1977)] contains a fair amount of economic and technological determinism”; McCraw, , Prophets of Regulation Charles Francis Adams, Louis D. Brandeis, James M. Landis, Alfred E. Kahn (Cambridge, Mass., 1984), 305Google Scholar; “More than any other single factor, this underlying structure of the particular industry being regulated has defined the context in which regulatory agencies have operated” (emphasis in the original). As McCraw's biographical approach showed clearly, while structural forces (technologies and markets) determine whether a business will be big or a particular regulation effective, it is left to perceptive individuals to understand those structural forces and to implement appropriate strategies and management structures. For an example of another historian who believes individuals can and do make a difference within the political-economic context, see Stoff, Michael B., Oil, War, and American Security: The Search for a National Policy on Oil, 1941 — 1947 (New Haven, 1980).Google Scholar

4. The long-range story, moreover, reflects a general state-to-federal pattern found in regulatory history, for in the 1920s Texas law limited the context of action, while in the 1930s the tensions of federalism characterized much of the debate over petroleum controls. See McCraw, Prophets of Regulation, esp. chap. 2.

5. For associational activities, see Hawley, Ellis W., “Three Facets of Hooverian Associationalism: Lumber, Aviation, and Movies, 1921 — 1930,” in McCraw, Thomas K., ed., Regulation in Perspective (Boston, 1981), 95–123.Google Scholar For examples of the continuity between progressivism and the 1930s, see Hawley, Ellis W., The New Deal and the Problem of Monopoly: A Study in Economic Ambivalence (Princeton, 1966)CrossRefGoogle Scholar; Himmelberg, Robert F., The Origins of the National Recovery Administration: Business, Government, and the Trade Association Movement, 1921–1933 (New York, 1976)Google Scholar; Seely, Bruce E., Building the American Highway System Engineers as Policy Makers (Philadelphia, 1987)Google Scholar; and Childs, William R., Trucking and the Public Interest: The Emergence of Federal Regulation, 1914–1940 (Knoxville, 1985).Google Scholar While the degree to which government agencies were involved in associational activities in the 1920s differed from one industry to the next, in general the activities formed the groundwork for further experimentation in cooperative activities in the 1930s. For works on southern business progressivism, see Tindall, George B., The Emergence of the New South, 1913–1945 (Baton Rouge, 1967)Google Scholar, and Grantham, Dewey W., Southern Progressivism: The Reconciliation of Progress and Tradition (Knoxville, 1983).Google ScholarBrown, Norman D, Hood, Bonnet, and Little Brown Jug: Texas Politics 1921 — 1928 (College Station, Tex., 1984)Google Scholar, furnishes the subtext of the Texas political economy, as well as that of southern progressivism, Texas-style.

6. Galambos, Louis, “The Emerging Organizational Synthesis in Modern American History,” Business History Review 54 (Autumn 1970): 279–90Google Scholar, and “Technology, Political Economy, and Professionalization: Central Themes of the Organizational Synthesis,” BHR 57 (Winter 1983): 471–93.Google Scholar For criticisms of the organizational synthesis, see Brinkley, Alan, “Writing the History of Contemporary America: Dilemmas and Challenges,” Daedalus (Summer 1984): 132–34.Google Scholar

7. For examples of works using cultural approaches to understand institutional behavior, see Dellheim, Charles, “The Creation of a Company Culture: Cadburys, 1861–1931,” American Historical Review 92 (February 1987): 13–44Google Scholar, and “Business in Time: The Historian and Corporate Culture,” The Public Historian 8 (Spring 1986): 9–22Google Scholar; Benson, Susan Porter, Counter Cultures: Saleswomen, Managers, and Customers in American Department Stores, 1890–1940 (Urbana, 1986).Google Scholar For a convenient collection of essays on organizational culture, see the special issue of Administrative Science Quarterly 28 (1983).

For related discussions, see Bender, Thomas, “Wholes and Parts: The Need for Synthesis in American History,” Journal of American History 73 (June 1986): 120–36CrossRefGoogle Scholar, and “A Round Table: Synthesis in American History,” JAH 74 (June 1987): 107–30. Although not tagging their work as “cultural,” the following focus on some of the same aspects of agency culture as found in the works cited above: Katzmann, Robert A., “Federal Trade Commission,” and Suzanne Weaver, “Antitrust Division of the Department of Justice,” both in Wilson, James Q., ed., The Politics of Regulation (New York, 1980).Google Scholar

8. Support for this summary can be found in this note and in notes 9–13 below. Zimmermann, Erich W., Conservation in the Production of Petroleum: A Study in Industrial Control (New Haven, 1967), 140–160, esp. 146–47 n. 4, wherein Zimmermann, citing Joseph E. Pogue, suggests proration's origins lay in the interaction between economic necessity to stabilize prices and the legal difficulty presented by the rule-of-capture (which will be introduced in the third section of this article). This article will describe specifically how and when and why the interaction took place. The best narrative of the political story in Texas in the 1930s is Barbara Sue Thompson Day, “The Oil and Gas Industry and Texas Politics, 1930–1935” (Ph.D. diss., Rice University, Houston, 1973).Google Scholar

9. A qualified exception is Williamson, Harold F. et al., The American Petroleum Industry: The Age of Energy, 1899–1959 (Evanston, III., 1963), 321–38.Google Scholar The authors give credit to state efforts in the 1920s for laying the groundwork for the 1930s, yet they focus on Oklahoma's efforts, and mention those in Texas only in passing.

Most historians have been drawn to the drama of the East Texas Field, the “hot oil” controversy, the petroleum code, the doomed efforts of Secretary of Interior Harold Ickes to garner federal control of petroleum production, and the evolution of the Interstate Oil Compact Commission—all events that took place in the 1930s. See especially Robert E. Hardwicke, “Legal History of Conservation of Oil in Texas,” 214–68, and Maurice Cheek, “Legal History of Conservation of Gas in Texas,” 269–86, both in Legal History of Conservation of Oil and Gas: A Symposium (Chicago: The Section of Mineral Law of the American Bar Association, December 1938)Google Scholar; Hardwicke, “Texas, 1938–1948,” in Murphy, Blakely M., ed., Conservation of Oil and Gas: A Legal History, 1948 (Chicago: The Section of Mineral of the Law American Bar Association, 1949), 447–516Google Scholar; Hart, James P., “Oil, The Courts, and the Railroad Commission,” Southwestern Historical Quarterly 44 (January 1941): 303–20.Google Scholar

10. For overviews of federal policies in the 1920s, see Nash, Gerald D., United States Oil Policy, 1890–1964 (Pittsburgh, 1968)Google Scholar, chaps. 4, 5, and Clark, John G., Energy and the Federal Government: Fossil Fuel Policies, 1900–1946 (Chicago, 1987)Google Scholar, chaps. 4, 6, 7. For a good overview of the controversies in the 1930s, see Hawley, New Deal and Problem of Monopoly, 212–20.

11. Larson, Henrietta M. and Porter, Kenneth W., History of Humble Oil & Refining Company: A Study in Industrial Growth (New York, 1959), 257–63Google Scholar, and chap. 13, nicely complements the Day dissertation; Beaton, Kendall, Enterprise in Oil: A History of Shell in the United States (New York, 1957), 337, 380–83Google Scholar; McLean, John G. and Haigh, Robert W., The Growth of Integrated Oil Companies (Boston, 1954), 101.Google Scholar As will be shown in the text, the impetus for proration in Texas did come from the private sector, but the RCT played a role in sponsoring such endeavors, thus lending a sense of legitimacy that the private operators seemed to believe was necessary for proration schemes to work. As with so many associational schemes in the 1920s, fears of antitrust prosecutions were assuaged when government agents sanctioned industrial cooperative agreements. Of course, as it turned out, government sanctions did not get around the antitrust laws. For material on how the American Petroleum Institute (API), the major trade association of the petroleum industry, worked to rationalize production, see Pratt, Joseph A., “Creating Coordination in the Modern Petroleum Industry: The American Petroleum Institute and the Emergence of Secondary Organizations in Oil,” Research in Economic History 8 (1983): 179–215.Google Scholar

12. California presents a curious aspect to the story. Its petroleum fields were not tied economically to the so-called Mid-Continent area of Kansas, Oklahoma, Texas, and Louisiana. But the private and public leadership concerned with conservation in California exchanged experiences and information with their counterparts in the Mid-Continent area, thus facilitating progress toward control of production. For the economic market situation, see Zimmermann, Conservation of Petroleum, 159–60, and for the exchange of information, see, for example, the articles in the 1931 volume of Transactions (American Institute of Mining and Metallurgical Engineers). See also Blackford, Mansel G., The Politics of Business in California, 1890–1920 (Columbus, Ohio, 1977), chaps. 3, 5.Google Scholar

13. Zimmerman, Conservation in the Production of Petroleum, 145 (quotation); W. P. Z. German, “Legal History of Conservation of Oil and Gas in Oklahoma,” in Legal History of Conservation of Oil and Gas, 110–213; Nash, United States Oil Policy, 113–14, mentions Texas controls in the 1920s, but he focuses on Rule 37, the well-spacing rule, moves on quickly to the post-1929 period, and appears to rely heavily (113 n. 1) on the Robert Conrod's M.A. thesis (see note 14 below). See also Lovejoy, Wallace F. and Homan, Paul T., Economic Aspects of Oil Conservation Regulation (Baltimore, 1967), 33–35.Google Scholar Most of the scholars cite Hardwicke (see note 9 above). Edward W. Constant II, “State Management of Petroleum Resources, Texas, 1910–1940,” in Daniels, George H. and Rose, Mark H., eds., Energy and Transport: Historical Perspectives on Policy Issues (Beverly Hills, 1982), 157–75.Google Scholar Despite the title, the essay does not focus on state regulatory activities in the 1920s. Instead, the author presents a cogent survey of the federal courts’ acceptance of proration on the basis of scientific enquiry and the recognition that due process had been followed by the RCT in judging a great amount of conflicting evidence.

Clark's recent book, Energy and the Federal Government, 146–52, continues to misrepresent the Texas story: “But neither Oklahoma nor Texas seriously enforced their laws until after 1926, when a series of enormously productive oil fields were discovered. Political opposition, especially by the smaller producers, and the decisions of federal courts during the 1930s stymied conservation efforts in Texas. In short, the regulatory efforts of these states failed to modify the rule of capture or to compel the application of the best technology and scientific knowledge to the exploitation of particular pools” (152). Clark cites here Zimmermann, Nash, and Constant noted above, and two other works. Clark's book was concerned mainly with federal policy and he simply did not check out the state stories carefully enough. He is correct that the rule-of-capture held up reform, as will be noted later in the text. His assertion that the state agencies did not apply technology and science in the fields needs to be modified: as the text will show, the regulators in Texas tried to stay on top of breaking developments and in some cases effected change in oil drilling based on new knowledge.

14. The responsibility for this omission in the historiography lies less with Conrod's flawed dismissal of the RCT's actions and more with those scholars following him who failed to examine his work closely. Conrod, Robert Lucas, “State Regulation of the Oil and Gas Industry in Texas,” M.A. thesis, Political Science, University of Texas, Austin, 1931), iv—vGoogle Scholar, 110–15, 115 (quotation). Conrod seemed too influenced by ongoing events in East Texas, for too often he charged the regulators with lack of action when in fact the regulators lacked the knowledge and, significantly, the authority to act responsibly during the East Texas fiasco. He carried this orientation backward into the 1920s to argue that the RCT's strategy of cooperation with oil industry operators had led the commission down the path of regulatory failure. My reading of Conrod's thesis reveals a young student enamored by the “progressive” or “conflict” approach to political economy and dedicated to an ideal, scientific approach to regulation. Thus, his thesis contains occasionally insightful analyses that are undermined by assertions that reveal a lack of comprehension of what actually had occurred in the preceding decade and what was possible given the context of the times. Even though he had access to the people who worked at the Oil and Gas Division, he apparently did not check their oral interviews with the correspondence available in their offices. Conrod, who began his study in November 1930, had access to the files of the division, but he apparently made little use of them. This is not surprising, given the difficulty the staff had in using its own disorganized files. See, for only one example of the chaos, H. E. Bell, Memorandum to the Railroad Commission, 31 July 1924, Box 4–3/391, wallet 1926, Record Group 455, Texas State Archives, Austin (hereafter cited as RG 455, TSA). Note: the archivists at the Texas State Archives are in the process of renumbering the boxes, Michael Green to Childs, 3 April 1990, copy in Childs's possession. When the longer work is completed, I will send to the Archives all the letters I photocopied for research purposes.

15. I found the eighty-two boxes of Oil and Gas Division correspondence at the Texas State Archives very disorganized; some railroad and motor carrier materials were scattered throughout, and there was little sense of chronological or thematic organization to the materials.

16. Twenty-Fifth Annual Report of the Railroad Commission of Texas for the Year 1916 (Austin, 1917), xxxii [hereafter cited as - th Annual Report of RCT (date)]. The positions included a secretary, a civil engineer, an expert rate clerk and assistant, an expert accountant and two assistant accountants, a rate clerk, a traveling inspector, two general clerks, and the porter; “Railroad Commission. Report of Subcommittee No. 5,” Reports of Subcommittees of the Central Investigating Committees of the House and Senate Third Called Session of the Thirty-Fifth Legislature of Texas Including Audits (Austin, n.d.), 606–39. Since 1910, numerous part-time workers had been hired to help with the rate investigations and the appeals of the Shreveport case of 1914, which effectively gave ratemaking authority over intrastate rates to the Interstate Commerce Commission.Google Scholar

17. As I will show in a book-length study, the RCT came into existence in 1891 as the result of political agitation in Texas for control over the alleged discriminatory practices of the railroads. Although late in its inception relative to many other railway regulatory commissions, including the Interstate Commerce Commission, the Texas agency, under the leadership of John H. Reagan, one of the authors of the Interstate Commerce Act in 1887, quickly came to the forefront in the development of railway regulatory strategies.

18. Another aspect, a dark-side progressivism that encompassed Ku Klux Klan activities, Jim Crow segregation laws, and the prohibition issue, would affect the story later and tangentially in the 1930s, when political personalities on opposite sides of the social issues clashed over the economic and legal issues.

19. See Woodward, C. Vann, Origins of the New South, 1877–1913 (Baton Rouge, 1951Google Scholar, 1971), chap. 6; Tindall, Emergence of the New South, 219–25ff.; Grantham, Southern Progressivism, esp. xv—xxii; and Brown, Hood, Bonnet, and Little Brown Jug, 4–8. For incisive critical appraisals of the origins and results of boosterism and business progressivism in the South, see Cobb, James C., The Selling of the South: The Southern Crusade for Industrial Development, 1936–1980 (Baton Rouge, 1982)Google Scholar, 5ff., and Industrialisation and Southern Society, 1877–1984 (Chicago, 1984)Google Scholar, chaps. 2, 6. For an intriguing and probably correct overview that has influenced the southern perspective in this article, see Wright, Gavin, Old South, New South: Revolutions in the Southern Economy Since the Civil War (New York, 1986). Given the racial and class orientations of the New South program (black and poor white Southerners were stuck in a low-wage cycle that was underscored by unwillingness to spend monies for progressive educational institutions), the South held fast to its tragic burden of history. Despite the opportunities offered by petroleum, Texans did not break the southern pattern. The irony was that southern businessmen and politicians, in trying to industrialize their region, attempted to attract the very kind of business that discouraged industrial and urban development: peripheral-style firms that focused on extraction and low-wage manufacturing industries (lumber, petroleum, textiles).Google Scholar

20. Pratt, Joseph A., “The Petroleum Industry in Transition: Antitrust and the Decline of Monopoly Control in Oil,” Journal of Economic History 4 (December 1980): 819–20Google Scholar, traces the Texan hatred of Standard to the so-called Waters-Pierce case and the political personality of Joe Bailey. Rister, Carl Coke, Oil! Titan of the Southwest (Norman, Okla., 1949), 187–89.Google Scholar

“Major” oil firms include corporations that had integrated at least two of the operations involved in the industry—production, transportation, refining, and marketing. “Independents” were firms engaged in only one of the operations. Of course, as the oil industry expanded in the 1920s, many “independents” became integrated, either by internal expansion or through merger.

21. Conrod, “Regulation of Oil and Gas in Texas,” 3–11; Nash, U.S. Oil Policy, chap. 1. Unclear during this time was what in just a few years (1923 and after) would become more widely accepted as fact: gas was a key element of the “drive” that brought the oil to the surface through the oil well; allowing the gas to escape diminished the drive and thereby reduced the total amount of oil recovered. See Harry Pennington to R. D. Parker, 30 October 1929, Box 2–10/560, wallet 1929–31, RG 455, TSA, wherein Pennington explained that he theorized in 1919 about gas lift and that in 1923 the industry became aware of methods through which to conserve the gas lift.

22. Hardwicke, “Legal History of Conservation of Oil in Texas,” 217 n. 4; Earl B. Mayfield to Frank M. Smith, 13 June 1919, Railroad Commission of Texas Letter Press, Record group 455, Texas State Archives, Austin (hereafter cited as RCTLP). The RCTLP is a series of 255 volumes, each with 700 to 1,000 onionskin copies of outgoing letters from the RCT, 1891 to the 1930s. Some letters found in the RCTLP were not located in the division records. Conrod, “Regulation of Oil and Gas in Texas,” 19–24. The 1913 law ordering casing-off of natural gas pertained only to gas wells, not oil wells.

23. In 1917, the state legislators, in an attempt to expose corruption and to streamline state government along southern progressive lines, ordered an internal audit and investigation of each state agency: The RCT passed its examination with only one minor indiscretion exposed (the pipeline expert was not an expert). Indeed, in early 1918, the investigatory committee concluded that while the commissioners were highly capable, they had been underworked because the so-called Shreveport rate case had turned over to the interstate Commerce Commission (ICC) most railway ratemaking duties. Meanwhile, discussions about general state utility regulation had been taking place in the legislature. See “Report of Subcommittee No. 5,” 603–4. Indeed, the committee noted that the Shreveport case of 1914 had eliminated state control of most railway operations; consequently, the commissioners had very little to do. Despite Shreveport, however, the commission still dealt with railroad-related matters, only now in cooperation with the ICC. In the 1920s, moreover, the commission would have to deal with the new motor buses’ and trucks’ effects on railway competition. “Efficiency” here alludes to administrative efficiency, not whether the results of RCT regulatory strategies helped the railways and the Texas economy; Hart, “Oil, Courts, and Railroad Commission,” 307–8, notes a general confidence in the state had developed from the RCT's record in railway regulation. In 1920, natural-gas utilities were placed under the RCT as well, 29th Annual Report of RCT (1920), 5–6.

24. Hardwicke, “Legal History of Conservation of Oil in Texas,” 217–18; Conrod, “Regulation of Oil and Gas in Texas,” 22–30, wherein he outlines the RCT's responsibilities; Clarence Gilmore to Department of Conservation, State of Louisiana, 13 September 1919, RCTLP. The tax increased in 1919 to 1½% and in 1923 to 2% of value of production; see Chief Supervisor to Miller Walker, 19 March 1927, Box 4–33/395, wallet 1927, RG 455, TSA.

25. For the story in Oklahoma, see German, “Legal History of Conservation of Oil and Gas in Oklahoma,” and Williamson (note 9 above). The Oklahoma commission had been established in 1907, but its duties with regard to petroleum were not clearly spelled out until 1914–15. The next state to follow suit was Kansas in 1931; Texas would not incorpo rate market-demand regulation until 1932. The curious twist in this story is this: Fears of trustlike activity by the integrated majors in Oklahoma furnished the basis for including price-fixing power for the commission; if the commission could regulate production on the basis of a minimum price, then the small-scale operators would be protected from underselling by the large-scale integrated firms. In Texas, however, antitrust fears forestalled the use of market demand regulation until 1932 because Texans believed the majors would direct any regulatory scheme that controlled prices.

26. Conrod, “Regulation of Oil and Gas in Texas,” 25–30; Gilmore to Mildren, 20 August 1919, Box 4–3/382, wallet 1919–20, RG 455, TSA; RRC to Mildren, 20 August 1919, RCTLP.

27. The Mayfields were cousins and active in the Texas Democratic party. Allison Mayfield, while a highly respected railway regulator and jealous guardian of states rights, twice had tried unsuccessfully to swing a coveted appointment to the ICC. Earle Mayfield, using his experience and connections with the RCT and courting Ku Klux Klan support, won election to the U.S. Senate in 1923. For Earl B. Mayfield, see Brown, Hood, Bonnet, and Little Brown Jug, 7, 99ff., 106; for Allison Mayfield, see Vertical File, Biographical, Barker Texas History Center, Austin (hereafter cited as BTHC); A. Mayfield to E. M. House, 6 October 1906, and to C. H. Lockhart, 21 June 1916, both in RCTLP.

28. “Clarence Gilmore Victim of Heart Attack,” Austin American Statesman, 11 October 1929, 1; Vertical File, Biographical, BTHC; Gilmore to S. H. Huston, 2 August 1919, RCTLP, for reference to public service.

29. For examples of the disinterested progressive public servant, see Childs and Seely (note 5 above); for the legacy of efficient public administration, see McCraw, Thomas K., “The Progressive Legacy,” in Gould, Lewis L., ed., The Progressive Era (Syracuse, 1974), 184–85Google Scholar, 187–90. For Gilmore's expressed enthusiasm for the petroleum industry, see Gilmore to Marshall, 16 September 1919, RCTLP.

Walter Splawn, who later became a member of the ICC, was appointed to succeed Earle Mayfield in March 1923, Gilmore to John E. Benton, 11 May 1923, RCTLP. C. V. Terrell succeeded Splawn in August 1924; W. A. Nabors succeeded Allison Mayfield in March 1923 and would be succeeded by Lon Smith in January 1925. No other changes occurred until Gilmore died in 1929.

30. Allison Mayfield to C. M. Cureton, 11 July 1919, RCTLP; Gilmore to J. L. Mildren, 20 August 1919, Box 4–3/382, wallet 1919–20, RG 455, TSA.

31. Correlative rights came from the 1900 U.S. Supreme Court case, Ohio Oil Company v. Indiana, 177 U.S. 190. In this case, Indiana had enacted a law preventing waste in order to serve not only the public's interests but also the interests of all owners of an oil field. No one individual could have the freedom to act in a manner that would injure the property rights of other landowners in the field. Thus, prorating pipeline runs assured that every producer in the field would have some of his oil taken to market when there was too much production for the market to absorb. See German and Zimmermann citations in note 32 and Williamson et al., Age of Energy, 322, wherein the authors note that the Oklahoma situation brought into conflict property rights and the rule-of-capture. Alas, the authors do not use the term “correlative rights,” but the German article furnishes a solid analysis of correlative rights. As Williamson et al. point out (322–23), the reason the Oklahoma legislation did not work well, even though it included consideration of market demand, was the lack of control over drilling.

32. Zimmermann, Conservation in the Production of Petroleum, 96–100, for the effects of the rule-of-capture; RCT to Lionel Adams, 20 October 1923, Box 2–10/544, wallet 1923, RG 455, TSA; German, “Oil and Gas Conservation in Oklahoma,” 122–33.

33. Gilmore to J. A. Germany, 24 July 1919, RCTLP, wherein Gilmore noted that not all drillers and operators were willing to cooperate and abide by the shutdown order; Gilmore to J. L. Mildren, July 1919, RCTLP, noted that there was uncertainty as to whether or not a shutdown would injure the wells; Gilmore to C. H. Clark, 20 October 1919, Box 2–10/539, wallet 1922, RG 455, TSA; A. Mayfield to C. ML Cureton, 11 July 1919, RCTLP. Conrod, “Regulation of Oil and Gas in Texas,” 31–43, presents an account of Burkburnett. That he misspelled Gilmore's name (“Gilman”) suggests the reader use caution. Conrod's description of Burkburnett relied heavily on articles from the National Petroleum News.

34. Gilmore to C. H. Hurdleston, 1 February 1919; Gilmore to Empire Petroleum Company, 16 August 1919; Gilmore to Ellis Campbell, 25 August 1919; RRC to Mildren, 19 August 1919, all in RCTLP. A related problem was the lack of control over the railways, which remained under federal control from the war period. Much of the crude was transported by tank car, but the railroads could not furnish enough extra cars; see Gilmore to D. C. Ernest, 17 September 1919, RCTLP.

35. Gilmore to C. H. Clark, 20 October 1919, Box 2–10/539, wallet 1922, RG 455, TSA; Gilmore to J. A. Germany, 24 July 1919; Gilmore to D. C. Earnest, 11 August and 17 September 1919, all in RCTLP; C. H. Clark to RCT, 11 October, and Gilmore to Clark, 14 October 1919, Box 4–3/384, wallet 1920–29; Gilmore to L. H. Moss, 29 March 1920, Box 2–10/534, wallet 1920, all in RG 455, TSA.

McCraw, Prophets of Regulation, 308: “Even though much of regulatory history is tinged with apparent failure, regulation cannot properly be said either to have ‘failed’ or ‘succeeded’ in an overall historical sense.” Yet as McCraw notes, general perceptions of failure in regulatory policies have dominated public thinking. The Burkburnett and later East Texas situations lend support to this generalization.

36. Gilmore to Cureton, 17 July 1919 (two letters); Gilmore to S. H. Huston, 2 August 1919; Gilmore to Earnest, 17 September 1919 (re oil gauger graft); RRC to Mildren, 19 August 1919; Gilmore to Prairie Pipe Line Company, 30 August 1919, all in RCTLP; Clark to RCT, 11 October and Gilmore to Clark, 14 October 1919, Box 4–3/384, wallet 1920–29, RG 455, TSA; Conrod, “Oil and Gas Regulation in Texas,” 43.

37. Gilmore to Clark, 14 October 1919, Box 4–3/384, wallet 1920–29, RG 455, TSA; Gilmore to L. H. Moss, 29 March 1920, Box 2–10/534, wallet 1920, RG 455, TSA. Gilmore's ideas about common purchaser legislation built upon—quite logically—the by then well-known approach to railway regulation. The chaos in the oil fields matched the chaos of the railway systems in the late nineteenth century; as price of crude and legal considerations drove the movement for controls in the 1920s, so too had the rates of transportation and legal constraints driven the movement toward state and federal regulation of railways. That pipelines were a form of transportation underscored the continuity in thinking between railway and petroleum regulations. Others in the 1920s would suggest similar approaches, but the final solution would not mirror the clearheaded reasoning Gilmore developed in 1919–20, for changes within the RCT, disagreement among experts as to what the law allowed, and culturally-based politics and symbols in Texas (states rights and antitrust) would impede rational development of petroleum controls. For suggestions similar to Gilmore's, see Major F. Bryce, 18 May 1927, Box 2–10/553, wallet 1927, RG 455, TSA; for the Oklahoma law, see J. T. Elliott, Conservation Agent's Daily Report, 30 July 1929, Box 2–10/582, wallet letters, RG 455, TSA.

38. German, “Conservation of Oil and Gas in Oklahoma,” 113–33. I suspect Gilmore developed his ideas from the experience in Oklahoma, but I found only circumstantial evidence in the records to support this.

39. Zimmermann, Conservation in the Production of Petroleum, 76 (“… during the twenties unitization was viewed by some as a more or less universal remedy for the ills that beset the petroleum industry. However, for reasons inherent in the situation, a different solution was adopted—state regulation, including prorating …”) and 122–23, including n. 20. Zimmermann is sensitive to the complexities in the story of petroleum conservation, 109–13, but he does not offer a detailed history of how the “reasons inherent in the situation” actually emerged. While the East Texas field would be accorded its own peculiar proration scheme, the other fields would be based at least in part on unitization. The Texas legisla ture passed a common purchaser law in 1930, but the RCT did not use it because (1) there was still the problem of not being able to control production through controlling drilling, and (2) the pipeline firms generally prorated their runs anyway.

40. On 12 November 1919, the commission sent out letters to numerous states asking for information that might aid its attempts to conserve petroleum. Replies came from Kansas, Illinois, Kentucky, and Pennsylvania. Louisiana, Wyoming, New York, West Virginia, Ohio, and Indiana were contacted, but I could not find their replies. See Box 4— 3/375, wallet 9–23, RG 455, TSA.

41. Art Walker to Allison Mayfield, 28 February, Campbell Russell to RCT, 20 June, and Chair to Russell, 25 June 1919, all in Box 2–10/532, wallet 1917–20, RG 455, TSA; Earl B. Mayfield to Frank M. Smith, 13 June 1919, RCTLP; Conrod, “Regulation of Oil and Gas in Texas,” 43–56, summarizes the rules, lists the forms, and criticizes the RCT for listening to the operators and for promulgating rules that had vague language; the result, according to Conrod, was easy circumvention of the law. The one exception was Rule 37, which Conrod noted was not vague, but specific; ironically, this rule was abrogated often as exceptions were granted liberally (Conrod, 68–70: during the first eleven years an average of 437 waivers to Rule 37 were granted and only 61 were denied). Scholars and devotees of petroleum regulation have overemphasized the importance of Rule 37 relative to the numerous other rules that encouraged safer oil-field operations. Rule 37 established 300 feet between each well and no closer than 150 feet to the nearest property line as the minimum distances to be kept. Butte to Elliott and Amen, 3 February 1920, Box 2–10/535, wallet 1921, RG 455, TSA (re shooting); “How to Plug a Well by Mud-Laden Fluid Process,” Office of RCT (n.d.), Box 4–3/382, wallet 1919–20, RG 455, TSA. Operators had to file a form (Rule 9) as notice of intention to plug a well twenty-four hours before actual plugging, along with a complete well log; then, after the operation was completed, the operator had to file another form listing plugging materials and procedure followed. Form 12 was an application for Form 5 (pipeline certificate).

42. I. F. Shaw to Texas RRC, 6 November 1919, Box 4–3/386, wallet 1921–31, RG 455, TSA, for populist complaints re Rule 37; A. H. McCarty to Allison Mayfield, 10 November 1919, Box 2–10/567, wallet 1931, RG 455, TSA, for defense of the “small fellows.”

43. Born in San Francisco in 1877, Butte moved with his family to Texas ten years later. After receiving a B. A. in 1895 from Sherman College, Texas, he taught school and studied law before entering the University of Texas in 1902. He received a B.A. and M.A. at UT and then left for Oklahoma, where he practiced law from 1904 to 1911. From Oklahoma, Butte took his family to Europe. After studies at the University of Berlin, the University of Heidelberg, and the University of Paris, Butte returned to teach at the UT Law School. His knowledge of Germany landed him a commission as a Major in the U.S. Army in 1918 and he headed the foreign intelligence department of the general staff. He returned to the UT Law School after the armistice. After his year with the RCT, Butte in 1920 drafted a general public utilities bill, which the legislature did not pass, and in 1924 ran an impressive race for governor against “Ma and Pa” Ferguson; his strong showing based on the campaign strategy of honest and efficient government underlay the Lone Star State's voting for Hoover in 1928. In succession, Butte became attorney general for Puerto Rico (1925— 28), an assistant to the U.S. attorney general, and associate justice of the insular Supreme Court of the Philippines. The only flaw in this makeup, and it apparently escaped contemporary observers, was that Butte held interests in oil leases for his land in Oklahoma while he worked with the RCT. See the George C. Butte Papers (esp. Boxes 2B163, 2B169, 2B172, and 2B173) and Vertical Files, BTHC; Norman D. Brown, Hood Bonnet, and Little Brown jug, 247–51; George McMillan to Butte, 28 April 1920, Box 2B169, folder 1897–1921, Butte Papers, BTHC. Butte died in Mexico City in 1940. Texas would not pass a general utilities regulatory bill until 1975; the first Republican commissioner would be appointed in 1987.

The “Republican” label for Butte is a bit misleading, as it is for Herbert Hoover. Both were “independent” public servants who believed “politics” should focus not on party as much as on the man and his ethics. See Brown, Hood, Bonnet, and Little Brown Jug, 247.

44. Art L. Walker to Allison Mayfield, 28 February 1919, Campbell Russell to RCT, 20 June 1919, Chair to Russell, 25 June 1919, all in Box 2–10/532, wallet 1917–20, RG 455, TSA; Conrod, “Regulation of Oil and Gas in Texas,” 43–51. See RRC to Mildren, 19 August 1919, RCTLP, for an early example of the cooperative approach. The RCT filed some suits for noncompliance with its rules, but only after the agency had given the operators one full year to learn the ropes of regulation; Butte to Wortham, 20 September 1920, Box 3–4/364, wallet 1919–22, RG 455, TSA.

45. Butte, Memorandum for the Commission, 27 April 1920, Box 2–10/584, wallet Fuel Co. Case, RG 455, TSA.

46. Butte to Editor, Texas Monthly Review, 7 February 1920, Box 2–10/534, wallet 1920; Butte to T. L. Coplin, 13 February 1920, Box 4–3/385, wallet 1920–29, both in RG 455, TSA. In the latter, Butte suggests “the idea of a wholesale Spring clean-up in the Burkburnett field, to be conducted under the direction, and at the instance, of the Railroad Commission”; Butte to Herman Walker, 9 June 1920, Box 4–3/381, wallet 1919–20, RG 455, TSA. For examples of the problems encountered in developing statistical sources, see H. E. Bell, Memorandum to the Railroad Commission, 9 and 15 January 1926, Box 4–3/391, wallet 1926, RG 455, TSA, wherein Bell notes that the operators are filling out and filing the required forms, but the office staff had been unable to keep up with the avalanche (“almost twice as many completion and plugging records as were reported to us a year ago”—Jan. 91); Auditor, Sinclair Pipe Line Company to RCT, 9 August 1926, Box 2–10/548, wallet 1925–31, RG 455, TSA.

47. J. W. Hassell to Jack Morehouse, 20 December 1922, Box 2–10/545, wallet 1923–23, for example of fluctuating numbers of deputy supervisors; RCT to R. P. McLaughlin, 11 November 1919, Box 2–10/567, wallet 1931; Chief Supervisor to J. L. Mildren, 26 October 1919, Box 4–3/364, wallet 1919–22; Butte to W. B. Wortham, 12 and 30 March and 1 July 1920, Box 4–3/364, wallet 1919–22; R. D. Parker to Hoffer, 7 June 1928, Box 2–10/556, wallet 1928, for example of continuation of annual meeting, all in RG 455, TSA; Gilmore to Ellis Campbell, 25 August 1919, RCTLP, indicates Gilmore, before Butte arrived, had established that the deputy supervisors had to be diplomatic in their dealings with oil-field operators. The close monitoring of expense accounts reflected the close audits of the 1917 investigations of state agencies and the progressive concern for efficient government.

48. One of Butte's special concerns was the danger of fire in the oil fields. Such accidents not only killed workers and wasted valuable resources but could be prevented. The fire problem reflected once again the consequences of the rule-of-capture. The more wells drilled on an operator's lease, the more quickly could he get “his” oil out of the ground. The close proximity of wells, open-air storage pits, and closely spaced steel storage tanks (to hold the overproduction), as well as electric motors and careless oil-well drillers, all added up to a dangerous situation in the fields. Prompted by Butte's letters, the deputy supervisors focused on the fire problem; and fires in the fields became less common later in the 1920s. Meanwhile, Rule 37 helped alleviate somewhat the problem of fires, but that rule was often abrogated in practice; reduction in fires can be attributed to the hands-on and personal contacts initiated by the deputy supervisors. See Arnold to Walthall, 25 August 1923, Box 4–3/373, wallet 1923–23; RCT to A. H. McCarty, 12 November 1919, Box 2–10/567, wallet 1931; Bell to R. C. Lomax, 1 November 1926, Box 4–3/391, wallet 1926; Butte (for the Commission) to Robert H. Hoffman, 15 September 1920, Box 4–3/371, wallet 1920–23, all in RG 455, TSA; Conrod, “Regulation of Oil and Gas in Texas,” 17, 68–70.

49. Secretary to T. H. Gilmour –10/533, wallet 1916–21; Clerk, Memorandum to Chief Supervisor, n.d., Box 2–10/551, wallet 1926, all in RG 455, TSA; Rister, Oil!, 185–86.

50. Rister, Oil!, 171–86, 220–21, chaps. 18–21; the percentages of national production from Texas were estimates taken from Warner, C. A., Texas Oil and Gas Since 1543 (Houston, 1939), 106. The increase was not sustained throughout the decade: 1925 saw a drop to about 19 percent of national production.Google Scholar

51. For examples of the continuation of Butte's approach to administration, see Chief Supervisor to John Lock, 14 November 1923, Box 2–10/542, wallet 1923–24, RG 455, TSA, wherein the Chief Supervisor suggests writing a letter to the operators to encourage them to plug the wells properly: “We believe that a personal letter in these instances is much better than a circular letter”; Chief Supervisor to Dallas News, 30 December 1925, Box 4–3/388, wallet 1924; Assistant to Chief Supervisor to Morehouse, 17 December 1928, Box 2–10/555, wallet 1928, wherein it is suggested that the deputy supervisor experiment with a new method for preventing water encroachment during drilling, all in RG 455, TSA. A good example of the camaraderie established through the annual meeting is R. C. Lomax, “The Deputy Supervisor,” address at Annual Meeting of Deputy Supervisors, Austin, 29 and 30 July 1927, Box 2–10/557, wallet 1926–27, RG 455, TSA.

52. Conrod, “Regulation of Oil and Gas in Texas,” 48, complained about the lack of training of the deputy supervisors; Gilmore to Ellis Campbell, 9 September 1919, Box 4–3/387, wallet 1921–31; Mildren to Gilmore, 12 May 1919, Box 4–3/364, wallet 1919–22, both in RG 455, TSA; Gilmore to Mildren, 9 August 1919, RCTLP. For examples of less professional deputy supervisors, see Sadler to Allison Mayfield, 4 May 1921, Box 44–3/382, wallet 1919–20 (deputy supervisor carrying a gun), Morris to Sadler, 15 May 1921, Box 2–10/535, wallet 1921 (reports of drunken driving), both in RG 455, TSA. See W. F. Arnold to Hassell, 20 September 1922, Box 4–3/386, wallet 1921–31, for an example of the deputy supervisor helping with drilling methods. See Hassell to H. W. Bell, 21 September 1922, Box 2–10/536, wallet 1922, which was labeled “Personal and Confidential,” for an example of the RCT trying to circumvent civil service employees in order to find experts for jobs in the fields, both in RG 455, TSA.

53. For a representative example of the daily activities of a deputy supervisor, see H. H. Fitzpatrick, Conservation Agent's Daily Reports, for January 1926, Box 4–3/387, wallet, 1924–26; D. C. Morris to D. E. Woods, 2 November 1920, Box 4–3/359, wallet, 1933; ? to Butte, 17 April 1920, Box 4–3/382, wallet 1919–20; Morris to Woods, 11 and 25 November 1920, Morris to RRC, 13 and 28 November, 10 December 1920, and Morris to Woods, 16 November 1920, all in Box 4–3/359, wallet 1933; Morehouse to Bell, 1 February 1926, Box 3–4/387, wallet 1924–26; all in RG 455, TSA. For examples of the local chamber of commerce of offering or taking away office space, see Morris to Woods, 16 November 1920, Box 4–3/359, wallet 1933; Morris to J. P. Sadler, 10 December 1920, Box 2–10/536, wallet 1920–23; Jack Morehouse to Laten Stanberry, 3 February 1923, Box 2–10/542, wallet 1923–24; Chief Deputy Supervisor to W. J. Carden, 23 February 1923, Box 2–10/543, wallet 1923, all in RG 455, TSA.

54. All of the following are found in RG 455, TSA: W. F. Arnold, “General Report on My Trip to the Laredo Fields,” 16 December 1922, Box 4–3/348, wallet 1920–22, reports on problems and cooperation: “Operators, who less than one year ago felt antagonistic toward us, have come to us for help, now realizing that we are of actual value to them”; Chief Deputy Supervisor to John Brownlee, 18 October 1923, Box 10/543, wallet 1923; Coplin to Bell, 20 August and 6 September, and Bell to Coplin, 27 August and 15 September 1924, Box 2–10/539, wallet 1922; Omar Burkett to Bell, 19 August 1925, Box 2–10/585, wallet misc.; Morehouse to Earl Calloway, 12 March 1926, Box 4–3/387, wallet 1924–26. In the latter, Morehouse noted that “after I got the movement well under way I worked pretty well under cover, so as not in any way to have it appear as being instigated by the Department”; B. C. Clardy, Memorandum to H. E. Bell 13 December 1926, Box 2–10/551, wallet 1926; J. T. Elliott to Parker, 30 April 1928, and Parker to Elliott, 4 May 1928, Box 2–10/556, wallet 1928; Underwood, Johnson, Dolley “Order Restricting the Use of Rotary Tools in Lefors Field in Gray County,” 29 September 1928, all in Box 2–10/555, wallet 1928. R. G. Barnum to Bell, 27 January 1927, Box 2–10/553, wallet 1927, gives a detailed report of a meeting of operators that had been suggested by the commission's staff. J. M. McDonald to Parker, 25 July 1929, Box 2–10/557, wallet 1929, and Chief Deputy Supervisor to Frank Fouch, 24 April 1929, Box 2–10/558, wallet 1929, reflect the continuation of the cooperative approach, necessitated in part by the imprecise nature of the commission's authority.

55. Hassell to W. M. Priddy, ? April 1922, Box 2–10/540, wallet 1922, RG 455, TSA (quotation). In June 1920, the division had fifteen employees, including nine deputy supervisors. The number of deputy supervisors dropped from twelve in 1921 to nine in 1923 and rose to fourteen in 1926 and seventeen in 1927. By November 1929, the Oil and Gas Division held twenty-five employees (fifteen deputy supervisors) comprising nearly half of the entire RCT staff (which included now a Motor Transportation Division along with railroad rate and engineering sections); Butte to W. A. Nabors, 24 June 1920, Box 2–10/534, wallet 1920; Hassell to Morehouse, 20 December 1922, Box 2–10/545, wallet 1923–24; Chief Supervisor to J. T. Elliott, 19 October 1926, Box 3–4/387, wallet 1924–29; Bell to R. A. Smith, 4 April 1927, Box 4–3/394, wallet 1927, all in RG 455, TSA; Commissioners to Moore Lynn, 16 November 1929, RCTLP. In 1929, the legislature changed the method of appropriating monies for the division by placing it on a regular budget (still another instance of concern for efficiency in government); Gilmore to Walter Cline, 18 March 1929, RCTLP.

56. All of the following are found in RG 455, TSA, except where noted: Chair to Lon A. Smith, 13 September 1923, Box 4–3/361, wallet 1931–35, wherein the RCT complains to the Comptroller that the plunge in oil prices has cut funds to where the commission cannot perform all of the “police work” necessary. Indeed, lack of monies postponed the annual meeting of deputy supervisors in 1929; Leslie McKay to Homer Pierson, 11 July 1929, Box 2–10/559; H. H. Fitzpatrick to RCT, 27 June, 1922, Box 4–3/384, wallet 1920–29; Arnold to Bell, 2 May 1924, Box 4–3/388, wallet 1924; Bell to R. C. Lomax, 1 November 1926, Box 4–3/391; wallet 1926; S. W. Blount to Parker, 25 June 1931, Box 2–10/560, wallet 1929–31 (in this case Blount asked to be rehired after working in the private sector); John Hoffer to Parker, 7 June 1929, Box 2–10/558, wallet 1929.

A curious barrier to effective enforcement emerged in 1926. Bell to S. W. Blount, 11 February 1926, Box 2–10/550, wallet 1925, explains that “the New Revised Statutes [1925] did not carry forward that part of the Conservation Law that assesses a penalty for the violation of a rule or order of the Commission”!

57. For examples of continuing cooperation and safer development of the oil and gas fields later in the 1920s, see (all in RG 455, TSA): R. G. Barnum to Bell, 27 January 1927, Box 2–10/553, wallet 1927 (president of West Texas Oil and Gas Association reports on exchange of ideas with RCT deputy supervisors); Memo, B. C. Clardy, n.d., probably March 1927, Box 4–3/381, wallet 1927–31, folder Clardy correspondence (re informal conference between RCT officials and representatives from the Church and Fields district); Chief Supervisor to J. W. Carden, 27 July 1928, Box 2–10, wallet 1928 (re journalist wanting to write a positive article of RCT efforts); J. M. McDonald to Parker, 25 July 1929, Box 2–10/557, wallet 1929 (operators want RCT to encourage association); Coplin, Conservation Agent's Daily Report, 8 October 1929, Box 2–10/584, wallet letters (followup meeting of operators from Nacona field and report that gas waste has been reduced).

58. Parker to Harry Pennington, 30 October 1929, Box 2–10/560, wallet 1929–31, RG 455, TSA; Lahee, F. H., “Unit Operation and Unitization in Arkansas, Louisiana, Texas and New Mexico,” Transactions of the American Institute of Mining and Metallurgical Engineers (New York, 1930), 34–42; W. P. Z. German, “Compulsory Unit Operation of Oil Pools,” 11–37, H. C. Hardison, “Proration of Yates Pool, Pecos County, Texas,” 74–79, and David Donoghue, “Proration in Texas,” 67–79, all three in Transactions (New York, 1931). For private-sector support of self-regulation of production and an overview of federal efforts to encourage conservation, see Larson and Porter, History of Humble, chaps. 11, 13. The authors note (298) that Humhle executives were especially active between 1927 and 1930 in encouraging proration and unitization of production in Texas. For an overview of the activities of the American Petroleum Institute, the industry's most important trade association during this period, see Pratt, “Creating Coordination in the Modern Petroleum Industry.” Pratt shows that the API focused on the gathering of statistics, promoted standardization of drilling tools, and stayed away from the conservation and price-fixing issues.Google Scholar

59. The Chief Supervisor in 1927, H. H. Bell, avoided considering the marketing problem because the laws did not allow him to; Bell to George S. Marshall, 16 May 1927, and Bell to W. H. Holmes, 18 May 1927, Box 2–10/551, wallet 1926.

60. The Hendricks field in West Texas apparently initiated a proration plan before the larger Yates field; Rister, Oil!, 299. For references to proration in the Oil and Gas Division records before 1930, see (all in RG 455, TSA, except where noted): C. D. Neff to Gilmore, 12 March 1928, Box 4–3/384, wallet 1920–29; ? to Morehouse, 9 April 1928, McKay to Morehouse, 26 May 1928, both in Box 2–10/552, wallet 1928; Gilmore to W. B. Hamilton, 4 May 1928 (first quotation), and Gilmore to John W. McGee, 18 March 1929 (second quotation), both RCTLP; W. H. Holmes to RCT, 17 May 1928, Box 2–10/541, wallet 1928; Gilmore to Charles R. Groff, 18 August 1928, Box 2–10/560, wallet 1929–31; Parker to Fitzpatrick, 2 November 1929, Box 2–10/448, wallet 1929. While Gilmore presents the position that all of this was aboveboard, the absence of direct references in the records to “numerous hearings and from sworn testimony” suggests otherwise. Larson and Porter, History of Humble, 319, mentions RCT hearings on the Winkler field. Of course, the possibility exists that the records have been missfiled; 1 found some motor-carrier and railway material in oil and gas boxes. The articles from Transactions cited above fail to mention the RCT, except in its sanctioning role.

61. Hardison, “Proration of Yates Pool,” passim; Larson and Porter, History of Humble, 316–21. First, well potential (the amount of oil the geologists and engineers thought lay beneath the well), then acreage allotments (again, a unit with which to estimate the amount of oil beneath the owner's land) formed the basis of proration in Yates.

Primary evidence in the Oil and Gas Division correspondence seems to sustain Larson's and Porter's assertions that Humble was less selfish and more interested in the common good than any other major firm; C. D. Neff to C. Hansen, 12 March 1928, Box 4–3/384, wallet 1920–29, RG 455, TSA (this letter also notes how the “experts” were inconsistent in estimating reserves).

62. Rister, Oil!, 306 (quotation); Larson and Porter, History of Humble, chap. 13, and for Gilmore's role, 312, 451; Conrod, “State Regulation of Oil and Gas in Texas,” 72–79.

63. Larson and Porter, History of Humble, 451, for the weakened position of the RCT, c. 1931.

64. 29th Annual Report of the RCT (1930), 64; in late 1929, Moore Lynn, acting state auditor, ran a biographical and employment survey of all state employees. Most of the replies from the employees of the Oil and Gas Division can be found in Box 2–10/565, RG 455, TSA. Of the eleven I located, only two lacked previous oil-drilling experience, but one of those had five years and the other four and one-half years experience with the division. The Chief Deputy Supervisor had previous drilling experience.

65. Humble Oil was associated in the Texan mind with Standard Oil; see note 20 above. “Moody Measures Still Wait Action,” Austin American Statesman, 10 February 1929; Parker to E. G. Allen, 11 January 1929, Box 2–10/561, wallet 129–30, RG 455, TSA; Day, “Oil and Gas and Texas Politics,” 68; Larson and Porter, History of Humble, 312–15, chap. 13.

66. “In Memory of Clarence Gilmore,” 28th Annual Report of the RCT (1929), 3–4; “Neff Rail Member,” Austin American Statesman, 14 October 1929; Parker to Tilly, 16 October 1929, Box 2–10/558, wallet 1929, RG 455, TSA. C. V. Terrell and Lon Smith were commissioners when Gilmore died. Terrell seemed more comfortable with railway regulation. He constantly referred to R. D. Parker, the Chief Deputy Supervisor, on oil and gas matters during legislative hearings in 1932, “Solons' Rights Challenged by Pope,” Austin American Statesman, 5 November 1932, 1. Former governor Pat Neff was appointed to replace Gilmore; Neff did not get along with Terrell or Smith; “Terrell and Smith Tell House Version of Split with Neff,” Austin American Statesman, 19 July 1931, 1.

67. Danciger Oil & Refining Co. of Texas et al. v. Smith el al. 4 Federal Supplement 236 (1933), 236–7 n. 1; Hart, “Oil, Courts, and the Commission,” 312; Day, “Oil and Gas and Texas Politics,” 83–87. For a description of the RCT's good relations with the Danciger firm, see Parker to J. P. Lightfoot, 6 June 1928, Box 4–1/395, wallet 1928, RG 455, TSA.

68. 39th Annual Report of the RCT (1930), 63–65; 41st Annual Report of the RCT (1932), 85–91.

69. “Texas Topics,” Austin American Statesman, 7 May 1931, 4; “Oil Board Plan Killed,” Austin American Statesman, 5 August 1931, 1; Day, “Oil and Gas and Texas Politics,” 204–6 (April-May 1932).

70. R. D. Parker represented the continuity in Progressive Era approaches. Born on 2 February 1878, Parker received an engineering degree from the University of Texas at Austin in 1898. After serving with the U.S. Geological Survey, teaching at UT, and working for two railways, Parker became chief engineer of the RCT in 1908 and held that position until 1920. He then joined the Natural Gas Utilities Division of the RCT and in 1927 took over as Chief Oil and Gas Supervisor. After Leaving the RCT in 1934, he worked for the Texas Petroleum Council and later entered private practice in engineering until he retired in 1948. He died in September 1958. See “R. D. Parker,” Vertical File, Biographical, BTHC, and Time Magazine, 2 July 1934, 50, for the story behind Parker's firing. See “Lawmakers Forgetting Politics and Trying to Aid Oil Industry,” Austin American Statesman, 19 July 1931, 12, wherein Raymond Brooks, a longtime observer of Texas politics, noted that the explanation of the facts behind the RCT's problems, much of which Parker brought before the lawmakers, had restored the legitimacy of the RCT.

71. The story in the 1930s will be developed in more detail in my forthcoming book. The distinctive features of the East Texas field, particularly its numerous operators, led to a different kind of proration system than had been developing in the 1920s. Unitization as found in Yates was not adopted in East Texas; instead, each well was rated for bottom-hole pressure and potential and on that basis given a production quota based on the entire field's quota. The sheer number of operators, the populist tradition in the area, and the inability to control the giant field from the beginning explain why proration developed differently there than elsewhere.

72. For a convenient listing of the pertinent literature, see McCraw, Prophets of Regulation, 147–52 and 342nn. 9, 13, 343 nn. 14, 18.

73. In the East Texas field, the legal and political forces blocked rational, unitized development; thus one could argue that in this case, the legal forces were stronger than the economic ones.

74. Chandler, Alfred D. Jr, Strategy and Structure: Chapters in the History of the American Industrial Enterprise (Cambridge, Mass., (1962).Google Scholar

75. Williamson et al., Age of Energy, 327–28, makes a similar argument, but in the immediate context of the book, the reference is to Oklahoma specifically and/or other states’ efforts generally. No significance is given to the efforts in Texas.

76. McCraw, Thomas K., “Business and Government: The Origins of the Adversary Relationship,” California Management Review 26 (Winter 1984): 33–52, suggests that “the conditions of legitimacy [in business-government relations] seem to be a complex amalgam of efficiency, fairness, and shared power” (47). He goes on to suggest six categories that might explain successful business-government policymaking: (1) a sense of crisis, (2) opportunity for a positive-sum game, (3) a coherent strategy implemented by first-rate talent, (4) high-percentage initial steps, (5) an identifiable measure of success other than profit, and (b) some means of controlling the agenda and limiting the number of players. The story in this essay supports some but not all of McCraw's speculations. A sense of crisis was absent in the 1920s story, but creative approaches still emerged to develop conservation in the oil fields. (McCraw suggested crises were not essential but often were helpful in forging creative policymaking.) Throughout the 1920s, the RCT attempted to help all players achieve something positive from government intervention: Small-scale, nonintegrated oil operators as well as the major integrated firms were given fair hearing. Gilmore and Butte represent the first-rate talent with a coherent strategy; Parker represents the continuity after 1929. The RCT eschewed high-percentage first steps because of the lack of authority in the statutes; the Oklahoma agency, however, with the authority, took strong action early. Identifying success other than profit in the story has to rest upon the growing legitimacy of the agency in the eyes of industry leaders. The proration agreements in the fields other than East Texas brought a measure of stability and thus the chance for steadier profits. Finally, despite the lack of market-demand legislation, the RCT and the industry controlled the agenda of conservation and made headway in stabilization of production until the East Texas crisis shattered temporarily that stability.Google Scholar