and so they indicted me-new deal-j edward jones-1938-249pgs-pol

7/27/2019 And So They Indicted Me-New Deal-J Edward Jones-1938-249pgs-POL

http://slidepdf.com/reader/full/and-so-they-indicted-me-new-deal-j-edward-jones-1938-249pgs-pol 1/249

"AND SO THEYINDICTED ME!"

A S t o r y o f N e w D e a l P e r s e c u t i o n

b y J . EDWARD JONES

1938J . EDWARD JONES PUBLISHING CORPORATION

NEW YORK



C o p y r i g h t , 1 9 3 8 , b y

J . EDWARD JONES PUBLISHING CORPORATION

SECOND PRINTING

PRINTED IN THE UNITED STATES OF AMERICA



" A r b i t r a r y p o w e r a n d t h e r u l e o f

t h e C o n s t i t u t i o n c a n n o t b o t h e x i s t . "

T h e S u p r e m e C o u r t o f t h e U n i t e d S t a t e s



"AND SO-THEY INDICTED ME!"



PREFACEN o w h e r e i n t h e w o r l d t o d a y i s t h e p u r p o s e o f

g o v e r n m e n t s o d e d i c a t e d t o p r i n c i p l e s f or t h e p r o -

t e c t i o n o f i n d i v i d u a l f r e e d o m a n d l i b e r t y a g a i n s t

t h e t y r a n n i c a l o p p r e s s i o n s o f p o l i t i c a l u s u r p a t i o n ,

a s i n A m e r i c a . T h e g r e a t i n s t i t u t i o n s o f g o v e r n -

m e n t c r e a t e d b y t h e C o n s t i t u t i o n o f t h e U n i t e d

S t a t e s s t a n d a s m i g h t y b u l w a r k s , n o t o n l y f o r i n -

d i v i d u a l f r e e d o m i n t h i s c o u n t r y , b u t a l s o a s o u t -

s t a n d i n g e x a m p l e s o f j u s t i c e t o a l l o t h e r p e o p l e s .

F o r i n t h e u l t i m a t e , t h e A m e r i c a n I n d i v i d u a l ,

n o t t h e A m e r i c a n S t a t e , i s s u p r e m e . T h e r e i s o nl y

one thing mo re powerfu l in the American De-

mocracy than the American Government itself,

and that is American Public Opinion-that com-

p o s i t e m a j o r i t y o f in d i v i d u a l i d e a s h e l d b y t h e s o -

c i e t y w h i c h s u p p o r t s t h e S t a t e . A s a g a i n s t t h e

American Govern ment itself, American Public

O p i n i o n w i l l p r e v a i l - f o r s u c h o p i n i o n , u n d e r o u r

f o r m o f g o v e r n m e n t , c a n c h a n g e t h e p o l i c i e s a n d

7



8 P r e f a c e

p u r p o s e s o f t h e g o v e r n m e n t a n d d i r e c t t h e m a t w i l l .

Before the establ ishment of the American De-

m o c r a c y , t h e h i s t o r y o f w o r l d a f f a i r s w a s a s o rr y

r e c o r d o f c o n s t a n t i m p o s i t i o n s a n d r e s t r i c t i o n s u p o n

h u m a n l i b e r t i e s a n d f r e e d o m b y o f f i c i a l d o m s w h i c h

t h e n h e l d t h e o r d i n a r y i n d i v i d u a l t o b e a m e r e p a w n ,

h i s p e r s o n a l r i g h t s a n d l i b e r t i e s s u b j e c t e d a l w a y s t o

t h e s u p r e m e r u l e a n d a r b i t r a r y p o w e r o f t h e S t a t e .

With profound wisdom and remarkable foresight,

o u r f o u n d i n g f a t h e r s p r o v i d e d u s w i t h a g o v e r n -

m e n t a l s y s t e m w h i c h n o t o n l y p r o c l a i m e d o u r n a -

t i o n a h a v e n f o r i n d i v i d u a l l i b e r t y , b u t , i n d e e d ,

c r e a t e d a t h r e e - f o l d s y s t e m o f c h e c k s a n d b a l a n c e s

within our own governmental structure to defend

against attempted encroachments upon the rights

a n d l i b e r t i e s o f o u r o w n c i t i z e n s e v e n b y o f f i c i a l s

and agencies of our own government .

T h i s b o o k i s a r e c o r d o f f a c t u a l e v e n t s w h i c h ,

t h a n k s t o t h e S u p r e m e C o u r t o f t h e U n i t e d S t a t e s ,

p r o v e t h a t i n d i v i d u a l f r e e d o m s t i l l l i v e s i n t h i s

country and that government of the people under

t h e A m e r i c a n s y s t e m r e a l l y f u n c t i o n s f o r t h e i r p r o -

t e c t i o n . I t r e v e a l s t h e g o v e r n m e n t i t s e l f , t h r o u g h

i t s a d m i r a b l e s y s t e m o f c h e c k s a n d b a l a n c e s , a c t i n g

j u d i c i a l l y t o e x p e l f r o m t h e e x e c u t i v e b r a n c h o f i t s

o w n s t r u c t u r e i n f l u e n c e s t h a t w o u l d s u b m e r g e h u -

m a n l i b e r t i e s . In face of a ty rannical ab use of



P r e f a c e 9

p o w e r a r b i t r a r i l y e x e r c i s e d t h r o u g h a u s u r p a t i o n

o f u n w a r r a n t e d a n d i l l e g a l l y a s s u m e d a u t h o r i t y o n

t h e p a r t o f o f f i c i a l s o f t h e e x e c u t i v e d e p a r t m e n t ,

the record shows the American judiciary supreme

i n i t s l o f t y p u r p o s e a n d f i r m l y s e t a g a i n s t n e w a n d

a l i e n c o n c e p t i o n s o f g o v e r n m e n t a l p r i n c i p l e s . I t

r e v e a l s t h e f a c t , a l s o , t h a t p o l i t i c a l g r a f t a n d e x t o r -

tion cannot control the American people by put-

t i n g a p r i c e t a g o n a l l o f t h e i r p u b l i c o f f i c i a l s -

e v e n i f p e t t y v i n d i c t i v e n e s s m a y a b s o r b t h e m e n -

t a l i t i e s o f s o m e o f t h e m .

I n o r d e r t o m a k e c l e a r t h e s i g n i f i c a n c e o f t h e

e v e n t s h e r e i n t r e a t e d , I s h o u l d l i k e t h e r e a d e r o f

t h e s e p a g e s t o r e m o v e , i n h i s a p p r a i s a l , m y o w n p e r -

s o n a l i t y f r o m t h e J . Edward Jones about who m the

f a c t s a r e r e c o r d e d . I t i s w i s e , I t h i n k , f o r o n e t o

consid er that the things which happened to me

well might happen to anybody else . But so long

a s c i t i z e n s o f o u r c o u n t r y c o u r a g e o u s l y s t r i k e b a c k

a t e v i l s e n c o u n t e r e d i n t h e m a l a d m i n i s t r a t i o n o f o u r

g o v e r n m e n t , j u s t i c e w i l l p r e v a i l . A c i t i z e n r y a p a -

t h e t i c t o c o n d i t i o n s d a n g e r o u s l y t h r e a t e n i n g i t s

o w n l i b e r t y i s n o t d e s e r v i n g o f t h e h o n o r o f s u c h

s a c r e d p o s s e s s i o n. I t i s u n - A m e r i c a n f o r a c i t i z e n

t o f e a r p e r s o n a l c o n s e q u e n c e s w h e n h e f a c e s a n a t -

t a c k u p o n h i s b a s i c b e l i e f s r e g a r d i n g h i s r i g h t s a s a

c i t i z e n .



1 0 P r e f a c e

M a n y o f m y f r i e n d s a n d w e l l - w i s h e r s h a v e a d v i s e d

m e a g a i n s t p u b l i s h i n g t h i s b o o k . F r a n k l y , t h e y f e a r

t h a t t h e p u b l i c a t i o n o f t h e e v e n t s h e r e i n r e c o r d e d

m i g h t p r o v o k e a n e w a s e r i e s o f v i c i o u s , v i n d i c t i v e

a t t a c k s a g a i n s t m e b y c e r t a i n p e r s o n s i n g o v e r n -

m e n t w h o m i g h t v e n t u r e a n y l e n g t h s t o a c c o m p l i s h

m y d e s t r u c t i o n . I n a c k n o w l e d g i n g , w i t h a p p r e c i a -

t i o n a n d s y m p a t h e t i c u n d e r s t a n d i n g , s u c h s p l e n d i d

c o n s i d e r a t i o n f o r m y w e l f a r e , I m u s t s t a t e t h a t I s i n -

c e r e l y f e e l i t t o b e m y d u t y , a s a c i t i z e n , t o r e v e a l

for public d igestion, information concerning a

s t a t u s o f a f f a i r s I c o n s i d e r t o b e s u b v e r s i v e o f g o o d

government in this country . I b e l i e v e , a l s o , t h a t

o n e p o s s e s s e d o f i n f o r m a t i o n o f t h e c h a r a c t e r o f

t h a t w i t h w h i c h I a m p o s s e s s e d , i s d u t y b o u n d t o

e x p o s e i t t o t h e e n d t h a t k n o w l e d g e o f t h e c o n d i -

t i o n s t h u s b r o u g h t t o l i g h t m a y a i d t o r e m e d y s u c h

c o n d i t i o n s . How can the art of go vernment pro-

g r e s s i f e v i l s i n g o v e r n m e n t b e b l a n k e t e d b y a c l o a k

o f s e c r e c y a n d s h r o u d e d w i t h f e a r a n d t r e m b l i n g ?

I a s s u m e f u l l p e r s o n a l r e s p o n s i b i l i t y f o r e v e r y -

t h i n g s t a t e d i n t h i s b o o k . I , m y s e l f , h a v e w r i t t e n

t h e w h o l e o f i t ; a n d I k n o w i t t o b e a l l t r u e a n d

c a p a b l e o f b e i n g p r o v e d , i f a n y n e e d t o p r o v e i t ,

p e r c h a n c e , s h o u l d a r i s e . I f t h e t r u t h f u l n e s s o f t h e

s t o r y t o l d i n t h i s b o o k b e s e r i o u s l y q u e s t i o n e d , I

s h a l l a d d u c e p r o p e r e v i d e n c e t o s u p p o r t i t . I h a v e



P r e f a c e 1 1

a t h a n d e x c e l l e n t m a t e r i a l o f e v e n m o r e s e n s a t i o n a l

c h a r a c t e r t h a n t h a t s o f a r u s e d - m a t e r i a l w h i c h

w e l l c o u l d f i l l m a n y o t h e r c h a p t e r s ; b u t I b e l i e v e

t h e b o o k , a s w r i t t e n , w i l l s u ff i c e t o se r v e , w h a t I

s h a l l a s k m y r e a d e r s t o b e l i e v e t o b e , a s i n c e r e e f -

f o r t t o w a r d s o m e t h i n g c o n s t r u c t i v e - n o t d e s t r u c -

t i v e .

J . EDWARD JONES

New York , N . Y .

March, 1938



CONTENTSC h a p t e r P a g e

P r e f a c e 7

I " I ' m f o r R o o s e v e l t" 1 5

I I T h e N e w D e a l L o o k s t o O i l 1 9

I I I I n t r o d u c t i o n t o t h e G o v e r n o r s ' O i l

C o n f e r e n c e 2 6

IV F i r s t G u n 3 4V M e e t M r . I c k e s 4 3

VI M e e t M r . R o o s e v e l t 5 5

V I I T h e G e n e si s o f N R A - I t s C h a r a ct e r 6 3

V I I I N e w D e a l P o l i c e m a n 9 4

IX L et t h e Seller B eware ! 1 0 4X Mr . F l y n n G o e s t o T o w n 1 2 5

XI N e w D ea l ' s " M o s t E f f e ct i v e W e a p o n" 1 3 1

X I I " A r b i t r a r y P o w e r " v s . " R u l e o f t h e

C o n s t i t u t i o n " 1 4 8

X I I I " T r u t h i n S e c u r i t i e s " 1 6 5

XIV M o re " T rut h in Securi ties " 1 7 6

X V T h e S u p r e m e C o u r t S p e a k s ! 1 9 3

X VI N e w D e a l a t W o r k 2 0 1

XVII N e w D e a l i r i u m 2 0 7

X V I I I B o o k s f o r S a l e ! 2 2 2

XIX Pax Vobiscu m 2 4 3



CHAPTER I

"I'm for Roos eve lt"

I w a s o n e o f t h o s e A m e r i c a n s w h o v o t e d

f o r F r a n k l i n D . R o o s e v e l t i n t h e P r e s i d e n t ia l E l e c -

t i o n o f 1932 . I was m ore th an tha t-I was one

o f t h o s e e n r o l l e d R e p u b l i c a n v o t e r s w h o h e l p e d h i m

to win . I b e l i e v e d i m p l i c i t l y i n h i s p r e - e l e c t i o n

p r o m i s e s . Mr . R o o s ev e l t , t o m e , g a v e e v e r y i n d ic a -

t i o n o f b e i n g a l e a d e r p o s s e s s e d o f p o l i t i c a l a n d s o -

c i a l p h i l o s o p h i e s w h i c h I t h o u g h t , c o u l d t h e y b e

p u t i n t o e f f e c t , w o u l d b e r e p r e s e n t a t i v e o f t h e b e -

g i n n i n g o f a n e w a n d b e t t e r e r a i n th e l i v e s o f m e n .

A s t h e G o v e r n o r s w u n g i n t o h i s f i r s t p r e s i d e n t i a l

c a m p a i g n - a t t a c k i n g , a s h e d i d , t h e o l d r e g i m e f o r

i t s a l l e g e d f a v o r s t o t h e e n t r e n c h e d m o n o p o l i e s ,

a n d p o s i n g a s t h e f e a r l e s s c h a m p i o n o f h i s " f o r g o t -

t e n m a n , " m y e n t h u s i a s m f o r h i s s e e m i n g c o u r a g e

i n a b a t t l e t o s e t a r i g h t e c o n o m i c e v i l s w a s a s b o u n d -

l e s s a s w a s m y u n l i m i t e d a d m i r a t i o n f o r t h e m a n -

a man whom I deemed a real Crusader, soundly

s u p p o r t e d b y g r e a t i d e a l s f o r t h a t m u c h d e s i r e d

1 5



1 6 "And So-They Indicted Me!"

" n e w a n d b e t t e r s o c i a l o r d e r ." The g enuin e ho pe

which Mr . R o o s e v e l t' s p r o m i s e s a n d h i s s t at e d p o s i -

t i o n a s a c a n d i d a t e i n s t i l l e d i n m e b e c a m e , a s t h e

c a m p a i g n p r o g r e s s e d , a f i r m b e l i e f , b e f o r e h e w a s

e l e c t e d , t h a t , g i v e n a c h a n c e , h e c e r t a i n l y w o ul d

p r o v e t o b e o n e m a n u p o n w h o m t h e p e o p l e

c o u l d d e p e n d t o r e s t o r e o p p o r t u n i t y i n l i f e t o t h e

i n d i v i d u a l a n d t o r e s t r i c t t h e p r a c t i c e s o f t h e p o w e r -

ful in unfair exploitation of the common man . I

believ e my thought of Mr . R o o s e v e l t i n t h a t c o n -

n e c t i o n w a s t h e t h o u g h t o f m i l l i o n s o f o t h e r A m e r i -

cans who had been attracted by the promises of

a s c h a r m i n g a n d g r a c i o u s a p e r s o n a l i t y a s e v e r h y p -

n o t i z e d a n a u d i e n c e - b e i t s t r e e t c o r n e r o r c o n -

v e n t i o n h a l l c a l i b r e .

T h e i d e a l s p i c t u r e d b y M r . R o o s ev e l t i n h i s c a m -

p a i g n a p p e a l e d t o a l l c l a s s e s o f t h e p e o p l e . B o t h t o

t h e i n t e l l i g e n t v o t e r a n d t h e u n t h i n k i n g m a s s e s ,

n e w v i s i o n s a p p e a r e d . Out of what s eemed to b e

s i n c e r e an d c o u r a g e o u s c a m p a i g n b a t t l e , b e a u t i f u l

a b s t r a c t i o n s r e a d i l y b e c a m e p r o m i s e s o f p r a c t i c a l

r e a l i t i e s a n d - b e h o l d ! - n o w t h e r a v a g e s o f t h e d e -

p r e s s i o n w e r e r e v e a l e d c l e a r l y a s t h e f r u i t s o f R e -

p u b l i c a n w i c k e d n e s s l i n k e d , o f c o u r s e , t o t h a t c l a s s

o f s o c i e t y h i t h e r t o r e g a r d e d a s s u c c e s s f u l p e o p l e

b u t n o w f r o w n e d u p o n , l a t e r , i n d e e d , t o b e c o u n t e d

a s t h e h a t e d " e c o n o m i c r o y a l i s t s ! "



" I ' m f o r R o o s e v e l t" 1 7

On March 4th, 1 9 3 3 , I t h r i l l e d g r e a t l y i n l i s t e n -

i n g t o t h e n e w P r e s i d e n t ' s I n a u g u r a l A d d r e s s a s i t

c a m e o v e r t h e r a d i o . T h e t r i u m p h a l t o n e a n d s e e m -

i n g l y s y m p a t h e t i c u n d e r s t a n d i n g w h i c h c h a r a c t e r -

i z e d t h a t a d d r e s s , c l e a r l y s i g n i f i e d t o m e t h a t t h e

people of America had rightly ch osen a man who

h a d c o r r e c t l y a n a l y z e d t h e i r p r o b l e m s , w h o h a d h i s

f i n g e r o n t h e i r r e a l c a u s e a n d w h o w a s p o s s e s s e d o f

t h e c o u r a g e , d e t e r m i n a t i o n a n d a b i l i t y n e c e s s a r y

t o s o l v e t h o s e p r o b l e m s i n q u i c k f a s h i o n . Tru e-

t h e p u b l i c d i d n o t k n o w t h e n a t u r e o f t h e p r e s c r i p -

t i o n w h i c h w a s t o b e a d m i n i s t e r e d t o c u r e i t s i l l s ,

but tremen dous confi dence born by the mere

existence of the new administration prod uced a

hypnosis which made for progress ev en prior to

New Deal p erfor mance .

P s y c h o l o g i s t s o f t h e f u t u r e w i l l f i n d r a r e a n d

f e r t i l e s o u r c e o f i n t e r e s t i n g m a t e r i a l i n s t u d y i n g

t h e p e r i o d 1 9 3 2 - 1 9 3 3 t o d e t e r m i n e t h e c a u s e s w h i c h

c o n t r i b u t e d t o s h a p e p u b l i c o p i n i o n o f t h e t i m e .

Well may they speculate upon the reasons w hy

a g r e a t p e o p l e b l i n d l y f o l l o w e d a n u n d e f i n e d a b -

s t r a c t i o n d a n g l e d w i t h s o u l - i n s p i r i n g e f f e c t b e f o r e

t h e i r i m a g i n a t i v e e y e s a s a p r o m i s e d c u r e f o r t h e

most practical of problems! Strange fiction may

t h e y w r i t e o f t h e r e a d i n e s s w i t h w h i c h t h e g r e a t

Am e r i c a n De m o c r a c y g a v e u p -a n d g l a d l y -




s w e e p i n g a u t h o r i t y o v e r i t s p e o p l e , t o m a k e o f i t s

p r e s i d e n t t h e s t r o n g e s t , m o s t p o w e r f u l a u t o c r a t t h e

w o r l d h a s e v e r s e e n i n g o v e r n m e n t !

B u t j u s t a s t h e p u b l i c m i n d w a s s u r c h a r g e d w i t h

h o p e a n d c o n f i d e n c e - w i t h n o i d e a o f a m o d u s o p e r -

a n d i for the accomplish ment of anything-so was

the New Deal administration eq ually charge d and

c h a m p i n g a t t h e b i t f o r a c t i o n i n s o m e d i r e c t i o n .

However, there was no signpost pointing the way

o v e r a n y r o a d s A m e r i c a p r e v i o u s l y h a d t r a v e l e d .

I n s u c h s t a t e o f a f f a i r s , I f e l t c e r t a i n , n o w t h e

inauguration was over, that steps q uickly would

be taken b y Washington to solve the highly con-

t r o v e r s i a l p r o b l e m s o f t h e p e t r o l e u m i n d u s t r y , w i t h

w h i c h I a l w a y s h a d b e e n i d e n t i f i e d .



CHAPTER II

The New Deal Looks to Oil

In a l e t t e r w r i t t e n t o m e d u r i n g h i s f i r s t

p r e s i d e n t i al c a m p a i g n , M r . R o o s e v e l t h a d p r o m i s e d

t h a t w h i l e a d d r e s s i n g t h e n a t i o n , h e w o u l d o u t l i n e

h i s p o l i c i e s w i t h r e s p e c t t o t h e A m e r i c a n o i l p r o b -

lem . I t h o u g h t n o t h i n g o f h i s f a i l u r e t o d o s o ,

however, since the progress of the campaign re-

v e a l e d h i s s e e m i n g d e t e r m i n a t i o n t o r e s t r i c t t h e un -

f a i r p r i v i l e g e s o f b i g b u s i n e s s i n a l l l i ne s o f i n d u s t r y .

I knew from my o wn exhaustiv e research, over a

p e r i o d o f y e a r s , i n t h e f i e l d o f p e t r o l e u m e c o n o m i c s

-having been commis sioned to repres ent my home

S t a t e o f K a n s a s i n p r e p a r i n g a n a l y s e s o f p e t r o l e u m

p r o b l e m s a n d h a v i n g a p p e a r e d b e f o r e v a r i o u s c o m -

m i t t e e s o f b o t h h o u s e s o f C o n g r e s s a s a r e p r e s e n t a -

t i v e o f t h e s o - c a l l e d " i n d e p e n d e n t s " o f t h e i n d u s t r y

-that the evils in the American Economy which

Mr. R o o s e v e l t h a d a t t a c k e d w e r e g l a r i n g l y p r e s e n t

i n o i l a n d r e p r e s e n t i n g p r o b l e m s d e m a n d i n g o f s o l u -

t i on . I n n o i n d u s t r y d i d t h e i n d i v i d u a l , i n d e p e n d e n t

1 9




operator need more protection against monopoly

t h a n d i d t h e s m a l l A m e r i c a n o i l o p e r a t o r . A s a m a t -

t e r o f f a c t , i n 1 9 3 2 , t h e " f o r g o t t e n m a n " i n t h e

p e t r o l e u m i n d u s t r y w a s j u s t a b o u t r e a d y t o b e b u r -

i e d a s the unknown sol dier in that great Ameri-

c a n w a r b e t w e e n t h e i n d i v i d u a l a n d t h e p r e d a t o r y

i n t e r e s t s i n b u s i n e s s .

And so, the New Deal Administration , tak ing

o f f i c e o n M a r c h 4 t h , 1 9 3 3 , i n o n e o f i t s v e r y f i r s t

a c t s , p l u n g e d h e a d l o n g i n t o t h e p o o l o f o il t r o u -

b l e s . Within a few day s after the inauguration,

t h e P r e s i d e n t ' s n e w S e c r e t a r y o f t h e I n t e r i o r , o n e

H a r o l d L o y I c k e s , i s s u e d a c a l l f o r a " G o v e r n o r s '

Oil Conference" to be held in Washington on the

27th day of March for the announced purpos e of

" s o l v i n g t h e p r o b l e m s " o f t h e p e t r o l e u m i n d u s t r y .

T h e p r i n c i p a l p r o b l e m t o b e " g r a p p l e d w i t h , " s a i d

t h e S e c r e t a r y i n h i s " C a l l , " w a s o n e o f " o v e r p r o -

d u c t i o n " o f c r u d e o i l i n t h i s c o u n t r y .

T o a n y s t u d e n t o f e c o n o m i c s , t h e " s o l v i n g t h e

p r o b l e m s " o f a n y i n d u s t r y i s a m a j o r u n d e r t a k i n g

t h a t s h o u l d b e a t t e m p t e d o n l y b y e x p e r t s s o u n d l y

grounded not only in comprehensive knowledge

o f t h e b a s i c f a c t s o f t h e i n d u s t r y u n d e r s t u d y , b u t

a l s o i n a t h o r o u g h u n d e r s t a n d i n g o f a l l t h e e l e m e n t s

a t p l a y t o i n f l u e n c e t h e f u n d a m e n t a l e c o n o m i c f a c -

t o r s o f s u p p l y , d e m a n d a n d p r i c e . Without s uch



The New Deal Looks to Oil 2 1

e q u i p m e n t , a t t e m p t t o f u n c t i o n w i s e l y t o w a r d t h e

a l l e v i a t i o n o f i n d u s t r i a l e v i l s i s p u r e f o l l y . B u t e x -

c e s s i v e v a n i t y o f m a n a l w a y s i n c li n e s d a n g e r o u s l y

t o w a r d f o l l y !

B y w a y o f g i v i n g a n a u t h o r i t a t i v e t o n e t o t h e

s t a t e m e n t m a d e i n t h e C a l l t o t h e C o n f e r e n c e , t h a t

" o v e r p r o d u c t i o n " o f c r u d e o i l w a s t h e p r o b l e m

t o b e " g r a p p l e d w i t h , " M r . I c k e s b o l d l y s t a t e d t h a t

t h e p r o d u c t i o n o f c r u d e o i l i n t h i s c o u n t r y a p p r o x i -

mated 2,500,000 b a r r e l s d a i l y w h e r e a s , h e s a i d , t h e

n a t i o n ' s c o n s u m p t i o n r e q u i r e m e n t s w e r e b u t 2 , 0 0 0 , -

000 b a r r e l s d a i l y . T h e " C a l l " t h e r e f o r e i m p l i e d a

b a d s u p p l y a n d d e m a n d b a l a n c e f o r c r u d e o i l a n d

i m m e d i a t e l y c r e a t e d a n i s s u e o f f i r s t m a g n i t u d e ,

i n d i c a t i n g s t r o n g n e e d f o r c o r r e c t i v e a n d c o n t r o l -

l i n g m e a s u r e s . And the New Deal Administration

s t o o d r e a d y - d e t e r m i n e d t o c o r r e c t a n d t o c o n t r o l !

O f t h e f o r t y - e i g h t A m e r i c a n s t a t e s , t w e n t y - o n e

o f t h e m p r o d u c e c r u d e o i l i n v a r y i n g q u a n t i t i e s .

A l l o f t h e s e t w e nt y - o n e s t a t e s , i f n o t , i n d e e d , t h e

e n t i r e f o r t y - e i g h t , a r e v i t a l l y i n t e r e s t e d i n t h e w e l -

f a r e o f t h e p e t r o l e u m i n d u s t r y a n d t h e p o l i c i e s

which determine its conduct . However, in at-

t e m p t i n g t o s o l v e t h e p r o b l e m s o f t h e n a t i o n ' s t h i r d

l a r g e s t i n d u s t r y , M r . I c k e s f i r s t i n v i t e d t h e G o v -

e r n o r s o f o n l y f o u r s t a t e s t o h i s " G o v e r n o r s ' O i l

C o n f e r e n c e . " Y e t m y d i s a p p o i n t m e n t a t t h e u n d u e




r e s t r i c t i o n o f t h e p r o p o s e d c o n f e r e n c e d i d n o t e q u a l

m y g r e a t d i s m a y a t w h a t I k n e w t o b e a m i s s t a t e -

m e n t i n t h e " C a l l " r e g a r d i n g t h e r e l a t i o n s h i p o f

supply and demand of crude oil .

F o r y e a r s , i n s p i t e o f g r e a t p r o p a g a n d a t o t h e

c o n t r a r y , p r o d u c t i o n o f c r u d e o i l i n A m e r i c a h a d

b e e n s o r e s t r i c t e d a r t i f i c i a l l y u n d e r t h e i m p o s i t i o n

o f c o n t r o l b y t h e g o v e r n m e n t s o f t h e o i l s t a t es , t h a t

w e a c t u a l l y h a d a n u n d e r p r o d u c t i o n , n o t a n o v e r -

p r o d u c t i o n , o f c r u d e o i l i n t h i s c o u n t r y . T h e d e -

f i c i e n c y , a m o u n t i n g t o m a n y h u n d r e d m i l l i o n s o f

b a r r e l s , h a d b e e n s u p p l i e d s t e a d i l y b y t h r e e o r f o u r

m a j o r o i l c o n c e r n s t h r o u g h t h e i m p o r t a t i o n o f

c h e a p f o r e i g n o i l s f r o m p r o p e r t i e s o w n e d b y t h o s e

o r g a n i z a t i o n s i n f o r e i g n c o u n t r i e s , p r i n c i p a l l y

V e n e z u e l a . T h e s e i m p o r t a t i o n s w e r e b e i n g f o r c e d

u p o n t h e A m e r i c a n o i l i n d u s t r y a g a i n s t t h e s t r o n g

p r o t e s t s o f t h e i n d e p e n d e n t p r o d u c e r s w h o s e A m e r -

i c a n o i l w e l l s w e r e f o r c e d t o s h u t d o w n . O f n e c e s -

s i t y , t h e s u p p l y i n g o f t h e m a r k e t t h e n w a s h a n d e d

e v e r , g r a t i s , t o t h o s e f e w o i l o r g a n i z a t i o n s i n p o s i -

t i o n t o o b t a i n o i l f r o m t h e i r f o r e i g n f i e l d s .

T h e c o n t r o v e r s y o v e r t h i s s i t u a t i o n h a d b e c o m e

s h a r p t o a p o i n t o f v i c i o u s n e s s b e t w e e n t h e i n d e -

pendents and the major oil concerns who both

monopolized the markets and propagandized the

p u b l i c i n t o t h e f i r m b e l i e f t h a t t h e o n e b i g p r o b l e m



The New Deal Looks to Oil 2 3

o f t h e i n d u s t r y w a s t o o m u c h o i l . T h i s w a s v e r i l y

b e l i e v e d b y t h e a v e r a g e m a n a l t h o u g h , a s I h a v e

s t a t e d , t h e f a c t w a s t h a t w e h a d i n o u r c o u n t r y a

c o n d i t i o n o f r e s t r i c t e d p r o d u c t i o n - a n underpro-

d u c t i o n w h i c h c o n t r i b u t e d t o a d e f i c i e n c y i n o u r

d o m e s t i c s u p p l y s o a s t o c r e a t e a t r em e n d o u s v o l u m e

o f g o o d b u s i n e s s d e n i e d t h e i n d e p e n d e n t p r o d u c e r

b u t r e s e r v e d e x c l u s i v e l y f o r t h o s e f e w c o m p a n i e s

w h o c o u l d m o n o p o l i z e t h e i m p o r t a t i o n s f r o m t h e i r

f o r ei g n h o l d i n g s . G o o d r e s u l t s f r o m a n e f f e c t i v e

p r o p a g a n d a !

T h e o l d H o o v e r - W i l b u r a d m i n i s t r a t i o n h a d f a -

v o r e d t h e m a j o r o i l c o m p a n y s i d e o f t h e c o n t r o -

v e r s y . Mr . W i l b u r p r o b a b l y b e s t s u m m a r i z e d h i s

p o l i c y b y s t a t i n g t h a t i f h e " w e r e t h e l a n d l o r d o f

t h i s c o u n t r y , " h e w o u l d s h u t - i n a l l A m e r i c a n o i l

w e l l s a n d f o r c e o u r c o n s u m p t i o n r e q u i r e m e n t s t o

b e f i l l e d f r o m w e l l s i n f o r e i g n c o u n t r i e s . T h e p o l i c y

e n r a g e d t h e i n d e p e n d e n t s o f t h e i n d u s t r y a n d c a u se d

them, throughout the country, to support Mr .

R o o s e v e l t .

O n t h e d a y f o l l o w i n g p r e s s a n n o u n c e m e n t s o f t h e

C o n f e r e n c e i n v i t a t i o n b y M r . I c k e s , w h o , b y s u c h

i n v i t a t i o n , g a v e e v i d e n c e t h a t h e i n t e n d e d t o f o l l o w

w h a t w e i n d e p e n d e n t s h a d f o u g h t f o r y e a r s as m i s -

g u i d e d p u b l i c p o l i c y t o w a r d o il , I r e c e i v e d t e l e g r a m s

f r o m a l l s e c t i o n s o f t h e o i l t e r r i t o r y - a s f a r w e s t



2 4 " A n d S o - T h e y I n d i c t e d M e ! "

as California-urging me to d o something toward

e x t e n d i n g t h e s c o p e o f t h e C o n f e r e n c e . I w a s u r g e d

t o s e t M r . I c k e s a r i g h t o n t h e r e a l f a c t s c o n ce r n i n g

t h e s u p p l y a n d d e m a n d o f p e t r o l e u m , a n d t o p o i n t

o u t t o h i m t h e d i s a s t r o u s i n f l u e n c e o f m o n o p o l y i n

c r e a t i n g a f a l s e i s s u e a n d i n s p r e a d i n g f a l s e p r o p a -

ganda to mask its real purpose . Theref ore, on

Mar ch 1 6 , 1 9 3 3 , I d i s p a t c h e d i d e n t i c a l t e l e g r a m s

t o a l l t h e g o v e r n o r s o f o i l p r o d u c i n g s t a t e s , w h o

h a d n o t b e e n i n v i t e d t o t h e C o n f e r e n c e . T h e t e l e -

g r a m s r e a d a s f o l l o w s :

NEW SECRETARY INTERIOR ICKES HAS CALLED

CONFERENCE GOV ERNORS TEXA S O KLAHOMAKANSAS CALIFORNIA FOR MARCH TWENTYSEVENTH TO DISCUSS PROBLEMS PETROLEUM

STOP YOUR STATE IS PROSPECTIVE PRODUCER

OF PETROLEUM AND IS VITALLY AFFECTED BY

PROBLEMS PETROLEUM INDUSTRY STOP SUCH

ISSUES AS REVOLV E AROUND MONOPOLISTIC

PRA CTICES THROUGH UNFAIR COMPETITIVE

METHODS REGULATION OF PRODUCTION PRICEFIXING GOV ERNMENTAL ACTIVITY RESPECT-

ING INDUSTRIAL CONDUCT ETCETERA WILL

BE TREATED AT CONFERENCE STOP THESE MAT-

TERS SHOULD NOT BE DISCUSSED FOR SOLU-

TION WITHOUT YOUR STATE BEING REPRE-

SENTED THEREFORE URGE YOU APPEAL SECRE •

TARY INTERIOR IMMEDIATELY FOR REPRESEN-

TATION AT THAT CONFERENCE STOP RESPECT ,

FULLY

J . EDWARD JONES

3 4 2 M a d i so n A v e nu e

N e w Y o r k C i t y



T h e N e w D e a l L o o k s t o O i l 2 5

T h e r e u p o n , s o m e t h i n g m u s t h a v e h a p p e n e d , f o r

a b o u t t w o d a y s l a t e r t h e p r e s s c a r r i e d a n n o u n c e -

m e n t s t h a t s e v e r a l a d d i t i o n a l g o v e r n o r s h a d b e e n

i n v i t e d b y M r . I c k e s t o a t t e n d h i s C o n f e r e n c e . T h e

Honorable Ruby Laffoon, Governor of Kentucky,

a p p o i n t e d m e t o r e p r e s e n t t h e S t a t e o f K e n t u c k y .

O t h e r i n d i v i d u a l s r e p r e s e n t i n g b o t h i n d e p e n d e n t s

a n d m a j o r s w e r e i n v i t e d t o a t t e n d a s w a s a l s o t h e

powerful American Petroleum Institu te-some-

t i m e s c a l l e d " t h e m o u t h p i e c e o f m o n o p o l y . "

As news of the new complexion of the coming

C o n f e r e n c e p e r m e a t e d t h e i n d u s t r y , a g e n e r a l r e c -

o g n i t i o n m a t u r e d t h a t t h i s f i r s t N e w D e a l s t e p i n

t h e d i r e c t i o n o f o i l w as g o i n g t o b e a n i m p o r t a n t

s t e p . D a t a w e r e h u r r i e d l y c o l l e c t e d , c h a r t s a n d

g r a p h s w e r e p r e p a r e d , m e e t i n g s w e r e s c h e d u l e d ,

and Washington became the Mecca for hundred s

o f o i l m e n f r o m a l l s e c t i o n s o f t h e U n i t e d S t a t e s .

W e a l l h a d c o n f i d e n c e a n d h o p e i n t h e N e w D e a l

A d m i n i s t r a t i o n , a n d w e r e d e t e r m i n e d t o l a y a l l t h e

f a c t s o f t h e c a s e b e f o r e t h e C o n f e r e n c e .



CHAPTER III

Introduction to the Governors'

Oil Confe renc e

T h e c r o w d o f o i l m e n a r r i v e d i n W a s h -

i n g t o n a f e w d a y s p r i o r t o M o n d a y , M a r c h 2 7 t h .

T h e y h e l d t h e i r c u s t o m a r y c o n f e r e n c e s an d i n e v i t -

a b l y f o r m e d t h e i r t w o o p p o s i n g c a m p s . T h e f i e l d

b e c a m e o n e o f b a t t l e - n o t o f p e a c e - a s t h e f o r c e s

o f t h e i n d e p e n d e n t i n d i v i d u a l m a r s h a l l e d a g a i n s t

t h e p o w e r f u l p h a l a n x e s o f o r g a n i z e d b i g b u s i n e s s .

The Governors' Oil Conference of the New Deal

A d m i n i s t r a t i o n q u i c k l y c r y s t a l l i z e d i n t o a p i c t u r e

t h a t r e p r e s e n t e d i n t h e c o n c r e t e a l l t h e e l e m e n t s

o f i n d u s t r i a l s t r i f e t h a t M r . R o o s e v e l t h a d s o

v i v i d l y p o r t r a y e d d u r i n g h i s c a m p a i g n . T h e e y e o f

t h e A m e r i c a n p u b l i c , t h r o u g h t h e l e n s o f M r . R o o se -

v e l t ' s p o l i t i c a l c a m e r a , h a d b e e n f o c us e d u p o n t h e

o u t l i n e s o f e v i l i n f l u e n c e i n o u r e c o n o m i c l i f e ; h e r e

w a s t h e a c t u a l g r o u p i n g o f a l l t h e c h a r a c t e r s o f a

m a j o r i n d u s t r y i n a p a n o r a m i c w a r f i l m t h a t c o v -

e r e d e v e r y t h i n g !

A n d t h e r e w a s p l o t i n t h e p l a y ; f o r t w o g r e a t

2 6



Introduction to the Governors' Oil Conference 27

o p p o s i n g f o r c e s c o n t e n d e d w i t h e a c h o t h e r i n a l -

m o s t d e s p e r a t e e f f o r t , e a c h t o j o c k e y i t s e l f i n t o t h e

p o s i t i o n m o s t l i k e l y t o i m p r e s s a n e w a n d i n e x p e r i -

e n c e d p o l i t i c a l m a c h i n e . One side, supported by

corporations owning and controlling billions of

w e a l t h b u t f e a r f u l o f t h e d e s t r u c t i v e c o m p e t i t i o n

o f m y r i a d s o f " l i t t l e m e n " b u s i n e s s e s , d e s i r e d F e d -

e r a l c o n t r o l o f t h e p r o d u c t i v e p r o c e s s e s o f t h e i n -

d u s t r y . T h e y d e s i r e d t h i s b e c a u s e t h e l e s s o n h a d

b e e n l e a r n e d t h a t u n w i s e a n d u n k n o w i n g o f f i c i a l -

dom, somehow or other, could be d epended upon

t o c o n t r o l a l w a y s i n t h e i n t e r e s t o f t h e p o w e r f u l

i n b u s i n e s s . A n d t h e p o w e r f u l i n t h e o i l b u s i n e s s

wanted to choke off the production of its inde-

p e n d e n t c o m p e t i t o r s . O t h e r w i s e , t h a t d e f i c i e n c y i n

d o m e s t i c p r o d u c t i o n , w h i c h n e c e s s i t a t e d h u g e f o r -

e i g n o i l i m p o r t a t i o n s , c o u l d n o t b e c r e a t e d .

T h e o t h e r s i d e r e p r e s e n t e d w h a t A m e r i c a k n o w s

a s r u g g e d i n d i v i d u a l i s m i n b u s i n e s s . And "rugge d"

i s a g o o d w o r d t o d e s c r i b e t h e q u a l i t i e s a n i n d i v i d u a l

o i l o p e r a t o r m u s t p o s s e s s i f h e i s t o e x i s t a t a l l .

C o u r a g e , s t r e n g t h o f c h a r a c t e r , t h e p i o n e e r s p i r i t ,

e n t h u s i a s m , c h e e r f u l n e s s i n f a c e of d i r e t r o u b l e ,

h o p e , d e t e r m i n a t i o n - a l l t h e s e o n e f i n d s i n t h e i n -

d i v i d u a l i s m t h a t h a s p u s h e d t h e o i l f r o n t i e r s t o s u c h

e x t e n t s t h a t i n a f e w y e a r s t h e p e t r o l e u m i n d u s t r y

h a s b e c o m e t h e c o u n t r y ' s t h i r d l a r g e s t . Comp eti -




t i o n ? T h e y m e e t i t ; t h e y c r e a t e i t ; t h e y l i v e o n i t

a s t h e l i f e o f t h e i r t r a d e . C o n t r o l ? W h a t i s m e a n t

b y t h e w o r d " c o n t r o l " ? R u g g e d i n d i v i d u a l i s m i n

o i l d e s p i s e d m o n o p o l i s t i c c o n t r o l o f b u s i n e s s , w a s

d i s t r u s t f u l o f a n y p l a n t h a t v e s t e d c o n t r o l o f t h e

a f f a i r s o f i n d u s t r y i n t h e h a n d s o f a p o w e r f u l F e d -

e r a l b u r e a u c r a c y . T h e i n d i v i d u a l o i l o p e r a t o r o w e d

h i s v e r y e x i s t e n c e t o t h e c o m p e t i t i o n h e a l w a y s h a d

b e e n f r e e t o c r e a t e i n d o i n g b a t t l e a g a i n s t " c o n t r o l "

i n b u s i n e s s . H e d i s l i k e d t h e w o r d a n d a l l i t i m p l i e d .

H e w a s a n a t u r a l a n d g e n u i n e c h a m p i o n o f t h e l a i s -

s e z - f a i r e p r i n c i p l e o f t r a d e . F o r y e a r s h e h a d f o u g h t

m o n o p o l i s t i c i n f l u e n c e a n d p o w e r , a n d M r . R o o se -

v e l t ' s e n t i re c a m p a i g n h a d i m p l i e d t h a t h e i n t en d e d ,

i f e l e c t e d , t o t a k e u p t h e c u d g e l s a n d p u t t h e f o r c e

o f g o v e r n m e n t b e h i n d t h e e f f o r t t o d e s t r o y " c o n -

t r o l " o f t h e a f f a i r s o f i n d u s t r y a n d t o p e r m i t f r e e ,

c o m p e t i t i v e , i n d i v i d u a l e n te r p r i s e .

A t t h e G o v e r n o r s ' O i l C o n f e r en c e t h e r u g g e d i n -

d i v i d u a l i s t d e s i r e d th a t t h e n e w g o v e r n m e n t b e a p -

p r i s e d o f t h e f a c t s o f t h e o i l c o n t r o v e r s y . More -

o v e r , h e w a n t e d t h a t p r o t e c t i o n a n d f r e e d o m f r o m

t h e p o w e r f u l m o n o p o l i s t i c c o n t r o l o f h i s a f f a i r s

w h i c h h e e x p e c t e d t h e N e w D e a l w o u l d g i v e h i m -

o n c e i t h a d l e a r n e d t h e t r u t h o f t h e s i t u a t i o n . P r e s i -

d e n t R o o s e v e l t' s c a m p a i g n s p e e c h e s s t i ll w e r e r i ng -

i n g i n h i s e a r s . T h e n e w Pr e s i d e n t , h e f e l t s u r e , w a s



I n t r o d uc t i o n t o t h e G o v er n o r s ' O i l C on f e r e n c e 2 9

his champion . M r . R o o s e v e l t m u s t n o t b e a l l o w e d t o

g e t o f f o n t h e w r o n g t r a c k a t t h e v e r y o u t s e t o f

h i s n e w a d m i n i s t r a t i o n ! T h a t w a s t h e cr y t h r o u g h -

o u t t h e r a n k s !

On Sunday morning, immediately preceding the

day set for the opening of the Conference, Mr .

W i r t F r a n k l i n , P r e s i d e n t o f t h e I n d e p e n d e n t P e t r o -

l e u m A s s o c i a t i o n o f A m e r i c a , c a l l e d t o o r d e r i n t h e

Chinese Room of the Mayflower Hotel, a meet ing

w h i c h h a d b e e n h e r a l d e d a s o n e t o b e a t t e n d e d b y

t h e i n d e p e n d e n t s o f t h e i n d u s t r y . I t w a s u n d e r s t o o d

t h a t a t t h e m e e t i n g t h e p o s i t i o n o f t h e i n d e p e n d e n t s

w o u l d b e f o r m u l a t e d s o t h a t , o n t h e m o r r o w , t h e

C o n f e r e n c e c o u l d b e n o t i f i e d o f t h e i r g e n e r a l l y a c -

c e p t e d v i e w s . I f t h e p o s i t i o n o f t h e i n d e p e n d e n t s

c o u l d b e m a d e k n o w n a n d r e c o r d e d i n s o m e s o r t o f

a n " o f f i c i a l " m a n n e r a t t h e v e r y o u t s e t o f t h e C o n -

f e r e n c e , i t w a s f e l t t h a t a r g u m e n t a n d d e b a t e a s

t o w h a t t h a t p o s i t i o n w a s , w o u l d n o t m a r t h e h o p e d -

f o r s u c c e s s o f t h e g r e a t m e e t i n g o f t h e g o v e r n o r s

a n d t h e i r r e p r e s e n t a t i v e s .

S u c h r e a s o n i n g s e e m e d l o g i c a l e n o u g h . Many of

t h e i n d e p e n d e n t s , h o w e v e r , l o o k e d u p o n t h e m e e t -

i n g w i t h c o n s i d e r a b l e s k e p t i c i s m a n d n o l i t t l e m i s -

g i v i n g s s i n c e a r u m o r p e r s i s t e d t o t h e e f f e c t t h a t

t h i s I n d e p e n d e n t P e t r o l e u m A s s o c i a t i o n o f A m e r i c a ,

of whi ch Mr . Wirt Franklin was presid ent, and ,




w h i c h p r e s u m e d t o s p e a k t h e i n d e p e n d e n t s i d e o f

t h e o i l c o n t r o v e r s y w a s , i n f a c t , a " d e c o y o f m o -

n o p o l y . " N e v e r t h e l e s s , i n a g e n u i n e s p i r i t o f c o -

o p e r a t i o n w e i n d e p e n d e n t s m a d e i t o u r b u s i n e s s t o

g o t o M r . F r a n k l i n ' s m e e t i n g o f i n d e p e n d e n t A m e r -

i c a n o i l m e n i n t h e C h i n e s e R o o m o f t h e M a y f l o w e r

H o t e l o n t h a t S u n d a y m o r n i n g p r e c e d i n g t h e o p e n -

ing of Mr . I c k e s ' G o v e r n o r s ' O i l C o n f e r e n c e - a

Conference called to "grapple with" a problem

w h i c h d i d n o t , i n f a c t , e x i s t , a n d t o " s o l v e t h e

p r o b l e m s " o f a m a j o r i n d u s t r y ( p r e s u m a b l y a t o n e

s i t t i n g , i m m e d i a t e l y f o l l o w i n g t h e o p e n i n g s p e e c h

o f t h e n e w S e c r e t a r y o f t h e I n t e r i o r ) .

M y D i r e c t o r o f R e s e a r c h , M r . W i l li a m J . Kem-

n i t z e r , a g r o u p o f r e p r e s e n t at i v e s f r o m C a l i f o r n i a ,

T e x a s a n d L o u i si a n a , a n d I , u p o n e n t er i n g t h e r o o m ,

w e r e s o m e w h a t s u r p r i s e d t o n o t e t h a t n e a r l y a l l t h e

s e a t i n g s p a c e o f o n e h a l f o f t h e r o o m w a s o c c u p i e d

b y r e p r e s e n t a t i v e s o f m a j o r o i l c o n c e r n s a n d t h e

A m e r i c a n P e t r o l e u m I n s t i t u t e , w h o s e m e m b e r s h i p

a n d f i n a n c i a l s u p p o r t d e p e n d e d u p o n t h e o i l c o m -

b i n e w h i c h t h e i n d e p e n d e n t s o p p o s e d a s a m a t t e r

o f p o l i c y . I n d e p e n d e n t s f i l l e d t h e r em a i n i n g s e a t s .

I t a p p e a r e d t o b e t h e o l d s t o r y - a m e e t i n g o f i n -

d e p e n d e n t s p a c k e d b y r e p r e s e n t a ti v e s o f t h e m a j o r s !Mr. W i r t F r a nk l i n , a s w a s h i s w o n t, m a d e a l o n g

a n d e m o t i o n a l s p e e c h . He stated that we we re



I n t r o d u c t i o n t o t h e G o v e r n o r s ' O i l C o n f e r e n c e 3 1

present to formulate a policy that could be an-

nounced to the Governors' Oil Conference as the

d e t e r m i n e d p o s i t i o n o f t h e i n d e p e n d e n t s o f t h e i n -

d u s t r y . He wanted no d iscord in his meeting but

i n s i s t e d u p o n r e s u l t s ! A n d , s h a k i n g w i t h e m o t i o n ,

h e d e m a n d e d t h a t a n y p e r s o n o p p o s i n g t h e c o n t e m -

p l a t e d a c t i o n l e a v e t h e r o o m !

The he ad of Mr . F r a n k l i n ' s a f f i l i a te d T e x a s c o n -

c e r n w h i c h , b y t h e w a y , T e x a s S t a t e o f f i c i a l s l a t e r

e x p o s e d , m a d e a s p e e c h i n w h i c h h e d e c r i e d w h a t h e

i n s i s t e d w a s a c o n d i t i o n o f " o v e r p r o d u c t i o n " i n t h e

i n d u s t r y a n d c a l l e d f o r m o r e c o n t r o l o f t h e p r o d u c -

t i v e p r o c e s s e s . Several other well-known henchmen

o f t h e " m o n o p o l y i n o i l " t h e n t o o k t h e f l o o r a n d

r e i t e r a t e d t h i s d e m a n d f o r m o r e " c o n t r o l " o f t h e

a f f a i r s o f t h e i n d u s t r y . R e p r e s e n t a t i v e s o f i n d e -

pendents from California, Texas and Louisiana

began, now and then, to shout questions at the

s p e a k e r s a s , o n e a f t e r t h e o t h e r , t h e y w e r e r e c o g -

n i z e d b y t h e c h a i r a n d p r o c e e d e d a l w a y s t o c l a i m

"overprod uction" and to demand "control . "

W i t h i n a s h o r t t i m e , w e w e r e d u m b f o u n d e d u p o n

seeing the genial Mr . B i l l B o y d , E x e c u t i v e V i c e

President of the American Petroleum Institute,

arise in this "independent" meeting! And, as he

stood surrounded b y numerous officers and em-

p l o y e e s o f t h e l a r g e s t o f t h e n a t i o n ' s o i l c o n c e r n s ,




he began to read a prepared resolution which he

moved as one to be adopted as the policy of the

meeting! The resolution emb odied the old thesis

o f t h e o i l c o m b i n e , d e p l o r e d t h e a l l e g e d " o v e r p r o -

d u c t i o n " s i t u a t i o n , c a l l e d f o r c o n t r o l o f t h e p r o d u c -

t i o n o f c r u d e o i l i n s o f a r a s A m e r i c a n o i l w e l l s w e r e

c o n c e r n e d b u t , s i g n i f i c a n t l y , m a d e n o m e n t i o n o f

a n y c o n t r o l o f f o r e i g n o p e r a t i o n s o r a n y c e s s a t i o n

o f c o n t i n u e d i m p o r t a t i o n s o f f o r e i g n o i l s .

A l t h o u g h a t t i m e s I h a d b e e n q u i e t l y u r g e d t o d o

s o , I h a d t a k e n n o p a r t i n t h e p r o c e e d i n g s t h a t h a d

p r e c e d e d t h e o f f e r i n g o f t h e r e s o l u t i o n . A t t h e c o n -

c l u s i o n o f M r . B o y d ' s r e m a r k s , h o w e v e r , m y f r i e n d s

literally pushed me from my seat and toward the

front of the room . N a t u r a l l y , I t h e n b e c a m e i n -

v o l v e d i n t h e d e b a t e .

I d i s c u s s e d t h e r e l a t i o n s h i p o f s u p p l y a n d d e m a n d

o f c r u d e o i l , p o i n t e d o u t w i t h t h e a i d o f e l a b o r a t e

c h a r t s a n d s t a t i s t i c s o f t h e U n i t e d S t a t e s B u r e a u o f

Mines that the "overprod uction" bugab oo was a

m y t h , r e v e a l e d t h a t a t t e m p t s t o w a r d a r t i f i c i a l r e -

s t r i c t i o n o f p r o d u c t i o n h a d p r e v i o u s l y h a d a n a d -

v e r s e e f f e c t u p o n p r i c e , a r g u e d a g a i n s t t h e c r e a t i o n

o f a f a l s e is s u e o f ' o v e r p r o d u c t i o n " w h e n n o s u c h

c o n d i t i o n e x i s t e d , u r g e d t h e m e e t i n g n o t t o b e a

p a r t y t o t h e m i s l e a d i n g o f t h e N e w A d m i n i s t r a t i o n

i n t h a t r e s p e c t , c h a l l e n g e d t h e o i l m o n o p o l y t o



I n t r o d u c t i o n t o t h e G o v e r n o r s ' O i l C o n f e r e n c e 3 3

m e e t t h e r e a l i s s u e o f t h e i n d u s t r y , c h i d e d t h e i r r e p -

resentatives for packing an independent meeting

a n d f o r t a k i n g p a r t i n a " s t e a m - r o l l e r " p r o c e e d i n g

t o c o n t r o l t h e f u n c t i o n i n g o f t h a t m e e t i n g , p o i n t e d

o u t t h e a d v e r s e e f f e c t o n p u b l i c o p i n i o n i f t h e B o y d

r e s o l u t i o n w e r e t o b e a d o p t e d , a n d f i n a l l y n o t i f i e d

t h o s e p r e s e n t t h a t i f t h e r e s o l u t i o n p a s s e d , I p r o -

p o s e d t o t a k e t h e f l o o r a t t h e G o v e r n o r s ' O i l C o n -

f e r e n c e t h e n e x t d a y a n d , a s t h e r e p r e s e n t a t i v e o f

t h e G o v e r n o r o f t h e S t a t e o f K e n t u c k y , n o t i f y t h e

C o n f e r e n c e o f t h e " p a c k i n g " o f t h e F r a n k l i n m e e t -

ing-who was present at it, and who had propos ed

a n d f o r c e d t h r o u g h t h e o b j e c t i o n a b l e r e s o l u t i o n .

Over the angry protests of the enraged Mr .

Franklin, debate deg enerated into argument be-

t w e e n t h e t w o f o r c e s . T h r o u g h t h e a i d o f t h e C h a i r ,

however, the question finally was put to the

" p a c k e d " h o u s e , w h e r e u p o n t h e C a l i f o r n i a d e l e g a -

t i o n , w h i c h o c c u p i e d f r o n t r o w s o f s e a t s , h e a d e d

by Mr . J o h n B . E l l i o tt , t h e i r a b l e l e a de r , a r o s e a n d

s t a r t e d t o f i l e f r o m t h e r o o m . Men f ro m Texas

a n d L o u i s i a n a f e l l i n w i t h t h e p r o c e s s i o n a s i t m o v e d

u p t h e c e n t e r a i s l e , a n d o t h e r f r i e n d s , a l o n g w i t h

m e , j o i n e d t h e m . W e a l l l e f t t h e m e e t i n g i n d i s a p -

p o i n t m e n t a n d i n d i s g u s t .

W e l e a r n e d , o f c o u r s e , t h a t t h o s e w h o r e m a i n e d

p a s s e d t h e r e s o l u t i o n .



CHAPTER IV

Firs t Gun

T h e f o l l o w i n g m o r n i n g w e f o u n d t h a t t h e

Washington Press, an d many other important pa-

p e r s t h r o u g h o u t t h e c o u n t r y , f e a t u r e d t h e b r e a k i n

t h e r a n k s o f o i l m e n a s r e p r e s e n t e d b y t h e " b o l t " o f

t h e i n d e p e n d e n t s . Hotel corridors buzzed with

s p e c u l a t i o n a s t o w h a t m i g h t h a p p e n a t t w o o ' c l o c k

that afternoon wh en the Conference prope r con-

vened . B e f o r e n o o n , r e p o r t h a d i t t h a t t h e b i g c o m -

p a n i e s w o u l d s e i z e u p o n t h e s i t u a t i o n a s a n o p p o r t u -

n i t y t o t h r o w a n o t h e r b i g o i l s c a r e a b o u t " o v e r -

p r o d u c t i o n " a n d w a s t e o f o n e o f t h e n a t i o n ' s i m p o r -

t a n t a n d i r r e p l a c e a b l e n a t u r a l r e s o u r c e s . The fact

t h a t h u g e i m p o r t a t i o n s o f c h e a p f o r e i g n o i l w e r e

b e i n g p o u r e d b y t h e l a r g e c o m p a n i e s u p o n a n a l -

leged "overprod uced" country was to b e kept as

q u i e t a s p o s s i b l e ; t h e N e w D e a l A d m i n i s t r a t i o n w a s

t o b e g i v e n a n e x c e l l e n t o p p o r t u n i t y t o " c o n t r o l "

t h e p r o d u c t i v e p r o c e s s e s o f a g r e a t i n d u s t r y a n d -

w i t h a n e y e t o t h e t i m e s a n d t o t h e a m b i t i o u s m a r c h

t o w a r d p o w e r o f s o m e o f t h o s e n e w c o m e r s , g i r d e d

3 4



F i r s t G u n 3 5

f o r t h e i r f i r s t t i m e w i t h t h e a u t h o r i t y o f g o v e r n -

ment-a plan of control was to be sugges ted that

envisaged the appointment of a dictator for the

p e t r o l e u m i n d u s t r y !

A f e w o f u s w h o u n d e r s t o o d t h e s t r a t e g y o f t h e

o i l m o n o p o l y i n i t s e f f o r t s t o w a r d m o u l d i n g p u b l i c

o p i n i o n a n d i n f l u e n c i n g t h e a c t s o f p u b l i c o f f i c i a l s ,

realized the power of such a program . A sensa-

t i o n a l s p e e c h a t t h e C o n f e r e n c e b y s o m e v i c e - p r e s i -

d e n t o r c h a i r m a n o f a n y b i g o i l c o m p a n y , c o u l d e a s -

i l y c r e a t e t h e n e w s t o c a u s e p u b l i c c o n c e r n , a n d t h e

a p p e a l t o t h e e g o o f a m b i t i o u s o f f i c i a l d o m c e r t a i n l y

w a s p r e s e n t i n t h e s c h e m e ; f o r w h a t a f i e l d i n w h i c h

a n e w o f f i ci a l m i g h t r i d e - s a d d l e d o n t h e h o r s e o f

h i s i m a g i n a t i o n , c h a r g i n g t h r o u g h a n i g h t m a r e o f

f e a r , a n d s a v i n g , t h r o u g h t h e r o u t e o f g o v e r n m e n t a l

control of production, the drowning public from

a d e l u g e o f o i l !

T h e i n d e p e n d e n t s o f t h e i n d u s t r y h a d t h e b i g g e s t

j o b o f t h e i r c a r e e r s . I t w a s u p t o t h e m t o e x p o s e

this "overprod uction" myth, to reveal the truth

o f t h e s i t u a t i o n , t o u n m a s k t h e f a l s e h y p o t h e s i s o f

t h e i r p o w e r f u l a n d i n f l u e n t i a l a d v e r s a r i e s , a n d t o

lay b efore the s ympathetic New Deal Government

t h e r e a l f a c t s o f t h e o i l p r o b l e m . And s ome of us

h a d t h o s e f a c t s - i r r e f u t a b l e a n d u n q u e s t i o n a b l y a u -

t h e n t i c !




W e h a d n o t c o n s i d e r e d , h o w e v e r , t h e p o s s i b i l i t y

o f l o s i n g o u r b a t t l e t h r o u g h t h e e n t h r o n e m e n t o f

v a n i t y a n d f o o l i s h a m b i t i o n u p o n a f o u n d a t i o n o f

a d m i t t e d i g n o r a n c e . N e i t h e r w e r e w e s u s p i c i o u s o f

t r i c k e r y , n o r d i d w e d r e a m o f u n d e r h a n d e d a t t a c k .

T h e h o u r f o r t h e m e e t i n g o f t h e g o v e r n o r s a n d

t h e i r r e p r e s e n t a t i v e s a p p r o a c h e d , a n d a h a l f - d o z e n

t a x i c a b s t o o k a n u m b e r o f m y c l o s e f r i e n d s a n d m e

t o t h e D e p a r t m e n t o f t h e I n t e r i o r B u i l d i n g , w h e r e

a great auditorium was to house s everal hundred

m e n o f t h e o i l i n d u s t r y .

As we walked d own the corridor toward the

e n t r a n c e o f t h e a u d i t o r i u m w h i c h a l r e a d y h a d b e -

g u n t o f i l l w i t h t h e r e p r e s e n t a t i v e s , w e n o t i c e d ,

g a t h e r e d i n a l a r g e c r o w d a n d i n f r o n t o f t h e d o o r ,

m a n y o f t h o s e f a m i l i a r f a c e s w h o h a d b e e n p r e s e n t

o n t h e d a y b e f o r e a s o u r a d v e r s a r i e s i n t h e F r a n k l i n

meeting . A v e r y n o t i c e a b l e b u s t l i n g i n t h i s c r o w d

was evidenced as we pushed our way forward to

t h e d o o r . I c a r r i e d i n m y h a n d a l e t t e r w h i c h r e a d

a s f o l l o w s :



Commonwealth o f KentuckyEXECUTIVE CHAMBER

RUBY LAPFoo NF r a n k f o r t

G o v e r n o r

C o m m o n w e al t h o f K e n t u c k y

U n i t e d W e S t a n d

D i v i d e d W e F a l l

To the Honorable

T h e S e c r e t a r y o f t h e I n t e r i o r

Washington, D . C .

S i r :

Mr . J . E d w a r d J o n e s , t h e b e a r e r h e r e o f , i s t h e r e p r e s e nt a t i v e

of the Governor of Kentucky, duly appointed by him to

r e p r e s e n t t h e St a t e o f K e n t u c k y a t t h e G o v e r n o r s ' O i l C o n -

ference to be held in Washington, D . C ., on March 2 7,

1 9 3 3 , w h i c h h a s b e e n c a l l ed b y t h e S e c r e ta r y o f t h e I n t e r i or

f o r t h a t d a t e .

Mr. J o n e s w i l l b e a d m i t t e d t o s a i d C o n f e r e n c e a s t h e d u l y

a u t h o r i z e d r e p r e s e n t a ti v e o f K e n t u c k y .

V e r y t r u l y y o u r s ,

RUBY LAFFOON

ATTEST :

Governor of Kentucky

Sara W . Ma h a n

S e c r e t a r y o f S t a t e

SEAL :

March 20 , 1933

37

C o m m o n w e a l t h

of

K e n t u c k y

U n i t e d W e S t a nd

D i v i d e d - W e F a l l




A s I s t a r t e d t o p u t m y f o o t a c r o s s t h e v e r y t h r e s -

hold of the door, a young man whom I never be-

f o r e h a d s e e n s t e p p e d q u i c k l y t o t h e f r o n t o f m e ,

s t o p p e d m e , a n d a s k e d i f I w e r e J . Edward Jones .

On receiving his answer he hand ed me a telegram

a n d r e m a i n e d s t a n d i n g b e f o r e m e i n m y p a t h . I f e l l

b a c k , a s d i d m y f r i e n d s w h o w e r e w i t h m e , o p e n e d

t h e t e l e g r a m a n d r e c e i v e d t h e s u r p r i s e o f m y l i f e !

Governor Laffoon of Kentucky had cancel led my

c r e d e n t i a l s !

T h e c r o w d o f h a n g e r s - o n t i t t e r e d a s t h e y w a t c h e d

m e r e a d a n d r e - r e a d , w i t h o u t , a t f i r s t , c o m p r e h e n d -

i n g t h e t e l e g r a m , w h i c h w a s a s f o l l o w s :

WESTERN UNION

R eceived at Interior Department B ld g . W a s h in g t o n , D . C .

1933 MAR 27 PM 1 01

WN54 40 -FRANKFORT KY 2 7 1141A

J EDWARD JONES CARE CONFERENCE OF OIL

MEN CARE SECY OF INTERIOR

I HAV E BEEN IMPORTUNED BY KENTUCKY OIL

MEN TO APPOINT A RESIDENT OF KENTUCKY

TO REPRESENT KENTUCKY AT THE OIL CON ,

FERENCE AND HAV E ACCORDINGLY APPOINT ,

ED MR M W SHIARELLA OF OWENSBOR O KY

YOUR AUTHORITY TO REPRESENT KENTUCKY

THEREFORE IS REVOKED

RUBY LAFFOON GOV OF KENTUCKY

Delegations from sev eral states headed by my



F i r s t G u n 3 9

f r i e n d s , J a c k B l a l o c k a n d J o e D a n c i g e r o f T e x a s ,

Major Parten from Louisiana and John Elliott of

California, walk ed with me down the corrid or in

hurried and excited comment as to what had con-

t r i b u t e d t o c a u s e t h i s h u m i l i a t i n g s l i g h t t o m e . A l l

u r g e d m e t o t e l e p h o n e G o v e r n o r L a f f o o n , i n F r a n k -

f o r t , t o o b t a i n a n i m m e d i a t e e x p l a n a t i o n .

I r e a c h e d t h e G o v e r n o r , t o l d h i m I h a d j u s t r e -

c e i v e d h i s t e l e g r a m a n d a s k e d h i m t o g i v e m e t h e

reasons which had prompted him to dismiss me .

T h e G o v e r n o r i n f o r m e d m e t h a t h e w a s n o t fa m i l i a r

w i t h t h e o i l c o n t r o v e r s y ; t h a t h e h a d n o t r e a l i z e d

t h a t t h e r e w a s g o i n g t o b e a n y d i v i s i o n o f o p i n i o n

a t t h e C o n f e r e n c e ; t h a t h e d i d n o t w a n t t o b e p u t

i n t h e p o s i t i o n o f f i g h t i n g t h e n e w a d m i n i s t r a t i o n ;

a n d , f i n a l l y , t h a t s i n c e t e n o ' c l o c k o f t h e n i g h t b e -

f o r e h e l i t e r a l l y h a d b e e n b e s i e g e d w i t h a d e l u g e o f

t e l e g r a m s a n d t e l e p h o n e c a l l s f r o m a t l e a s t s e v e n

t o w n s a n d c i t i es o f K e n t u c k y i m p l o r i n g h i m t o a p -

p o i n t a s K e n t u c k y ' s r e p r e s e n t a t i v e a t t h e C o n f e r -

e n c e , a r e s i d e n t o f t h e s t a t e !

I t h a n k e d t h e G o v e r n o r f o r h i s e x p l a n a t i o n a n d

f o r t h e c o u r t e s y h e h a d s h o w n m e i n o u r c o n v e r s a -

t i o n a n d r e s p e c t f u l l y a c c ep t e d , o f c o u r s e , h i s w i s h e s .

I a d v i s e d h i m , h o w e v e r , t h a t o p p o s i n g t h e n e w a d -

m i n i s t r a t i o n w a s t h e f a r t h e s t t h i n g f r o m m y m i n d ;

that I saw no reason for such an attitude on my




p a r t a s I w a s , s o h e k n e w , a s u p p o r t e r o f t h e i n d e -

p e n d e n t s i d e o f t h e o i l c o n t r o v e r s y ; and that we

independents were in Washington to help the ad-

m i n i s t r a t i o n i n a p r o p e r u n d e r s t a n d i n g o f t h e r e a l

o i l i s s u e , n o t t o f i g h t i t . Governor Laffoon then

h o s p i t a b l y i n v i t e d m e t o v i s i t h i m t h e n e x t t i m e I

f o u n d m y s e l f i n t h e S t a t e o f K e n t u c k y .

M y i n d e p e n d e n t f r i e n d s a n d a s s o c i a t e s t h e r e u p o n

r e f u s e d t o t a k e a n y p a r t i n t h e C o n f e r e n c e a n d w e

a l l r e p a i r e d t o a n o t h e r a u d i t o r i u m o f t h e b u i l d i n g

w h e r e r e s o l u t i o ns w e r e p a s s e d e x p r e s s i n g i n d i g n a -

t i o n f o r t h e t r e a t m e n t t o w h i c h I h a d b e e n s u b -

j e c t e d , c o n d e m n i n g t h e n o n - r e p r e s e n t a t i v e c h a r a c -

t e r o f t h e C o n f e r e n c e , a n d a p p o i n t i n g a c o m m i t t e e

w h i c h w a s i n s t r u c t e d t o w a i t u p o n t h e S e c r e t a r y o f

t h e I n t e r i o r f o r t h e p u r p o s e o f r e q u e s t i n g p e r m i s -

s i o n t o l a y b e f o r e h i m t h e i n d e p e n d e n t s ' v i e w o f

p e t r o l e u m t r o u b l e s .

M e a n w h i l e t h e c o n f e r e n c e p r o p e r h a d h e a r d S e c -

r e t a r y I c k e s ' a d d r e s s , c o p i e s o f w h i c h w e r e o b -

t a i n e d a n d d i s t r i b u t e d a m o n g t h o s e p r e s e n t a t o u r

o w n m e e t i n g w h i c h c o n t i n u e d i n s e s s i o n u n t i l o u r

committee had communicat ed with the Secretary

i m m e d i a t e l y a f t e r h e h a d l e f t t h e m a i n c o n f e r e n c e .Mr. I c k e s v e r y k i n d l y c o n s e n t e d t o m e e t w i t h u s a t

ten o'clock the following morning, Tuesd ay the

28th, and a Committee of fiv e was appointed to



F i r s t G u n 4 1

c o n f e r w i t h h i m , I b e i n g i n c l u d e d o n t h e m e m b e r -

s h i p o f t h a t C o m m i t t e e . A r e s o l u t i o n w a s p a s s e d

a u t h o r i z i n g t h e f o r w a r d i n g o f t h e f o l l o w in g t e l e -

gram to the Governor of Kentucky :

WESTERN UNION

WASHINGTON DC MARCH 27 1933

HONORABLE RUBY LAFFOONGOV ERNOR OF KENTUCKY FRANKFORT KENTUCKY

YOUR APPARENTLY INNOCENT ACTION IN RE-

V OKING THE AUTHOR ITY OF MR J EDWARD

JONES TO REPRESENT YOU AT THE GOV ERN-

ORS OIL CONFERENCE BEFORE THE SECRETARY

OF INTERIOR CAME AS A G REAT SHOCK TO

MR JONES PERSONALLY AND TO ALL TRUE

AND UNCONTROLL ED OIL OPERA TORS FROM

EVERY SECTION OF THE UNITED STATES HIS

MASTERY OF OIL ECONOMICS TRUE BA SIS

FACTS AND FIGURES AND FUNDAMENTALPRINCIPLES AND HIS CAPABLE AND FORCEFUL

PRESENTATION OF THEM BEFORE A LAR GE

GATHERING OF REPRESENTATIV ES OF THE OIL

INDUSTRY GAINED THE RESPECT AND ADMIRA-

TION OF HIS AUDIENCE THE TELEGRAMS AND

LETTERS SENT YOU TO THE EFFECT THAT HE

WAS NOT THOROUGHLY FULFILLING HIS MIS-

SION FROM ANY POINT OF VIEW INDICATES

THE VICIOUS METHODS TO WHICH THE MONOP-

OLISTIC ELEMENT IN THE OIL INDUSTRY WILL

STOOP TO DISCREDIT AND DESTROY AN HON-

EST AND FEARLESS REPRESENTATIVE OF THE

PEOPLE WE FEEL IT A MATTER OF SIMPLE JUS-

TICE AND OUR PLAIN DUTY TO INFORM YOU

OF THE SOURCE OF HIS OPPOSITION AND CON-

SIDER SUCH UNDERHANDED ACTIVITY ON THE




PART OF PREDATORY INTERESTS THE HIGHEST

FLATTERY THAT COULD BE PAID THE ABILITY

OF MR JONES AS AN ILLUSTRATION OF THE EF-

FICIENT MANNER IN WHICH HE WAS REPRE

SENTING THE GREAT STATE OF KENTUCKY WE

ARE SENDING YOU A COPY OF HIS ADDRESS

WHICH MONOPO LY SUCCEEDED TEMPOR ARILY

IN SUPPRESSING AS A RESULT OF THEIR MIS-

REPRESENTATIONS TO YOU RESPECTFULLY RES ,

OLUTION ADOPTED BY COMMITTEE REPRESENT ,

ING INDEPENDENT OIL PRODUCESRS OF UNITEDSTATES ASSEMBLED IN WASHINGTON

JOHN B ELLIOTT LOS ANGELES CALIF CHAIRMAN

JACK BLALOCK MARSHALL TEX AS SECRETARY



CHAPTER V

Me e t M r . I c k e s

Mr. I c k e s r e c e i v e d u s o n T u e s d a y m o r n -

i n g i n a s m a l l r o o m o f t h e I n t e r i o r B u i l d i n g . H e s a t

b e h i n d a h u g e d e s k a n d t o h i s l e f t s a t M r . E . S .

R o c h e s t e r , S e c r e t a r y o f t h e F e d e r a l O i l C o n s e r v a -

t i o n B o a r d .

Our spokesma n, Mr . J o h n B . E l l i o t t, C a l i f o r n ia ' s

l e a d e r , b e g a n , i n m o s t p o l i t e a n d r e s p e c t f u l m a n n e r ,

t o e x p l a i n t o M r . I c k e s o u r r e a s o n s f o r h a v i n g m a d e

t h e r e q u e s t f o r a s p e c i a l m e e t i n g w i t h h i m . As Mr .

E l l i o t t w a r m e d t o h i s s u b j e c t , r e f e r r i n g t o t h e s h a r p -

n e s s o f t h e o i l c o n t r o v e r s y , h e m a d e r e f e r e n c e t o

t h e p a c k i n g b y t h e m a j o r s o f t h e F r a n k l i n m e e t i n g

w h i c h , h e s t a t e d , h a d b e e n c a l l e d a s o n e f o r i n d e -

p e n d e n t s o n l y . H e a d v i s e d t h e S e c r e t a r y o f t h e f a c t

that the resolutions passed by that meeting had

b e e n p r o p o s e d a n d s u p p o r t e d , i n f a c t , b y t h e m a j o r

concerns and their henchmen . He also d eclared

t h a t t h e G o v e r n o r s ' O i l C o n f e r e n c e it s e l f w a s n o t

a t a l l r e p r e s e n t a t i v e o f t h e r a n k a n d f i l e o f t h e

4 3




p e t r o l e u m i n d u s t r y , b u t w a s , o n t h e c o n t r a r y , p r i n -

cipally composed of the dominating monopolistic

o r g a n i z a t i o n s o f t h e I n d u s t r y .

As Mr . I c k e s l i s t e n e d t o M r . E l l i o t t, h e v e r y d e f i-

nitely began to exhibit a demeanor of anger and

b e l l i g e r e n c y . His face bec ame drawn and almost

white . F i n a l l y h e c u t s h o r t M r . E l l i o tt b y b u r s t in g

o u t , a s h e t u r n e d d i r e c t l y t o w a r d m e , t h a t " i f i t

h a d n ' t b e e n f o r M r . J o n e s , " t h e C o n f e r e n c e w o u l d

not have been so big anyway . "Mr . J o n e s , " h e

s t a t e d , " w e n t o v e r m y h e a d b y s e n d i n g a t e l e g r a m

w h i c h i m p l i e d I h a d s l i g h t e d t h e g o v e r n o r s b y n o t

i n v i t i n g t h e m a l l . " H e s a i d t h a t h e h a d t h e r e u p o n

i n v i t e d m o r e g o v e r n o r s , a s w e l l a s s e v e r a l a s s o c i a -

t i o n s o f o i l m e n , i n c l u d i n g t h e E x e c u t i v e C o m m i t -

t e e o f t h e A m e r i c a n P e t r o l e u m I n s t i t u t e . He the n

complained that "you ind ependents" had "come

d o w n h e r e " a n d c a u s e d t r o u b l e b y b o l t i n g a m e e t -

i n g o f o i l m e n o n S u n d a y s o t h a t " a l l t h e p a p e r s "

on Monday m orning carried news of a breakup of

t h e C o n f e r e n c e e v e n b e f o r e i t h a d b e e n o f f i c i a l l y

c a l l e d t o o r d e r b y h i m . Mr . I c k e s w a s o b v i o u s l y a

very wrought-up and angry man as he snapped his

w o r d s i n a s e v e r e , a l m o s t l e c t u r i n g s t y l e.

The very much surpris ed Mr . E l l i o tt , i g n o r a n t

o f t h e p o i n t o f M r . I c k e s ' a d v e r s e c r it i c i sm o f m e ,

m u m b l e d t h a t h e k n e w n o t h i n g o f t h e m a t t e r , t h a t



Meet Mr . I c k e s 4 5

h e c o u l d n o t " s p e a k f o r M r . J o n e s, " b u t t h a t s i n c e

I w a s p r e s e n t h e w o u l d y i e l d t h e f l o o r t o m e .

A s I a r o s e , I f a c e d a m a n w h o m I f u l l y d e s i r e d

t o a i d i n w h a t I k n e w t o b e a c o m p l e x a n d d i f f i c u l t

u n d e r t a k i n g i n s o f a r a s h i s j o b t o w a r d t h e p e t r o l e u m

industry was concerned . A l t h o u g h I n e v e r b e f o r e

h a d h e a r d o f h i s c o n n e c t i o n w i t h a n y g r e a t a c c o m -

p l i s h m e n t s , I i n s t i n c t i v e l y w a s m o s t f r i e n d l y a n d

s y m p a t h e t i c a l l y i n c l i n e d t o w a r d h i m b e c a u s e h e h a d

b e e n s e l e c t e d a s a C a b i n e t o f f i c e r o f t h a t N e w D e a l

Administration in which I had so muc h genuine

hope and confidence . I w a s c e r t a i n t h a t , o n c e i n

Washington and at the seat of our government-

n o w n e w l y d e d i c a t e d t o p r i n c i p l e s a f f o r d i n g p r o -

t e c t i o n a n d a i d t o t h e i n d i v i d u a l " f o r g o t t e n m a n "

i n h i s l o n g s t r u g g l e t o w a r d r e a l f r e e d o m o f c o m -

p e t i t i v e e n t e r p r i s e ' I w o u l d f i n d a l l t h e p r o m i n e n t

N e w D e a l r e p r e s e n t a t i v e s , a t l e a s t , o f a d e m o c r a t i c

a t t i t u d e , r e p r e s e n t a t i v e o f t h e a p p e a l w h i c h h a d

won the tremendous support of the public in the

r e c e n t e l e c t i o n .

I b e g a n , i n v e r y c a l m a n d r e s e r v e d m a n n e r , t o

u t t e r a n e x p r e s s i o n t o t h e e f f e c t t h a t I d i d n o t t h e n

recall the exact wording of my telegr am to the

governors but that I knew I had not intended to

c o n v e y a n y s l i g h t t o t h e e s t e e m e d S e c r e t a r y . Mr .

I c k e s , w i t h w h i t e n e d f a c e a n d h i s f i n g e r s h a k i n g a t




me, exploded that he knew well what was in the

telegram and that he then had a copy of one on

his des k befor e him! He thereupon appeared to

s l u m p i n t o a s u l k o f s e e m i n g j u v e n i l i t y a n d s a t s t a r -

i n g a t p a p e r s o n h i s d e s k , b u t n o t m a k i n g a n y a t -

t e m p t a t a l l t o e n l i g h t e n t h e a u d i e n c e a s t o t h e

nature of the telegram which seemed s o to have

u p s e t h i s m e n t a l p o i s e a n d e q u i l i b r i u m .

A s f a r a s d i g n i t y p e r m i t t e d , I g a v e e x p r e s s i o n t o

m y r e g r e t s a t t h e c i r cu m s t a n c e s . I t o l d M r . I c k e s ,

h o w e v e r , t h a t I f e l t I h a d b e e n w i t h i n m y p r o p e r

province in my communication to the governors,

p a r t i c u l a r l y s i n c e h e h a d m a d e m i s s t a t e m e n t s c o n -

c e r n i n g f a c t s r e l a t i n g t o a v e r y i m p o r t a n t m a t t e r

a n d t h a t b y v i r t u e o f h i s m i s s t a t e m e n t s , a f a l s e i s s u e

h a d b e e n c r e a t e d i n t h e i n d u s t r y . I t h e n t o l d t h e

S e c r e t a r y t h a t I d e s i r e d t o a s k h i m t w o q u e s t i o n s .

H e a n g r i l y n o d d e d a s u l l e n a s s e n t .

" F i r s t , " I s a i d , " I s h o u l d l i k e r e s p e c t f u l l y t o a s k

whether you are an oil man and whether you are

f a m i l i a r w i t h t h e s t a t i s t i c a l p o s i t i o n o f t h e p e t r o -

leum industry . " H e b a n g e d h i s f i s t a s h e r o u s e d

from his sl ump, almos t bellowin g, "I am not an

o i l m a n a n d I d o n ' t k n o w a d a m n t h i n g a b o u t t h e

o i l b u s i n e ss ! "

I d o n ' t k n o w t h e i n f l u e n c e w h i c h p r o m p t e d i t ,

b u t m y m i n d , i n a s p l i t f r a c t i o n o f a s e c o n d , q u i c k l y




g l i m p s e d , i n p a n o r a m a , s e v e r a l o f o u r n o t e d r e p r e -

s e n t a t i v e s o f g r e a t n e s s w h o h a d s a t i n W a s h i n g t o n

d u r i n g o u r h i s t o r y - t h e m s e l v e s f a m e d f o r a w i s d o m

w h i c h a l w a y s w a s t e m p e r e d w i t h , i f n o t , i n d e e d , a c -

t u a t e d b y c a l m n e s s o f m i n d , t o l e r a n c e o f s p i r i t ,

m e n t a l i t i e s o p e n n o t o n l y t o h e l p f u l s u g g e s t i o n s

b u t a l s o , i n d e e d , t o a r g u m e n t . T h e p r o f u n d i t y o f

L i n c o l n e s q u e t h i n k i n g , f o r i n s t a n c e , d i d n o t g o

a l o n g w i t h e x p l o s i v e a n d v i n d i c t i v e t h r u s t s s h o t o u t

i n d e f e n s e o f a n y s i l l y v a n i t y. What a chapter on

c h a r a c t e r t h i s d e m o n s t r a t i o n b e f o r e m e w a s w r i t -

i n g !

I d e c i d e d t o a p p e a l - a n d t o m a n h o o d !

" M y s e c o n d q u e s t i o n , M r . Secretary, is th is : I f I

c a n s h o w y o u , a s a m a n t o m a n p r o p o s i t i o n , t h a t

y o u m a d e a m i s t a k e i n t h e s t a t i s t i cs y o u q u o t e d i n

y o u r C a l l t o t h e C o n f e r e n c e a n d t h a t t h e f i g u r e s

a s y o u u s e d t h e m t h e b e t t e r c o u l d h a v e b e e n r e -

v e r s e d t o c o m e n e a r e r f a c t s , a n d i f I c o u l d c o n v i n c e

y o u t h a t y o u h a d b y y o u r m i s t a k e c r e a t e d a f a l s e

i s s u e a s t h e v e r y b a s i s f o r y o u r o w n C o n f e r e n c e " -

I c o n t i n u e d - " I h a d i n t e n d e d t o a s k a q u e s t i o n - b u t

I w i l l n o t d o s o : I w i l l s t a t e t o y o u t h a t I b e l i e v e

t h a t i f I c o u l d , a s m a n t o m a n , s o c o n v i n c e y o u , y o u

w o u l d r e t r a c t y o u r s t a t e m e n t w h i c h I h a p p e n t o

k n o w w a s g i v e n w i d e s p r e a d p u b l i c i t y b y a l l t h r e e

w i r e s e r v i c e s t h r o u g h o u t t h e e n t i r e c o u n t r y . "



4 8 "And So-They Indicted Mel"

Mr. Ickes' demean or sudd enly changed . His a n-

gry and bellicos e attitude at once gave way to an

a l m o s t i n q u i r i n g c u r i o s i t y . "What is wr ong wi th

m y f i g u r e s ? " h e a s k e d . I r e p l i e d t h a t h e h a d s t a t e d

t o t h e g o v e r n o r s a n d , t h r o u g h h i s p u b l i c i t y r e l e a s e

to the American public, that the problem to b e

"grappl ed with" was one of "overprod uction ; " a n d

that he had said that we were producing in this

country 2,500,000 b a r r e l s o f c r u d e o i l d a i l y w h e r e -

a s , h e h a d c l a i m e d , w e w e r e c o n s u m i n g o n l y 2 , 0 0 0 , -

0 0 0 b a r r e l s d a i l y . I advised him that we had , in

fact, no cond ition of "overproduction," that the

s t a t e s t h e m s e l v e s a l r e a d y h a d t h e s i t u a t i o n w e l l u n -

der control and that during the whole year prior

t o h i s i n d u c t i o n i n t o o f f i c e o u r p r o d u c t i o n h a d a v -

eraged only 2,2 37,000 b a r r e l s o f c r u d e o i l d a i l y

whereas we had consume d over 2,559,000 b a r r e l s

d a i l y . T h a t , I i n s i s t e d , w a s n o t " o v e r p r o d u c t i o n , "

but "underproduction," instead.

Mr . I c k e s t h e n a s k e d m e t h i s s p e c i f i c q u e s t i o n .

" W h a t i s t h e a u t h o r i t y f o r yo u r f i g u r e s ? " I r e p l i e d :

"The Unite d State s Burea u of Mines, Mr . S e c r e t a r y

-a section of your own department . " I t h e n a s k e d

t h e S e c r e t a r y i f h e c a r e d t o s t a t e t h e s o u r c e o f h i s

s t a t i s t i c s a n d h e r e p l i e d t h a t h e h a d p r o c u r e d t h e m

" f r o m t h e F e d e r a l O i l C o n s e r v a t i o n B o a r d a n d f r o m

the American Petroleum Institu te . "




A n d w h e n M r . I c k e s m a d e t h a t s t a t e m e n t , h e

c o n f i r m e d o f f i c i a l l y w h a t , i n t w o d a y s , h a d b e c o m e

my fear-that he was being misled by our oppo-

n e n t s .

W h y s h o u l d o u r F e d e r a l G o v e r n m e n t , I t h o u g h t ,

g o t o t h e A m e r i c a n P e t r o l e u m I n s t i t u t e , f o u n d l i n g

and mouthpiece of the very b iggest of organized

b i g b u s i n e s s , f o r f a c t u a l i n f o r m a t i o n c o n c e r n i n g

c o n d i t i o n s d i r e c t l y i n v o l v e d i n a g r e a t c o n t r o v e r s y

b e t w e e n s u c h p e o p l e a n d t h e i n d e p e n d e n t , i n d i v i d u a l

c i t i z e n w h o s e b u s i n e s s l i f e w a s a t s t a k e i n c o m p e t -

i n g w i t h m o n o p o l i s t i c b i g b u s i n e s s ? F r e e a n d u n -

h a m p e r e d c o m p e t i t i o n i n o i l m e a n t t h a t t h e " l i t t l e

m a n b u s i n e s s e s " w e r e a t h o r n i n t h e s i d e o f m o n o p o -

l i s t i c p r i c e - f i x e r s , i m p o r t e r s a n d p r o d u c t i o n c o n -

trollers ; for free competition, guaranteed b y a

proper enforcement of our anti-trust laws-them-

s e l v e s b o r n o f o i l - w o u l d d e s t r o y s u c h b u s i n e s s t a c -

tics. I knew that monopoly in oil need ed a power

e v e n g r e a t e r t h a n t h e i r o w n t o c o n t r o l t h e i r i n d e -

p e n d e n t c o m p e t i t o r s . A n d w h a t p o w e r , i f n o t t h a t

o f g o v e r n m e n t i t s e l f , w a s a v a i l a b l e ? M o r e o v e r , e v e n

g o v e r n m e n t a l p o w e r c o u l d b e e n l i s t e d b y m o n o p o l y

o n l y o n t h e s h o w i n g o f c o n c r e t e e v i d e n c e t h a t a n

e m e r g e n c y e x i s t e d b e c a u s e o f t h e p o s s i b i l i t y o f a

v i o l a t i o n o f s o m e g r e a t i d e a l i s t i c p r i n c i p l e .

B u t a n i s s u e c o u l d b e c r e a t e d , e v e n t h o u g h i t



5 0 " A n d S o - T h e y I n d i ct e d M e ! "

m u s t b e b o g u s . C o n s e r v a t i o n o f n a t u r a l r e s o u r c e s

w a s a n i d e a l r e a d i l y t o b e s u p p o r t e d b y t h e p u b l i c .

T h e r e f o r e , s h o u t w a s te ! C u r r e n t " o v e r p r o d u c t i o n ! "

F u t u r e o i l s h o r t a g e ! E v e n t h e s c a r e a b o u t a d e -

f e n s e l e s s na t i o n i n t i m e o f w a r ! F r i g h t e n t h e p u b -

l i c b y m i s r e p r e s e n t i n g f a c t s ; f o o l t h e p o p u l a r N e w

D e a l A d m i n i s t r a t i o n i n t o a c c e p t a n c e o f w r o n g f i g -

u r es ; h o l d o u t t o a b r a n d n e w , a m b i t i o u s a n d i n e x -

p e r i e n c e d o f f i c i a l d o m t h e b a i t o f g o v e r n m e n t a l c o n -

t r o l o f a h u g e i n d u s t r y - a n d i f a n y t h i n g w a s n e e d e d

to usher in for America a New kind of Deal in

b u s i n e s s , t h e r e i t w a s !

S o m e h o w g o v e r n m e n t a l c o n t r o l m i g h t b e i n f l u -

enced t o perpetuate-even enha nce-the monop-

o l i s t i c c o n t ro l a g a i n s t w h i c h w e w e r e f i g h t i n g !

L e t t h e P e t r o l e u m I n s t i t u t e f e e d M r . I c k e s - a n d

t h r o u g h h i m , a g o v e r n m e n t o f f i c i a l , t h e A m e r i c a n

p u b l i c - t h e " o v e r p r o d u c t i o n " p r o p a g a n d a ! L e t o u r

g o v e r n m e n t f a l l h a r d a s a t o o l t o m o n o p o l i s t i c

s c h e m e s . S i m p l y c h a n g e t h e r e a l p r o d u c t i o n f i g u r e

o f 2 , 2 3 7 , 0 0 0 t o o n e o f 2 , 5 0 0 , 0 0 0 - c h a n g e t h e r e a l

c o n s u m p t i o n f i g u r e o f 2 , 5 5 9 , 0 0 0 t o o n e o f 2 , 0 0 0 , -

0 0 0 , a n d t h e i s s u e is a l i v e ! A p p e a l t o t h e v a n i t y o f

a m a n a d m i t t e d l y i g n o r a n t o f t h e e n t i r e m a t t e r

a n d p e r s u a d e t h a t m a n t o s t a r t h i s a m b i t i o u s m a r c h

t o w a r d t h e p o w e r o f " c o n t r o l l i n g " a g r e a t A m e r i -

c a n i n d u s t r y ! I t s e e m e d t o m e t h a t o u r M r . I c k e s




w a s d i s t i n c t l y a t a d i s a d v a n t a g e i n c o n f r o n t i n g t h e

s u b t l e , p o w e r f u l , i n f l u e n c e s o f t h e A m e r i c a n P e t r o -

l e u m I n s t i t u t e . I t a l s o s e e m e d t o m e , t h a t b e c a u s e o f

t h e t e n d e n c i e s o f o u r n e w g o v e r n m e n t , t h e " f o r g o t -

ten man" of American oil would prob ably ha ve

f a r e d b e t t e r w e r e h e t o f i g h t t h e m o n o p o l i e s a l o n e .

He now appeared to b e confronted with an al-

l i a n c e b e t w e e n h i s a d v e r s a r i e s a n d h i s o w n g o v e r n -

m e n t .

But what about the ad vice Mr . I c k e s h a d r e -

ceived from the Federal Oil Conservation Board?

And who comprise d the membership of that

esteemed body?

The Federal Oil Conserv ation Board had been

e s t a b l i s h e d i n 1 9 2 4 b y f o r m e r P r e s i d e n t C o o l i d g e .

Its memb ers were the Secretaries of War, Navy,

Commer ce and Interior . I t s d u t i e s w e r e t o c o n d u c t

i n v e s t i g a t i o n s a n d t o d e t e r m i n e t h e r e s p o n s i b i l i t i e s

o f t h e g o v e r n m e n t i n t h e c o n s e r v a t i o n o f o u r p e -

t r o l e u m r e s o u r c e s . A s t i m e p r o g r e s s e d , m u c h o f t h e

r e a l h a n d l i n g o f t h e m a t t e r s b e f o r e t h e B o a r d h a d

been d one by Mr . E . S . R o c h e s t e r , S e c r e t a r y o f t h e

Board .

W i t h o u t l a b o r i o u s e l a b o r a t i o n , i t c a n b e s t a t e d

s u c c i n c t l y t h a t , f o r s o m e r e a s o n o r o t h e r , M r . R o c h -

e s t e r h a d b e c o m e v e r y c l o s e i n d e e d t o t h e h e a d s o f

t h e b i g o i l c o n c e r n s a n d , a g a i n , f o r s o m e r e a s o n o r



5 2 " A n d S o - T h e y I n d i c t e d M e l "

o t h e r , h a d p e r f o r m e d s a t i s f a c t o r i l y a s o r t o f l i a i s o n

s e r v i c e b e t w e e n t h e g i a n t o i l c o m p a n i e s a n d c e r -

t a i n F e d e r a l g o v e r n m e n t a l o f f i c i a l s . H e h a d w r i t t e n ,

on Decemb er 2 1 , 1 9 3 2 , a p e r s o n a l l e t t e r t o M r .

G e o r g e C r e e l , s t a t i n g , a m o n g o t h e r t h i n g s , t h a t i t

w a s h i s d u t y a s f a r a s t h e F e d e r a l O i l C o n s e r v a t i o n

B o a r d w a s c o n c e r n e d , " t o r u n t h e w o r k s , m a p p r o -

g r a m s , a r r a n g e h e a r i n g s . F o r e i g h t y e a r s I j u g g l e d

t h i s a s s i g n m e n t , a n d n e v e r s l i p p e d a c o g . A do z e n

C a b i n e t M e m b e r s w e r e s a t i s f i e d ; t h e o i l i n d u s t r y

w a s s a t i s f i e d . Coolidge and Hoover and Cabinet-

o f f i c e r C h a i r m e n o f t h i s b o a r d r o d e g r a n d i l o q u e n t l y

u p t o a n d i n t o t h e s p o t l i g h t a s m a s t e r s t a t e s m e n ,

i n s o f a r a s a d r o i t m o v e s d e a l i n g w i t h t h e e c o n o m i c

c o n d u c t o f t h e o i l i n d u s t r y w e r e c o n c e r n e d ! " A n d

- " f r o m t h e t i m e t h i s b o a r d w a s c r e a t e d u n t i l t h i s

hour I have handled the administration job for

those Cabinet Members , and n e v e r s l i p p e d a c o g . "

He referred to the "adv antage the contacts he

( H o o v e r ) a n d h i s C a b i n e t e n j o y e d w i t h t h e g i a n t s

o f t h e o i l i n d u s t r y , " a n d s t a t e d t h a t " M r . R o o se -

v e l t c a n n o t a f f o r d t o g e t a w a y f r o m t h e h e a d s o f

t h e n a t i o n ' s g r e a t o i l c o m p a n i e s . " H e f u r t h e r t o l dMr. C r e e l i n h i s l e t t e r t h a t " t h e c o n t a c t s a s n o w

made a r e i n v a l u a b l e t o a l l c o n c e r n e d , a n d s h o u l d

n o t b e d i s t u r b e d ." Mr . R o c h e s t e r f u r t h e r s t a t e d

to Mr . C r e e l t h a t ' I h a v e i n m y p o s s e s s i o n p e r s o n a l




l e t t e r s f r o m t h e p r e s i d e n t s o f m a j o r o i l c o m p a n i e s

. . . c o n c e r n i n g t h e g r e a t v a l u e a n d h e l p f u l n e s s o f

t h i s G o v e r n m e n t O i l B o a r d . T h e s e m e n a r e t h e b i g -

g e s t o n e a r t h i n s o f a r a s o i l i s c o n c e r n e d . I c a n n o t

u s e t h e s e l e t t e r s , b u t . . . you may see them and

k n o w j u s t w h a t t h e s e m e n t h i n k a n d w h y t h e y t h i n k

s o . "

I , k n e w t h a t f o r y e a r s m a n y o i l o p e r a t o r s h a d

b e e n e x a s p e r a t e d b y t h e f a c t t h a t h i g h g o v e r n m e n t a l

o f f i c i a l s , p a r t i c u l a r l y t h e f o r m e r S e c r e t a r y o f t h e

I n t e r i o r , W i l b u r , c o n s t a n t l y i n d u l g e d i n t h e p r a c -

t i c e o f m a k i n g p u b l i c s t a t e m e n t s w h i c h m i s r e p r e -

s e n t e d t h e t r u e f a c t u a l c o n d i t i o n s o f t h e p e t r o l e u m

i n d u s t r y . Apparently, United States Bureau of

M i n e s s t a t i s t i c s w e r e n o t b e i n g p r o p e r l y a n a l y z e d ,

o r e l s e s o m e b o d y i n t h e g o v e r n m e n t w a s s u p p l y i n g

b o g u s f i g u r e s w h i c h , s t r a n g e l y e n o u g h , s u p p o r t e d

t h e f a l s e p r o p a g a n d a o f m o n o p o l y . A f i c t i t i o u s p i c -

ture of the industry was presented the American

p u b l i c a n d i t w a s p a i n t e d b y h i g h s o u r c e s . Appar-

ently the hand of monopoly actually worked

through the med ium of Mr . R o c h e s t e r , t h e C o n s e r -

v a t i o n B o a r d ' s S e c r e t a r y , s i n c e t h a t B o a r d c o n t r i b -

uted false information regarding production and

consumption .

I o b s e r v e d t h a t t h i s M r . R o c h e s t e r , w h o s a t b yMr. I c k e s ' s i d e , m a d e n o t e s a s I q u o t e d s t a t i s t i c s




and finally after some whispered remarks to the

S e c r e t a r y , a r o s e a n d s l i p p e d q u i e t l y f r o m t h e r o o m .

I then warne d Mr . I c k e s t h a t s o m e b o d y i n t h e

g o v e r n m e n t h a d s u p p l i e d h i m w i t h w r o n g i n f o r m a -

t i o n a n d u r g e d t h a t h e d e p e n d u p o n t h e h i g h l y r e -

s p e c t e d a n d e s t e e m e d U n i t e d S t a t e s B u r e a u o f M i n e s

f o r a u t h e n t i c s t a t i s t i c s . The Secretary there upon

announced an adjournment of the hearing to ten

o ' c l o c k t h e f o l l o w i n g m o r n i n g , s t a t i n g t h a t i n t h e

meantime he would have the figures checked to

d e t e r m i n e w h o w a s c o r r e c t , h e o r I .



CHAPTER VI

Mee t Mr . Roosev elt

The events which had occurr ed durin g

the preceding two or three days stimulated much

d i s c u s s i o n a m o n g t h e g r o u p o f i n d e p e n d e n t o i l m e n

with whom I was id entified . We r e g a r d e d Mr .

I c k e s a s u n f r i e n d l y t o o u r p o s i t i o n a n d w e t h o u g h t

his admitted and demonstrated ignorance of oil

m a t t e r s c o n s t i t u te d a g r a v e d a n g e r s i n c e , t h r o u g hMr. I c k e s , t h e N e w D e a l w o u l d a c t .

I t i s s i g n i f i c a n t n o w t o r e c o r d t h a t o f a l l t h e g o v -

ernors invited to the Conference, only one, Alf

L a n d o n o f m y h o m e s t a t e , w a s p e r s o n a l l y p r e s e n t ,

the remaining governors having commissioned in-

d i v i d u a l s t o b e p r e s e n t a s t h e i r r e p r e s e n t a t i v e s . By

v i r t u e o f t h e f a c t t h a t M r . Landon w as the only

governor at hand, he, as the ranking member of

the Conference, was made Chairman . We all knew

A l f a s a s m a l l o i l o p e r a t o r, b u t w e a l s o k n e w h i m a s

o n e w h o f a v o r e d , t o o m a n y t i m e s , w e t h o u g h t , t h e

m a j o r c o m p a n i e s ' v i e w o f o i l i s s u e s . Even then he

5 5




i n s i s t e d t h a t t h e g o v e r n m e n t b e g i v e n m o r e c o n t r o l

o v e r t h e p r o d u c t i v e p r o c e s s e s o f t h e i n d u s t r y , g o -

i n g s o f a r f i n a l l y , i n a t e l e g r a m t o t h e N e w D e a l

A d m i n i s t r a t i o n , a s t o a d v o c a t e a f o r m o f d i c t a t o r -

ship for the petroleum ind ustry! (This position

was taken, o f course, long b efore Mr . L a n d o n ' s

n a m e e v e n w a s m e n t i o n e d a s a p o s s i b l e p r e s i d e n t i a l

c a n d i d a t e , a n d l a t e r , i n c a m p a i g n b a t t l e , M r . I c k e s

t h r e w a t h i m t h e r e c o r d o f h i s f o r m e r e x p r e s s i o n s . )

B u t w e i n d e p e n d e n t s , f o l l o w i n g o u r f i r s t m e e t -

ing wi th Mr . I c k e s , f e l t g r e a t l y p e r t u rb e d o v e r t h e

m a n n e r i n w h i c h a f f a i r s s e e m e d t o b e d r i f t i n g . We

met therefore, at the Mayflower Hotel the night

o f t h a t T u e s d a y , M a r c h 2 8 t h , a n d a f t e r f u l l d i s c u s -

s i o n f o r m e d t h e " I n d e p e n d e n t P e t r o l e u m A s s o c i a -

tion Opposed to Monopoly," and banded ourselv es

t o g e t h e r t o c a r r y t h e m a t t e r , i f n e c e s s a r y , t o p r o m i -

n e n t m e m b e r s o f C o n g r e s s a s w e l l a s t o t h e P r e s i -

d e n t o f t h e U n i t e d S t a t e s . A l l w e r e i n s i s t e n t t h a t

e v e r y t h i n g p o s s i b l e s h o u l d b e d o n e , a n d q u i c k l y , t o

prevent the new Roosevelt Administration from

s t a r t i n g i t s c a r e e r w i t h a m i s u n d e r s t a n d i n g o f o i l

problems .

We eagerly and hopefully, therefore, awaited

Mr. I c k e s ' e x p e c t e d a n n o u n c e m e n t o n t h e f o l l o w i n g

morning . We thought that he would admit that

h e h a d b e e n w r o n g l y a d v i s e d a s t o t h e f a c t s o f t h e



Meet Mr . R o o s ev e l t 5 7

o i l i s s u e . S u c h a d m i s s i o n w o u l d d e s t r o y t h e d a n g e r

o f g o v e r n m e n t a l c o n t r o l o f o i l p r o d u c t i o n i n t h e

i n t e r e s t s o f m o n o p o l y a s a g a i n s t t h e p r i n c i p l e o f

f r e e a n d c o m p e t i t i v e e n t e r p r i s e .

T h e m e e t i n g o f t h e n e x t m o r n i n g w a s s h o r t a n d

s w e e t . Mr . I c k e s , i n t h e p r e s e n c e of o u r c o m m i t -

t e e a n d o t h e r i n d e p e n d e n t s , a p p e a r e d t o b e j u s t a

l i t t l e n e r v o u s , s o m e w h a t i r k e d a t t h e b u s i n e s s a t

h a n d , a n d c o n s i d e r a b l y p r e o c c u p i e d w i t h n u m e r o u s

p a p e r s t h a t c l u t t e r e d h i s d e s k . A f t e r a c o n s i d e r a b l e

p a u s e h e f i n a l l y g r e e t e d u s . H i s m a n n e r w a s p a i n e d ,

r e s e r v e d a n d c o n d e s c e n d i n g .

I a r o s e a n d a s k e d t h e S e c r e t a r y w h e t h e r h e h a d

c o n f i r m e d t h e c o r r e c t n e s s o f t h e f i g u r e s I h a d q u o t e d

o n t h e p r e c e d i n g d a y . Mr . I c k e s a n s w e r e d : " I h a v e

h a d t h e f i g u r e s y o u u s e d c h e c k e d a n d t h e y a r e c o r -

r e c t . F i g u r e s , h o w e v e r , a r e s u b j e c t t o i n t e r p r e t a -

t i o n ! "

T h e d e m e a n o r o f t h e S e c r e t a r y , h i s a c c e n t u a t i o n

a n d e m p h a s i s o f h i s l a s t r e m a r k , w e r e s o i n d i c a t i v e

o f a m i n d c l o s e d t o o u r p u r p o s e t h a t , o n h i s o b -

vious des ire to conclude the matter without any

further ado-much less an acknowled gment by him

t h a t h i s u s e o f w r o n g s t a t i s t i c s i n h i s C o n f e r e n c e

invitation had been in error-I, nonplus ed, an-

swered :

" W e l l , i f t h e g o v e r n m e n t i s d e s i r o u s o f ` i n t e r -




p r e t i n g ' f i g u r e s w h i c h r e p r e s e n t a c t u a l f ac t s , i t w i l l

b e p r i v i l e g e d , I p r e s u m e , t o i n t e r p r e t t h e m i n i t s

o w n w a y .

O n e o r t w o o t h e r i n d i v i d u a l s , i n c l u d i n g m y o w n

Researc h Direct or, Mr. Kemnitzer, attempted to

d i s c u s s m o r e f u l l y t h e f a c t s i n q u e s t i o n , b u t M r .

I c k e s s h o w e d g r e a t b e l l i g e r e n c y a n d e v e n a n g e r a s

h e r a i s e d h i s v o i c e , i g n o r i n g , i n i n s u l t i n g m a n n e r ,Mr. Kemnitzer, who attem pted v ainly to spea k .

Needless to say, the meeting broke up in q uick

f a s h i o n , t h e d i s h e a r t e n e d a n d c h a g r i n e d o i l m e n

wondering what next was to b e done .

But Mr . J o h n B . E l l i o t t , C h a i r m a n a n d s p o k e s -

man of our newly formed "Independ ent Petroleum

Association Opposed to Monopoly," quick ly threw

h i m s e l f i n t o a c t i o n . Throu gh the t wo Calif ornia

S e n a t o r s , a p p o i n t m e n t s w e r e m a d e w i t h o t h e r C a b i -

n e t o f f i c e r s a n d o n e a l s o w i t h P r e s i d e n t R o o s e v e l t .

I w a s o n e o f a c o m m i t t e e s e l e c t e d t o l a y o u r p r o b -

l e m b e f o r e t h e P r e s i d e n t . W e d i d t h i s t h e f o l l o w -

ing day .

I s h a l l n o t s o o n f o r g e t t h e h o u r a n d t e n m i n u t e s

at the White House . I n h i s s t u d y , M r . R o o s e v e l t

g r e e t e d u s w i t h g r e a t c h a r m a n d c o r d i a l i t y . I h a d

known him since 1923 a n d w a s p l e a s e d a t h i s p e r -

s o n a l w o r d t o m e a s h e s h o o k m y h a n d . C h a i r s h a d

b e e n a r r a n g e d i n a s e m i - c i r c l e a b o u t h i s d e s k a n d




w e s e a t e d o u r s el v e s a t h i s v e r y h o s p i t a b l e s u g g e s t i o n ,

i n q u i t e i n f o r m a l f a s h i o n .

B e i n g i n t h e p r e s e n c e o f F r a n k l i n D . R o o s e v e l t

w h e n h e i s a t h i s b e s t i s s o m e t h i n g t o r e m e m b e r .

H e h a s a g r a c i o u s n e s s o f m a n n e r t h a t s e e m i n g l y c a p -

t i v a t e s a n d i n f l u e n c e s e v e r y b o d y a b o u t h i m t o i n -

c l i n e t o h i s v i e w . H e , a l s o , v e r y p o l i t e l y a n d g a l -

l a n t l y , a g r e e s w i t h e v e r y t h i n g t h a t i s s a i d . O n e i s

i m p r e s s e d , a n d i m m e a s u r a b l y s o , w i t h t h e f i r m b e -

l i e f t h a t t h e P r e s i d e n t n o t o n l y , a g r e e s w i t h , b u t

p r o m i s e s t o d o e v e r y t h i n g t h a t i s d e s i r e d . H e d o e s n ' t

"hypnotize ; " h e d o e s n ' t " e l e c t r i f y . " H i s g r a c i o u s

m a n n e r , h i s n a t u r a l p o i s e , h i s d e m o c r a t i c a n d s o c i a l

m a n n e r o f m e e t i n g p e o p l e a n d o f d i s c o u r s i n g w i t h

them, win the day for Mr . R o o s e v e l t .

T h e P r e s i d e n t r e c l i n e d e a s i l y b e f o r e u s , h i s l e f t

e l b o w o n t h e a r m o f h i s c h a i r , h i s h e a d l e a n i n g o n

h i s l e f t h a n d w i t h i t s l o n g m i d d l e - f i n g e r s t r e t c h e d

a l o n g s i d e a n d d e e p l y i m b e d d e d i n h i s l e f t c h e e k .

He was almost boyish as he asked us to reverse

in our minds the ord inary conception that "one

teacher usually teaches many pupils . " Tod ay,

h e l a u g h i n g l y d e c l a r e d , h e w a s the pu pil-we were

t h e t e a c h e r s . What could we teach hi m, what di d

w e w a n t a n d w h a t c o u l d t h e p u p i l d o f o r u s ?

Out of the good-natured , intimate atmos phere

w h i c h t h e P r e s i d e n t ' s p e r s o n a l i t y s o e a s i l y c r e a te d ,




w e t o l d h i m f i r s t o f t h e r e g r e t t a b l e f a c t o f M r .

I c k e s ' e r r o r i n o i l s t a t i s t i c s . W e s t a t e d o u r s u s p i -

c i o n s c o n c e r ni n g t h e S e c r e t a r y o f t h e F e d e r a l O i l

Conserva tion Board (Mr . E . S . R o c h e s te r ) . Wes t a t e d t h e i m p o r t o f t h e u s e o f w r o n g i n f o r m a t i o n

t o c r e a t e a f a l s e i s s u e i n p e t r o l e u m . (We-did not

mention the E . S . R o c h e s t e r " n e v e r - s l i p p e d - a - c o g "

l e t t e r t o M r . C r e e l , a l t h o u g h w e h a d c a u s e d a c o p y

o f t h a t l e t t e r t o b e h a n d e d t h e P r e s i d e n t o n t h e

p r e c e d i n g n i g h t ) .

T h e P r e s i d e n t , s t i l l i n h i s " p u p i l " r o l e , m o s t p l a y -

f u l l y , s a i d , " W e l l , I d o n ' t k n o w w h o t h e f e l l o w i s ,

b u t , s i n c e l a s t n ig h t , t h e r e a i n ' t n o S e c r e t a ry o f t h e

F e d e r a l O i l C o n s e r v a t i o n B o a r d a n d t h e r e a i n ' t n o

F e d e r a l O i l C o n s e r v a t i o n B o a r d n e i t h e r . That has

b e e n a b o l i s h e d . "

We presented to him the several recommend a-

tions which the "Independ ent Petroleum Associa-

t i o n O p p o s e d t o M o n o p o l y " h a d m a d e a s i t s c o n t ri -

b u t i o n t o t h e G o v e r n o r s ' O i l C o n f e r e n c e . He ac-

c e p t e d o u r o f f e r i n g w i t h m o s t k i n d l y a n d s y m p a -

t h e t i c g e s t u r e . W e s p e n t a b o u t f i f t e e n m i n u t e s i n

discussing the supply and d emand condition of

c r u d e o i l , I l e a v i n g h i m , a t h i s r e q u e s t , s o m e c h a r t s

and material which my research d epartment had

p r e p a r e d . W e a l s o s p e n t a b o u t f i f t e e n m i n u t e s i n

discussing our recommendation for a divorcement




o f o i l p i p e - l i n e s f r o m t h e i r p r e s e n t m a j o r o i l c o m -

pany ownership .

Of all our recommendati ons, each of which we

c o n s i d e r e d t o b e o f m a j o r i m p o r t a n c e , M r . R o o s e -

v e l t , s t r a n g e l y e n o u g h , s e e m e d i n t r i g u e d a t t h e p i p e -

l i n e d i v o r c e m e n t s u g g e s t i o n a n d s h o w e d t h e g r e a t -

e s t a n d m o s t a v i d i n t e r e s t i n o u r a r g u m e n t r e g a r d -

i n g t h e m a t t e r . T o m y s u r p r i s e , o n o u r c o n c l u d i n g

t h e p i p e - l i n e p r e s e n t a t i o n , t h e P r e s i d e n t , w i t h a

r a t h e r g r a n d i o s e , f l o u r i s h i n g t o s s o f h i s h e a d , s a i d ,

a n d v e r y s e r i o u s l y , " I t h i n k y o u a r e r i g h t . I am

g o i n g t o r e c o m m e n d i t . "

A s w e l e f t t h e W h i t e H o u s e , f o l l o w i n g o u r l o n g

d i s c u s s i o n o f o i l p r o b l e m s , I c o u l d n o t b u t f e e l p u z -

z l e d - a l m o s t f r i g h t e n e d , a t t h e p o s s i b i l i t i e s I f e l t

m i g h t h a v e b e e n r e v e a l e d b y t h e e x p r e s s i o n o f M r .

R o o s e v e l t a n d h i s a t t i t u d e a b o u t t h e p i p e - l i n e d i -

vorcement proposal . I championed div orcement

o f p i p e - l i n e s , b u t o n l y a f t e r l on g a n d c a r e f u l s t u d y

o f t h e e f f e c t o f t h e i r o w n e r sh i p , a s c o n s t i t u t e d , u p o n

p r i c e c o n t r o l i n t h e i n d u s t r y a n d t h e i r b e i n g u s e d ,

a s I k n e w t o b e t h e c a s e , a s a n i n s t r u m e n t a l i t y o f

monopoly . But, the divorcement from pres ent

o w n e r s h i p o f a n y k i n d o f a s s e t s v a l u e d a t $ 8 9 5 , -

000,000 ( a s t h e p i p e - l i n e s w e r e ) , r e g a r d l e s s o f t h e

i s s u e s i n v o l v e d i n a n y c o n t r o v e r s y , i s a m a t t e r o f

grave moment . S u r e l y d e c i s i o n r e g a r d i n g s u c h a




m a t t e r s h o u l d c o m e o n l y f r o m p r o f o u n d d e l i b e r a -

t i o n f o l l o w i n g m o s t c o m p l e t e a n a l y s i s o f t h e p r o b -

l e m s i n v o l v e d . T h e P r e s i d e n t h a d b e e n a t h i s n e w

j o b o f m a n y a n d a r d u o u s d u t i e s f o r l e s s t h a n f ou r

s h o r t w e e k s . Could he hav e given great s tudy to

this matter? I knew of no work b y any govern-

mental department that had resulted in any con-

c l u s i o n s r e g a r d i n g t h a t i m p o r t a n t s u b j e c t . Could

the President-and I almost s hudd ered at the

t h o u g h t - b e s o c o n s t i t u t e d a s t o p a s s s n a p j u d g -

ment, involving such tremendous consid erations,

f o l l o w i n g o n l y f i f t e e n m i n u t e s o f d i s c u s s i o n o f j u s t

o n e s i d e o f t h e q u e s t i o n ? I d i d n o t t h e n p e r m i t m y -

s e l f t o g o t o o f a r i n v i s u a l i s i n g t h e p o s s i b l e c o n s e -

q u e n c e s t o t h e n a t i o n , w e r e i t s C h i e f E x e c u t i v e

s o c o n s t i t u t e d a s t h u s t o h a n d l e l a r g e i n d u s t r i a l

m a t t e r s .



CHAPTER VII

The Genes is of NRA-Its Character

T h e G o v e r n o r s ' O i l C o n f e re n c e o f M a r c h ,

1 9 3 3 , s h o u l d g o d o w n o n t h e r e c o r d a s a n i m p o r t a n t

c h a p t e r i n N e w D e a l h i s t o r y . I t l a s t e d f o r o n l y

t h r e e d a y s , b u t i t r e p r e s e n t e d t h e f i r s t a t t e m p t o f

a n e w a n d i n e x p e r i e n c e d o f f i c i a ld o m t o s o l v e a n

a c u t e i n d u s t r i a l p r o b l e m .

T h e p e t r o l e u m i n d u s t r y w a s t h e f i r s t o n e t a c k l e d

b y t h e R o o s e v e l t A d m i n i s t r a t i o n i n an e f f o r t t o

g r a p p l e w i t h a r e a l b i g e c o n o m i c p r o b l e m . I t i s m y

b e l i e f t h a t t h e G o v e r n o r s ' O i l C o n f e r e n c e f i r s t s o w e d

the seed that stirred the New Deal toward the N R A

p r o g r a m w h i c h f o l l o w ed .

A t t h e t i m e o f t h e C o n f e r e nc e , e v e n t s s h o w e d

t h a t t h e P r e s i d e n t w a s s t i l l " p u s h i n g " o r p r o m o t i n g

that old abstraction dangled b efore the voters in

1 9 3 2 s i m p l y a s t h e u n d e fi n e d " N e w D e a l . " O u t

o f t h e C o n f e r e n c e c a m e a m b i t i o u s n o t i on s t h a t

f i n a l l y b o r e f r u i t i o n i n t h e f a m o u s c o d e s o f i n d u s -

t r y .

6 3




T h e o r i g i n a l m o t i v a t i n g f o r c e t h a t c r e a t ed t h i s

g r e a t a n d n o v e l e x p e r i m e n t w a s s u p p l i e d n o t b y

t h e y o u n g b r a i n t r u s t e r s - a s m a n y b e l i e v e - b u t b y

t h e s o - c a l l e d " l e a d e r s " o f t h e o i l i n d u s t r y , i n t h e i r

d r i v e t o e n l i s t t h e a i d o f t h e F e d e r a l G o v e r n m e n t

i n t h e i r s t r u g g l e t o m o n o p o l i z e a n d t o c o n t r o l t h e i r

i n d e p e n d e n t c o m p e t i t o r s . I t w a s , i n f i n e , t h e g r a n d -

e s t s c h e m e e v e r a t t e m p t e d t o l e g a l i z e m o n o p o l y

a n d t o d e s t r o y c o m p e t i t i o n . T h e c o d e s w h i c h f o l -

l o w e d p r o v e d t h a t p o i n t - a n d t h e v e r y f i r s t t h i n g

d o n e i n t h e s c h e m e w a s t h e w r i t i n g i n t o t h e I n -

d u s t r i a l R e c o v e r y A c t i t s e l f , a n a b r o g a t i o n o f t h e

a n t i - t r u s t l a w s , a l w a y s t h e g r e a t f e a r o f t h e m o -

n o p o l i s t ! I n o i l , t h e r e f o r e , t h e N e w D e a l t h e o r y

o f F e d e r a l c o n t r o l o f A m e r i c a n i n d u s t r y w a s b o r n ,

a n d t h e o i l c o d e , n a t u r a l l y , w a s t h e f i r s t c o d e o f

i n d u s t r y t o b e a d o p t e d b y t h e g o v e r n m e n t .

T h e a d m i n i s t r a t i o n , a t t h e G o v e r n o r s ' O i l C o n -

f e r e n c e , h a d n o t h i n g t o o f f e r a n d c a m e f o r w a r d

w i t h n o o r i g i n a l c o n s t r u c t i v e r e c o m m e n d a t i o n s .

T h e m a j o r o i l c o n c e r n s u r g e d F e d e r a l G o v e r n m e n t

c o n t r o l o f t h e p r o d u c t i o n o f a l l c r u d e o i l . The

i n d e p e n d e n t s w e r e p r i m a r i l y c o n c e r n e d w i t h o p -

p o s i n g t h e p r o p o s e d i m p o s i t i o n o f s uc h a r t i f i c i a l

r e g u l a t i o n u p o n t h e p r o d u c t i v e p r o c e s s e s o f i n d u s -

t r y . O t h e r r e c o m m e n d a t i o n s c o l l a t e r a l t o t h e " c o n -

t r o l " i s s u e w e r e m a d e , b u t t h a t w a s t h e b a s i c c o n -



T h e G e n e s i s o f N R A - I t s C h a r a c t e r 6 5

t r o v e r s y . T h e s i g n i f i c a n t o u t c o m e o f t h e C o n f e r -

e n c e w a s , I h a v e a l w a y s b e l i e v e d , t h e p l a n t i n g o f

t h e a m b i t i o u s i d e a i n t h e m i n d o f H a r o l d I c k e s t h a t

h e s h o u l d , i n s o m e m a n n e r , s o p l a y h i s h a n d a s t o

p l a c e h i m s e l f i n p o s i t i o n t o " r u n " t h e p e t r o l e u m

i n d u s t r y - t o b e i t s d i c t a t o r , i n f a c t .

I t s e e m e d t o m e , a l s o , t h a t t h e C o n f e r e n c e r e -

v e a l e d a t e n d e n c y o n t h e p a r t o f t h e P r e s i d e n t f o r

g r a n d i o s e a c t i o n a n d h a s t y a n d i n c o n s i d e r a t e j u d g -

m e n t .

On April 3rd, Mr . R o o s e v e l t re f e r re d t o t h e g o v -

e r n o r s o f s e v e n t e e n o i l s t a t e s t h e r e p o r t s a n d r e c o m -

m e n d a t i o n s o f t h e M a i n C o n f e r e n c e a n d o f t h e " I n -

depend ent Petroleum Associ ation Opposed to Mo-

nopoly . " T h e P r e s i d e n t a p p r o v e d o f o n l y o n e r e c -

ommen dation from each of many submitte d by

those two bodies-selecting from the Conference

r e p o r t t h a t c a l l i n g f o r l e g i s l a t i o n b y C o n g r e s s p r o -

h i b i t i n g t r a n s p o r t a t i o n i n i n te r s t a t e a n d f o r e i g n

c o m m e r c e o f o i l p r o d u c e d i n v i o l a t i o n o f s t a t e l a w ;

a n d f r o m t h e r e c o m m e n d a t i o n s o f t h e i n d e p e n d e n t s ,

h e s e l e c t e d a n d a p p r o v e d t h e p i p e - l i n e d i v o r c e m e n t

p r o p o s a l s t a t i n g t h a t " s u c h l e g i s l a t i o n s h o u l d b e

e n a c t e d a t a s e a r l y a d a t e a s p o s s i b l e . " I t i s s i g n i f i -

c a n t t o n o t e h e r e t h a t t h e a p p r o v a l b y t h e P r e s i d e n t

o f t h e m o n o p o l i s t r e c o m m e n d a t i o n s r e g a r d i n g i n t e r -

s t a t e s h i p m e n t s o f o i l l a t e r w a s e m b o d i e d i n l e g i s -




l a t i o n p a s s e d b y C o n g r e s s a s t h e f a m o u s C o n n a l l y

Ac t ; that regardin g pipe-line divo rcement and

recommended by the independents, was introduced

a s a b i l l b y S e n a to r B o r a h , f r o m I d a h o , b u t n e v e r

p a s s e d , M r . I c k e s a d v i s i n g C o n g r e s s a g a i n s t i t , s t a t -

i n g t h a t t h e P r e s i d e n t h a d b e e n " i l l - a d v i s e d " a t t h e

t i m e t h e s u b j e c t h a d b e e n p r e s e n t e d t o h i m . Re-

p e a t e d e f f o r t s o f M r . B o r a h i n t h i s c o n n e c t i o n h a v e

b e e n o f n o a v a i l a n d M r . R o o s e v e l t h a s n o t p u r s u e d

t h e m a t t e r f u r t h e r .

No favorable mention whatsoe ver was made by

t h e P r e s i d e n t , i n h i s l e t t e r t o t h e g o v e r n o r s , o f t h e

c o n t r o v e r s i a l s u b j e c t o f t h e F e d e r a l c o n t r o l o f o i l

production, although this was th e Number One

a n d m o s t i m p o r t a n t o f t h e r e c o m m e n d a t i o n s o f t h e

major oil company group, which, by the way,

was sign ed b y Governor Alf Landon, as Chair-man .

T h e r e i s n o t h i n g o n t h e r e c o r d t o i n d i c a t e t h a t

t h e P r e s i d e n t , a t t h a t t i m e , r e a l l y e n t e r t a i n e d a se -

r i o u s n o t i o n c o n c e r n i n g a c e n t r a l i z e d g o v e r n m e n t a l

r e g u l a t i o n a n d c o n t r o l o f t h e e c o n o m i c e l e m e n t s o f

i n d u s t r y . A s a m a t t e r o f f a c t a n d o f r e c o r d , t h e

P r e s i d e n t , i n h i s o w n l e t t e r t o t h e G o v e r n o r s , r e -

fused to follow the Conference recommend ation

t h a t h e u s e t h e p o w e r o f t h e F e d e r a l G o v e r n m e n t

t o r e g u l a t e d e v e l o p m e n t o f o i l p o o l s , t o c o n t r o l p r o -



T h e G e n e s i s o f N R A I t s C h a r a c t e r 6 7

duction or to force even a temporary shutdown

o f p r o d u c i n g o i l w e l l s . H e s t a t e d , " I t i s o b v i o u s

t h a t t h e a c t i o n p r o p o s e d t o b e t a k e n i n t h e s e p a r a -

g r a p h s i s w i t h i n t h e s o l e a u t h o r i t y a n d j u r i s d i c t i o n

o f t h e i n t e r e s t e d S t a t e s , " a n d t h a t " h e m i g h t b e

r e g a r d e d a s i n f r i n g i n g o n t h e s o v e r e i g n t y o f t h e

S t a t e s " i f h e s h o u l d e v e n m a k e s u c h a " s u g g e s t i o n "

t o t h e G o v e r n o r s o f t h e S t a t e s . S u c h a c a t e g o r i c a l

s t a t e m e n t o f p o s i t i o n s e e m s s t r a n g e l y i n c o n t r a s t

to the sw eeping policy of NRA Codes , ad opted

s h o r t l y t h e r e a f t e r , b y v i r t u e o f w h i c h c i t i z e n s a c -

t u a l l y w e r e j a i l e d i n p r o s e c u t i o n s w h i c h M r . I c k e s

l a t e r d i r e c t e d i n e n f o r c i n g t h e c l o s i n g i n o f p r o d u c -

i n g o i l w e l l s .

F o l l o w i n g t h e c o n c l u s i o n o f t h e G o v e r n o r s ' O i l

C o n f e r e n c e a n d t h e f a i l u r e o f t h e p r o t a g o n i s t s o f

" F e d e r a l c o n t r o l " t o o b t a i n P r e s i d e n t R o o s e v e l t ' s

s a n c t i o n t o t h e p l a n t h e n p r e s e n t e d , a d o g g e d a n d

p e r s i s t e n t e f f o r t w a s u n d e r t a k e n b y r e p r e s e n t a t i v e s

o f m a j o r o r g a n i z a t i o n s t o w a r d b r i n g i n g a b o u t s o m e

f o r m o f F e d e r a l c o n t r o l o f t h e o i l i n d u s t r y .Mr. R o o s e v e l t , d u r i n g t h e f i r s t s e v e r a l w e e k s a t

h i s W h i t e H o u s e d e s k , h a d n o t h o u g h t o f e x e r c i s i n g

F e d e r a l c o n t r o l o v e r t h e p r o d u c t i v e p r o c e s s e s o r

o t h e r e c o n o m i c e l e m e n t s o f i n d u s t r y o r b u s i n e s s ,

b e l i e v i n g g e n u i n e l y t h a t u n d e r t h e C o n s t i t u t i o n a n d

the American sys tem of government such exercise




o f p o w e r w o u l d b e c o n s i d e r e d a n i l l e g a l a n d u n w a r -

r a n t e d e n c r o a c h m e n t u p o n S t a t e s o v e r e i g n t y , a n d ,

a s s u c h , u n c o n s t i t u t i o n a l a n d v o i d . O t h e r w i s e , h o w

c a n o n e i n t e r p r e t h i s l e t t e r t o t h e G o v e r n o r s , w r i t -

t e n o n A p r i l 3 r d , 1 9 3 3 , a n d i n w h i c h , i n c o m m e n t i n g

o n t h e s u g g e s t i o n s a n d r e c o m m e n d a t i o n s w h i c h h a d

b e e n m a d e b y t h e o i l m o n o p o l i s t s t h a t t h e F e d e r a l

Government should take a hand in regulating the

m a n n e r o f d e v e l o p m e n t o f o i l p o o l s a n d c o n t r o l l i n g

t h e p r o d u c t i o n o f o i l w e l l s i n t h e S t a t e s , h e s t a t e d

e x p r e s s l y t h a t i n s u c h c i r c u m s t a n c e s , " T h e P r e s i -

d e n t o f t h e U n i t e d S t a t e s h a s n o ( s u c h ) a u t h o r -

i t y . . . " a n d " h e m i g h t b e r e g a r d e d a s i n f r i n g i n g

o n t h e s o v e r e i g n t y o f t h e S t a t e s i f h e s h o u l d m a k e

( e v e n ) t h e - s u g g e s t i o n " w h i c h w a s c o n t a i ne d i n t h e

recommendation .

T h e h i s t o r i c a l f a c t r e v e a l s , h o w e v e r , t h a t p o w e r -

f u l , a l b e i t q u i e t , i n f l u e n c e s w e r e se t t o w o r k i m m e -

d i a t e l y f o l l o w i n g t h e G o v e r n o r s ' O i l C o n f e r e n c e ,

b y t h e b i g o i l c o n c e r n s , t o p u t o v e r o n t h e A d m i n i s -

t r a t i o n t h e i r i d e a f o r F e d e r a l C o n t r o l o f t h e o i l

i n d u s t r y . T h i s i d e a f i n a l l y t oo k h o l d w i t h M r . I c k e s

- i t a p p e a r s t h a t t h e a m b i t i o u s b r a i n - t r u s t e r s an d

y o u n g r a d i c a l s t h e n r e s i d e n t i n W a s h i n g t o n l e a p e d

a v i d l y t o w a r d i t , a n d a l t h o u g h i t o r i g i n a t e d i n t h e

m i n d s o f t h e e c o n o m i c r o y a l i s t s a g a i n s t w h o m t h e

P r e s i d e n t h i m s e l f r a i l e d i n 1 9 3 2 , t h e A m e r i c a n N a -



T h e G e n e s i s o f N R A I t s C h a r a c t e r 6 9

t i o n h a d t h e d o s e h a n d e d t o t h e m s h o r t l y a f t e r w a r d

under the s ponsors hip of the President' s "New

Deal . "

T h e a n o m a l y o f i t a l l s e e m s n o w t o b e t h a t t h e

g r e a t e s t o f a l l i d e a s w h i c h t h e N e w D e a l s e i z e d u p o n

a s i t s m o d u s o p e r a n d i were o f f e r e d t o i t b y t h e h a t e d

e c o n o m i c r o y a l i s t s w h o m t h e p r e s i d e n t i a l c a n d i d a t e

had attacked with such great fervor in the cam-

paign . A n d , s h o r t l y , t h e n e w a d m i n i s t r a t o r o f t h e

P e t r o l e u m C o d e w a s t o a p p o i n t t h e c a p t a i n s o f t h e

o i l i n d u s t r y , t h e h e a d s o f t h e g r e a t e s t o f a l l m o n o p o -

l i e s , t o p o s i t i o n s o n h i s A d m i n i s t r a t i v e B o a r d s a n d

Committees, to rule und er an enthronement of

a d m i t t e d i g n o r a n c e , t h e e n t i r e k i n g d o m o f o i l , w r i t -

i n g t h e r e g u l a t i o n s t o c o n t r o l t h e b u s i n e s s m e t h o d s ,

a y e , e v e n t h e o p p o r t u n i t i e s o f t h e i n d e p e n d e n t s ,

the competitors of monopoly . Und er NRA, mo -

nopoly was, ind eed, entrenched-and in the very

s u b s t a n c e o f t h e N a t i o na l G o v e r n m e n t i t s e l f !

T h e p r e s s o f t h e c o u n t r y s o o n c a r r i e d r e p o r t s t o

t h e e f f e c t t h a t C o n g r e s s w a s t o b e a s k e d t o p a s s

l e g i s l a t i o n p r o v i d i n g f o r F e d e r a l c o n t r o l . S h o r t l y

a f t e r , a b i l l w a s i n t r o d u c e d m a k i n g t h e S e c r e t a r y

o f t h e I n t e r i o r a v i r t u a l d i c t a t o r o f t h e e n t i r e i n -

d u s t r y , i n s o f a r a s e x p o r t s , i m p o r t s , p r o d u c t i o n , e t c . ,

were concerned . Secretary Ickes supported and

s p o n s o r e d t h e p r o p o s e d l e g i s l a t i o n , a p p e a r i n g l a t e r




b e f o r e C o n g r e s s a n d e v e n w r i t i n g n e w s p a p e r a r t i -

c l e s i n f a v o r o f t h e p l a n .

A n I c k e s p r o p a g a n d a a r t i c l e e n t i t l e d " T h e C r i s i s

i n O i l : A Huge Nation al Proble m," appea red i n

the Sund ay New York Times o f J u n e 1 1 , 1 9 3 3 , i n

w h i c h d e s p i t e h i s h a v i n g b e e n i n f o r m e d p r e v i o u s l y

t o t h e c o n t r a r y , h e s t r e s s e d t h e " w a s t e " s c a r e a n d

r e f e r r e d e r r o n e o u s l y t o t h e " e n o r m o u s q u a n t i t i e s

o f e x c e s s p r o d u c t i o n . " I n s p i t e o f t h e i n f o r m a t i o n

which had b een given Mr . I c k e s a t t h e G o v e r n o r s '

Conference and his own admis sion that he had

c h e c k e d t h e i n f o r m a t i o n a n d h a d f o u n d i t t o b e c o r -

r e c t , h e , n e v e r t h e l e s s , t o l d t h e p u b l i c i n h i s Times

a r t i c l e t h a t " f o r t h e p r e s e n t o u r p r o b l e m i s o n e

of coping with an overproduction which is more

s e r i o u s t h a n p e r h a p s e v e r b e f o r e . " T h a t s t a t e m e n t ,

o f c o u r s e , w a s u n t r u e .

I , f o r q u i t e s o m e t i m e , h a d p u b l i s h e d r e g u l a r l y

t h e " J . Edwa rd Jones Monthly Petro leum State-

m e n t , " i n w h i c h p u b l i c a t i o n s t a t i s t i c a l d a t a a n d

comment regarding the fundamental economic

f a c t o r s o f su p p l y , d e m a n d a n d p r i c e w e r e p r e s e nt -

e d t o t h e i n d u s t r y . W h e n I b e g a n t o r e a l i z e t h a tMr. I c k e s w a s w o r k i n g , a l o n g w i t h t h e o i l c o m b i n e ,

f o r n a t i o n a l l e g i s l a t i o n t o e n f o r c e a F e d e r a l c o n t r o l

o f t h e p e t r o l e u m i n d u s t r y , I s t a r t e d , i n m y p u b l i c a -

t i o n , t o a n a l y z e t h e p r o b l e m a n d t o o p p o s e , q u i t e



T h e G e n e s i s o f N R A - I t s C h a r a c t e r 7 1

f o r c e f u l l y - t h o u g h , o f c o u r s e , i n r e s p e c t f u l m a n -

n e r , t h e l i n e s o f p o l i c y M r . I c k e s w a s p u r s u i ng . S u c h

a n a t t a ck o n h i s p r o g r a m w a s m a d e q u i t e f o r m i d a b l e

s i m p l y b y t h e p u b l i c a t i o n o f s t a t i s t i c a l d a t a , a u -

t h o r i t a t i v e l y a d d u c e d , t h a t c o n t r a d i c t e d f l a t l y a nd

c o m p l e t e l y t h e p o s i t i o n M r . I c k e s t o o k a n d t h e

r e p r e s e n t a t i o n s h e m a d e b o t h t o t h e A m e r i c a n p u b -

l i c a n d t o v a r i o u s c o m m i t t e e s o f b o t h H o u s e s o f

C o n g r e s s a s w e l l .

Came the NRA and the Oil Code (now all de-

f u n c t ) . Mr . I c k e s , t h e m a n w h o , w i t h a b a n g o f

h i s f i s t i n a m o m e n t o f r i s i n g a n g e r , h a d e x c l a i m e d

i n a d m i t t e d i g n o r a n c e , " I a m n o t a n o i l m a n a n d

I d o n ' t k n o w a d a m n e d t h i n g a b o u t t h e o i l b u s i -

n e s s , " w a s m a d e A d m i n i s t r a t o r o f t h e P e t r o l e u m

C o d e !

Some q uality of human nature-not knowled ge

o r i n t e l l i g e n t u n d e r s t a n d i n g o f t h e " o i l b u s i n e s s " -

s u f f e r e d M r . I c k e s t o a c c e p t t h e j o b o f " r u n n i n g "

a g r e a t i n d u s t r y c o n c e r n i n g w h i c h h e k n e w n o t a

" d a m n e d t h i n g . " B u t , i n l i f e w e f i n d t h a t t h e p e r -

f o r m a n c e o f a n o v i c e , i s , o f c o u r s e , j u s t e x a c t l y

l i k e t h a t o f a n o v i c e . N o t h i n g e l s e i s e x p e c t e d . T h e

laws of na ture -a Houdi ni-eve n a New Deal-

c a n ' t m a k e a s o p h i s t i c a t e o f a n o v i c e a n d s t i l l r e t a i n

t h e n o v i c e . Mr . I c k e s , a s t h e P e t r o l e u m A d m i n i s -

t r a t o r , n e v e r d e m o n s t r a t e d a n y t h i n g i n h i s o f f i c i a l



7 2 " A n d S o - T h e y I n d i c t e d M e l "

a c t s , t h a t b e l i e d h i s f i r s t a n d m o s t a u t h e n t i c s t a t e -

ment ab out oil-that he wasn't "an oil man" and

didn't "know a damned thing about the oil b usi-

n e s s . "

I continued my oppos ition to Mr . I c k e s , p o i n t-

i n g o u t h i s i n c o n s i s t e n c i e s , h i s e r r o r s , h i s f a v o r i t i s m

i n t h e a d m i n i s t r a t i o n o f t h e o i l c o d e t o w a r d t h e

o i l m o n o p o l y , u n t i l i n F e b r u a r y , o f 1 9 3 4 , I p r e -

s e n t e d t o t h e M e m b e r s o f t h e C o n g r e s s o f t h e U n i t e d

S t a t e s a M e m o r i a l r e g a r d i n g p r o b l e m s o f t h e p e -

t r o l e u m i n d u s t r y . In my Memori al, I paid high

tribute to President Roosevelt and, alon g with

v o l u m i n o u s s t a t i s t i c a l d a t a p o i n t e d o u t w h a t I r e -

g a r d e d a s t h e e r r o r s o f M r . I c k e s , o p p o s e d h i s p o l i-

cies and mad e recommendation s to the Congress

w h i c h w e r e d i r e c t l y o p p o s e d t o t h e I c k e s ' p r o g r a m .

I appeared before the Committee on Mines and

Mining and the Finance Committee, both of the

U n i t e d S t a t e s S e n a t e , a n d t h e C o m m i t t e e o n I n t e r -

s t a t e a n d F o r e i g n C o m m e r c e o f t h e H o u s e o f R e p -

r e s e n t a t i v e s i n o p p o s i t i o n t o l e g i s l a t i o n s p o n s o r e d

by Mr . I c k e s w h i c h w o u l d h a v e p l a c e d e v e n m o r e

d i c t a t o r i a l p o w e r i n h i s h a n d s t h a n t h a t a l r e a d y

l o d g e d t h e r e b y t h e P e t r o l e u m C o d e . A t s u c h h e a r -

i n g s , I c k e s a p p e a r e d , n o t i c i n g m e , b u t n e v e r s p e a k -

i n g t o m e . I s t e a d f a s t l y p r e s e n t e d a n a l y s e s a n d f a c -

t u a l i n f o r m a t i o n i n o p p o s i t i o n t o h i m , a l t h o u g h t h e



The Genesis o f NRA-Its Character 7 3

record will show my position to h ave been always

a respectful one .

I have never sympathized with the publicly ex-

pressed views of Mr . Ickes in his blustering opposi-

tion to the power of monopoly and "big business . "

My atti tude toward him in this regard has always

been prompted by the fact, known to those having

intimate knowledge of his acts as Administrator

of the Petroleum Code, that when he had the great

power of a code dictato r, he actually surrounded

himself with th e heads of th e huge o il combines

that always opposed the interests of the indepen-

dents of the industry! On his Planni ng and Coor -

dination C ommittee, that important policy deter-

mining Committee for Mr. Ickes as the Code Au-

thority, the principal personag es on the Commit-

tee * were the heads and representatives of the na-

tion's largest oil organizations : Standard Oil Com-

pany of New York , Standard Oil Company of Cali-

for nia, Pure Oil Company, Tide Water Oil Com-

pany, Barnsdall Oil Company, Standard Oil Com-

pany of New Jersey, etc . There were also a few

other men on this Committee: henchmen of mo-

nopoly, but little k nown as independents .

And then, too, I have had little respect for the

principle demonstrated by Mr . Ickes when he has

attacked "high prices ." I knew that under the Code,



74 "And So-They Indicted Me!"

when he had real power in his hands, his own or-

ganization actually fixed prices in the petroleum in-

dustry, not at the lowest competitive price of the

independent, but at the highest monopolistic price

of the major companie s . In this connection, I was

amazed to learn the benevolent attitude of Mr .

Ick es toward monopoly and high prices, when a

member of his Petroleum Administration Board,

Dr. John W. Frey, in charge of marketing for theCode Authority, Mr. Ickes, testified in September,

1934, at Hearings before the Committee on Inter-

state an d Foreign Commerce of the House of Rep-

resentatives at Washingt on, D. C In that testi-

mony, Congressman Wolverton of New Jersey, by

skillful questioning, established the fact that the

high price of gasoline was actually fixed by official

Washington and that Mr . Ickes' code organization

exerted influence to keep the price up to levels de-

sired by the big companies!

Mr. Wolverton asked Dr. Frey whether the big oilcompanie s met the low competit ive price s of in -

dependent dealers in Camden, New Jersey . (I quote

from the Congressional Record . )

Mr. Wolverton : Well, did they meet it in Cam-

den?

Dr. Frey : They did not meet it in Camden because

I asked them not to .



The Genesis o f NRA-Its Character 75

Mr. Wolverton : Asked who not to?

Dr. Frey : The major companies.

Mr. Wolverton : You mean, you as an official of

the Government, asked them not to decreasetheir price?

Dr. F r e y : I did .

Mr. Wolverton : Well, now we are gett ing down to

where the prices are fixed. The gentlemen whopreceded you did not k now anything about it

and I had gathered that somebody was thefixer and that t he res t by some means of men-

tal telepathy were able to find it out, but now

I find that it is done here in Washington and

you are the man who does it, and you are the

man who is responsible for what I pay forgasoline in Camden!

Dr. F r e y : Not entirely . I have done it in hundreds

of cases .

Mr. W olverton : But the big operators are main-

taining prices just the same . Did you ask the m

not to come down in price?

Dr. Frey : We asked them not to meet that com-petition .

Mr. Wolverton : That surprise s me . I have nothing

more to say when I find that the major com-

panies in my locality are charging me whatthey are at the request of an official in Wash-

ington . That is interesting indeed . I do nothave anything more to say at this time .




Dr. Frey : We have done that in hundreds of in-

stances .

To give some idea of the manner in which the

truth was represented or misrepresented (the read-

er may take his choice) to the Congress of the

United States about exactly what was or what was

not done in the matter of price fixing by the gov-

ernment under the direction and responsibility of

Mr. Icke s, the following record of the hearing sreferred to is reproduced :

Mr. Wolverton : Then you would not favor a price-

fixing policy?

Secretary Ickes : Not at the present ; no. Underthe present code we have not attempted to

fix prices . We have not up to the prese nt,

and I do not think that is the way to approach

this problem. We must approach it from a

long-range viewpoint .

Mr. Wolverton : Mr Secretary, if the authority

under the code has not fixed the price for gaso-

line, how does it happen that in many locali-

ties there is no difference in price between that

charged by one company and that charged by

another?

Secretary Ickes : There is no differentiation in price?

Mr. Wolverton : Not in the locality in which I live

nor any other in which I have bought gasoline .



The Genesis of NRA-Its Character 77

I can go to a Standard station, an American,

Sun, Purol, Atlantic, or a ny other, and there

is no difference, not as much as one-tenth of

a cent in the price .

Secretary Ickes : That may be just a coincidence.

The following is also enlightening :

Mr. Wolverton : I am interested to know how thesame price is arrived at unless the code au-

thority has determined it .

Secretary Ickes : We have not had a hand in that.

Having in mind the testimony of the esteemed

Secretary of the Interior, Mr . Ickes, the following

testimony of his marketing expert before the sa me

committe e and in t he same heari ngs, only two days

later, is most interesting :

Mr. Wolverton : When the Secretary of th e Inter-

ior was present I asked him about the question

of price-fixing, and he said that he did not be-

lieve in it .

Dr. F r e y : Yes .

Mr. Wolverton : I would like to know the names

of the big companies you requested not to re-

duce their price .

Dr. F r e y : Well, in that particular instance you are

talking of, that is, Camden?




Mr. Wolverton : Yes.

Dr. F r e y : The Company that was going to cut andI asked not to cut was the Sun .

Mr. Wolverton : When you heard that the Sun wasgoing to cut, you asked them not to do it ; i s

that right?

Dr. F r e y : That is right .

Mr. Wolverton : Is that a policy of the board or

you as an individual?

Dr. F r e y : It is a policy of the board .

And further, a startling negation of the repre-

sentations of the Interior Secretary, Mr . Ickes, was

given as follows :

Mr. Wolverton : I want to know the responsibility

for this policy that you speak of, and I want to

know wheth er Secret ary Ickes knows that you

had pursued the course which you did in this

particular instance?

Dr. Frey : I make a report to him every week ofwhat I do .

Mr. Wolverton : Was this in accord with his wishes?

Dr. Frey : If it was not, he did not tell me it was

not .

Mr. Wolverton : Did you tell him you had done it?

Dr. Frey: I did .

Mr. Wolverton : Did he disapprove of it?

Dr. Frey: No.




MrWolverton Then we can assume that the re-

sponsibility is with him?

DrFrey: Isuppose so .

In my fight ag ains t the bill which would create

Federal control of business in the petroleum indus-

try, I stated in September, 1934, before the Inter-

state and Foreign Commerce Committee the fol-

lowing, in opposit ion to th e price-fixing o f Mr .

Ickes' Administration :

"A piece of information, startling in its effect,

was that elicited here T hursday of this week when

questioning developed a fac t that other witnesses

had not divulged, to the effect that under such Fed-

eral control as is already lodged in the Interior De-

partment, price-fixing by the government itself is

resulting . The intelligence, so brought to light,

reveals the government made a tool of monopoly

in the infliction of a high price upon the consuming

public that free competit ion would reduce and re-

duce legitimately at profit, no doubt, to the inde-

pendent marketer. Governmental price -fixing was,

in this instance, set not at the lowest, but at the

highest price .

"Here is not one case but `hundreds of cases' in

the test imonial words before you here of a govern-

ment official wherein the matter of monopolistic

price-fixing actually has obtained the services of the

Petroleum Administrative Board, with the full offi-




cial knowledge of the Administrator himself, in

placing the influence of our Federal Governmentbehind the monopolist in maintaining a higher price

of identic al quality to the c onsuming public th an

that which free competition on the part of the in-

dependent markete r legitimately would give . Whenthe Petroleum Administrative Board, wittingly or

unwittingly, in its concept of government com-municates with major organizations with which it

has such close and intimate contact, and, apparently

toward which it has such beneficent inc linations,

advises that organization, confronted with a healthy

independent competition, to maintain its high price

level to the cons umer while the Board proce eds to

use the weight of Federal power and influenceagai nst the purpose of the independent to induce

that independent to fall in line and to raise his price,

that particular governmental agency demonstrates

its futility, as a governmental agency, in the per-

formance, yea, even, may I say, in its conception,

of a proper governmental function. Such failure,

if far extended in our government, spells the failure

of government itself in respect to its duty to the

public which supports it . It follows the principle,

argued here, of Federal control . The adoption byour national legislature of that fallacious notion,

born of the vanity of man in a stubborn march to

dictatorial power, will not conform to the princi -

ples of American government, will not co nstitute

a wise and necessa ry move as an emergency measure,

will not be based upon justifiable facts, and, finally,



The Genesis o f NRA Its Character 81

will be objectionable both to the industry itself and

to the public at large .

"America is not yet ready for the institution of

doctrines that take the white stripes, and the blue

from out the Star Spangled Banne r . "

Although Mr. Roosevelt had placed the proposed

Oil Bill on his "must" list, the Bill eventually failed

of passage .

During the summer, I appeared before the Na-

tional Recovery Review Board, of which th e cele-

brated Clarence Darrow was Chairman . At this

hearing, which lasted several days, Mr . Ickes sent

a special young lawyer to represent him and a con-

cer ted, deliberate attempt was made before Mr .

Darrow to damage my reputation in a scurrilous

attack upon my personal business .

The attack was not founded upon any justifiable

facts and it therefore amounted to nothing . It did

serve to prove, however, that the only refutation

of my position with respect to the problems of the

petroleum industry, was, henceforth, to be a per-

sonal attack upon me . Mr. Darrow was incensed at

such tactics and warned me that he fear ed that I

would be persecuted by litigation of some kind . He

stated that, although he had retired from the prac-

tice of law, he would be glad to defe nd me if I

were attack ed by the Administration .




In the fall of 1934, Mr . Ickes, the Oil Adminis-

trator, addressed a Convention of the American

Petroleum Institute at Dallas, Texas . In his speech

he dwelt at length in lecturing and chiding oil men

for the manner in which they ran their businesses,

made great fun of the architecture of filling sta-

tions, referred to the "three foci" of iniquity in the

oil industry-designating the localities as California

(home of my friend Mr. John B. Elliott), East

Texas (home of my friend Mr. Jack Blalock) and

New York (I live in New York) but not calling

anybody's n ame-and finally thre aten ed nation al-

ization of the petroleum industry!

The A merican Public recently has been shock ed

at the action taken by the Mexican Government

toward the nationalization of the Mexican Petrol-

eum Industry. Great and adverse criticism of our

southern neighbor's action has resulted. The charge

of Communism has been leveled at what most po-

litical economists would characterize as a distinctly

"red" policy. Be it remembered, however, that

our own New Deal Administration at Dallas, Texas,

in 1934, through the person of Harold L. Ickes,

actually made a si milar "red" threa t toward the

American Petroleum Industry almost four years

before the Mexican coup was effected .

My studies of Mr. Ickes' connections with and



The Genesis of NRA Its Character 83

support of various radical movements and associ a-

tions in Chicago before his having been called into

public notice, warned me agains t his possible pur-

poses . When he boldly threatened the nationaliza-

tion of the American Petroleum Industry, there-

fore, I was not so greatly surprised although I sensed

the urgent need of some action toward curbing

him .

The ra dical threat of t he est eemed Secretary of

the Interior and Administrator of the Petroleum

Code, aliena ted what had been support of Mr . Ickes

by major oil concerns in the industry . Oil publica-

tions editorially attacked him and he began quickly

to lose prestige .

(The New Deal Administration later indicted a

large number of the so-called leaders of the indus-

try, many of whom actually had sat on Mr . Ickes'

Code Boards and Commissio ns, which under his di-

rection and rule, had fixed petroleum prices . These

self same individuals, now fallen from his benign

favor, were in dicted, along with the ir companie s,

for an alleged conspiracy to fix prices ; herded to a

selected section of th e "Union" to be tried befor e

a selected jury of country folk ; and finally purged

by conviction in the now famous Madison, Wis-

consin, oil trial!)

My mail became heavy with demands that some




step now should be taken to rid the industry of

this man and I accordingly forwarded a number

of editorials together with a letter to the President

on November 24, 1934, in which I set forth reasons

to support a request which I made of Mr . Roosevelt

to remove Ick es as Administrator of the Petroleum

Code. I did this in the following letter :

The President

The White House

Washington, D. C .

My dear Mr. President :

As an American Citizen who has given all of his

fifteen years of business career to operations in the

petroleum industry and to profound and extensive

research studies of the eco nomics of petroleum, I,

with great respect, invite your attention to a matter

which I deem of such ser iousness to the welfare of

the country as to require frank discussion of it .

The petroleum industry, as a result of an appoint-

ment you have made, since the inception of its Code

in September 1933, has been under the administra-

tion of a man, Mr. Harold L. Ick es, who, on hisown admission knew nothing at all about it . He has

surrounded himself with a group of young acad-emicians with no oil experience who seem incapable

of properly assisting him either in the administra-

tion of the industry or in a thorough understanding

of i ts problems .




Mr. Ickes, as Administrator of the Code of Fair

Competition for the Petroleum Industry has (in ad-

dition to his admissions), by his a cts r evealed an

incapacity for efficient performance of his duties

and an utter lack of comprehension of the real issues

of the industry that have lost for him the confidence

and respect which the industry, under the influence

of your own leadership, placed in h im as your a p-

pointee. I enclose h erewith editorial comment f rom

important publications confirmatory of t his state-

ment. The editorials enclosed are only a few frommany, but they indicate a definite trend of opinion

and are taken from oil trade publications such as the

"National Petroleum News," the "Oil Weekly,"and "Oil and Gas Journal," and from one of ourgrea t Metropolitan dailies, the "New York World-

Telegram. "

Among a great many improper acts and short-comings of Mr. Ickes, I refer to the following as

representing some of those of which I believe you

should be in formed .

1 . Mr. Ickes apparently is imbued with an in-

ordinate a mbitio n for more a nd more power to dic-

tate the course of the in dustry's conduct, and in

an attempt to influence Congressional legislation

designed to confer that power upon him, upon oc-

casion h as appeared before Committees o f Cong ress

and has misrepresent ed befor e such committe es im-

portant phases of the industry's problems . Thesemisrepresentations have been made by him after hi s

atte ntio n had been called to the real facts which




he later obscured so completely and contradicted

so flatly by his misstatements of fact that intelligent

opinion must conclude his position was deliberately

take n for th e purpose of deceiving and misleading

Congress in an attempt to influence the legislative

acts of our National legislature. Such conduct on

the part of a member of your own Cabinet ca nnot

be descr ibed only as unbecoming a C abinet of fice r

but should be recognized as a danger to representa-

tive government .

Before the Committee on Interstate and Foreign

Commerce of the House of Representatives on May30, 1934, for instance, Mr . Ickes, painted a doleful

picture of reckless overproduction and extravagant

waste in the petroleum industry which do not exist .

His statements when analyzed, convey the clearimplication o f a production of crude oil in thi s

country much beyond our normal needs and stres s

the dange rs of "waste" resulting from overproduc-

situation and, if regarded as true, is particularly

Ickes is at variance with the facts of the petroleum

tion which he claims prevails . This position of Mr .

dangerous because, being represen ted officially to

Congressi onal agencies it might result in national

legislation based upon a false premise . It appears

that no person other than the President of theUnited States is in position to arrest or to curb such

practice .

2 . Mr. Ickes has issued false statements to the

press of the United States thereby causing the Amer-

ican public to become incited to a feeling of appre-




hension concerning possible danger that might arise

from petroleum conditions of supply and demandalleged by Mr. Ickes but which, in reality, were not

as he represented them . At the very outset of his

career as Secretary of the Interior, for instance, 'he

issued a call for th e Governors' Oil Conference in

March, 1933, in the invitation for which he stated

that the problem of the petroleum industry to be

"grappled with" was one of "overproductio n ." He

even cited statistics which were incorrect and when

I personally called the matter respectfully to his at-

tention, proving by the U . S . Bureau of Mines that

he was wrong and asked that he retract his state-

ment because it raised a false issue, he refused to

correct his position and indicated a belligerent at-

titude of stubbornness in holding to the false posi-

tion he had created for the Administration . In sub-

sequent public utterances and before official agen-

cies he has, throughout his c areer as Oil Adminis-

trator, persistently maintained a similar false posi-

tion with respect to the f acts of petroleum supply

and demand and alleged waste . I am in position to

supply you with copies of memoranda issued to the

Press and with sta tistical proof which c onfirm the

statements above made .

3 . By Mr. Ick es' own admission and by his own

acts and those of many of his subordinates, he ha s

displayed himself and his administration before the

industry, over which he rules, as incompetent, in-

experienced, unqualified, temperamentally unfitted,

unfair, biased, and as lacking in a proper conception




of real government functions . He exhibits a poor

and ridiculous management of the industry's affairs

and plays upon public opinion by frightening th e

people about false issues such as an impending and

imminen t oil shor tage , waste and war-all of which

notions are n ot based upon substantial knowledge

of actual conditions of fact . These are factorswhich have contributed, in material fashion, to the

loss of confidence which th e industry had in Mr .

Ickes as Oil Administrator .

4. Instead of applying h imself to the business

of learning the basic factors contributing to the

real and great problems of the industry and result-

ing in the controversial issues which so distract it,

Mr. Ickes in Don Quixote fashion, "grapples" with

false and imaginary issues, small and relatively un-

important to the basic problems, and, by exaggerat-

ing the importance o f his little notions about the

incon sequent ial matte rs which apparen tly absorb

his th oughts, makes his administration ridiculous

and puerile in its ineffective attempts to aid recov-

ery. The lack of cooperation and respect whichcharacterizes Mr . Ickes' administration is splendidly

in evidence curren tly as represented in the utter-

ances of the leaders of important factions of the in-

dustry, by prominent editors who speak the opinio n

of the industry's rank and file and by prominent

State officials who oppose his program .

It is not too much for one to say (certainly it is

something concerning which you should be in-

formed) that Mr. Ickes stands today as having lost




the confidence of the industry as a whole, and that

he is now taking issue with responsible leaders of the

industry. In taking that issue he disports himself as

a vituperative lecturer, violent and insulting in his

language, cheap and shallow in his conc eptions of

the merit of his opponents, unbending in his atti-

tude, vain in hi s ambitious demands for more and

more power to be given one who has not demon-strated a capacity for the exercise of the power de-

sired. His address made befor e a conventi on of oil

men in Dallas, Texas, on 14 November, 1934, lis-

tened to in silence by thous ands and broadcast by

radio in which he childishly "poked fun" at the in-

dustry and compared the policies of our leadingorganizations to the prolific antics of guinea pigs

along with threatening nationalization of the indus-

try as a public ut ility is an excellent example of

an attit ude that bespeaks such lack of comprehen-

sion of the industry's problems that intelligent opin-

ion cannot further interest itself in futile efforts

to work in cooperative spirit under his direction .

Mr. Icke s' Dallas threat of nat ionalization ofthe petroleum industry as a public utility was in

poor form and without his province as a h igh g ov-

ernment off icial sinc e no such development in in-

dustry in this country could become possible merely

through the fr ightened whim of an official of the

Executive Branch of our government, because ofthe necessity for Congressional action . His threat,

ther efor e, was unwise a nd indiscree tly made with-

out any evidence whatsoever of authoritative Con-




gressional approval . It is very questionable whether

any such drastic and extreme action would be tak en

by Congress regarding any of the major in dustries

of our country and such an expression, by an offi-

cial of Cabinet rank, is almost impertinent in its

disregard for proper etiquette toward Congress .

This c ountry is not yet under any delusions which

permit a dictator ial concept of government of our

people .

5 . Mr. Ickes has failed, in a misguided policy, to

assist the recovery program by adopting a "shut-in"

policy of restricting the production of crude oil to

points far below the normal needs for such, thereby

creating huge deficiencies in our domestic produc-

tion which, under his orders, can not legally be sup-

plied by American oil producers but which, on

the other hand, can only be supplied exclusively

either by a monopoly which draws upon foreignsource s of supply through i mports and withdrawals

from stocks built up from imports, or by producers

in thi s count ry who are willing to produce in ex-

cess of his abnormally low "allowables," thereby be-

coming outlaws (according to Mr. Ick es), andbootleggers o f oil in the supplying o f a natur al,

normal and legitimate demand of our Americanmarkets. Such a policy does not "put more menback to work," it keeps them away from work .

6 . Although Mr . Ickes has taken credit for sta-

bilizing price conditions within the industry, his

acts have created instability inasmuch as they have

enhanced a c ondition of inequitable relationships




between the fundamental price f actors of the in-

dustry. Under his administration the marketing

branch of the industry has suffered, without allevia-

tion on his part, the greatest, most severe, most de-

structive and most c ostly price war ever experi-

enced in its history .

Although before th e subcommittee of the House

Committee of Interstate and Foreign Commerce,Mr. Ick es denied having any hand in price-fixing,he concealed a fact of startling nature, later brought

out by Congressman Wolverton in questioning asubordinate member of Mr. Ickes' own staff, that hisadminis trati on was and had been g uilty in "hun-

dreds of cases" of using the influence and power of

his of fice t o fix the price of petroleum products

to the cons uming public and that tha t fixed price

was fixed by his s taff -not at the lowest co mpeti-

tive price of independent operators but at the high-

est price o f dominating major organizations . Such

acts of price-fixing on t he part of Mr . Ickes' ad-

ministration have been done deliberately, according

to the testimony of a government witness, with the

full official knowledge of the Oil Administrator .

They have been detrimental to the welfare, not only

of the hapless consumer, but also to free and inde-

pendent co mpetit ion an d to the advanta ge of major

monopolistic organizations .

7 . Mr. Ickes, as Oil Administrator, has shown,

by avoidance of the issue and by inaction, disrespect

of the Presidenti al recommendation fo r divorcement

of oil-pipe lines from their present ownership,




ther eby fost erin g a harmful monopolisti c pract ice

and continuing the existence of a concrete inst ru-

mentality of monopoly .

8 . In answering, in his Dallas speech above re-

ferred to, charges of failure in his administration

of the Petroleum Code, Mr . Ickes admitted failure

but excused such failure on the gr ound that the

Code was a faulty mechanism, promulgated with-out his having been consulted regarding its consti-

tution, and thereby implied direct and adverse criti-

cism of the President of the United States who did

actually promulgate the Code. By so construingthe Co de and its manne r of promulgati on, Mr . Ickes

claimed, in effect, that he now is engaged in a dif-

ficult attempt to administer the Nation's third larg-

est industry through faulty and defective Code

mechanism. Such admission alone, challenges his

availability for Code administration .

Because of the act s and inabilities of Mr . Ickes

for his position as Oil Administrator, several in-

stances of which have been recited above and addi-

tional supporting data for which can and will be

supplied if you desire, and because also o f a very

strong and wide-spread feeling persisting t hat h e

has lost the confidence of the industry which he

directs, I most respectfully ask, because of my gen-

uine solicitude for the welfare both of the petroleum

industry and of t he public, that you remove h im

from the office of Administrator of the Code for

Fair Competition for the Petroleum Industry . Thedestiny of your administrat ion, of the petroleum



The Genesis o f NRA Its Character 93

industry and of th e Americ an public i tself, de-

mands it .

With my highest consideration, I am

Most respectfully,

(Signed) J EDWARD JONES

The request for Mr. Ickes' removal was given

widespread publicity throug hout t he country, and

from the date of my sending the letter to the Presi-

dent, there was set into motion the strangest possible

chain of events to affect my destiny that could pos-

sibly occur in this so-called free country of ours .

I very promptly received an a ckn owledgment to

my letter from the White House and was advised

that the President would give further answer when

"the investigation" had been concluded . I still am

in doubt as to just what was meant or whether

irony was intended in the words "the investigation . "

Nothing in the White House letter specified the

object of "the investigation" or hinted as to who

or what was to be investigate d .

I do know that whatever in th e way of furt her

answer was given to me came not in the form of a

letter from the President, but rather in the form

of a strangely new kind of "Deal . "



CHAPTER VIII

New Deal Policeman

My business operations in New York are

conducted from my office at 342 Madison Avenue,

the on e business address I have had in New York

since I arrived from Kansas, in January, 1920,

to start my business career . For fifteen years I had

devoted my entire business life to selection and

purchase in the oil fields of the g reat Mid-Conti-

nent reg ion, of landowners' royalties on the pro-

duction of oil lands, operated chiefly by the larg-

est of the oil operating companies . I distributed

these royalties to a substantial clientele which I

personally had built up in the Eastern part of this

country and in certain parts of Europe. My New

York of fice was the headquarters of the business

which I had established, and from that office, op-

erations were conducted from four of my branch

offices-a distributing of fice in Boston, Massachu-

setts, as well as one in Dresden, Germany, and field

o f f i c e s in I ndependence, Kansas a nd in Tulsa, Okla-

homa .

94



New Deal Policeman 95

In addition to our regular commercial activities

a Resea rch Department was maintained at cons id-

erable cost, studies were made and research conduct-

ed in the field of petroleum economics, including,

of cours e, the problems of the industry . I person-

ally was intrigued by the interesting phases of pe-

troleum problems and gave considerable time tothis work, contributing, as best I could, to enlight-

enment regarding the too little known elements of

i t .

Possibly two hundred individuals made up my en-

tire organization-unincorporated, and known as

the J. Edward Jones Organization -and it was rec-

ogni zed thro ughout t he coun try as reputable, suc-

cessful, expert, and foremost in its particular and

special line of business activity .

Although our volume of business was comfort-

ably in the seven figure class and was supported by

several thousand clients, we never had been con-

fronted by any complaint on the part of any official

of either the Federal or of any State Government .

No complaints ha d been f iled against us by any of

our clientele and none was pending at the t ime my

request for removal of Mr. Ickes was made on

November 24th .

At that time, I enjoyed most cordial relationships

with the Securit ies and Exchange Commissi on and




with the Federal Trade Commission, its predeces sor

in the administration of the Securities Act of 1933 .

Immediately following the passage of that Ac t by

Cong ress, I had gone directly to the Federal Trade

Commission to register a "Royalty Trust" which

bore my name and which we were regularly distri -

buting to our clientele . I had the pleasure of being

congratulated by Mr. Baldwin B. Bane, of the Fed-

eral Trade Commission, on having formulated, in

1930, a trust, the provisions and principles of which,

so he advised me, met the strict requirements of the

New Deal Securities Act of 1933 and earned the

exemptions provided for reg istrations. Mr. Bane

told me, that, since my trust earned the exemptions

from registration I should not clutter his files by

leaving with th e Commissi on the mater ial descr ip-

tive of our offerings which I personally carried to

his offices, and furthermore advised me to "take it

back to New York. "

I followed the sugges tions made and confi rmed

in writin g my understanding of the exempted privi-

leges earned and of our inten tion to proceed with

our business as theretof ore .

I was requested to visit with one of Mr . Bane's

aides, to advise hi m of the fundamental nature o f

the business which I sponsored and to assist him

in the formulation of additional rules and regula-




t i o n s f o r i t s c o n d u c t . I h a v e i n m y f i l e s t o d a y r o u g h

drafts of proposed rules and regulations which the

Commission forwarded to me along with requests

for my recommendations and comment regarding

t h e i r i d e a s f o r r e g u l a t i n g t h e o i l r o y a l t y b u s i n e s s .

I gave my views and assisted them in their work .

And when the Securities and Exchange Commis-

s i o n w a s e s t a b l i s h e d , o b e d i e n t t o p r o v i s i o n s o f t h e

Securities Exchange Act of 1934, that Commission

taking over the Securities functioning and consid-

erable of the personnel of the Federal Trade Com-

m i s s i o n , I c o n t i n u e d t o c o l l a b o r a t e w i t h a n d t o a i d

Mr. B a n e , a n d h i s a s s i s t a n t s , i n t h e i r n e w c a p a c i t i e s .

In this work, a very . c o r d i a l a n d f r i e n d l y a t t i t u d e

was the rule, always, and I was glad of the oppor-

tunity afforded to be of some constructive ser-

v i c e .

Within a few days following the dispatch of my

I c k e s r e m o v a l r e q u e s t t o t h e P r e s i d e n t , t h e r e w a l k e d

into my New York office my old friend, Dr . I r v i n g

Perrine, a prominent and widely known petroleum

geologist of Oklahoma City, Oklahoma, and with

him a young man of heavy build and shaggy coun-

tenance, whom Dr . Perrine introduced as John L .

F l y n n , a l a w y e r n e w l y o n t h e s t a f f o f t h e S e c u r i t i e s

and Exchange Commission. I knew that Dr . P e r -

r i n e h a d j o i n e d t h e s t a f f o f t h e C o m m i s s i o n a s t h e i r




expert advisor on oil matters and he informed me

that he, with Mr. Flynn, were desirous of "getting

acquainted" with the oil royalty men by way of

harmonizing the efforts of the Commission in the

direction of the regulation of their businesses as a

branch of the Securities business, and that he had

felt pleasure in bringing Mr . Flynn first to me, as,

so he stated, I was recognized as heading the fore-

most org anization in th e business under survey .

I was, of course, pleased at the call and, after

an exchange of the usual courtesies, offered the fa-

cilities o f myself and my organizatio n toward any

good purpose, stat ing my admiration f or the prin-

ciples which prompted Congress in the es tablish-

ment of the Commission and making some brief

comment conc erning what I regarded as a real need

for some such agency of government .

Dr. Perrin e thanked me in polite and familiarmanner and proceeded to outline some of his views

rega rding the good results he expected to accom-

plish for the government by virtue o f his wide ac-

quaintanceship among oil men. He stood actually

aghast, a few seconds later however, and I was seized

with complete amazement, when young Mr . Flynn,

in most impolite, hostile and even menacing man-

ner, launched into a series of swift and curt ques-

tions which he directed at me regarding most inti-




mate details of my own business methods, particu-

larly as to our cost and sale prices, my profits, etc .

Dr. Perrine stood this sort of thing for a few min-

utes, whereupon he informed me, as he frowned

upon Mr. Flynn, that he had been sent t o New

York to interview people, and that Mr . Flynn had

simply accompanied him . Also, that on coming into

my offi ce, he had not intended any such examina-

tion as Mr . Flynn had started, that he thought the

tact ics were impolite and improper, that he was

sorry for the incident and that it had interrupted

his conversation with me and his plans-for which

he was regretful .

The two gentlemen th en departed, having in -

vited me to come to Washington to meet with some

additional new personnel of the Commission for

the purpose of discussing with such personnel means

by which the purposes of the Commission in the

regulating of the Royalty Business could best be

attained . We set a date for such meeting within

a few days following .

When I arrived at the offices of the Commission

in Washington, I felt no longer the ease of congenial

atmosphere which always previously had character-

ized the place. I was received with an air of for-

mality (a girl secretary or receptionist directing

me to an outsideish-like small office, where I sat




on a h ard bench for a seemingly inte rminably long

period) . Finally, I was ushered through a door and

a passage in to a small room which, on ent erin g, I

perceived to be fa irly well filled with personag es

who somewhat stiffly acknowledged my introduc-

tion to them .

Dr. Perrine was present as was also the Mr. Flynnwho had visited me in New York. Among others,

I met Commissioner Landis, of the Commission,

and a Mr. John J. Burns, General Counsel of the

Commissio n, who sat, authorit atively, at the big

desk, centered in the room and surrounded by chairs

which the others present occupied .

I had not understood that the meeting was to be

of the nature of a formal hearing, but, nevertheless,

a court st enog rapher was called and an atmosphere

that should have been lighten ed by so many brigh t

young faces presen t, became stilted with enf orced

formality as Mr . Burns, a young I rishman with a

decided Harvard accent began to speak for the bene-

fit of the record!

At the outset of his remarks, Mr . Burns alleviated,

in some small degree, the tension which I had begun

to feel at the stiff and unnatural setting that had

been provided. He stated that he wanted me to

understand that it was now the practice of the

Commission to make a record of all conferences



New Deal Policeman 1 0 1

but that the Commission had no complaint what-

soever against me and was not holding t he meeting

for any such purpose. On the other hand, Mr .

Burns complimented me by advising me that the

Commission regarded me as heading the "premier

organization" of its kind, and they wanted to solicit

my cooperation to aid the Commission in what they

all recognized as a difficult problem in the regulation

of the business which I sponsored, since such busi-

ness was somewhat technical in nature . He stated

that t he Commission could benefit if i t could have

the assistance and cooperation of myself and my en-

tire organization .

Mr. Burns, explaining the necessity for his imme-diate departure, thereupon arose and left the room .

On his leaving , Mr . Flynn, who had sat perfectly

quiet but watching me closely, immediately took

Mr. Burns' seat at the desk and, once again, with-out even any polite deference to the thoughts just

expressed by Mr. Burns, began a vigorous and ob-

viously hostile, almost brutal style of questioning

which plainly indicated an antagonism toward me

and my business. He drove hard at field costs,

stressed the urgent need to be supplied with infor-

mation regarding my profits in my business, de-

manded, in the court-room style of a prosecuting

attor ney of some homicide bureau, to be informed




as to my abilities to assess values of oil properties,

insi sted upon being supplied, and in quick or der,

with the names and addresses of my clients a nd, in

general, opened what an up-to-date Chinaman

might have regarded as hostilities in an undeclared

war .

Dr Perrine arose and protested the treatment to

which I was being subjected . He stated that I was

an individual of wide experience in oil field buying,

that I was a man of reputation so far as my abilities

to judge oil property values was con cerned, that

he objected to a line of questioning about the

profits which were made in business, and that, as

he considered it an honor to know me and my or-

gani zation, he would be embarrassed to remain an y

longer in t he room . Dr. Perrine t hereupon strode

from the room. I promised to supply Mr . Flynn

with the information he desired and the meeting

was concluded .

On returning t o my New York of fice, I start ed

the work of accumulating the data demanded by

Mr. Flynn and notifi ed the Commissi on that t he

material would be forwarded at the earliest possible

moment. My extreme bewilderment, the refo re, can

be . imagin ed when, only a few days befor e Ch rist -

mas, I received a telegraphic not ice from the Gen-

eral Counsel of the Commission, the young Mr.



New Deal Policeman 1 0 3

Burns, summoning me to be present at a hearing

to be held at the New York office of the Commis-

sion on December 26th, the day after Christmas,

for the announced purpose of conducting an in-

vestigation into my personal business activities!



CHAPTER IX

Let the Seller Beware !

The wrath of the American Government

on the warpath a gai nst an y parti cular individual,

is something with which to cope . When orders "to

get a man" originate at the top and go down the

line t hrough all the co gs o f go vernmental machin-

ery, there is a force, a power, an influence let loose

that almost baffles opposition . The only thing tha t

can successfully withstand it is the might of truth,

ably and, of course, expensively presented, and sup-

ported by those fundamental principles of the

American Governmental system which still stand

as mighty bulwarks agai nst tyrann ical abuses of

power to the detriment of individual freedom in

this country .

If there is any great weakness in the American

Democracy, such lies in the idealism of it . For con-

stitutional government in this country is built upon

principles o f ho nor, sometimes t o be subverted by

the acts of man .

104



Le t th e Seller Beware! 105

The acts of government which fall in any cate-

gory other than that of honor are not the legitimate

acts of American Go vernment but rather tho se of

"little men dress ed in brief autho rity" who, by

some quirk of fate, find themselves within the gov-

ernmental machinery and clothed with a power they

know not how to wield. And such acts eventually

will run afoul of those protective provisions of our

government which guarantee to us, in the end, that

freedom which makes us admire the principles, re-

spect the majesty and love with patriotic fervor

the justice of our g overnment .

And just so far as our government is a govern-

ment of laws, based upon the highest principles of

honor written in the Charter of our very existence,

the Constitution of the United States, to that exact

degree it is not a government of men, whose a cts

may be motivated by all the influences, great and

small, that sway human emotions and preju-

dices .

The long two and one-half years of struggle for

everything I hold dear in this world, into which I

was thrown by the a ctio n anno unced by the t ele-

gram I received from the Securities and Exchange

Commission, was a struggle, proved by the record,

not against the legitimate acts of my government,

not in violation of any of the valid laws of the land,




but again st the unwise ac ts of unwise of ficialdom,

an officialdom which, in the celebrated words of

the Supreme Court o f the United State s in it s de-

cision later handed down in my own case found

"no support in right principle, or in law . It is whol-

ly unreasonable and arbitrary . It violates the cardi-

nal precept upon which the Constitutional safe-

guards of personal liberty ultimately rest-that this

shall be a government of law-because to the precise

extent that the mere will of an official or an official

body is permitted to take the place of allowable

official discretion or to supplant the standing law

as a rule of human conduct, the Government ceases

to be one of law and becomes an autocr acy . "

Knowing that I ever had been zealous in directing

my business, to the best of my ability, along scrupu-

lous lines of conduct with due regard always to

every legal requir ement, having in mind my oft-re-

iterated expressions of willingness to abide by what-

ever rules the Commission might make with regard

to my busines s, recalling my pleasant relationship

with the Commission and their complimentary at-

titude and their assurances to me, I was greatly

puzzled at the definitely hostile attitude of their

new lawyer, Flynn, as well as the launch ing of the

investigation of my business activities. I telephoned

Mr. Burns, the general counsel, in an effort t o



Let the Seller Beware! 1 07

l e a r n t h e r e a s o n s f o r t h e o b v i o u s s h i f t i n t h e C o m -

mission's attitude, but met with a cold, non-com-

mittal, and hostile reception that did me no good .

I realized that somebody in the government was

determined to cause the machinery of government

t o b e t u r n e d a g a i n s t m e , a l t h o u g h , a t f i r s t , I c o u l d

not sense the real source of my trouble . I hired

l e g a l s e r v i c e s , s p e n t a m i s e r a b l e C h r i s t m a s i n t r y i n g

to conceal my worry and anxiety from my family

and my friends, and awaited the morning of the

26th with puzzled concern .

T h e h e a r i n g t h a t s t a r t e d ; its method of conduct ;

the indignities to which I was subjected, in spite

o f m y r i g h t s a s a c i t i z e n ; and the knowledge gained

a s t o t h e h i g h s o u r c e o f o r i g i n a t i o n o f t h e c a s e w h i c h

had been launched-all contributed, along with the

s e q u e n c e o f e v e n t s t h a t f o l l o w e d , t o a l o n g a n d b i t -

t e r s t r u g g l e f o r m y i n d i v i d u a l f r e e d o m , m y l i b e r t y ,

my very existence! Eventual victory for me-cost-

ly beyond a measure never to be realized-came in

t w o g r e a t l e g a l a c t i o n s : o n e c u l m i n a t i n g i n a f i n a l

decision of the United States Supreme Court and

o n e e n d i n g i n t h e f i n a l v e r d i c t o f a j u r y o f t w e l v e

men of my peers . In the Supreme Court's own

words, my victory proves that in America "arbi-

trary power and the rule of the Constitution can-

not both exist. They are antagonistic and incom-




patible forces ; and one or the other must of ne-

cessity perish whenever they are brought into c on-

f l i c t ." That ruling alone is so basically important to

the safeguarding of freedom for individual citizens

as ag ainst the tyrannical acts and despotic power

of usurpers in government in this country, that the

sacrifice made is willingly laid down .

Arriving at the offices of the Commission at 120

Broadway, with my counsel, Mr. George S . Leisure,

I found the Commission r epresented in its action

agai nst me by their new lawyer, the hostile, young

Mr. Flynn, supported by a staff of assistants .

I was informed by another lawyer of the Com-

mission' s staff , who acted as the judge, or tria l

examiner, that the investigation was to be con-

ducted by authority of an "order" of the Securities

and Exchange Commission. At th e very outset I

asked to be apprised of the nature of the complaint

which I was advised, for the first time, the Commis-

sion had against me .

Strange as it may seem, the Securities and Ex-

change Commission in sisted upon conducting its in-

vestigation o f me, but refused to advise me of th e

nature of its complaint, if any of such it had . I

desired to know, of course, what it was I sh ould

defend myself against and I therefore said : "This be-

ing the first time that I have heard from the Com-



Let the Seller Beware! 109

mission th at the re was any complaint whats oever

lodged against any of my operations, I do not know

whether I am within my rights to a sk the nature

of the complaint . . . I am not aware of any com-

plaint . I do not know the nature of it . I would

ask you to let me know what t hat i s . . . . I appear

to have been summoned here to g ive you inf orma-

tion, and I would think-my instinct would tell me,

at least, that I should be apprised of the nature of

the c omplaint . "

But the trial examiner advised me that he himself

didn't know what the complaint was! He said, "As

to the nature of that complaint, I am not advised .

I do not know what the information is!"

I then asked, "What is the nature of the viola-

tion alleged or otherwise?" The trial examiner an-

swered, "That I am not informed of, other than

what is stated in the order . I would not be informed

as the Trial Examiner!"

I therefore was compelled to subject myself to a

searching, brutal and hostile investigation of many

complicated aspects of my private and personal

business affairs without knowing of any charge

against me except that the Commission had "or-

dered" the investigation. The Supreme Court later,

in my own cas e, condemned "fish ing expedition s"

and the Commission, saying : "The Citizen when




interrogated about his private affairs, has a right

before ans wering to know why the inquiry is made ;

and if the purpose disclosed is not a legitimate one

he may not be compelled to answer." The Court

further stated that, "An investigation not based

upon specified grounds is quite as objectionable as a

search warrant not based upon specific statements

of fact . Such an investigation or such a search, is

unlawful in its inception . "

I was handed, at this first appearance before the

trial examiner, a subpoena requiring the production

by me of voluminous books, files and records, among

which particularly was demanded the names and

addresses of my clients .

I knew of no reason why I should not make such

records available to the Commission and I thereupon

agre ed to a stipulation which permitted the Com-

mission "to examine" such records "at" my offic e

for my "convenience" (in not being compelled to

bring such voluminous material to the offices of the

Commission) . The st ipulatio n, which was sig ned

by counsel of both parties, specifically stated the

examination of my books and recor ds was to t ake

place "at" my office-no provision at all being in-

corporated for their removal .

There followed an examination at my offices of

books and records, such examination being con-



Let the Seller Beware! 1 1 1

ducted by one William H . Rabell, Assistant Chief

Investigating Accountant for the C ommission, un-

der the immediate and personal direction of Flynn .

Five or six accountants worked in my offices under

Rabell's direction, the entire procedure, of course,

completely demoralizing and disorganizing my own

office staff, and disrupting my business operations

as well .

The names and addresses of my clientele were

obtained by Flynn and the destruction of my stand-

ing in my business started in as deliberate an at-

tempt to destroy and to ruin as possi bly could be

put into motion. Telegrams were sent promiscu-

ously to a satisfied clientele to shock, to warn, to

shatter confidence. The following words, tele-

graphed to my uncomplaining clients, was their first

notice that something was wrong :

"Please arrange to be at office of the Securities

and Exchange Commission One Twenty Broadway

Room Nineteen Eleven New York City at yourearliest convenience this afternoon or tomorrow

and bring with you all your corre spondence litera-

ture and records relative to your purchase of roy-

alty trust certificates from J. Edward Jones .

Securities and Exchange Commission

By John L. Flynn . "




Interviews with the clients followed, at which

Flynn made in sinuations and categori cal statements

to create apprehension concerning the safety of the

investments which had been made with me . He

even dictated his own version of complaints he

wished to be made, following his talks with my

clientele, submitting such to the clients in an en-

deavor to have the complaints signed . Refusal to

sign such dictat ed complaints was given by several

of my clients, but others, influenced as they were

by an officer of the government, and frightened, of

course, signed as directed .

Some of my clients who signed the complaints

dictated by Flynn, late r came to me and told me

they had signed such affidavits because Flynn had

frightened them concerning the soundness of their

investments a nd had told them that if they would

sign the c omplaints he would have their money re-

turned to them. Numerous statements along this

line were made to me and I possess evidence to that

effect .

A parti cularly insidious situatio n which s eemed

deliberately desig ned to take from me the business

which, through long years of e ffor t, I had estab-

lished as my own, developed almost immediat ely on

the tak ing from my office of the confidential list

of my valued clientele . Those client s thereupon



Let the Seller Beware! 1 1 3

began to be solicited by at least three concerns, of

new and unknown standing, who set themselves up

as my "competito rs . "

I have affidavits from clients, who, on interview-

ing one concern which, in some manner, became

possessed of the names of my clients, were advised

by the head of that concern, one Mr. Bush (who

later was put into jail by the Attorney General of

the State of New York) that the Securities and

Exchange Commission had "pulled a van" up to

my office door and had taken all my books and

records from me. He slandered me and my busi-

ness, referring cons tantly to the Commission' s ac-

tion a gainst me, and finally telephoned one Oster-

weil, of the Securities Commission' s staff, with

whom he conversed on most cordial basis and to

whom he addressed a letter of introduction, which

he gave to the clients who were present, asking

them to go down to the Commission and to file a

complaint against me. I have evidence of this mat-

ter, including photostatic copies of the letters of

introduction given . I was later advised, and by a

member of the Commissio n's own staff (as will be

revealed herein), that Osterweil passed out thenames and addresses of my valued clients to persons

who thereupon circularized them for attempted

sales of other offerings .



114 "And So-They Indicted Mel"

The examinatio n cont inued "at" my offi ce in ac -

cordance with the written stipulation until on Sat-

urday, January 5, 1935 . On this day, at about 2 :30

in the afternoon, I returned to my office from lunch-

eon, to find strange men, under the direction of

Rabell, carrying armloads of my books and re-

cords, including f iles of cor respondence, from my

office .

With in dignatio n and emphasis, I prote sted this

action to Rabell, calling his attention to the pro-

visions of the stipulation to the effect that the ex-

amination was to be conducted "at" my office and

stating that I objected to the seizure and removal

of my records, insisting that such action consti-

tuted violations of my constitutional rights. Myobjecti ons, however, met with an attitude of scorn

on the part of Rabell, who scoffed at my statements,

threatened me with arrest in case I interfered with

"Federal men," and refused to cease the seizure and

removal of my books, papers and files .

These records were taken to the Commission's

o f f i c e s a t 120 Broadway, late r indeed, to be removed

to Washington, D. C., and not to be returned to my

offices unt il the following March 11th .

The hearings at the Commission's offices contin-

ued throughout the greater part of the month of

January. I spent many days in giving testimony,



Let the Seller Bewarel 1 1 5

confronted by an irate and bellicose Mr . Flynn, who,

at all times, employed a brutal method, questioning

me as if I were a convicted horse thief .

As this thing proceeded I was naturally very

much perturbed and distracted . I could not un-

derstand why "the investigation" should have been

directed against me and I accordingly dispatched to

Washington, one of my counsel, a gentleman of

eminent standing, and one of my regular office

staff, a man who, prior to his coming with my

organization, had done duty in the intelligence ser-

vice of the State Department . I instructed both of

the gentlemen to ascertain, if possible, the reason

for the attack against me .

To my great amazement, I was advised that Mr .

Ickes, following my request to the President for his

removal, had instructed the head of the Secret Ser-

vice of the Interior Department, one Mr . Glavis,

to obtain information con cerning my business ac -

tivities and to supply such to the Securities and

Exchange Commission. I learn ed, from the s ame

source, that Mr . Glavis had communicated with a

Mr. Montgomery, then with th e Commissi on, con-

cerning ce rtain information about our operations

which Glavis had obtain ed through the tapping of

the telephone wires of my New York office!

And, what hurt me more, I was advised-auth or-




itatively, from an unimpeachable source-(later,

indeed to be con firmed in a stat ement by a member

of the Securities and Exchange Commission' s staff-

as will be noted herein) that a member of the Presi-

dential Secre tari at had gone fr om the White House

to the Securities and Exchange Commission with

the request that the Commission "get a ca se" on

me and that i t "make i t a cin ch!"

Young Mr. Flynn, the new legal addition to the

Commission's talent was, I also learned, the nephew

of Mr. E d Flynn, Democrati c leader of New York

City's great Bronx and probably the President's clos-

est political friend and confidante . Mr. Flynn was

assigned to t he Commission and his very first job

was the "J. Edward Jones Case . "

The Hon. Bainbridge Colby, former Secret ary

of State under President Wilson, and an old ac-

quaintance of mine, went before the Commission

at Washington in my behalf, and obtained from

Mr. Burns, the General Counsel, an oral stipulationand agreement that for an d in consideration of my

going before the Commission and cooperating, I

would be given the privilege, following the conclu-

sion of the presentation by Mr . Flynn, of present-

ing refutation in my own defense. I, therefore,

even in the face of the forcible seizure of my books

and records, continued with the hearings which



Le t th e Seller Beware) 1 1 7

did not conclude with Flynn's presenta tion until

January 23rd, 1935 .

In spite of the agreement had with my counsel,

Mr. Colby, and although I had proceeded in theunderstanding arrived at by him with the General

Counse l, the Commissi on ref used to permit of suf-

ficient time for the present ation by me of my side

of the case, or to call witnesses in my behalf . The

Commission, on a Saturday afternoon, with rain

pouring, suddenly closed its side of the case without

any warning having been given prior to that day,

and, in such circumstances, catching us, of course,

without any witnesses present .

My counsel for the hea ring, Mr . George S . Lei-

sure, asked for time to call a few witnesses-petro-

leum engineers-to testify regarding values of" oil

properties in Oklahoma . The hearing however, was

adjourned, subject to call at t he will of the Com-

mission, which never reopened it again . The official

sten ogra pher recorded the following : "Whereupon,

on January 23, 1935, at 3 :2 0 P.M. , the hearing

was adjourned subject to furt her no tice of res ump-

tion ." And to this day no further notice has been

given of any resumption of the hearings thus closed .

Throughout the hearing, on numerous occasions,

as the record will show, the trial examiner repeat-

edly promised me opportuni ty to bring out c erta in




facts on "cross-examinat ion . " The record also

shows ho wever, tha t although I ha d fully complied

with their wishes, I was refused that opportunity .

In addition to the fact that the Commission, in

spite of their agreement with Mr . Bain bridge Colby

and the promises made on the reco rd by the trial

examiner himself, denied me th e privilege of pre-

senting my defense and to refute the allegations

made, a thing was done in the conduct of the inves-

tiga tion o f my books and records that , because of

subsequent happening s, is worthy of special men-

tion .

In the words of Rabell himself, later to be quoted

in a following ch apter concerning a most extra-

ordinary episode, Flynn ordered Rabell to "chop

off" my books at a certain date, December 27, before

final entries had been made by my Auditing De-

partment, and to ignore information at hand in

my files, in order to "frame" a case again st me by

charging an untrue state of affairs in my business .

Following the c onclusion of the formal hearings

by the Commission, on January 23rd, Flynn and

Rabell, with an as sist ant by the name of Bouche t,

rushed the preparation of a formal affidavit to be

used as the basis of a complaint again st me. An

affidavit was prepared, covering various points

which Flynn desired be made, and both Rabell and



Let the Seller Beware! 119

Bouchet, as accountants for the Commission, were

asked by Flynn to sig n it . Bouchet later testified

under oath that he refused to sign th e affidavit,

even in fac e of urg ing s by Flynn, who carri ed the

argument to Washington, D . C . Bouchet based his

refusal on the s tated grounds that he did not be-

lieve the affidavit could be proved . Rabell, however,

on Bouchet's refusal, swore to and signed the affi-

davit which had been prepared and Mr . Flynn then

and there had his "case!"

The a ffidavit of R abell was made a supporti ng

voucher for a complaint which Flynn and the t rial

examiner-the "Judge"-prepared against me . The

General Counsel of the Commission came down to

New York from Washington, and proceedings were

rushed to file charges against me as soon as possible

and before I could think of any defense prepara-

tions .

In such circumstances, and on advise of counsel,

I consented to a temporary injunction of very

strange nature. The injunction did no more than

restr ain me from acts already forbidden all per-

sons by the laws themselves . It, for instance, forbade

using the mails and the facilities of interstate com-

merce in any scheme to defraud . It forbade, in ef-

fect, the selling of any securities in interstate com-

merce unless there was "in effect a reg istration




statement as to such securi ties," provided, how-

ever, that "such registration statement is required"

by the Securities Act .

As I int ended to do none of t he thing s outlined

in the order, and as I had no opportuni ty to pre-

sent a defense a t that t ime, I consent ed to a tem-

porary order, only to r ealize that much was to be

made of the c ase by the r oute o f newspaper publi-

city, and by speeches and "statements" on the part

of members of the Commission's staff who felt called

upon to make very damaging remarks about me.

For my part, to inform my clientele and the pub-

lic of the background of the action, I published the

following advertisement in prominent New York,

Boston and Oklahoma newspapers :

An Open Letter

To My Clientele

and the General Public

During the past year and a half it has fallen to

my lot to oppose Secretary Ickes in his oil policy . In

this opposition I have memorialized Congress .and

have appeared before various Congressional Com-mittees in presenting factual information whichcontroverted the position which Ick es sponsored .

By such action, I have incurred his animosity .

Although my attit ude in the petroleum contr o-

versy has been displayed in open and public oppo-



Let the Seller Bewarel 1 2 1

sition to the Ickes oil policy-which only recently

has been condemned by Supreme Court decision-Ilately have been subjected to secret and underhanded

practices desig ned, apparently, to damage my repu-

tation a nd pursued in a way to cause the ruination

of my private busine ss .

In November, 1934, I respectfully asked the

President of the Unite d State s to remove Ickes as

Oil Administrator-citing as rea sons, among other

things, the misrepresentation of oil facts by Ickes

before Congress and to the press in order to induce

the passage of oil legislation practically giving dic-

tatorship powers to him for the absolute control of

the petroleum industry . I have been advised that

Ickes instructed Mr . Glavis, head of the secret ser-

vice of the Interior Department, to "go out andbuild up a cas e ag ains t J . Edward Jones." I alsohave been informed that within one week from the

date of my letter to the President the telephone

wires to my office in New York as well as to myhome in Scarsdale were tapped. Any such lowpractice I resent with all the emphasis of patriotic

citizenship .

Publicity in dozens of papers throughout the

United States has been to the effect that Ickes has

besought the Securities and Exchange Commission

to "turn on the he at" in my personal direc tion . I

am reliably informed he has stated that "I will put

J. Edward Jones in cold stor age and keep him there

till the next Ice Age ." I understand that Ickesappealed, through Glavis, to the Securities and




Exchange Commission for action against me .

Following the se threats and Ickes' direction t o

Glavis, the Securities and Exchange Commissionhas insti tuted an investigati on of my business ac-

t i v i t i e s . On the flimsy ground of an alleged "corn-

plaint"-the nature of which the Commission re-

fused to divulge-I have been subjected, for more

than thr ee weeks, to an e xhaustive examination of

the books, records and files of my offices and even

have suffered the indignity of having vital files and

record books take n from my offices . I have been

forced to reveal the names and addresses of my cli-

ents, to whom the Commission ha s sent telegrams

and letters which have grossly reflected upon me

and which tend to shat ter the confidence of a sub-

stantial clientele built up from fifteen years of hon-

est effort from my present address . I am threat-

ened with all manner of court a ction and have been

denied an opportunity of putting on the record mat-

ters of refutation, explanation or correction .

I have attempted to cooperate both with theFederal Trade Commission and with the Securities

and Exchange Commission and am willing and de-sirous of following scrupulously any rules which

they may promulgate. My business operati ons are

conducted to the best of my ability in that direc-

tion . I have had a satisfied clientele, no one of whom

was making complaint to me. If any complaintor charg e again st me does exist, I desire to know

what it is so that I can defend myself. All my per-

sonal responsibility is behind my business practices .



Let the Seller Beware! 12 3

In the present instance, I h ave had no opportunity

even to learn what "complaint" exists-therefore,

no opportuni ty for defens e . I am forced to subject

myself, however, to an "Ickes I nquisition" which I

feel is deliberately directed toward the destruction

of the business which over a period of many years

I have built with painstaking care and effort .

Congress created the Securities and ExchangeCommission and gave it wide powers for construc-

tive purpose. It seems now to have been made aweapon of a high governmental official for the de-

struction o f an individual who dared oppose that

o f f i c i a l .

The J. Edward Jones Organization brands such

practices as representative of a despotic tyranny

dangerously threatening to the very fibre of our

governmental structure. The Organization willfight this tyranny in the genuine belief that in its

attempts to er adicate an evil from our government

it is performing a real public service . It will make

this figh t in the open regardless of con sequences .

It believes the best way to fig ht such underha nded

and low practices is to raise the curtain of secrecy

from them. Full details of this "grudge" fight will

be revealed in subsequent statements in this and in

other n ewspapers .

J. EDWARD JONES

New York Boston

342 Madison Ave. 50 Congress St .




The injunction order was signed on February 8th,

and, even befor e it fi nally had been decided upon,

Mr. Burns had telephoned the various New Yorknewspapers requesting them to come to the Securi-

ties and Exchange Commission offices f or an "im-

portant statement." Mr. Burns' "statement" gross-

ly reflected upon me and indulged in general repre-

sentations which had not th en and have never since

been proved.

The New Deal had started a ball rolling in my di-

rect ion, but the boomerang, even then, was on th e

way!



CHAPTER X

Mr. Flynn Goes to Town

Since the date of my letter to the Presi-

dent requesting the removal of Mr . Ickes as Ad-

ministrato r of the Petroleum Code, I had encoun-

tered personal opposition on the part of those con-

nected with the Government . This opposition

seemed to me a definite personal antagonism, a vin-

dictive spirit of pursuit . At my first and succeed-

ing meetin gs with young John L . Flynn, for exam-

ple, I had met with an attitude which, even before

I had any knowledge whatsoever that I was to be a

formal object of prosecutive purpose, impressed me

with the thought that Mr . Flynn felt the urgings

of some special commission to "get J. Edward

Jones." His bullying tactics in a so-called "fact-

finding" investigation that covered the minutest de-

tails of my every business activity since 1930, in-

cluded even the counting of pigs and chickens on

a Kentucky farm I had purcha sed as a home for my

father and mother . He went far i n the direction

125




of scorn and scoffing-even asking, on the official

record, whether I had any pigs or c hickens at my

offices at 342 Madison Avenue, New York .

Mr. R abell, who, under Flynn, was i n c harg e ofthe Commission's accountants at work in my of-

fice, paraded before me and my office person nel in

impolite and disrespectful manner . His peculiar

personal antagonism toward me was climaxed in

his bold and arbitrary attitude at the time of the

seizure a nd removal of my records .

And on the day of the consenting to and the

signing of the temporary injunction order, Mr.

Burns spurned to speak to me when we met .

Mr. Joseph P. Kennedy, Chairman of the Com-mission, speaking to the press in Chic ago, supple-

mented Mr. Burns' "important statement" to the

newspapers of N ew York, when he f elt called upon

to refer to the "J. Edward Jone s Expose . "

These people of the Securities and Exchange Com-

mission seemed to have a penchant for publicity

of a type th at would ruin both my business and my

personal standing and reputatio n .

But human nature is revealing . Success in per-

sonal effort, no matter what emotions may have

propelled such ac tio n, is very probable to res ult

in joy and exultation when the goal finally is

reached . It is difficult, however, for one to conceive



Mr. Flynn Goes to Town 12 7

of an ordinary functioning of the machinery of

our government resulting in emotional demonstra-

tions of it s officials over the discomfiture of an

individual, stung and hurt by government att ack .

Of course we may expect national delirium to

sweep officialdom as well as citizenry upon the

occasion of the surrender of the e nemy's armies,

an armisti ce, or what- not, but for of fici aldom to

"cut loose" on the k nock out of an individual citi -

zen is strange stuff, indeed!

But, Mr. Flynn, the special ambassadorial spear-

head of the New Deal attack upon me, gave way .

He had a big night on that day on which theinjunction order was agreed to and signed . He

celebrated. He apparently surrendered to a nat-

ural proclivity, and how he celebrated!

If anything is needed to reveal the personal feel-

ings behind the scenes in this battle, Mr . Flynn, in

his own way, and of his own kind, proceeded to

show i t .

He had learned that during the hea rings I had

taken a room at the Biltmore Hotel, across the

stre et from my offi ces which were, of course, oc-

cupied by Rabell and his men. At this room, my

attorneys and my special auditors worked on the

case as it proceeded .

On the night in question, numerous friends, my




attorneys, auditors, and members of my organiza-

tion were congregated in the Biltmore quarters,discussing with me the various aspects of the case .

During the course of th e evening we were gre at-

ly surprised and amused to see none other than

Mr. John L . Flynn, legal representative of the Se-

curities and Exchange Commission, come reeling

into the room, gloriously drunk, snort ing with the

stron g breath of much liquor, beaming with go od

nature and friendly to a boundless degree! He stag-

gered directly to me, threw his arms affectionately

about my neck, familiarly address ed me as "Ed,"

slapped me on the back and complimented me on

being "such a good fighter!"

Mr. Flynn's diction that evening wasn't as goodas it might h ave been, his enun ciat ion was just a

little bad as was also his pronunciation, but what

he lacked in his quality of speech was supplied by

loud tone and raucous manner. He really held the

interest of all those present .

I ho spitably asked my new socia l guest what I

could do for him and the answer was a clap on my

back and a shout for scotch and soda, "with a little

lemon peel, please . "

Mr. Flynn has large, fat, stubby fingers, and Ishall never forget how, as he drank scotch and

soda afte r sco tch and soda, he invariably, between



Mr. Flynn Goes to Town 129

gulps, stuck his finger into the glass and stirred his

mixture thoroughly, spinning it round and roundwith his big pudgy finger, a s he passed the evening .

As the hours wore on, to the gleeful amusement of

my other guests, the Securities and Exchange Com-

mission's celebrating counselor continued his liba-

tions to a point where his moods began to change .

From the good-natured hilarity of his entrance

he s lumped into an unfri endly and sullen quietude .

Picked up, then, by another libation, Mr. Flynn

gloated over what he had done to me, praised him-

self for his self-recognized abilities, boasted of his

previous experience as a prosecuting lawyer for the

Bronx Homicide Bureau, and, on further progress,

agai n professed the extreme pleasur e he had found

in meeting a "good fighter . "

Not until the "wee sma' hours " of the morni ng

did Mr. Flynn feel called upon to leave us . Uncere-

moniously, then, he arose and, like a sea c aptain

striding his deck in a heavy rolling sea, the Protector

of the Investor started, in anti-bee-line style, to the

door. An associate, Mr. H. Van Cor tlandt Fish,

who was presen t, arose, and in g entlemanly manner

began to assist Counselor to the door . Solicitous

concerning Flynn' s welfare, he asked the departing

guest not to hurry, whereupon Flynn pushed two

very large hands to the chest of Mr . Fish, who is




of medium stature, gave a lunging shove and ac-

tually sen t Mr . Fish somersaulting across the floor

plump into the fireplace, which, fo rtunat ely, was

not ablaze .

With this official demonstration of kind-hearted-

ness, the Securities and Exchang e Commission, as

there represe nted, paused only for a bleary eyed

survey of everybody prese nt, and passed on out o f

the room.

The celebration a nd the gloati ng, the crude ex-

hibition of personal satisfaction, the boasting, the

exultation of a vindictive spirit in the happy feel-

ing of a job of destruction well started, had been

demonstrated .



CHAPTER XI

New Deal's "Most Effective Weapon"

The power of the printed word is tre-

mendous. The New Deal Adminis trat ion, early in

its career, rightly appraised the value of publicity

and elaborate uses have been made of it to further

New Deal purposes .

Herbert Hoover in a discussion of th e moral

questions in public life involving intellectual hon-

esty in officials and in government, recently asked,

"Do you think the g overnment which en gages hun-

dreds of paid publicity agents daily and hourly to

eulogize its official acts, can hold the faith of the

citizen in what his g overnment says? Wit hon est

or sportsmanlike to a nswer the argument, protest

or appeal of the citizen by smearing him as the ene-

my of the people?"

One of the members of the Securities and Ex-

change Commission has stated publicity to be that

Commissi on's "most effective weapon ." But publi-

city designed to ruin the standing and reputation

1 3 1




of a citizen, without a fair and public trial on the

merits of any cont roversy between that citizen and

his government, is publicity that both imposes upon

the freedom of the press and the civil liberties of

the individual citizens as well .

Busine ss men of American s hould realize that it

is in the power of highly-placed officials to create

publicity by the simple and easy route of the issu-

ance o f "press releases," the making of speeches,

etc ., in a manner to kill absolutely a business or the

career of a business man. This can be done without

the trouble even of bringing out the truth at a

trial on the merits of any particular case . Certainly,

officials of the Securities and Exchange C ommis-

sion have resorted to publicity for what appears as

obvious purpose to damage i ndividual citizens in

the public esteem, realizing, apparently, the credu-

lity of the people on reading statements of govern-

mental officials quoted in the press .

There really seems to be nothing more authorita-

tive to the lay individual than a press quotation of

an official of the Federal Government . Ideas of such

an o fficial, by the route of publicity, may become

importa nt only because of the auth orit ative posi-

tion o f the individual who utters the m . Deprived

of official cognizance, the utterances might go un-

noticed as chattering Main Street gossip .



New Deal's "Most Effective Weapon" 133

Beveridge, for instance, in his magnificent "The

Li fe of John Marshall," point s out th at the ideas

contained in th e gre at Declaration of Independence

were not at all new or, original. The y had been ut-

tered many times and by many men before they

finally were immortalized by Jefferson when he

wrote the famous Declarat ion . Chie f Justic e Mar-

shall, himself, in as great a legal opinion as history

has recorded-that in Marbury vs. Madison, did

nothing more than restate tha t which hundreds of

men previously had declared .

Authoritative positions of speakers or writers

may lend importance to the subjects treated and

disarm the public of suspicions regarding the truth-

fulness of statements made . This being so, a dan-

ger to civil liberty arises when unfair advantage is

taken in the making by some official of adverse pub-

lic reference to reflect upon the business or stand-

ing of a particular individual .

An example of what I reg ard as gross unfairness,

is the statement released to the press by Mr . Burns,

Gener al Counsel of the Commission, on the day on

which the temporary injunctio n order was cons ent-

ed to . As I have previously stat ed, the princ ipal

newspapers of New York were invited to send re-

porters to his office for an "important statement . "

In his statement, he referred to "700% profit" which




he claimed I had made in my business operations .

He made no mention whatsoever of the fact that

no s uch profi ts h ad been made by me in my regular

business dealings but apparently based his unex-

plained reference on an instance wherein I had pur-

chas ed a lease on prospecti ve oil land, which had

been absolutely non-productive . When later, the

gamble of drilling having been taken, oil was struck,

I had naturally made handsome profit. This was

perfectly legitimate. It was a lucky strike made

in a speculative venture .

Mr. Burns, however, framed his "important state-ment" in a manne r calculated to imply that "700%

profit" might be considered the rule in my ordinary

business operations . This, of course, was not true .

Yet a statement made as a press release, coming, as

it did, from the Ge neral Counse l of the Federal

Securities and Exchange Commission, was news .

The publication of it, together with its implied

meaning, was, of cours e, very damaging to my in-

vestment busine ss . It na turally crea ted havoc and

destruction-as I think it was intended to do . Why,

I thought, was it necessary for thi s "Truth in Se-

curities" representative to imply, subtly, albeit ef-

fectively, such damaging untruth? Why should

this lawyer try his lawsuit in the newspapers? What

decision could the reading public give him, if not,




indeed, a "thumbs down" decision on J . Edward

Jones and his business? But the se young New Deal

academicians are, to a degree, bright and smart, and

logical deduction of the most elemental nature told

me that my destruction was the ultimate end of

this new vindictive purpose in our govern-

ment.

And then, Mr. Joseph P. Kennedy, Chairman of

the Commission, close friend of the President and

the man who, in the words of a member of the

Commission's own staff (later to be quoted in a

subsequent chapter) had given orders to "get a

case" on J. Edward Jones and to "make it a cinch,"

proved that he was alive to the very latest develop-

ments and availed himself of the facilities of publi-

city to damage me even further. In Chicago, on

the day following my first public brush with his

honor able agen cy, he made reference before press

reporters to the "J. Edward Jones Expose"-what-

ever that was-without defining the "expose" or

stating what it might be. The word "expose,"

however, carr ied its own obvious implication s and

it was, per se, damaging when used as Kennedy

used it .

The Commission's zealous Chairman even went

so far as to advise a client of mine, a friend of his

(according to the written word of the individual




in question), that my offic e had been closed and

that I was "not allowed to sell royalties any more . "

While exceedingly damaging, of course, to me and to

my business, neither o f these statements was true,

the injunction order to which I had consented hav-

ing done no such thing . The client, however,

alarmed by the advice given, brought legal action

against me for a return of the amounts , invested

with me.

Ther e were other "press releases" and "stat e-

ments" forthcoming from the Securities and Ex-

change Commission, all very damaging to me and

to my busines s . It is difficult for me to conceive

of any legitimate purpose to be served by such a

policy and the conclusion s eems inescapable that

the New Deal Administration resorts to publicity

(quoting again Mr . Hoover's words) to "answer the

argument . . . of the citizen by smearing him as an

enemy of the people ." I do know that neith er Mr .

Icke s nor any member of his staff ever answered,

in open debate, my argument reg arding t he prob-

lems of the petroleum industry .

The weeks following February 8th, 1935, wore

on, taking their t oll in the form of the ruinat ion

of my business an d the destructio n of my business

organization . Mr. Burns continued to inflict dam-

age by writing letters that greatly reflected upon



New Deal's "Most Effe ctive Weapon" 137

me, attempting apparen tly, as Kennedy had done,

to stir my clients to bring suit against me .

An illustration of what one must recogni ze as

the extreme to which the New Dealers were pre-

pared to go in their program to ruin me, is to be

found in Mr. Burns' resorting to the giving of of-

ficial advice to promote legal actions against me by

my clientele . One of my clients had written to

the Commission in an attempt to help me . Burns

replied, "It is my advice that you should take imme-

diate steps to get your money back from Jones,

if you are able . "

The c lient was most favorably inclined toward

me and was th oroug hly happy with the performance

of the investments he had made . He accordingly

handed Mr. Burns' letter to me .

On examining the records, we learned that my

client's investments-from December, 19 3 0, to Au-

gust, 1932-had been $21,870.00 . By July, 1935,

he had received a return of $22,808 .67 . The advice

of the General Counsel of the Securities and Ex-

change Commission, therefore, for the client to sue

me for "the return" of his money was ridiculous

-if not, indeed, thoroughly pernicious. Mr. Burns,

to give such advice over his signature and on the

stationery of the Securities and Exchange Commis-

sion, should be presumed to speak with the weight




of an authority supported by knowledge of the

facts . His advice, however, belied the t ruth and

it there fore follows that he must not have known

the facts .

But to give advice of such character without

being possessed with knowledge as to facts i s to

demonstrate irresponsibility! And this, to damage

my standing and reputation ; to stimulate additional

legal trouble for me ; to shatter the confidence of

my clientele ; to bring ruination of my business!

I forwarded copies of Burns' correspondence with

my client, along with extracts f rom the rec ords

revealing how shockingly wrong Burns had been,

to the United States District Attorney _ .in New

York City, calling upon that official for some action

to protect me, as a citizen, from such abuse . And

I received a letter from the District Attorney advis-

ing me that he had forwarded my correspondence

to the Securities and Exchange Commission in

Washingt on for action! That, of course, was the

last I hea rd of that one i tem! That was my pro-

tection!

Several weeks passed and the heads of my de-

partments agreed with me that an attempt on my

part to register our trust with the Commission

might now be received favorably by them . I ac-

cordingly went to Washington and sought a con-



New Deal's "Most Effe ctive Weapon" 139

ference with my old friend, Baldwin B . Bane, now

in charge of Registrations for the Commission .

Mr. Bane refused to see me until he ha d sum-moned to the room none other than the lawyer,

Mr. William Green, who had acted as trial exam-iner during my hearings before the Commission a nd

another member of the Commission' s staff .

In the presence of these three gentlemen I re-

vealed my purpose . I stated that the injunction

order, while restraining me from the committing

of no specific act, simply reiterated, in effect, the

law itself and also prohibited the sale of securities

which were unreg iste red, "provided they should be

registered ." I recalled my first efforts to register

my trust and my having been informed that the

trust had earn ed exemptions from registrati on . I

wanted bygon es, however, to be bygone s, and ask ed

whether the diffic ulties so far experie nced in my

controversyy with the Commission would preclude

my registering a new series of my trust .

Mr. Bane assur ed me, in a most co rdial manne r,that a new reg istr atio n by me would not a t all be

affected by the past controveries-that his registra-

tion section of the Commission was an entirely dif-

ferent se ction from the one tha t had done battle

against me, and urged me to file a registrat ion

statement .




I thereupon asked for a form which I might use

in filing and was told that the Commission had never

prepared any forms suitable for my trusts. Mr .

Bane, however, handed me a n o rdinary investment

trust form, telling me to use i t as best I could

and that if there were any changes required or any

deficiencies at all found in the registration state-

ment when completed, we could together "sit down

and work i t out . "

I infor med the g entlemen of the Commission of

my pleasure o n receiving such polite and courteous

cons ideratio n, assured them of my hope of working

constructively with them, took the registration

forms they had given me, and departed .

On reaching my New York office, I decided to

make application for registration of a Series of my

Trust and to submit it t o the Securities and Ex-

change Commission. I concluded that because of

the previous contr oversy it would be wise fo r me

to refrain personally from having anything what-

soever to do with the preparation and filing of such

a document. Accordingly, I arranged for such work

to be done by a thoroughly competent, able and

eminent member of the Oklahoma Bar-an oil law-

yer intimately familiar with the busine ss which I

sponsored-the Honorable E. J . Lundy, of Tulsa,

Oklahoma .



New Deal's "Most E$ective Weapon" 141

Mr. L undy, a former st ate legislator, was widelyknown as a highly respected, honorable member of

his profession, and, on his arrival in New York, I

assig ned to him the exclusive task o f meeting the

necessary requirements of the Commissio n in filing

my application for r egis trati on. He spent several

days in this work, during which time I scrupulously

avoided taking the slightest personal part in the

business at hand. Finally, on May 4, 193 5, MrLundy, acting in my behalf, formally filed with

the Commission at Washington, the application

which he, as my counsel, had prepared .

When, ordinarily, applications for registrations

are filed with the Securities and Exchange Commis-

sion, such applications are examined by the Com-

mission staff and if deficiencies in the papers are

discovered, the applicants are notified, within ten

days of filing, that deficiencies exist and oppor-

tunity thereupon is given the applicants to supply,

or to make good, such deficiencies . Registrations

become effective by law, twenty days following

their filing date, provided, of course, that no action

has been taken to deny this rule .

Reference may be made at this point to the as-

surance that previously had been given to me by

Mr. Baldwin B. Bane, of the Commissio n, prior to

the filing of my application for reg istration, to the




effe ct tha t if an y defic iency at all in my papers

were discovered by the Commission, I would be

given opportunity to "sit down and work it out . "

Such assurance accompanied Mr . Bane's cordial in-

vitation to me to apply for registration . I therefore

proceeded in full confidence th at I would be ac-

corded "fair treatment," and that my previous con-

troversy with the Commission would not mitigate

at all against such t reatment of me .

Mr. L undy having been given similar assuranc e,wrote me a lette r, after he had performed his ser-

vice in filing my registration statement, and advised

me that I could expect to r eceive notice fr om the

Commissio n within ten days of the date of filing

if any deficiencies were found to exist, and, if so,

I then, in accordance with established custom, would

be given opportunity to supply them .

As I have stated, my registration statement was

filed with the Commission under date of 4 May,

193 5 . Following the filing, the days passed and I

heard not a word from the Commission. One week

passed, the first ten days passed-and no notice, no

requests, no intelligence of any sort came from the

Washington agency regarding my registration . I

then presumed that Mr. Lundy had done a good

job and that th e Commission and I had good chance

to get along well together once again .




I congratulated Mr. Lundy on his accomplish-

ment and awaited, as the days came and went, the

expiration of the legal twenty day time limit after

which I might proceed with my business registered

with the SEC!

The last few days of the time limit soon came and

the Commission had not seen fit to notify me of any

deficiencies in my registration statement . The nine-

teenth, or last day before the registration became

effective on the twentieth, passed, and I advised my

organization, at the close of business on that day,

that the Commission had notified me of no require-

ments whatsoever, and that, therefore, we could,

on the morrow proceed with a registered issue .

After my office had closed on the nineteenth day,

however, and at a late hour, I received a telegram

from the Securities and Exchange Commission at

Washington, dated 5 :35 P.M . , May 23rd. The tele-

gram, sent to me and received after business hours

on that day, did not notify me of any deficiencies

or of any opportunity to correct or to amend the

statement which I had filed . Instead, my notifica-

tion from the "Truth in Securities" Commission

was one which stated, in substance, that it "ap-

peared" to the Commission that my registration

statement included "untrue statements of mate-

rial facts" and that it omitted to state "material facts




necessary to make the statements therein not mis-

leading. "

The telegram further informed me that the Com-

mission was going to hold an official hearing upon

the matter at its office in Washington, and advised

me that at the time of such hearing I might appear

and "show cause why a stop order should not be

issued suspending the effectiveness" of my regis-

tration statement!

A great splurge of publicity was released by the

Securities Commission, of course, and newspapers

carried stories to the effect that J. Edward Jones was

to be called upon the carpet to face a stop order

against his business because he had resorted to what

the Commission felt "appeared" to be "untrue"

and "misleading" statements. Numerous clients

and friends of mine began to look upon me as

though I were Some strange, outmoded "curio,"

hopelessly out of step with the smiling and confident

"happy days are here again" complex in Washing-

ton .

"Orders" to answer charges about "untrue and

misleading" statements in hearings held by our gov-

ernment for the announced purpose of "stop or-

dering" an investment business, have a bad and de-

structive effect upon an investment clientele, espe-

cially when pains are taken by governmental offi-




cials to create sensational publicity on the subject

before even a hearing is held on the merits of the

case. My business, consequently, suffered almost

total stagnation. Sales representatives began to re-

sign, heads of departments applied themselves to the

business of looking for new jobs, and Mr . John G .

Scattergood, my executive assistant, a splendid gen-

tleman of admirable character and reputation, ac-

tually became quite ill from the worry and distress

caused him by the publicity and notoriety which the

attacks of the Securities and Exchange Commission

attracted to our organization. Sales volume slumped

off practically to the vanishing point and my asso-

ciates advised me that, in face of the Securities

Commission's attacks and the attendant adverse

publicity which was being fed to the newspapers,

all business effort was almost futile .

Having in mind the honest purpose and able ef-

fort of the very competent Mr . Lundy, I was very

incensed at the fact that the Commission seemingly

had resorted to deliberate planning to impute to

me improper purpose in preparing the registration

statement ; and that they intended to give me no op-

portunity, as was ordinarily permitted, to meet any

requirement they might make regarding any defi-

ciency they may have felt had been disclosed . I

also resented what I considered cheap tactics in the




delay of my notice until the zero hour shown by

their telegram-5 :3 S P.M. of the nineteenth day .

The charge of "untrue" and "misleading" state-

ments, too, made so destructive of my business by

being used as material for sensational publicity-all

this impressed me with the conviction that I was

confronted with a powerful, deliberate attempt to

give vent to vindictive purpose in wreaking de-

struction of my business, my standing and a repu-

tation that had been built by fifteen years of hard

and honest effort .

Within a few days, I received a subpoena duces

tecum commanding me again to appear, on June18th, before Mr. William Green of the Commis-

sion's legal staff, at the office of the Commission at

Washington, D. C., and to bring with me numerous

books and voluminous records relating to my pri-

vate business-none of which, however, was related

to the trust that I was desirous of registering .

It appeared fairly obvious to me that I was being

summoned down to the throne of the Commission

for a real big publicity stunt-a proceeding which

the Supreme Court of the United States later con-

demned, in a decision in this very case, as a "fishing

expedition"-"an undertaking," said the Court,

"which uniformly has met with judicial condemna-

tion. "




I telegraphed instructions to Mr . Lundy to meet

me in Washington and made my own way there,

only to meet with a most extraordinary experience

with a Commission that, because of its tyrannical

abuses of power in an unlawful exercise of discre-

tion, seemed to me to be under the influence of

minds wholly succumbed to personal animosities .

The attitude which the Securities and Exchange

Commission was to demonstrate at the "affair"

which it had ordered, was later to get for it what

lawyers have described as the most severe castiga-

tion and stinging rebuke ever administered by the

Supreme Court of the United States to an agency

of the executive branch of our government .



CHAPTER XII

"Arbitrary Power" vs. "Rule of the

Constitution"

By arrangement, I met my counsel, Mr .

Lundy, in Washington, two days prior to the date

of the hearing, in order to have sufficient time to

go over the subject matter to be treated . Almost

immediately, on his arrival from Oklahoma, Mr .

Lundy unfortunately fell ill at his hotel, grew

steadily worse to the point where he required the

constant attention of a doctor and a nurse and

finally, on the day before the hearing, was com-

pelled to inform me of his inability to be present

as my counsel on the following day .

I became, naturally, quite worried at the prospect

of my being compelled to appear at the Commis-

sion's hearing without the presence and services of

the counsel who was intimately acquainted with

the registration statement which he, himself, had

prepared .

In such a state of mind, I received a "tip" on that

day which astonished me . A lawyer friend from

148



"Aribtrary Power" vs . "Rule o f the Constitution" 149

Boston who found himself in Washington com-

municated with me to the effect that he had just

left Mr. John Burns, General Counsel of the

Commission, and that, from what Burns had stated,

the hearing scheduled for next day was geared

to be a great publicity affair with the newsmen in-

vited. Furthermore, everything already had been

arranged for formal action to be taken by the Com-

mission to place a "stop order" against me . I was

advised of the absolute futility of any attempt on

my part to satisfy those who were to be in charge

of the hearing . The entire proceeding was to be a

"cut and dried" affair .

As my informant was a man who held my con-

fidence, I became greatly distressed to come to the

realization that, here again, the New Deal cards

seemed to be stacked against even a fair public hear-

ing for me . My thoughts went, in retrospect, to

the "chopping off" of my books as of that previous

December 27th prior to the month's-end entries

by my bookkeepers; the bullying tactics of Flynn ;

the forcible seizure and removal of my books and

records by Rabell .

"But," I thought, "what about that cordial in-

vitation to register my trust which had been ex-

tended to me by Mr. Bane? And his assurances of

fair play?"



1 5 0 "And So-They Indicted Me!"

As I pondered these apparently conflicting

thoughts, one thing became increasingly clearer to

me. I decided that my attempts toward coopera-tion with the Commission were not only futile, but

also, if continued, most certainly would result in

the ruination of my business standing and repu-

tation. I therefore decided to withdraw my ap-

plication for registration and to abandon my hope

of offering my securities to my clientele . I accord-

ingly penned the following letter to the Commis-

sion and telephoned to one of my New York coun-

sel, Mr . H . I. Fischbach, instructing him to fly to

Washington that evening in order to be present on

the morrow to present my withdrawal to the Com-

mission .

Mr. Chairman, Representatives of the HonorableCommission:-

I caused to be filed with your honorable selves,

under date of 4 May, 1 9 3 S , an application for the

registration of Participation Trust Certificates of

the J . Edward Jones Royalty Trust, Series "M" .

I filed this application in genuine purpose directed

toward cooperation with the Commission in its

commendable endeavors to secure registrations of

important offerings of Securities to the public . I

did this, although I previously had understood that

the J. Edward Jones Royalty Trust had earned



"Aribtrary Power" vs. "Rule o f the Constitution" 151

exemptions established by rules and regulations

promulgated by the Commission and that therefore

registration of the Trust was not required .

In the preparation of the statement which was

filed, I procured the valued services of an honorable

member of the Bar, one of eminent standing and

esteem among a substantial profession and in a noted

community, the honorable E . J . Lundy, of Okla-homa. Judge Lundy wrote the indenture creatingthe Trust, prepared all the statements made in the

registration papers in question, consulted with me

after their preparation and advised me that they

conformed, in general plan, to the Indentures which

have created previous series of the J . Edward Jones

Royalty Trust. I approved judge Lundy's work andexecuted the documents .

Preliminary to these preparations, I had visited

your offices here, seeking a modus operandi for the

registration of my trust . In conference, I was ad-

vised, in the presence of the esteemed Chairman

here, Mr . Green, that you had no forms applicable

to the registration of a Trust similar to mine but

that I could employ your regular Investment Trust

form (some of which then were handed to me for

that purpose) and that I should fill out those forms

as best I could, whereupon they would be accepted

and, if after study any additional information or

data were required by you, I would be given oppor-

tunity to supply the deficiencies . I was advised that

we could "sit down and work it out . "

Although I believe the Commission does, in fact,




notify registrants of deficiencies in filings within

ten or twelve days after filing has been made, and

in view of the conference I had had I expected

to be notified before the expiration of the 20 dayperiod allowed by law, I was surprised to receive my

notification by telegram after business hours on the

nineteenth day, the telegram being dated at 5 : 3 5

P.M. of that day .

Instead of being allowed an opportunity, as

others have enjoyed, to "sit down and work it out"

with you, my notification advised me of "untrue

statements of material facts" and of omissions of

"material facts necessary to make the statements

therein not misleading," and peremptorily set a date

at which I might appear before you in formal hear-

ing to "show cause why a stop order should not be

issued" suspending the effectiveness of my registra-

tion statement .

I immediately communicated with judge Lundy,

whereupon close study was made of copies of the

registration papers and to this day neither of us

can discern, by any possible stretch of intelligent

imagination, any untrue or misleading statement

contained therein . Nevertheless, you have seen fit

to issue a press release giving widespread publicity

to such references as "untrue" and "misleading"

statements which, to my mind, places me severely at

damage, in that my Government is, by such release

in effect notifying the public and, of course, my

own clientele, that J . Edward Jones is likely to have

a "stop order" placed against his Trust .




I believe such practice is subversive of honorable

intentions in business, damaging to constructive

purpose, undermining of the confidence of business

men in Governmental attempts at business regula-

tion, and not capable of serving J . Edward Jones

well in the circumstances .

I, therefore, with regret and with distressful feel-

ings but with respect toward you, now formally

withdraw my application for registration of the

Participation Trust Certificates of the J. EdwardJones Royalty Trust, Series "M" I do this because

of my fear that the business which I founded fif-

teen years ago and to which I have dedicated the

whole of my business career, will be made the object

of continued sabotage .

J . EDWARDJONES

Washington, D. C .

June 18, 1935.

Mr. Fischbach duly arrived in Washington and,after learning from me the developments in the

case, approved my plan for the withdrawal of my

registration statement . He advised me against ap-

pearing personally at the offices of the Commission,

stating that he wished me to avoid the publicity that

he feared would be staged by the Commission. He

advised me, further, that he, as my counsel, could

properly withdraw my application for registra-

tion, whereupon the entire proceedings, by vir-




tue of such withdrawal, must, perforce, cease .

On Mr. Fischbach's arrival at the hearing on thefollowing morning, he observed the presence of

several lawyers representing the Commission, in-

cluding a very serious Mr . Burns and a very sober

Mr. Flynn (my February ninth early morning Bilt-

more Hotel guest) . Strange as it may seem, although

the present hearing was in connection with an ap-

plication for the registration of an entirely new

Trust, Mr. Flynn had piled high on a table before

him, photostatic copies of my books and private

records which Rabell previously had seized and also

the transcripts of the previous hearing which, of

course, did not even make reference to the trust

that I now hoped to register . Present also, were

several representatives of the press-ready, appar-

ently by arrangement, to report the details of an

anticipated happening .

With such an obvious stage setting, my counsel,

following formal opening of the hearing, promptly

informed the Commission that he had a statement

from me which he desired to read into the record,

stating that he believed the statement would very

much affect the proceeding under way.

But Mr. Burns immediately objected to the read-

ing of my statement-even before he knew what

it was-stating that he suspected "very strongly"




that my statement was just a publicity "device" of

mine!

The examiner, Mr. Green, before permitting dis-

cussion concerning the request that my statement

be read into the record, took the document from

the hands of my counsel and read it carefully . He

then asked my counsel whether he wanted "to in-

sist upon the application to withdraw the registra-

tion statement . "

On Mr. Fischbach's answer in the affirmative the

Examiner asked what appeared to be a surprised

Mr. Burns, "What does the Commisison have to sayto that?" Burns called for a few minutes time "to

confer . "

Burns then, taking my statement with him, left

the room and went into conference with the Securi-

ties and Exchange Commissioners themselves who

conveniently were in session in an adjoining room .

Returning, after a short interval, the General

Counsel for the Commission advised the examiner

that the Commission, after considering the "prob-

lem," had determined that "they would not exer-

cise the discretion to permit a withdrawal of the

registration statement ." He further stated that he

would like to state for the record that the Com-

mission would "refuse to permit a registrant to go

right up to the guns of a stop order proceedings




and then seek to avoid it without establishing any

sound basis for such avoidance . "

Such a statement seemed to confirm our strong

suspicions that a stop-order really was the original

purpose of the Commission, which now seemed de-

sirous of kicking me out of the hearings into a

cauldron of adverse publicity instead of permitting

me a graceful exit by way of withdrawal .

My counsel, however, desirous of adverse char-

acterization on the record of a statement which-

although scrutinized by the Commission and its law-

yers-had not yet even been admitted of record,

said : "Before any comment can be properly made

on the record as to the soundness of the position

taken by the registrant I think the statement ought

to be in the record, and I ask permission of the

examiner to read it into the record ." But Mr. Burns

continued to insist that my statement be excluded

from the record, suggesting, instead, that it sim-

ply be "marked for identification ." The examiner,

of course, so ruled . My counsel, however, insisted

upon stating for the record the fact that I had

withdrawn my, registration statement .

In consideration of the wide diversity of the

views on this point held by the Commission and by

Mr. Fischbach, and particularly since the Supreme

Court of the United States later upheld the position




of my own counsel, the following colloquy which

ensued is of interest :

Mr . Fischbach : As counsel for J. Edward Jones,

the registrant, I wish to note on the record

the formal withdrawal by the registrant of-

Examiner Green : You mean request for withdrawal,

do you not?

Mr Fischbach : Well, I mean, Mr. Examiner,exactly what I said .

Examiner Green: You recognize, of course, that

you have no. power or authority to withdraw

a registration statement without the consent

of the Commission.

Mr. Fischbach : Our minds do not meet on the sub-

ject, Mr. Examiner, and I wish to note on the

record the formal withdrawal by the registrant

of the registration statement signed by the

registrant and filed under date of the 4th of

May, 1935, with the Securities and Exchange

Commission, identified with this proceeding as

file No . 2-1408, and I wish to state with re-

spect to the withdrawal of such registration

statement that there is no proceeding before

the Examiner .

Examiner Green: With regard to the application

of the registrant to withdraw his registration

statement, I direct his attention to rule 47

of the Commission which provides, amongother things :




`Any registration statement or amendment

thereto may be withdrawn upon the request

of the registrant if the Commission consents

thereto. '

In view of the rule and regulation of the Com-

mission, and the action of the Commission

heretofore taken on your application for with-

drawal, I will not permit a withdrawal, and

we will proceed .

Mr. Fischbach : May it be noted of record that fur-

ther proceedings to be had based on the regis-

tration statement, it is not my intention nor

the intention of my associate, Mr . Toomey, to

participate in any of the proceedings and that

we wish the record to show formally that al-

though we may be present at some part of the

proceeding, that our presence is that of spec-

tators .

Examiner Green : Has the Commission anything to

say?

Mr. Burns : In view of the ruling of the Examiner

I think comment is unnecessary .

Examiner Green : Very well . The record will show

that Mr. Jones is not now appearing by coun-

s e l .

The hearing was adjourned until June 27th.

While it proceeded, however, and before such ad-

journment, I sought relaxation by visiting Washing-

ton's very splendid zoo .



"Aribtrary Power" vs . "Rule of the Constitution" 159

I, for some time, had wanted to see the zoo, par-

ticularly because of the fact that considerable publi-

city had appeared in Washington newspapers re-

garding some interesting construction work done

there under the direction of Mr . Harold Loy Ickes

with public funds supplied him by Congress . I had

been intrigued by the story, then being narrated in

Washington, to the effect that the esteemed Interior

Secretary had accomplished what in those times

seemed to be an admirable three-fold purpose :

spending public money, putting men to work and

doing a charitable thing for the mountain goats,

herded within the confines of the capital city's zoo .

As the story ran, it seemed that there were no

mountains in Washington's zoo and that the moun-

tain goats resident in that urban center were with-

out their natural habitat . No record existed of any

protest of intelligence on the part of the mountain

goats but story again had it that sympahy had

been created in the minds of some of the economic

radicals of the New Deal whose brain-trusting was

being expanded to great limits in devising schemes

of all sorts which might hold promise for the spend-

ing of large sums of the people's money. But enough

of that-the people are not the goats, and the

Washington goats, being of the mountain variety,

must have their mountains somehow!




Should Mr. Ickes move a mountain and thereby

bring to the Zoo Goats a New Deal to prisoners?

No-but Mr. Ickes would "figure out" some an-swer to the perplexing problem . And Mr. Ickes did

so "figure." He decided to create a mountain.

Accordingly engineers, architects, brain-trusters,

contractors, professors, laborers, treasury check

writers-men of many trades were "put back to

work" to build a mountain in Washington's zoo

down by the corner of the place where the poor

mountain goats were wont to herd on the cruel

levels of the rockless terrain .

Out of this purpose there grew to fruition a huge

strange something that the disrespectful habitually

referred to as the "Ickes Monstrosity" but which

reasonable human intelligence was supposed to con-

clude was a perfectly good mountainous crag, wild

and real enough to appeal strongly to the natural

instincts of animals other than humans .

On completion of this New Deal fantasy, the

humans who had built it slipped quietly away from

the place, while the mountain goats were driven

back to it from other parts of the zoo whither they

had gone during construction . But the goats ex-

hibited great alarm and, in fear, fled the scene, ex-

hibiting little gratitude for the present which hard

earned public dollars had bought for them . All of




the herd, without exception, remained constantly

as far away from their New Deal home as high

fences would permit .

Finally, the guide who showed me the place said,

Mr. Ickes ordered some of his helpers to corner andto seize one of the goats and to take him, forcibly,

to the top of the new "mountain" so that, by pres-

ence enforced, the goat, might become acclimated

to the new whatever-the-goat-might-call-it . This

was done by the regularly employed of Mr . Ickes'

staff, and when the goat's legs actually were freed

on top of the ragged "cliff" which had been con-

structed, the poor thing, instead of bleating its

grateful thanks to the great White Father, sprang

in terrified and fearful manner from the very high-

est point straight away to the hard ground below,

breaking two of its legs and necessitating its 'liquid-

ation" by the merciful guns of Uncle Sam .

Such was the story, and my visit to the scene of

the experiment, which, by the way, was then devoid

of goats, would have provided pleasant relaxation

except for my reflections, compelled by the ludi-

crous sight, which were concerned with who finally

might become the real goats for all the great experi-

ments now under way by virtue of the new directing

of things from Washington . I, myself, at that very

moment, in a way, was being given treatment that




might be compared, figuratively, to that which had

cost the life of that poor citizen of the wilds of

Colorado.

I returned to my hotel still in a reflective mood,

and, as the day was oppressively hot, on meeting

Mr. Fischbach, I engaged a car to drive the distance

to New York .

When we reached the city in the early hours of

the following morning we were dumbfounded to

learn from the morning papers that the Securities

Commission again had scored by the use of its "most

effective weapon." A publicity release had accom-

plished another damaging purpose .

Headlines such as "J . Edward Jones eludes U . S .

Marshal" screamed a story about how I had man-

aged, in some way or other, to escape being served

with a subpoena to be present at the hearing which

the Commission had adjourned to the 27th. The

news, however, was effective in that it implied that

J . Edward Jones was "on the run" much in the

fashion of a western hi-jacker, guilty of robbery,

murder and other vicious crimes . The mere fact, of

course, that a process server was unable to find me

after the adjournment of the Commission's hearing

was not news of any particular moment . Its being

made public, colored with the strong implication

that I was eluding the United States Marshal who




might have been in mad pursuit, smacked of news

involving a thrilling case in which government au-

thorities were chasing a real criminal . The melo-

dramatic nature of such a release made news, of

course. Many of my clientele and even numerous

of my friends showed strange reactions to this start-

ling news story. Naturally, it was devastating in its

effects upon what still remained of my business

and caused great pain of embarrassment and worry

on the part of myself, my family and members of

my business organization .

At the earliest possible moment that morning, I

telephoned the New York office of the Securities

and Exchange Commission, advising them of my

innocence in having escaped, without knowing or

realizing it, subpoena service in Washington, and

expressing my willingness to accept such service at

any time at my New York office . An appointment

accordingly was made at an hour on that very day

when I could accept service and the subpoena was

duly served .

I immediately instructed counsel to proceed, as

soon as possible, in bringing legal action against the

Commission contesting the validity of their acts and

rulings in order to determine whether I had been

within my rights in taking the position I had taken,

through counsel, at the hearing at which I had at-




tempted to withdraw my registration statement .

Inasmuch as I felt that the Commission had exer-

cised tyrannical power in going far afield of its

proper legal province in heaping unwarranted abuse

upon me, I instructed counsel to follow the action

which I proposed to institute, to the highest court,

if necessary, in the establishment, once and for all

time, of the individual rights that had been denied

to me by the Commission .

But an event was to occur in the next few days

that was so startling in its revelations, so revolting

in its suggestions and implications, that the press

of the entire nation carried stories and editorials of

a scandal that struck deeply and close to the very

roots of the real cause of my trouble .



CHAPTER XIII

"Truth in Securities"

Within the next twenty-four hours, I re-

ceived a strange telephone call suggesting a most

extraordinary step for me to take. The call came

unexpectedly and, of course, entirely unsolicitedly,

from the wife of William H . Rabell, the Assistant

Chief Investigating Accountant who had assisted

Flynn in the hearing of the first action brought

against me by the Securities and Exchange Com-

mission . It was Rabell who, I felt, deliberately and

at Flynn's orders "framed" a case against me and

had seized, without any warrant or right, my books,

papers and private records and forcibly removed

them from my office .

Mrs. Rabell told me it was very important and

urgently necessary for me, in my own welfare, to

telephone her husband at a Washington address

that very evening at five o'clock. She gave me his

telephone number and asked me to make the call

from some telephone booth outside my office, re-

165




questing specifically that I avoid the use of my own

office telephones. Mrs. Rabell, in answer to a ques-

tion as to whether Mr . Rabell had favorable or un-

favorable news for me, at once assured me most

emphatically that the information I could receive

from her husband would be good and very favorable

from my point of view .

I accordingly did as requested and at five o'clock

heard Rabell's familiar voice at the Washington

end of the wire. He forthwith informed me that

he had been ordered by his superiors to "pull a

lousy trick" on me, that he was sorry to have been

compelled to participate in a "dirty persecution,"

that he desired to make amends for his part in the

affair, that he had been forced to "frame" the in-

junction case against me, that he felt sure it could

be beaten, and that if I would "lay $2,500 on the

line as a starter" he would show me how I could

beat the case which the Commission had built against

me. He advised me that he expected to be in NewYork on the coming Friday, June 21st, and asked

permission to telephone me at five o'clock on that

day so that an appointment could be made enabling

him to go fully into the plans which he had in mind .

I, therefore, advised Rabell of my willingness to

receive his next call .

I immediately notified counsel of Rabell's ap-



"Truth in Securities" 1 67

proach and was warned to beware of an attempt

by members of the Commission's staff to entrap me

in a bribery plot. I was advised to have no conver-

sation with the man whatsoever unless a full record

was made of every word spoken, else I might face

an accusation that could be made difficult for me

to disprove .

For some considerable time I had been shadowed

steadily and, being greatly annoyed and worried by

such tactics, I had employed detectives to watch

me and to "shadow the shadowers." My detectives

were expert technicians who also were assigned to

catch the persons who were responsible for tapping

the telephone wires at both my office and at my

home in suburban Scarsdale . I accordingly notified

these men to be prepared with appropriate appara-

tus, to record, on quick notice, conversations I

might have with Rabell .

True to his promise, Rabell telephoned me on the

following Friday, and, as he expressed a desire to

see me at once, I made an appointment for him to

meet me at my home in Scarsdale at nine o'clock

that evening .

I immediately communicated with Mr . Fischbach,

asked him to obtain the services of his assistant and

two court stenographers and to go with them at

once to my home .




My detectives were notified of the impending

conference and were instructed to install appro-

priate apparatus to permit the recording of the con-

versation both by the two court stenographers and

by phonograph recording devices as well .

I made arrangements with the Scarsdale police

for the stationing of officers in my home during the

course of the evening .

I notified the District Attorney of Westchester

County, New York, inviting him or his representa-

tive to be present . The District Attorney's office

notified the United States Attorney's office and

an Assistant United States Attorney came to

my home late that night, after the conversations

had been concluded .

All the persons communicated with by me per-

formed their respective functions with precision

and, along with several of my regular office staff,

arrived at my home in good time to install dicta-

phone and recording equipment sufficient for the

job at hand . All records were to be made on the

third floor of my home and the conversations were

to take place in my den on the first, or ground floor .

When I personally arrived at my home at about

eight o'clock, I found preparations practically com-

plete, with all the persons involved at their stations

in three different rooms on the third floor .




In due course of time Rabell appeared and we

went together into my den where we at once became

engrossed in the subject matter of his visit .

Rabell immediately referred to the hearings con-

ducted in January at which he had taken such

prominent part. He unheistatingly stated, when

referring to that case, that "I can lick it . "

I asked him "how" and he replied, "Because I

have supporting schedules to show it is not so . "

To my astonishment, he told me that the govern-

ment had instructed him to "get a case" on me,

and that in his examination of my books at my

offices he had rejected evidence and information he

had found in the files which, if noted by him,

would have negated the case he had "framed" in

accordance with his orders . The following quota-

tion from the transcript of our conversation is

pertinent to this point as revealing Rabell's method :

Mr. Jones : The Government told you to make acase and you went in and fixed my books and

got the things that made the case, as I under-

stand you?

Mr. Rabell: I rejected the supporting evidence

which would help you .

Rabell then amazed me as he went on to point

out that the real purpose of the Commission in its




battle against me was to work up a criminal case

against me. In this connection the record reveals

the following colloquy concerning the real purpose

of the Commission in holding the Washington hear-

ings and their refusal to permit me to withdraw

my registration statement :

Mr. Rabell : Well, they have another thing now that

has come up, and that is your registration .

Mr. Jones: I withdrew it, but they wouldn't let

me, and so I am going to have the courts make

them let me.

Mr. Rabell : The court will let you do that, I am

sure .

Mr . Jones : They won't let me. They want to get

me down there to razz me again .

Mr . Rabell : They want to put you on the pan again .

All they are working for is to get criminal pro-

ceedings. That is all they want .

Rabell then informed me that the thing I should

do was to permit him to compile from my books and

records evidence he knew to exist that would refute

the charges which the Commission had made

against me. The record on this score follows :

Mr . Jones: You think that you can go with the

books I have and take evidence out of them that

will contradict the Government's evidence?



"Truth in Securities" 171

Mr. Rabell : Too f f s e t i t .

Mr. Jones : And nullify the Government's case?

Mr. Rabell : The Government won't win this case .

I am willing to take a bet . Like I told you

over the telephone, I don't want anything out

of this case unless you win the case .

Mr. Jones : Well, what is your proposition?

Mr. Rabell : Well, I have got to have some dough .

I got to have something for my time. And if

I win this case, then I want to be paid . And I

think you should be willing to do that .

Mr . Jones : Don't you think that it is a dirty, rotten

thing to do when I let you see my books and

then they weren't properly analyzed? I know

why you are here ; but I had very hard feel-

ings against you .

Mr. Rabell : I know it; you hated me .

Mr. Jones : No, I didn't hate you, but it is better

for us here to talk things quite frankly, because

I think you did as you now say you did-build

up a case for the Government .

Mr . Rabell : I certainly did .

Mr. Jones : And now then, d-n it, you tell me

that you are going to turn around and build

up another case that will kill the Government's .

Well, you will destroy the Government's

case?

Mr. Rabell : Yes, sure. Because there were things

done there that were not right .




Rabell then outlined to me what "investigating

accounting" was, and again I was astonished to

learn how insidiously the cards of fate are stacked

against a citizen when his government is out to

"get a case" against him. The following conversa-

tion concretely reveals the grave dangers to civil

liberties resulting from tyrannical abuses of govern-

mental power lodged in the hands of usurpers who

prey upon the public .

Mr . Jones : I can't understand you fellows, how you

would come into a man's books through "in-

vestigating accounting" and pick out things

that you can prove to be violations when there

is other information in the same books which,

if you took it, would offset it .

Mr. Rabell : That is just exactly what it is .

Mr . Jones : That i s crooked business .

Mr . Rabell: No .

Mr . Jones : What is it?

Mr. Rabell : It is just good investigating work .

Mr. Jones : In other words, you have to change

my books?

Mr. Rabell : Certainly, and build it up on the other

side.

Inasmuch as Rabell had signed the affidavit for

the "Truth in Securities" Commission, I desired to



" T r u t h i n S e c u r i t i e s " 1 7 3

learn from him whether he was, in fact, to be a

witness against me .

Mr. J o n e s : You will be-however-are you not

now in the category of a Government witness

a n d t e s t i f y i n g f o r t h e G o v e r n m e n t i n t h i s c a s e ?

Mr. R a b e l l : Yes, I will testify for the Government,

but the testimony-I will give you-I will give

you the other side, to refute it .

Mr. J o n e s : Offset-

Mr. R a b e l l : Y e s , a b s o l u t e l y r e f u t e i t .

Shortly after the Commission had taken the

names and addresses of mymany clients from my

b o o k s I l e a r n e d f r o m d i f f e r e n t s o u r c e s t h a t a t l e a s t

three new royalty firms, unknown to me, had be-

gun to circularize my clientele in solicitations for

t h e i r b u s i n e s s . I was very desirous of learning from

Rabell just how the names and addresses of my

clients, which, of course, always had been held in

the strictest of confidence, could suddenly be ob-

tained by newcomers to the business who boldly

set themselves up as my competitors . I therefore

asked Rabell this question, 'Who gave out the names

and addresses of my clients?"

Rabell then told me the name of the man in the

offices of the Securities and Exchange Commission

a t 120 Broadway, New York City, who had re-




leased the confidential clientele list to other dealers :

Mr. Rabell : Osterweil is the fellow who gave them

out .

Mr. Jones : Did they find out that he did it?

Mr. Rabell : Who, the Commission?

Mr. Jones : Yes .

Mr . Rabell : Yes .

Mr . Jones : They know Osterweil gave those names

to Bush? (One of the three new royalty deal-

ers. )

Mr. Rabell : Yes.

Mr. Jones : That is a nice thing to have a man come

in and get a man's confidential records, and-

Mr . Rabell : There's another fellow who did it, too .

Mr. Jones : Who is he?

Mr. Rabell : Clark

Mr. Jones: Of course, if anyone will do that-what

do you think I ought to do about it?

Mr. Rabell : I don't think you could do a damned

thing!

Rabell then explained to me how he would advise

the Government lawyers as to their accounting side

of the case, then, "on the side," make known to my

own auditors the Government's case and collaborate

with my staff to defeat it . He continued to express

his confidence in his ability to win my case for me




and stated his price as $2,500 cash payment and

$25,000 following the successful conclusion of the

litigation .

The man who had represented the Federal Se-

curities and Exchange Commission and on behalf

of whom that Commission actually issued a public

statement commendatory of his record and his char-

acter, then left my home, with the understanding

that he would return on the morning of the com-

ing Sabbath to receive the first installment of the

money he demanded to free me from a case which

had its genesis in a deliberate and diabolic plot to

bring about my ruination by means, admittedly

and now of record, foul to an indescribable degree .

I now had my first records of the statements made

by one of the conspirators . When Rabell took his

leave, however, I did not realize that a miserable and

scandalous situation was to result from the next

scheduled meeting with him, on the occasion of

which revelations were to be made that were even

more despicable and disgraceful than those he had

so far related .



CHAPTER XIV

More "Truth in Securities"

On the following day, Saturday, the As-

sistant United States District Attorney who had

come to my home following Rabell's departure on

the night before, asked permission of me for two

agents of the Department of justice to inspect and

to test the recording apparatus at my home and also

for them to be present when Rabell should again

visit me on the coming Sunday morning . I granted

this, and the Department of justice agents, there-

fore, were on hand early the next day, along with

all the others who had assisted in the recordings of

the Friday night preceding . They gave me definite

instructions concerning questions to be asked Ra-

bell and, furthermore, made record of the numbers

of the bills which I had obtained for the purpose

of presenting to Rabell as the bribe which had been

demanded .

Rabell arrived at my home at about ten-thirty

Sunday morning, and, on his being received, we

176



More "Truth in Securities" 177

again went directly to my den to continue our con-

versations. We covered a great deal of more or

less inconsequential matters, but interspersed

throughout our talks were bits of most important

information .

Rabell told me, for instance, that the President's

Secretary, Mr. Louis McHenry Howe, had com-

municated with Joseph P . Kennedy, Chairman of

the Securities and Exchange Commission and had

made inquiry to determine whether the Commission

was sure of its case against me. This surprising in-

formation confirmed a report which previously had

been made to me by an unimpeachable source. The

record of the conversation on this particular point

follows :

Mr. Rabell : Kennedy used to call me every night,

used to call me on the long distance telephone-

they are so damned scared all the time that you

are going to beat them. No kidding!

Well, I will tell you this much-that when

Colby (Mr. Bainbridge Colby) went downthere-I don't know who he saw-but I know

Howe called up Kennedy and Kennedy called

me up and raised hell with me .

Mr. Jones : What about?

Mr. Rabeli : He wanted to be absolutely sure that

I had this thing cinched .




Mr. J o n e s : Do you mean the President's Secretary?

Mr . Rabell : Yes .

Mr . Jones : Called Kennedy up and told him that?

Mr . Rabell : Yes, asked him-"Were they sure?"

Mr . Jones : He asked that?

Mr. R a b e l l : In this business-they were raising the

devil down there .

Rabell stated that when he was called as a wit-

ness in my case he would "be very dumb" insofar

as his testimony was concerned. He explained how

Flynn had ordered him to "chop off" my books as

of a certain date, thus denying the making of proper

entries from records already at hand . He went into

great detail as to how he would present information

he knew was in my books to refute the points of

the government's case . When I asked Rabell to in-

form me who had directly ordered him to "get a

case" on me, he replied as follows :

Mr. Rabell : F l y n n s a i d t o " g e t t h e c a s e . "

Mr. J o n e s : Flynn said to "get the case" and to get

it as of the date you could get it . I s t h a t i t ?

Mr. Rabell : I came to him and said, "Listen, what

date do you want to get Jones at?" He said,

"Go to this date . "

Mr. J o n e s : Which date?

Mr. R a b e l l : I don't remember the date now .



More "Truth in Securities" 1 79

Mr, Jones : Well, why did he say that?

Mr. Rabell : Because the books were transcribed

that day .

Mr . Jones : In other words, then-

Mr . Rabell : Flynn didn't give you a chance to put

your other stuff in there .

Mr . Jones : They didn't give me a chance?

Mr . Rabell : No, they are not going to let you put

it in this case unless you do it yourself .

Mr. Jones : Well, in other words, just from the

standpoint of moral principles-here, this man

Flynn knew that my books could show a situa-

tion favorable to me and he told you not to

take it?

Mr. Rabell : He didn't give you a chance to do

that .

Mr . J o n e s : He didn't give me a chance .

Mr . Rabell : He didn't give you a chance to put

your entries in . He grabbed them off as of a

certain day. He made a cut off.

Mr. Jones : That he knew would be unfavorable to

me?

Mr. Rabell : Oh, yes ; certainly he knew it .

Mr. Jones : And he told you to "make the case" as

of that date?

Mr. Rabell : As of that date .

Mr. J o n e s : Isn't that a trick?

Mr. R a b e l l : And not give you a chance to put your

entries in . Every one of your supporting en-




tries that came in before that date, they are

not in .

Mr . Jones : They're not?

Mr. Rabell : They were not allowed in .

Mr. Jones : I know .

Mr. Rabell : You got a rotten deal .

Mr . Jones : And Flynn knew that, didn't he?

Mr. Rabell : Certainly .

Mr. Jones : Flynn told you to cut my entries off,

and not-

Mr. Rabell : Not to give them recognition .

Mr. Jones : And you did?

Mr. Rabell : I did not take into-

Mr. Jones : Or any other information that was in

my office! Listen-isn't that arick, itmakes me so mad I don't know what t(

do!

Mr. Rabell : Holy Gee! you can't help it now

The thing is, to refute it .

Mr . Jones : And those records were on hand at that

time?

Mr . Rabell : Absolutely ; and those entries were

made by your girl at that time .

Mr. Jones : In other words, you wouldn't allow the

entries to bring it up to date?

Mr. Rabell : That is correct .

Mr. Jones : Well, that's dirty!

Mr. Rabell : Of course, it is dirty ; that is the reason




I am here . Those items were not put in because

we were told not to put them in.

Mr. Jones : Will you swear to that?

Mr. R a b e l l : Absolutely .

Mr . Jones: My God! That will ruin their case!

Mr . Rabell : Of course, that is what I tell you .

Rabell went on to inform me that he had advised

Flynn, at the time both of them were in my office

in the act of going through my books, that my en-

tries had not all been made at the date on which

Flynn ordered my books to be "chopped off," but

that Flynn then told Rabell to ignore the informa-

tion and not to allow the entries to be made .

Mr. Rabell : Flynn didn't want to know. "Those

entries," I said, "belong in . He hasn't had a

chance to make them. Do I allow them, or

don't I allow them ." He said, "No, don't

mess up the deal now ."

Mr . J o n e s : He said not to allow me to enter them?

Here he comes down here and tells you to"build up a case" and you look into my books

and you find all the information ; you say,

"Here, Mr. Flynn, those books, as of this day,

are not up to date . "

Mr Rabell : That is right .

Mr. Jones: "All the entries are not in . Shall I-

Shall I-"




Mr . Rabell : (interrupting) "allow them?"

Mr . Jones : (interrupting) "allow them?"

Mr. Rabell : "No. "

Mr. Jones : Heorders you then-he comes and he

says, "No, don't allow him to enter them"?

Mr. Rabell : That is right .

Mr. Jones : To "catch his books before they are

brought up to date"-

Mr . Rabell : "Before he has a chance to bring them

up to date . Catch him right here . "

Mr. Jones : "Catch him there . "

Mr . Rabell : "Don't take any recognition of them . "

Mr . Jones : "And don't recognize them and then we

have got a case ." Now, isn't that a hot stunt?

Mr . Rabell : Then he had a case .

Mr . Jones : He had a case, but-

Mr . Rabell : You can go into any bank and do the

same d-n thing!

Mr . Jones : In other words, when I said in my ad-

vertisement that they had gone out to "get a

case" on me, I was right .

Mr . Rabell : Youwere right, you knew you were

right .

Mr . Jones : I knew I was right, yes . But-

Mr. R a b e l l : I don't know what the actual cause of

that was .

Mr . Jones : Well, I know that . That started with

Ickes-that hard-headed Ickes .



More "Truth in Securities" 1 8 3

Mr. R a b e l l : I don't know that.

Mr. J o n e s : But this is the first time that I ever had

it definite that Flynn ordered you to build that

case against me and wouldn't permit you to do

otherwise. Can you beat it!

Mr R a b e l l : Do you see, they had a real case there,

that way . But it was not fair, that is not fair ;

i t is not fair to let you take-you should be

allowed to put in all of these substantiating en-

tries which would have offset their case .

And so, ran the story that Rabell unfolded of the

New Deal "Truth in Securities" Commission's per-

formance. It continued to maudlin details . The

conversation finally ended by my giving Rabell the

first cash installment of his price to deceive his own

government. He accepted the bills, the numbers of

which the Department of justice agents, waiting

on the third floor of my home had carefully noted,

and started to take his leave .

As we passed from my den into the hall that

divides the ground floor of the house, we observed,

coming quickly down the stairway from the upper

floors, the Department of Justice Agents, my two

lawyers, a Scarsdale policeman, my detectives and

possibly one or two other individuals . At this sight

I stepped into the entrance vestibule of the front

door and Rabell immediately dashed across the hall




and into the dining room as if he were headed for

the rear of the house and to the outdoors by way

of the butler'ss pantry and the kitchen . Confront-

ing him and across his pathway, however, quite by

chance, was my butler-a large, genial-natured ne-

gro. Rabell, trapped, hesitated one split fraction

of a second, turned half-way around, and very

quickly began to take from his pocket the bills I

had given him, throwing them to the floor behind

the door which led from the hall into the dining

room.

As he was doing this, one of the justice agents

seized him and placed him under arrest .

Within twenty minutes following Rabell's arrest,

to our amazement, there dashed across my lawn,

white of face and breathless, Mr . John J . Burns,

General Counsel of the Securities and Exchange

Commission at Washington! Mr. Burns' headquar-

ters were in Washington-his home in Boston, Mas-

sachusetts . How did he ever happen to be so nearby

while Rabell was conducting his operations in my

home? Why did he arrive with a look of consterna-

tion on his face and in obviously agitated frame of

mind?

Mr. Fischbach stepped outside to greet the Com-mission's Counsellor as he approached the door .

Burns' first words, spoken almost in gasping man-




ner-as he ignored even the giving of response to

my counsel's greetings, were: "Just how far am I

involved in this thing, Fischbach?"

But the General Counsel soon left my premises,

as the Department of Justice Agents took Rabell

to New York City . Rabell there was imprisoned

until bail had been arranged for him, following his

indictment by a Federal Grand jury on charges of

soliciting and accepting a bribe to influence his testi-

mony as a government witness.

Having in mind that it was I who had instructed

my own men to record the Rabell conversations,

that it was I who had communicated with the au-

thorities prior to those conversations, that it was

I who had talked with Assistant United States At-

torney Murphy of the Department of justice on the

night of Friday, June 21st, following the first re-

corded conversation, and that i t was I who had ar-

ranged with Mr. Murphy for the two Department

of Justice Agents to be present at my home on Sun-

day for the second recording, and that I had never

discussed any of these arrangements with Burns or

with anybody else of the Commission, and that

Burns was not present at my home at all until about

twenty minutes after Rabell had been arrested, I

was greatly amazed to read a "Release in the Morn-

ing Newspapers of Tuesday, June 25, 1935," issued




by the Securities and Exchange Commission and

entitled "Release No. X. "

The "Release" concerned the Rabell affair . It,

of course, was published in the press for the benefit,

presumably, of the American public . It stated that

the Commission, only a few days before, had re-

quested the resignation of "Mr. Rabell, whose ap-

plication indicated broad experience!"

I accepted that "resignation" story fairly willing-

ly a s about the only thing I could expect to hear .

But I regarded some of the statements contained

in the "Release," as strange and unusual distortion

of the facts. I released no publicity statement,

however, to the effect that such "appeared" to me

as 'untrue statements of material facts or omissions

of material facts necessary in order to make the

statements made, in the light of the circumstances

under which they were made, not misleading ." Af-

ter all, I was dealing with the "Truth in Securities"

Commission. I quote, however, the statements in

question, with my own comment parenthetically

stated as insertions within the Commission's state-

ment .

"On June 22, the Commission, through confi-

dential sources, received word that Mr . Rabell had

approached one J . Edward Jones" (the "approach"

had been made several days before the first



More "Truth i n Securities" 1 8 7

recorded conversation on June 21st) .

"The Commission immediately conferred with

officials of the Federal Bureau of Investigation ( De-

partment o f Justice) and requested their active co-

operation . (But the assistance of the Federal Bu-

reau of Investigation already had been obtained by

me from Assistant United States Attorney Mur-

phy.) At the interview which Mr Jones had ar-

ranged with Mr. Rabell (Rabell, not I, solicited the

interviews) at the former's home in Scarsdale, New

York, on Friday, June 21st, and on Sunday, June

23rd, complete records of the conversations were

recorded for use by the Department of justice

authorities. ("Complete" records were made, it is

true, but they were not made by Department of

Justice authorities nor were they made expressly, as

the "Release" implied, for their use . On the other

hand, they were made at my personal direction, by

my own paid staff o f employees, for my own use and

for my own protection on advice o f counsel, and

against what I feared was a "frame-up" against

me by Rabell, Burns and Flynn .) The Department

of Justice Agents from the Southern District of

New York and Judge John J. Burns, General

Counsel of the Securities and Exchange Commis-

sion, were present at the meeting on the 23rd . (This

implies, of course, that the youthful "Judge" was




on hand, bright and early, and that he personally

took part in the proceedings, attending the record-

ing of the conversation and that he, of course, being

"present at the meeting" also took part in the cap-

ture o f his own Assistant Chief and the arrest which

followed. The statement made by the Commission

that Burns was "present at the meeting" appears

to be somewhat 'misleading" since, indeed, he

played quite a different role . He had arrived, out

o f breath, twenty minutes after the arrest o f his

confrere had been made, apparently fearing that

he himself had been involved . ) Immediately after

Sunday's meeting (at which time the "Release"

states Burns was present) Rabell was taken into cus-

tody. " (But by authorities who were present, not

by Burns who was absent!)

These few paragraphs concerning the Commis-

sion's "Release No. X," while they may be passed

over as inconsequential observations, nevertheless

pertain to the Commission's "most effective wea-

pon"-that of publicity, informing the great Amer-

ican public of the "Truth in Securities . " Here is

the "truth" torn naked . Here is a case where the

public may have been given "news" which strangely

implied "facts" that I felt never existed . For one

might think, on reading the Commission's words

above quoted, that young Burns was a prime factor



somehow felt that I had accomplished that feat

and I now feel that honesty toward the public,

fairness toward me and gentlemanly honor toward

their own consciences, should have demanded from

the Commission authorities, not cheap attempt at

credit-taking, but dignified official quietude in such

an unfortunate circumstance .

Rabell shortly was to be tried in court proceedings

that resulted in a "hung" jury. He then was tried

again, but the "Truth in Securities" Commission's

representative, John Flynn, as the sole witness for

the defense at the trial, testified under oath that

the Commission did not, after all, intend to use

this man, who, under Flynn's own urgings, had

sworn to their affidavit against me, as a witness in

my case! The judge thereupon did not allow the

case to go to the jury for decision, but, instead, dis-

missed the indictment against Rabell because of the

stated fact that the indictment charged him with

having solicited and accepted money to influence

his testimony as a government witness . Flynn's

sworn testimony to the effect that the Commission

was determined not to use Rabell as a witness,

therefore saved the day for his erstwhile associate

and Rabell again went free .

While I realized fully the noble purpose Con-

More "Truth in Securities" 189

in the capturing of his own lieutenant! Yet, I




gress had in mind in passing the laws that created

the Securities and Exchange Commission, my unfor-

tunate experience demonstrated the grave danger

to personal liberties in this country in the creation

of political agencies of government-a New Deal

policeman, in the present instance, if I may-which

can be used by officials to besmear and to ruin a

man who had incurred the displeasure or antagon-

ism of a high governmental official .

The ideals which gave birth to the Securities and

Exchange Commission may be poorly served, if in

the administration of the laws, ambitious young

men, hitherto unknown, but eager to gain a repu-

tation or newspaper publicity, become, alas, imbued

with a vindictive spirit of personal animosity to

ruin citizens and their businesses . The acts of the

individuals so charged with the thrill of the "chase"

are quite apt to become the invalid acts of irrespon-

sible and unwise public officials . Such, of course, are

not acts which were intended by the lawmakers .

Responsible officialdom, however, no matter how

highly placed, should be firm in the imposition of

restraints upon its subordinates, lest the civil liber-

ties without which this government could not, in

fact, long exist, be destroyed. The Supreme Court

rightly sensed this great issue in my own case and,

in its celebrated decision, struck hard at such dan-



More "Truth in Securities" 1 9 1

ger in warning against the making of our nation a

government of men instead of one of laws. The

Court stated in my own decision that the "Consti-

tutional safeguards of personal liberty ultimately

rest" upon the premise "that this shall be a govern-

ment of laws ;" and the Court warned that "to the

precise extent that the mere will of an official or

an official body is permitted to take the place of

allowable official discretion or to supplant the stand-

ing law as a rule of human conduct, the government

ceases to be one of laws and becomes an autocracy. "

The expressions of the Court in my case upon

the right of the individual to protection from gov-

ernment bureaucracy were couched in most vigor-

ous terms . The decision continued in these words :

"Our institutions must be kept free from the ap-

propriation of unauthorized power by lesser agen-

cies," and, "if the various administrative bureaus

and commissions necessarily called and being called

into existence by the increasing complexities of our

modern business and political affairs, are permitted

gradually to extend their powers by encroachments,

even petty encroachments, upon the fundamental

rights, privileges and immunities of the people, we

shall, in the end, while avoiding the fatal conse-

quences of a supreme autocracy, become submerged

by a multitude of minor invasions of personal




rights, less destructive but no less violative of con-

stitutional guarantees . "

But more of the type of thing to which I had

been subjected was yet to come, and to an ever

increasingly vicious degree .



CHAPTER XV

The Supreme Court Speaks

On June 27th the adjourned hearing of

the Commission's "stop-order" proceedings against

me in connection with the Registration statement

which Mr. Lundy had filed, opened in Washington

to the usual accompaniment of complete arrange-

ments for the accommodation of the press. Al-

though I had been served with a subpoena requiring

my attendance at this staged "affair," I did not re-

gard the proceeding as a valid one and consequently

refused to honor the subpoena by my personal ap-

pearance .

Inasmuch as I contended that I already, at the

June 18th hearing, had effectively withdrawn my

registration statement, I refused to attend the hear-

ing but, instead, dispatched my Counsel, Mr . Fisch-

bach and an oil lawyer, from Enid, Oklahoma, to

appear for me.

My counsel submitted formal motions to dismiss

the registration statement as well as the proceeding

193




itself, and to quash the subpoena which had been

served upon me at my offices in New York . These

motions, in quick and decisive manner, successively

were denied by the trial examiner of the Commis-

sion. Appropriate exceptions to these rulings were

noted on the record by my counsel who thereupon

again withdrew from the proceeding .

Lately American citizens have read in the public

press of what they have regarded as strange pro-

ceedings in Russian Soviet Courts. A glance at the

records made by some of the New Deal Commissions

in their functioning as quasi-judicial bodies will

bring America to the fore in the list of countries

possessing bureaucratic organs to exhibit strange

performances in dealings with individual liberty .

Aside from the general ruthlessness of the Securi-

ties and Exchange Commission in its tyrannical

abuses of power exhibited toward me, I often was

amused at the conduct of some of the young counsel

who represented the Commission, and as well, the

attitude of the "Judge" or trial examiner a s he

demonstrated his judicial temperament and dignity

in the dispensation of his particular brand of "jus-

tice." In appraising the nature of the hearings, or

"trials" that are accorded those whom the Com-

mission summons before it, and the press, as well,

i t is advisable to remember that the trial examiner



The Supreme Court Speaks! 195

is, in fact, simply a member of the legal staff of the

Commission itself. He is subject, of course, to the

orders of the Commission, on the payroll as such,

but charged with the duty of rendering decisions

regarding controversies between citizens and the

Commission. The trial examiner sitting as "Judge"

for my hearing, strange to say, was the same trial

examiner who had sat in my first long hearings at

New York and who, also, had spent considerable

time in drawing the complaint against me, based

upon Rabell's affidavit. In the Washington hear-

ing, above described, an incident occurred which

recorded a ludicrous "judicial" practice. At a cer-

tain point in the proceeding, the counsel for the

Commission, a young Mr . Cohn, suddenly sprang

to the bench and actually began to whisper into the

"judge's" ear! The record thereupon shows the

following :

Mr. Fischbach; I would like to know, Mr. Exam-iner, whether Mr . Cohn is now addressing you

on any matter concerning this proceeding,

and, if he is, I believe it should be on the record .

No comment is needed to emphasize an obvious

point indicative of the danger that could flow from

such "judicial" business . The conclusions which




may be drawn from such type of procedure are left

to the reader .

On the very next day, June 28th, 1935, I pro-

ceeded against the Securities and Exchange Com-

mission by filing a petition in the United States Cir-

cuit Court of Appeals at New York, in which I

asked the Court to review the action of the Com-

mission in denying the motions I had filed before it .

A few days later, the Securities and Exchange

Commission brought action against me in the Unit-

ed States District Court at New York to compel

me to obey their subpoena to attend their hearing .

I, of course, defended myself in this action, but

lost on a decision by judge Caffey who ordered me

to obey the subpoena, remarking, in his decision,

that, as I had not attended the hearing, I should

not "kick" before I was "spurred ."

As I did not wish, however, to be "spurred" any

more, I made further "kick" in the form of an ap-

peal from judge Caffey's decision and his order was

stayed pending the appeal .

Arguments duly were made in the United States

Circuit Court of Appeals on a consolidation of

the appeal from judge Caffey's decision and the

action which I had brought against the Commission,

as well. I lost both actions in a decision which again

upheld the Commission .



The Supreme Court Speaks! 197

I thereupon instructed my Counsel to take the

case to the United States Supreme Court for re-view of the decision of the lower Court, and during

the next several months work in preparing the case

went forward. My legal staff in this action com-

prised the late Honorable James M . Beck, noted

Constitutional lawyer and former Solicitor General

of the United States; the Honorable Bainbridge

Colby, distinguished American statesman and Secre-

tary of State in the Cabinet of President Woodrow

Wilson; Mr . J . N. Saye, eminent oil lawyer of Long-

view, Texas, and Mr. Fischbach .

In the meantime, due to the tremendous amount

of adverse publicity released by the Securities and

Exchange Commission concerning me, my business

became almost wholly stagnated to a point of ruina-

tion and my business organization was practically

destroyed . I abandoned all my offices except that

one in New York and became almost submerged

with distress caused by financial worries and the

great embarrassment that attended my struggle .

My Executive Assistant, Mr. John G. Scattergood,

a sensitive man of a very high sense of honor, within

a few months succumbed to the public shame he

felt from the Commission's attacks, to a point where,

weakened by worry, he contracted a streptococcus

infection and died in September, 1935, leaving a




wife and three small boys to survive him . Mrs.

Scattergood, his lawyer and his doctor all attri-

buted his untimely death to the acts of the Com-

mission .

Arguments duly were presented before the Su-

preme Court in Washington, and finally, on April

6th, 1936, the great decision of the Court was hand-

ed down. In this decision, the Court, speaking

through justice Sutherland, in strong and vigorous

language, upheld the rights and liberties of indivi-

dual citizens in this country as against the tyrannical

abuses of power on the part of officials of the gov-

ernment. By a vote of 6 to 3, the Court reversed

the lower Courts in their decisions against me and

held that the Securities and Exchange Commission

bureaucratically invaded my Constitutional rights .

The Court denounced, in forceful language, bu-

reaucracy by governmental agencies, adding that

liberty in this country would be "submerged" in

petty tyrannies if efforts such as those which rep-

resented the acts of the Securities and Exchange

Commission went unchecked .

The majority ruling held that arbitrary power

and the rule of the Constitution were antagonistic

and incompatible forces, and that one or the other

must perish .

The Court further declared that "the action of



The Supreme Court Speaksl 199

the Commission finds no support in right principle

or in law" and that "it is wholly unreasonable and

arbitrary . "

In condemning the Commission severely for vio-

lating "the cardinal precept . upon which the Con-

stitutional safeguards of personal liberty ultimate-

ly rest," the Court said that in the supplanting of

the standing law by the mere will of an official, "the

government ceases to be one of laws and becomes

an, autocracy. "

"Arbitrary power and the rule of the Constitu-

tion cannot both exist," said the Court which, in

quoting a decision concerning a "fishing expedi-

tion," further declared that : "An investigation not

based upon specific grounds is quite as objectionable

as a search warrant not based upon specified state-

ments of fact .

"Such an investigation, or such a search, is un-

lawful in its inception," the Court held, and, con-

demning specifically the action of the Commission,

stated: "If the action here of the Commission be up-

held, it follows that production and inspection may

be forced not only of books and private papers of

the guilty, but those of the innocent as well, not-

withstanding the proceedings for registration, so

far as the Commission is concerned, has been

brought to an end by the complete and legal




withdrawal of the registration statement. "

The decision of the Supreme Court was handed

down on that April 6th, 1936, before a crowded

court room that held a group of astonished Securi-

ties and Exchange Commission lawyers who were

present as very much surprised and disappointed

v i s i t o r s . Great publicity throughout the land fol-

lowed the decision .

But the New Deal was not slow . On the very next

morning, April 7th, 1936, at ten o'clock, the United

States Attorney went before a Federal Grand Jury

in the City of New York to indict me!



CHAPTER XVI

New Deal at Work

The Securities and Exchange Commission

delivered to the United States Attorney at New

York, books, records and private papers which that

Commission had obtained in the raid they conducted

on my offices through the medium of their man

Rabell, operating under the direction of Flynn .

The Commission also delivered to the United States

Attorney the affidavit of Rabell and the complaint

and papers constituting the case which they had

built against me in the old injunction proceeding

that followed the operations of the Commission de-

scribed in the quoted words of Rabell in a previous

chapter .

The United States Attorney, Mr . Lamar Hardy,

newly appointed by President Roosevelt, presented

the case, through an assistant, to the Grand Jurors ,

who, in turn, handed up their indictment on May

8, 1936, charging me with violation of the mail

fraud statute, a penitentiary offense, if proved .

201




Great publicity resulted from this charge and

press headlines and stories carried the startling news

of an indictment that contained fifteen separate

counts against me! My children, Edward, twelve,

and Cathryn, fifteen, read in the papers that five

years for each count, or a total of seventy-five

years in the penitentiary, might be their father's

penalty. On reading the indictment, however, I

learned that each count was similar to every other,

the basis for the fifteen counts being simply fifteen

different routine letters which had been mailed by

my organization. It so happened that not one of

these letters had been written by me personally, but

by subordinates of our office in the ordinary routine

of their work . But I was the only defendant, how-

ever, no conspiracy of several individuals, as often

is the case in such actions, being charged . It ap-

peared as if J. Edward Jones was the only one

hunted!

God forbid that any reader of these lines, through

any possible quirk of fate, should be indicted by his

government! The laws of this country, lawyers

and the courts themselves say, are such that one

accused is presumed to be innocent until proven

guilty. I have found the practical effect of an

accusation to be exactly the reverse ; one, indicted,

really is presumed by his fellow man to be guilty



New D eal at Work 203

until proved to be innocent . And, even then, after

complete vindication has been fully established and

innocence proven in a public trial on the merits

of the case, the scars that remain from the deep

and damaging cuts received in such encounter, are

there forever to stay as permanent labels-to dam-

age one's standing ; to hurt sensitive feelings of

pride; to dampen hope and aspirations ; to question

the sincerity of friendly encouragement even from

one's best friends ; to create doubt of all humanity ;

to build bitterness in the heart against nearly every-

thing "government ;" to enhance continued worry ;

to develop a frantic state of mind that can visualize

nothing constructive but, instead, only destruction

of all ideals previously held high as the great goals

of a life. I can say that the persecution attendant

such terrible attack as an indictment by one's own

government, is ruinous . This is said, now, in the

matured belief that the individuals of the govern-

ment who promoted my indictment never have real-

ized the full extent of the consequences of their

acts.

A man can, from depths of his despair, take his

mind from the ruination of a business built upon

a lifetime of work ; and, likewise, from the destruc-

tion of his business organization which for years has

been his pride ; he can face threatened financial ruin




-even what seems to be the destruction of all hope

for the rehabilitation of his business ; but he cannot

forget his worries and the sleepless nights of floor-

walking that haunt his every thought, every hope

of himself and those for whom life has made him

responsible. Even as I write these words, sickness,

resulting from continued aggravations caused by

many months of worry, has weakened and destroyed

health in my immediate family .

Immediately following the rush that brought my

indictment so soon after the Supreme Court had

spoken in my favor, the United States District At-

torney adopted the policy of delaying a trial of the

charges that had been made against me. Steadily

and in routine manner, on or about the first of each

succeeding month, the government regularly ap-

peared in Court, asked and was given an adjourn-

ment of the case until the following month .

In the meantime, clients of mine were visited,

questioned, summoned before the United States At-

torney and, of course, in many cases made exceed-

ingly apprehensive concerning their relations with

me. My representatives in the oil fields likewisewere examined and put to such fright concerning

their relationship with me that shortly I was abso-

lutely without any direct field representation what-

soever .



New D cal at Work 205

At the time, I had undertaken the development

of some considerable oil property in the State of

Louisiana, necessitating the drilling of several deep

oil wells. I contracted the drilling of the wells with

several drilling contractors, only to learn, to my

great dismay, that such individuals subsequently

were haled before representatives of the government

and subjected to a searching line of inquisition-all

to result in the cancellation of the drilling contracts

that I had negotiated . This condition of affairs de-

veloped to a point where I found myself almost

estopped in my efforts to do any operating in the

fields at all-so concerned did my field operators

become at what seemed to be an almost endless con-

tinuation of "investigation" of my affairs and ac-

t i v i t i e s . It will be understood, too, that such in-

quiries had no relation whatsoever to the charges

made in the indictment rendered against me .

In addition to these official acts of my govern-

ment, I was made the target of many persons-some

of whom were highly placed in personal relation-

ships either with political channels or with persons

prominently identified with powerful individuals

in the government. At all times, offers were made

by these individuals to have the attacks which had

been made against me called off and the indictment

quashed; providing, of course, I paid such sources




substantial sums of money. My experiences in con-

nection with these persons brought home to me the

important part graft plays in the very highest

planes of activity surrounding our government .

The sorry chapters recorded by Rabell, of the

Securities and Exchange Commission, for instance,

were completely eclipsed, just a little later, by two

different gentlemen-among others one, a "Colo-

nel" Myles A. Lasker, who introduced himself-ex-

hibiting as he did so, original signed contracts to

prove it-as the Radio Business Manager for Eleanor

Roosevelt, wife of the President ; and the other, a

John J. O'Donnell, representative of nothing less

than the Democratic National Committee! The

qualifications which these two men of high position

advanced to convince me of their ability to perform

the services they wished to sell, the stories related

by them designed to prove to me the power . and

influence they wielded-all were so startling in the

profundity of their significance that they left me

with a revolting realization of a condition of affairs

that seemed to me to need, and to need badly, a

thoroughgoing and purefying investigation of it-

s e l f !



CHAPTER XVII

New Dealirium

During the summer of 1936, I was ap-

proached by many different individuals who had

some very strange proposals to make to me . On ad-

vice of counsel, and having in mind also the value

of the recordings of the Rabell conversations, I

caused to be installed in my office recording appara-

tus that could be used to make phonographic rec-

ords of conversations had there .

I made these preparations as a precautionary

measure in my own protection against what caution

suggested might be a wise measure to forestall any

possible attempt to misconstrue the meanings of or

to misquote my own words .

Accordingly, on the occasion of visits by persons

whom I regarded as possible governmental repre-

sentatives, as extortionists, or "fixers," I made use

of the recording equipment. Without laborious

elaboration concerning many recordings made, the

purpose of this book can be served by referring

only to "Colonel" Myles Lasker, and Mr. John J .

207




O'Donnell . If perchance, any serious question be

raised as to the authenticity of the record as quoted

by me, arrangements may be made for the hearing,

on loud speaker, of the actual voices in conversa-

tion. I have found that the phonographic needle,

unlike, sometimes, the human tongue, does not wab-

ble when actual fact is wanted, but that it relates

its story truthfully from the record . In this in-

stance, I have the records .

One day, a young man I had not known before,

visited me at my office and offered to introduce me

to a person who, it was stated, represented himself

as having a definite contractual relationship with

the wife of the President of the United States and

also with having influence with the powerful Presi-

dential Secretariat . I was urged to go to see the

gentleman in question, one Myles Lasker, who, I

was advised, wished to make my acquaintance and

who no doubt could "do something" for me . I,

of course, intrigued by the suggestion, was desirous

of learning how far this kind of business might go .

I, therefore, went with my new found friend to

Mr. Lasker's office, about a block from that of myownOn meeting Mr. Lasker, self .styled "Colonel"

with big eyes, heavy, well-filled frame, and deep

husky voice, I perceived a tendency on his part



New Dealirium 209

toward loquacity characterized by a free and fami-

liar reference to personnel known to be identified

closely with the White House, obviously, as I

thought, to impress me with his high connections .

He very promptly produced for my inspection

certain contracts which were sealed by the original

signatures of Eleanor Roosevelt and himself. He

advised me that he was the "Radio Manager" for

the First Lady and that he was in position to speak

with her at any time and on any subject .

He took occasion to exhibit to me some check

vouchers showing that many thousands of dollars

had been paid to him by one of the large oil com-

panies, which money, he pointed out to me, had

been given to him for special services he had been

able to render through his Washington connections

in thwarting the purposes of Governmental agencies

in the making of investigations and the handling of

reports concerning the activities of the corporation

in question .

With such apparent attempt to qualify for his

ability to perform, our conversation naturally re-

verted to my own troubles and the "Colonel," in

sympathetic style, held himself open to help me as

best he could, stating that it would be necessary,

because of his very high connections, to "keep it on

the up and up. "




An appointment was made for the Colonel to

come to my own office, where, it was agreed, we

could have ample opportunity to go fully into the

matter .

The Colonel arrived at my office at about seven

o'clock on the stormy evening of August 13th .

At the outset of our conversation I asked what his

services in my behalf would cost me and he said

that about $2,000 would be required for "expenses,"

and $25,000 was finally stated as "a fair fee . "

"I would say, offhand, if you put it up to me,"

said Colonel Lasker, "that a fee of $25,000 .00

would be a fair fee . "

The Colonel seemed particularly desirous that I

regard his proposition to me as one made on a very

high level. He took special pains to warn me

against any thought that he would be concerned

with graft .

"It's got to be above board," said the Colonel,

"or I don't want any part of it . I'm getting cured

of playing with fire! I don't believe in what is

called graft, not at all!"

But, apparently sensing a way out, if any question

might arise as to the ethics of what he had to pro-

pose, the esteemed Colonel, in a striking pose of

innocence, said, " . . . I'll even do this, if undue in-

fluences were brought to bear I would allow you to



New Dealirium 211

hire me as your Public Relations Counsel for one

year at a salary of $25,000.00 a year and whatever

other publicity expenses there are . "

In stating further how he wished me to regard

him as well as how not to regard him, Col . Lasker

said :

"I do want you to get one thought in your mind

or out of your mind-either way . I don't want you

to ever think of me as a `fixer,' because that's the

one thing that I'm not ."

Mr. Jones : Well, I don't know anything about the

way you function, I don't know you .

Col. Lasker : I mean, I just don't-I don't want

to be known as that . As big a job of public

relations as any other is the fact of being able

to square things-to square things .

In speaking of the indictment, Colonel Lasker

assured me that, through his influences, he could

have it dismissed .

"It is going to be dismissed," declared the Colonel,

"there is no question about it. I do feel, I may be

all wrong, but I do feel that I can have it dismissed,

but it's going to mean a lot of work."

And then as if by way of qualifying himself

further, Mr . Lasker related a story of amazing im-

port! He told me that for a very substantial fee, he




had been retained by a big public utility man of

Chicago, who had employed him to put a stop to

an investigation which the United States Senate

had launched into the utility man's affairs. And in

the relation of his story he indicated that he had

thwarted the purpose of the United States Senate

by using his influence with the Presidential Secre-

tariat and that, through his ability "to put in a

word with Black" (then United States Senator

Black, who headed the Senatorial Investigating

Committee-now Associate Justice Black of the

United States Supreme Court) the investigation had

"fizzled off to nothing ." In this connection the

following colloquy is pertinent :

Col. L a s k e r : I got Harley Clarke out of his investi-

gation down there .

Mr. J o n e s : Who's that?

Col. Lasker : Harley Clarke .

Mr. J o n e s : Clarke Brothers Bank-that closed?

Col . Lasker : No. Harley Clarke is the man whoheads big utilities, and Harley Clarke wrote me

a very substantial check .

Mr. J o n e s : What did you do for him?

Col . L a s k e r : Well, I connected with his investiga-

tion down there before a Senatorial Commit-

tee . I was able to put in a word with Black, so

that the whole thing just fizzled off to nothing .



New Dealirium 2 1 3

Mr. J o n e s : Did you do that through the same chan-

nels that-

Col. Lasker : I did it when Louie Howe was alive

down there, and Harley Clarke, as I say, paid

me a very nice check, a fee which, unfortu-

nately, I had to share with some other people .

The Colonel seemed to think that his perform-

ance in the Clarke case had resulted in the success-

ful handling of a problem much more intricate or

difficult than that which mine would represent .

Mr. J o n e s : How long do you think it will take to

get it knocked out?

Col. L a s k e r : With luck, in a week .

Mr. J o n e s : Have you ever had anything as bad as

that knocked out? An indictment?

Col. L a s k e r : Well, I think this Harley Clarke case

was even worse.

Mr. J o n e s : I'm not familiar with that case .. Were

they after him?

Col. Lasker : Every which way!

Mr. J o n e s : They were? Of course, my name is

"mud" with some of the people down there in

Washington .

Col. Lasker : That's all right. We'll take care of

that .




The Colonel urged me to go, personally, with him

to the White House, at Washington, when, he stat-

ed, he would take up the matter with his friend Steve

Early, who had great influence with the President .

Col. Lasker : Steve Early has charge of all the press

relations for the President, so on and so forth .

Secretary, as you know, to the President . He

has a tremendous amount of influence with the

President. Tremendous. Since Louie Howe

died, I should say that Steve has sort of walked

into Louie's shoes .

The Colonel then told me he would urge Mr.

Early to take my matter to the President, or to

Mr. Cummings, in order to get my case "dropped. "

Then he predicted having the case knocked out "in

a week. "

Another sidelight on how an individual, so inti-

mately placed as was Colonel Lasker, viewed the

possibility of easy "fixing" is shown by comment

made by the Colonel about one Ralph Steinberg,

described as a "powerful man," connected with the

Democratic Committee .

Col. Lasker : And I'll go to a man who is very

powerful. He happens to be up here at the

Biltmore . Steinberg .



New Dealirium 2 1 5

Mr. J o n e s : Who's that?

Col. L a s k e r : Ralph Steinberg .

Mr. J o n e s : I don't know him . I s he working for

the Committee?

Col. Lasker : That's right. And that would prob-

ably mean that I would have to give Ralph

part of my fee, but Ralph can do lots of things

that I can't do, but as far as fixing is con-

cerned, that all means money .

Mr. J o n e s : I s he connected with Cummings?

Col. Lasker : He is connected with the Democratic

Committee, and has nothing to do with Cum-

mings, but he can walk into any one of the

Cabinet offices as I can walk into the White

House.

Mr. J o n e s : Yeah? Well, then your plan is first to

go to Early?

Col . L a s k e r : Yes .

The Colonel then referred to an investigation

launched by the Black Senatorial Investigating

Committee of Cities Service Company, referring,

also, to payments made by that company to him for

his "services"-.the vouchers for which he actually

had showed to me in his own office .

Mr. J o n e s : How did you ever keep the S .E.C . o f f

the Henry L. Doherty business?

Col . L a s k e r : Well, it was real hard work .




Mr. J o n e s : The S.E.C.-I thought they landed on

everybody!

Col. Lasker : No. It was real hard work that wasdone and up to the time the Black Committee

started investigating Cities Service I was on

that payroll for a retainer each month . A very

lovely retainer at that-they used me when

they wanted me. If they wanted me, they used

me. Three times in the first year that I waswith them. Twice the second year-twice the

third year and once the fourth .

Mr. J o n e s : From the check vouchers you had there

-my God, you must have spent a lot of money

for them some place .

Col . Lasker : That was money that they gave me

for my services .

Mr. J o n e s : Yes?

Col. Lasker : Now, they paid me as I said, one

year, $30,000, then $25,000, to $30,000 for

the fourth year .

The Colonel assured me that he knew what he

could do and that he had been and still was quite

intimate with the affairs of White House person-

ages .

Col. Lasker : What I tell you is definitely what I

can put across .

Mr. J o n e s : Well, now, of course, you are in close,

on the inside of the Roosevelt family, as I



New Dealirium 2 1 7

understand it . And what are you for Eleanor

Roosevelt?

Col. Lasker : I handle all of her radio broadcasts,

as Public Relations Counsel .

Mr. Jones : Publicity to newspapers?

Col. Lasker: No, I don't handle any of that .

Mr. Jones : How do you get your influence with

Early?

Col. Lasker : Well, I handled all of Louie Howe's

private business, when Louie Howe was alive .

Steve and I have been friends for a good many

years .

Mr. Jones : Well, you'd recommend that I go down

there and have a talk with him?

Col. Lasker : I would, in your case .

Mr. Jones : Do you think that he will bring it to

the attention of Cummings?

Col. Lasker : I do. I certainly do .

At another point in our conversation I pressed the

Colonel as to whether he knew that Mr . Early really

possessed sufficient influence to do the thing Col .

Lasker represented he could have done and I received

the most positive assurances that the White House

Secretary definitely could accomplish that purpose .

Mr. Jones : Do you think that Early will haveenough influence?

Col. Lasker : Oh, definitely .




Mr . Jones : . . . to bring about the dismissal of-

Col . Lasker : Definitely .

Mr . Jones : You're sure?

Col. Lasker : Oh, positively. I have nothing to

worry about.

At the outset of my conversation with Lasker, I

really had a desire to lay before either the President

or Mr. Cummings, what I regarded as the iniquities

of a deliberate persecution of me-still thinking

that possibly I could prevail upon someone high in

authority to call a halt to what I then felt eventually

would result in defeat for the government, even

though I were to be ruined . In face of such a de-

sire, I, nevertheless, was suspicious of the legitimacy

of the proposals which I might receive from Lasker .

While the recorded conversation was proceeding,

I decided to follow, just a little further, the sugges-

tions which had been made to me and to learn, if

possible, how bold this particular new scheme might

become. Accordingly, I agreed to fly with Col.

Lasker to Washington on the coming day .

I arranged for my counsel, Mr . Fischbach, to ac-

company us and, on arriving at the Capital, the

Colonel promptly telephoned the White House,

whereupon an appointment with Mr . Early readily

was made for him. I decided not to go to the



New Dealirium 219

White House, but sent Mr . Fischbach in mystead,

instructing him to observe the treatment accorded

Colonel Lasker and to formulate , in his own mind,

and from his own observations, plans I should fol-

low and to be prepared to advise me later whether

any possible legitimate chance might exist to war-

rant a continuation of my association with the

Colonel .

Secretary Early, of the White House, sent Col .

Lasker and Mr. Fischbach to the office of the Attor-

ney General of the United State s, where, Mr. Fisch-

bach reported, t he two were advised that the mat-

ter would be taken up with the United States At-

torney in New York by a personal visit on the part

of an assistant to the Attorney General himself .

The advice, however, which my counsel later, on

our return home, gave me was for me to discontinue

forthwith all further contacts with the esteemed

Colonel, since, Mr . Fischbach advised, no legitimate

purpose, in his opinion, could be accomplished

through such channel .

I, of course, promptly ended all further associa-

tion with Lasker . But wonde r has never since left

my mind concerning the possible danger to good

government of this country, if conditions such as

Lasker described could exist .

He had specifically stated that he worked through




the White House. In emphasizing his power, he

had pointed a finger at the possibility that a genuine

purpose of the United States Senate, in investigat-

ing what seemed to be important matters, had

been thwarte d through his powerful contacts . He

strongly implied that money had been used in sur-

reptitious manner to bring about such contingency .

He was closely identified , even through contracts,

with very prominent personages and his statements,

therefore, naturally demande d some respect .

Purely as a matter of public concern, it would, I

believe, be interesting, and, no doubt, helpful, as

well, if the full facts of all that Lasker related to

me, could only be made known. If any Senator,

no matter how highly placed at this time, ever gave

improper heed to a "few words from the hand-

somely paid Lasker, the Senate, itself, should be in-

formed of all the influences-no matter from what

source exerted-that can work in Washington to

nullify genuine purpose of that body in investigat-

ing matt ers its good conscience suggests should be

investigated . A denial of such purpose strikes de ep

at t he very roots of the only kind of government

that long can endure among a free people .

But an even more dangerous and disgrace-

ful element shortly was to make itself known to

me in presenting a shocking proposal that caused



New Dealirium 22 1

me quickly to refer the matter to the Federal Au-

thorities for proper handling . Big national politics

stooped low for money wanted! Further revelations

were to be forthcoming that pictured national fig-

ures indulging in practices unworthy even of the

cheapest of ward politics!



CHAPTER XVIII

Books for Sale!

During the two months following the

Lasker proposals, the Presidential Campaign of 1936

warmed to a very considerable degree . The general

headquarters of the Democratic National Commit-

tee, ensconced in the Biltmore Hotel across the street

from my New York offices, swarmed with loyal

party workers who shouted t heir praises for the

political purposes of the great New Dealer-a can-

didate to succeed himself .

As time rolled along, I was steadily shadowed, my

telephone wires were tapped at intermitte nt in-

tervals and, as the months went by, my trial on the

indictment which had been rendered so hurriedly

against me, constantly was subjected to adjourn-

ment, t he United State s Att orney requesting addi-

tional postponement each month .

In the oil fields, "investigations" of my current

efforts continued . In this particular respect, how-

ever, I had been enabled, through the friendly act

of a good citizen, to start a substantial drilling pro-

222



Books for Salel 223

gram. Such a stroke of good fortune came from a

Samaritan from Texas. On being informed by me

of my difficulties in obtaining drillers because of the

insistence by governmental representatives upon

scrutinizing drilling contracts and "investigating"

the drillers' connections with me, this gentleman

promptly agreed to drill 6,000 foot oil wells for me

on my own word and without a "scratch of paper"

between us . The cooperation in this kind of a new

deal on the part of this very splendid individual

soon permitte d me to discover a new and big oil

pool, and I shall always be gratefully indebted to

Mr. Tom Potter, of Kilgore, Texas, for the honor of

a lasting friendship with a real man .

Confronted as I was with my difficulties, caused

by those persons of the government who so stooped

to snoop, I became immediately wary on receiving

on one Tuesday, October 20th, a telephone call an-

nounced as coming direct from the headquarters of

the great Democratic National Committee ! Thecaller introduced himself as one John J . O'Donnell,

stat ed that he was speaking from the Democratic

National Headquarters, 'just across the street," and

asked for an appointment to see me .

Taken aback, somewhat, by this new gesture from

such a mighty source, I expressed my surprise that,

in view of my own difficulties with the administra-




tion, anyone connected with the Democratic Na-

tional Committee should wish to see me . I w a s a s -

sured by O'Donnell, however, that before he would

be through with me I would be "wearing a Roose-

velt button ."

Even buttons were beginning to be somewhat

s c a r c e w i t h m e , s o I t o l d m y D e m o c r a t t h a t h e c o u l d

come over to my office . In no time at all he was

t h e r e : r o t u n d , t e n o r v o i c e , s m i l e s a l l o v e r a p r o -

f e s s i o n a l l y f r i e n d l y f a c e .

O'Donnell promptly began to reveal to me how

the Democratic Committee had devised a scheme

to permit them to evade compliance with the Fed-

e r a l l a w r e s p e c t i n g c o n t r i b u t i o n s t o p o l i t i c a l c a m -

paigns. Along with such information, he advanced

an astounding proposal whereby I might, through

the Committee, buy myself out of the troubles the

government had heaped upon me! This could be

done, he said, providing I would "cooperate" with

the Democratic National Committee by giving

them money for some old, out of date convention

books. The transaction, in O'Donnell's own words,

being, not a campaign "contribution," but a

" b l i n d , " i n s t e a d !

During the whole of my life, I always had the

greatest respect for the majesty of the law and of

my own Government . S i n c e t h e d a y s , f i r s t r e m e m -



Books for Sale! 225

bered by me, when early in infancy, I rumbled

across the Kansas state line in a prairie schooner,

my parents patriotically had taught a conception

of America that eschewed any thought other than

that the highest of motives always guided the pur-

pose and functioning of the great American Gov-

ernment. The ideal of that government, in fact,

was conceived by my parents to be one always

characterized by the highest plane of honor ; a

government, if you please, to respect ; to honor ;

to defend, if need should arise, with one's last ef-

fort .

Even now, I like to forget an experience that re-

vealed to me sordid realities of a long and bitt er

struggle, and, instead, still bask in the idealistic

conceptions taught of a great government . Such

conceptions, I believe, absorbed t he minds of the

founding fathers when they established the Ameri-

can system of government, because there seems to

be little provision in our charter of government to

protect against the possibility that, perchance,

through the falling into the hands of cheap politi-

cians, the government, itself, might be turned to

purposes other than honorable . If, indeed, any great

weakness exists in the system originally established

as our very own, it well may be found in t he fact

that, in principle, an ideal founde d upon a basis




of honor, but, t hrough fate, allowed to be manipu-

lated or administered by elements imbued with baser

motives, may fall an easy tool to the d estruction

even of those fundamental principles which it was,

in fact, designed to perpetuate .

As I admire and love the great principles and

ideals upon which the American governmental sys-

tem is based, I despise the invalid acts of unwise or

vindictive governmental officials, and, as well, the

lowly purposes of "fixers," grafters and cheap poli-

ticians whose acts and practices I believe to be sub-

versive of the high motives and purposes of our Fed-

eral government. In that attitude, I believe, also,

that good citizenship requires the exposing of any-

thing at all which may prove to be inimical to the

best interests of our government . As a matter of

fact, in that very conviction, lies the reason for

the writing of this book .

When the representative of the Democratic Na-

tional Committee first came into my private office

I at once demanded to be informed as to the pur-

pose of his visit, asking these words . "What do you

have on your mind?"

Inasmuch as I personally had been indicted for

an alleged scheme in violation of law, I was sur-

prised to be informed that the Democratic National

Committee had a scheme to obtain money under



B o o k s f o r S a l e ! 2 2 7

the false pretense of selling merchandise instead of

accepting campaign contributions, "as such." The

plan, or artifice, I was advised, had been formulated

as a means by which funds could be procured by

the Democrats in a manner to defy revelation by

investigation on the part of the United States Sen-

ate-a scheme by which the law that requires full

reports of all contributions, could be evaded, or vio-

lated, by the clever subterfuge of creating a "blind"

for such contributions in the form of a "sale" of

books or merchandise, which no law requires to be

reported .

In answer to my question O'Donnell immediately

asked me t o "cooperate" with t he Democratic Na-

tional Committ ee .

Mr. O'Donnell : Well, now, here's the way that

we'd like to get you to cooperate with us .

Mr. J o n e s : Cooperate with you?

Mr. O'Donnell : We've got this Democratic Na-

tional Convention Book . The only reason for

its being in existence is to have the committee

know that they're with them in spirit-pur-

chase books! They can buy merchandise . I t ' s

not a contribution to the- (in confidential

tone) it's a contribution to the campaign but

it isn't the type open to Senatorial investiga-

tion .




My nerves being just a little frayed by "investi-

gations" of many sorts, I ejaculated :

"Gee, I don't want any Senatorial investiga-

tion!"

The National Committee 's "book salesman" was

thereupon quick to define the virtue of the Demo-

cratic scheme and to alleviate my fear .

Mr. O'Donnell : Not anything of that sort . Acontribution, as such, to the campaign-they

have to make a list ; but, with the books, they

just report "so many books sold . "

Mr. Jones : Right smart of them .

Mr. O'Donnell : Because we're selling them all over

the country and we have men that don't want

any publicity and that is the method in which

we-that's the only reason for this thing being

in existence . . . .

As O'Donnell pointed out to me how a purchaser

shielded from Senatorial expose, avoided even the

public eye given to those who placed advertisements

in the book, I asked,

"Why do you come to me when I've been so

pursued and persecuted and hounde d by the

New Deal Administration that I just-"



Books for Sale! 229

I was interrupted by his

"Well, now, here's the point. . "

Mr Jones: You are connected with the Democratic

National Committee .

Mr. O'Donnell: I'm in charge of the Democratsof the metropolitan area.

Mr. Jones: How many people have you got whodon't want publicity-what kind of a deal

is made?

Mr. O'Donnell: Plenty, if you ask me .

Mr. Jones: Plenty? Not in as bad a situation asI'm in, have you?

Mr. O'Donnell: Yes . . . . probably 1,000, so far .

Mr Jones: Contributors who want a little-

Mr. O'Donnell: They buy merchandise . They say,"All right, we like the book

." It's a very fine

-the book contains a history of the last four

years and we think it's a very nice thing .

Mr. Jones: A nice book .

Mr. O'Donnell: Yes, it's a nice book, and "we feelthat you should distribute those among the

worthy Democrats in spots where it'll do the

most good. I'll underwrite so many copies of

the book." They write their own checkThey're making it in the form of a contribu-

tion, but actually they're buying merchandise .

They get a receipt ; I give you a receipt .




Mr. Jones : You say that there's no Senatorial In-

vestigation-?

Mr. O'Donnell : Oh, no. But-the only thing is,

those records are kept very confidential . They

have to be because we have been-I mean, men

have given to this and they said, "Now this is

absolutely confidential." There's no one but

Mr. Farley and Forbes Morgan that know any-thing about this .

Mr . Jones : And they instruct you to keep it confi-

dential?

Mr. O'Donnell : Oh, yes-by all means . . . Theorders go right into their office . . . and the

checks ; and it's acknowledged . . . . I ' l l g i v e

you a letter on Democratic stationery bearing

Farley's and Morgan's signature .

Mr. Jones : Is that so?

Mr. O'Donnell : Your check goes to the Commit-

tee . You get a receipt from the Treasurer's

office that you have purchased so many books

for so much money .

Mr Jones : Treasurer of what?

Mr . O'Donnell : Treasurer of the Democratic Na-

tional Committ ee .

Mr . Jones : Well, to whom do I draw my check?

Mr . O'Donnell : To the Democratic National Com-

mittee .

Mr . Jones : And they keep it confidential?

Mr O'Donnell : Absolutely .



B o o k s f o r S a l e ! 2 3 1

Mr. J o n e s : Then-and you say to me that that is

not subject to a Senatorial investigation?

Mr . O'Donnell : It is not because it isn't a contribu-

tion to the campaign as such. You will pur-

chase books .

Mr . Jones : I see .

Mr. O'Donnell : You purchase merchandise, see?

Mr. Jones : Who thought that one up?

Mr. O'Donnell : Well, it's "one of those things . . . . "

Mr. J o n e s : Well, that's a means of getting money

without having it made subject to-

Mr. O'Donnell (interrupting) : Correct . Now,

here's the point .

Mr. Jones: To a Congressional investigation .

Mr . O'Donnell : Correct . And it's a nice gesture

on your part . It shows the Committee at least

you're thinking of them in the campaign .

Mr . Jones : Don't you know what they've done to

me, this administration?

Mr . O'Donnell : Yes . . . you're in a spot. I mean-it's not too bad, it's one of those-

Mr. J o n e s : Well, I'm certainly in a spot . You've

got me right, there .

Mr. O'Donnell : Yes-well, I-

Mr. Jones: Will it d o me any good?

And so, t he scheme of the Democratic National

Committee to get around t he law in the obtain-




ing of money, and to avoid publicity by the route

of a Senatorial investigation had been outlined as

an artifice that clearly put the Committee out of

the business of soliciting campaign contributions

and into . the business of selling an out of date politi-

cal "Convention" book that, long since, served its

purpose at the rollicking, ballyhooing Philadelphia

meeting of the Democrats months before .

O'Donnell unfolded to me, in an apparent at-

tempt to be confidential, the real reason why he

had come t o see me . "Personally," he said, "I'll tell

you why I'm in here. I'm a very good friend of

Keith Morgan. Do you know Keith?"

Mr . Jones : No, I don't know him .

Mr. O'Donnell : He's one of the closest friends of

the President in the South . He's got to be in

this picture .

Mr. J o n e s : He's close to the President?

Mr. O'Donnell : Very close .

Mr. J o n e s : Now, do you work through him?

Mr. O'Donnell: Occasionally .

Mr. J o n e s : And would you work through him in

my case?

Mr. O'Donnell : I certainly would . I'd take it

through him. I think the more you have bat-

ting for you the better off you are .

Mr. J o n e s : Well, can you get all of this array of



Books for Salel 233

good, powerful Democrats here to go to the

bat for me? How can you do that?Mr. O'Donnell : I'll have it worked through Keith

Morgan .

Mr. J o n e s : Think he can do it?

Mr. O'Donnell : Yes, I know he can .

O'Donnell advised me that t he book purchase

plan was the way to get things done . "Have it con-

firmed," he instructed, "and, the day after election,

step right into headquarters and say, `Now, boys,

what are you gonna do for me?"'

Mr. J o n e s : You said they can do something .

Mr. O'Donnell : Yes, that's right .

Mr. J o n e s : Before I give you any money, I want to

know what you're going to do for me.

O'Donnell hinted strongly that if I made a pur-

chase of the books he was offering I could have the

services of powerful individuals, either of the Demo-

cratic Committee or closely affiliated with it, in

having my troubles with the government ended.

He said he couldn't, at the time, promise me in

writing, but he did advise me what was necessary

for me to do in order to obtain t he powerful in-

fluence he insisted would be available to me, pro-

viding, of course, I made the purchase .




Mr. O'Donnell : Here's what I think . Here's the

thing that I want you to do and I think it

would be a d-ned good thing for you to do .

Mr . Jones: All right, out with it .

Mr . O'Donnell : Underwrite a thousand of these

books .

Mr. Jones : How much are they apiece?

Mr. O'Donnell : $2 . 5 0 a copy .

Mr. Jones : That's $2500 . 0 0 . Two thousand five

hundred dollars. Supposing I give you two

thousand five hundred dollars . What will you

do for me?

O'Donnell told me that on the very day after the

election he would be at my services, stating it in

these words :

"Now, I will-the day after election-I'll step

right to the bat for you . "

The "book salesman" was evasive as to exact

promises, but he continued to assure me that if I

would but advance the money he sought, I could

depend on being taken care of immed iately after

the election . In face of my requests for a categorical

statement from him, or a letter from somebody else

of the Committee, he insisted that he could not ac-

tually go on record to the effect that "everything

will be white-washed . "

But I asked this cog of a smooth-running, well-



B o o k s f o r S a l e ! 2 3 5

oiled machine, "Why, that's what you're implying

by this conversation . "

Mr. O'Donnell : But that can't be done in that-

in so many words .

Mr. J o n e s : You mean you can't put it on record

that way?

Mr. O'Donnell : That's the idea .

Following the price quotations made by O'Don-

nell for the books the Democrats had for "sale,"

he phrased in his own way what I could expect by

stating that the Committe e would be "glad to run

an errand" for me .

"Underwrite a thousand of those books," said

Mr. O'Donnell, "of which you want one hundredhere, or twenty, or fifty, or two hundred . The

Committee can send the rest where it will do the

most good, at their discretion ."

"After that," he continued, "if you ask the Com-

mittee for a favor after election, we'll be glad to

run an errand for you. Let me put it that way . "

Mr. J o n e s : Now all right . If I give you two thou-

sand five hundred, you'll be glad "to run an

errand" for me .

Mr. O'Donnell : That's right .

Mr. J o n e s : Now, just be twee n you and me, you'd




get somebody in the Committee , Morgan, or

whoever he is-

Mr. O'Donnell : That's right .

Mr. J o n e s : . . . to do the necessary things with

Lamar Hardy down here to get my case n o l l e

prossed-is that what you mean?

Mr. O'Donnell : I'll do my damnedest .

I was advised that the transaction would be kept

so confidential that the United States Senate could

not get at the records . And the famous Mr . Farley,

along with the Democratic Treasurer, would be

the guardians of the secret!

Mr. J o n e s : Well, who would know that I made a

contribution to this-

Mr. O'Donnell : Mr. Farley and Mr. MorganMr. J o n e s : That I did the buying?

Mr. O'Donnell : Because they would know it .

They'd know about it immed iately .

Mr . Jones : Mr. Farley would know it?Mr . O'Donnell : And Mr. Morgan .

And I asked this esteemed representative of the

nation's dominant political party that even then, in

campaign battling was condemning chicanery,

hypocrisy, graft and fraud, the following :

"And you say to me, that if I do that you think

my case will be forced out?"



Books for Sale! 237

And the representative of that which is good in

Government again replied, "I'll do my damnedest!"

O'Donnell then e xhibited a copy of the famous

book, exclaiming as he produced it, "It's a beauti-

ful thing-if you can conceive this thing .

And as I turned the pages I observed, on viewing

the pictures of many of those Democrats who held

the highest positions of honor capable of being be-

stowed by a trusting people : "I guess it's a good

book. There's the President of the United States

to start it off with . "

Mr. Jones : Does he, does Roosevelt know anything

about the way this book is merchandised?

Mr. O'Donnell: You bet your life he does, and he

approved it!

Mr. Jones : He approved it?

Mr. O'Donnell : Yes, he's approved it . Why he was

sore because the liquor ads went in these and

then finally he let it go .

Mr. Jones : Does he know it's a sort of blind for

contributions?

Mr. O'Donnell : Why, sure he does. Can't be any-

thing else!

And, on observing other pictures-

Mr. Jones : There's Homer Cummings. Does he

know about this book?




Mr. O'Donnell : I should say he does . He posed

specially for that photograph .

Mr. Jones : For this photograph?

Mr. O'Donnell : Yes .

Mr. Jones : Posed specially for a photograph for this

"blind for contributions"?

Mr. O'Donnell : (Laughing) Certainly!

Mr . Jones : He shouldn't do a thing like that .

(More laughter by O'Donnell .)

That's terrible .

Mr. Jones : (reading aloud)

"Department of Justice by Homer Cummings,

Attorney General ." Posed especially for this

"blind alley" book. Can you beat that?

And as we ran through the pages to beam upon

many familiar faces of those only rece ntly made

great-

Mr. Jones : Here's Mr. Farley. Did he pose specially

for that?

Mr. O'Donnell : I guess he did .

And after looking over t he ent ire panorama of

greatness-

Mr. O'Donnell: Now, there's the picture!

Mr. Jones: You think you can do something for

me, eh?



Books for Sale! 239

Mr. O'Donnell : I'll do my damnedest . I think I

can .

Mr. J o n e s : You think you can to the point where

you can solicit me to pay two thousand five

hundred of my money in the hope that your

thoughts are right?

Mr. O'Donnell : T h a t ' s r i g h t .

I then told the gentleman that I would think

over his proposal and made an appointment to see

him again on the morrow . H e s t r e s s e d t h e d e s i r -

a b i l i t y o f k e e p i n g t h e m a t t e r c o n f i d e n t i a l a n d h a n d -

ed me a receipt for $2,500 .00 which actually had

been prepared prior to his coming to my office, he

apparently having felt secure in the confidence of

his salesmanship ability with respect to the real

thing the Democratic National Committee had to

s e l l t o o n e w h o , i n h i s o w n w o r d s , h a d b e e n p u t " i n

a spot!"

The Democratic National Committee, in a man-

ner unknown to me, learned of the fact that I had

made some kind of a record of O'Donnell's conver-

sation with me. Newspapermen came to advise me

that Mr. Forbes Morgan, Treasurer, stated that he

h e l d a n a f f i d a v i t f r o m O ' D o n n e l l a n d t h e p r e s s c a r -

r i e d t h a t o f f i c i a l ' s q u o t a t i o n t h a t t h e a f f i d a v i t w a s

one "repudiating that alleged dictaphone record ."

A denial of such sort struck me as really very




amusing . The characterization did not, of itself,

deny the fact that a conversation had been held,

neither did it deny the truth of what the record

stated had been said . The very strange part of the

quickly prepared de nial, however, was that it ac-

tually had been issued prior to the time I had

made the record public and before anyone possibly

could have known what my record was to disclose!

Thinking that perhaps the affidavit "repudiat-

ing" the "record" had been made under the man's

oath before the fact concerning the kind of record

I actually had made was known, and to save any-

one from committing the egregious error of deny-

ing the truth told by a simple phonographic nee dle

as it took its story from a mechanical disc record, I

eliminate d further squirmings and wabblings of hu-

man tongues by summoning representatives of the

press to my own office where, to clear all doubt as

to the "alleged" record, I reproduced, on the loud

speaker, the voices of O'Donnell and myself in the

conversation . Press comment on the matter was

widespread throughout the country .

I filed transcript of the recorde d conversation

with t he United State s Senate Committ ee on Cam-

paign Expenditures, as well as with the United

States District Attorney in New York City .

The Chairman of the Republican National Com-



Books for Sale! 241

mittee called upon the Senate Committe e for action

against those responsible for improper solicitations

for campaign funds, but that Committee subse-

quently held, however, that no law had been vio-

lated in the premises .

The United States At torney issued subpoena for

two of my technicians who made the recordings,

summoning these gentlemen as witnesses before a

Federal Grand jury, in a specified room of the Fed-

eral Building in New York. On appearing at the

room at the time designated, the witnesses found no

Grand jury present. They then presented them-

selves to the United States At torney who, through

an assistant, instructed them to return on the fol-

lowing day, but to telephone before coming down

to his office. On telephoning, according to instruc-

tions, the witnesses, on that second day scheduled

for their appearance, were told to come to the

United Stat es Attorney's office on the following

day, but, again, they were advised to telephone

before making the trip .

In the afternoon, of the second day, the United

State s Attorney advised the press that the Grand

Jury had found, on investigating the evidence pre-

sented, that no law had been violated .

When the witnesses t elephoned on the third day,

they were informed that they would not be need ed .




I personally was never even invited to appear

before any authority in connection with any phase

of the investigation-if such, indeed ever took place .

The minority leader of the House of Re presenta-

tives at Washington, the Honorable Bertrand H.

Snell, requeste d a transcript of the recorded con-

versation with O'Donnell, and, on its receipt from

me, filed it and other information with the Att or-

ney General of the United State s, asking whether

the Department of justice had instituted an inves-

tigation to determine whether Section 313 of the

Federal Corrupt Practices Act had been violated by

sales of books by the Democratic Committee. In

Mr. Cummings' reply, finally made public underdate of December 24th, 1937, Congressman Snell

was advised t hat :

"A comprehensive study of the law and the facts

has now been completed, and the conclusion has

been reached that a criminal prosecution would not

be warranted. "

In about two weeks following the Democratic

Committee's book-selling attempt, President Roose-

velt, at the zenith of his popularity, was reelected

and swept into office by a huge vote in that Novem-

ber Election of 1936 .



CHAPTER XIX

Pax Vobiscum

My counsel and I had thought, during

the fall of 1936, that possibly, for political reasons,

the administration had been delaying deliberately

my trial until after the November election . When,

therefore, on the first of 'December, the trial again

was postponed for another thirty days, my patience

became thoroughly exhausted and I instructed

counsel to oppose with his greatest vigor any fur-

ther delay .

Accordingly, on the first of January, 1937, when

the government once more asked further adjourn-

ment, my counsel demanded an immediate trial,

pointing out to the judge the devastating effect

upon me of the policy of delay which characterized

the action of the United States Attorney . The trial,

nevertheless, on the desire of the government, again

was postponed for another thirty day period .

We concluded that surely we now would be giv-

en the privilege of a trial on the merits of the issue

243




that had been created by the charges in the indict-

ment, which, strangely, had so quickly followed my

victory in the United Stat es Supreme Court . We

therefore, at considerable cost, made full arrange-

ments to proceed when the case next should be

called in the first week in February .

During all the intervening time, it should be

remembered that the "investigating" of my every

activity in the oil fields and elsewhere continued

without abatement. My clients were constantly in-

te rviewed , my personal movements closely watched,

and the general "grind" of my business destruction

went forward with cruel effectiveness .

I was present and ready to proceed with my coun-

sel in February when my case was again called .

To my amazement, anger and disgust, however, the

United States Attorney again requested adjourn-

ment for the traditional thirty days. Spirited clash-

ings between the attorneys of the respective sides

enlivened, for me, t he short period of time it re-

quired for the judge, again, to allow another ad-

journment until the first week in March!

For one who never has been subjected to the

treatment suffered by me in my long struggle for

just an opportunity to prove my innocence of the

serious charges made against me by the government,

it must be difficult to realize the terrible effect of



Pax Vobiscum 245

such continuous delay. The worry incident to the

unusual ordeal ; the great expense of it all ; the tan-

talizing effect of hope destroyed, courage shattered,

confidence in all justice doubted-all combine to

weaken even one's de termination for strong de-

fense against se emingly insuperable odds . "You

can't lick the government" dins into the conscience

of one so pressed, to write futility as answer to

every question arising from one's own communion

with one's own thoughts .

Additional burdens must be shouldered, however,

and preparations anew went forward to what we,

again, felt sure would be, as the columns call it,

"My Day." When March rolled around, therefore,

we were on hand in every expectation that my case,

long under intensive preparation by several different

agencies and departments of the government and

whipped by the fury of several tempestuous squalls

of publicity, would be called for trial .

When, again-and I thought to the very shame

of the government-the United States Attorney,

once more, with bland countenance, asked the

Court to postpone my trial for still another thirty

days, my counsel, Mr. Fischbach, goade d by his

realization of the devastating effect upon me and

my family of such seeming torture, eloquently de-

manded a surcease from the delaying tactics of the




government. The judge once more, however, al-

lowed the adjournment but, at this time, he notified

the United State s Attorney that if another request

for delay beyond t he April term of court were to

be made, he would e ntertain a motion by my coun-

sel to dismiss the indictment on the ground of "lack

of prosecution . "

The April term, therefore, saw my trial finally

underway-one whole year following the decision

of the Supreme Court in my favor, and the Grand

Jury proceeding that produced the indictment

which immediately thereafter was brought against

meAt the trial, my legal staff was headed by the

Honorable Lloyd Paul Stryker, of New York, as

Chief of Counsel-a gentleman characterized by a

very high sense of honor ; sincere and earnest in

his endeavors ; most capable in every detail of prep-

aration and presentation ; thoroughly genteel as an

associate ; tireless and fearless as well, in his work .

He had as associates Mr. Fischbach and an Oklahoma

oil lawyer .

If a perfect description of my trial were possible

to flow from my humble pen, no outstanding or

sensational occurrence would be related to quicken

the pulse of the reader . It had been rumored that

J. Edward Jones was to be convicted by "atmos-



Pax Vobiscum 247

phere"-and, as the history of the trial was record-

ed, "atmosphere" was about all that was offered in

the way of incriminating evidence .

Government witness after government witness

came forward-a crippled man exhibiting hideous

physical deformities, a deaf witness, an elderly, poor

lady nearing the century mark, a blind gentleman

-a parade to excite the sympathy of a jury of

twelve men!

But cross-examination of the government wit-

nesses by Mr. Stryker, brought out the fact, time

and again, that such witnesses had no quarrel with

me-always had been dragged into the case by the

government itself and forced to appear against me!

The trial went on, day after day, and week after

week, until the United States At torney had con-

sumed three weeks of time in his efforts to convince

twelve men that I was a criminal and that the

world would be the better were I to make my

home in a penitentiary . 'Atmosphere, " however,

instead of thickening into something concrete, di-

luted itself perceptibly into nothing more substan-

tial than very thin air . Indeed, my counsel advised

me at about three days before the government

finally rested, that if nothing were to be forthcom-

ing of a nature more damaging than that which

already had been presented, they would be prepared




to advise me that the government's case had col-

lapsed!

When, therefore, the Unite d States Attorney ac-

tually rested his case without having unearthed any-

thing to cause concern, my counsel, one and all,

took the view that, since two and one-half years

had been spent in preparing the case against me

and three weeks had been required to present it, and,

in their opinion, the government had failed even

to "make a case," we could, in confidence, leave the

matter to the jury without putting on even one

character witness or one scrap of paper in my de-

fense .

I, at first, opposed the strategy recommended by

my counsel as I was absorbed with the desire to

relate to the jury a long list of items I had prepared

for my defense . On listening to the analysis of the

government's presentat ion which my counsel out-

lined to me, however, I came to the realization of

the wisdom of the conclusion of my lawyers . My

counsel, t hereupon, surprised the courtroom audi-

ence, by permitting my case to be decide d by the

Jury from the one-sided present ation that three

weeks of effort had produced for it .

With the record the government had made , there-

fore, punctuated only by cross-examination of the

government's own witnesses, the jury, after clos-



Pax Vobiscum 24 9

ing arguments, went out to decide my fate . They

retired at exactly twenty minutes to twelve o'clock

on the morning of April 30th, took plenty of time

out for lunch and returned to their box precisely

at twenty minutes past three that afternoon . In a

few seconds thereafter, the foreman speaking to end

a year old suspense, gladdened my heart and those

of my counsel and many friend s there present by

uttering the words, "Not guilty!"

A full sense of all my responsibilities toward those

in this life who look to me for happiness and sup-

port came upon me as I listened to the words that

meant so much. My thoughts and feelings at that

moment, however, are not for record .

Counting the decision in my case made by the

Supreme Court of the United States as my first,

the conclusion of my trial represented the second

great victory in my long and costly struggle for

individual rights and for my personal liberties .

After April 30, 1937, only one major legal action

with the Government remained for disposal-the

old original injunction suit brought against me by

the Securities and Exchange Commission in Febru-

ary, 193 5 . This suit resulted from the extraordinary

exploits of John L . Flynn, together, of course, with

his comrade, Rabell, whose good name had been




protected when Flynn of the Securities and Ex-

change Commission took the stand as the sole wit-

ness for the defense at Rabell's trial. Be it remem-

bered that Rabell it was who had sworn to the

affidavit supporting the complaint the Commission

had made against me. But Flynn, of the "Truth

in Securities" Commission, under oath solemnly

administered, swore before fellowman and Maker,

that the honorable Commission did not intend to

us the "affiant" as a government witness, thereby

paving the way for the saving of his brother in

crime-hunting, whose indictment thereupon was

quickly dismissed by the honorable judge .

As preparations now were begun by me for a trial

on the merits of the old complaint the Commission

had brought against me, the contacts naturally had

between my counsel and those of the Commission

brought about discussions that led to proffers of

settlement of that case . Without needless discussion

of a rather insipid and protracted series of negotia-

tions, suffice to say that this legal action from

which had come both the Supreme Court and

my indictment cases, died a somewhat ignominious

death . This occurred when the Securities and Ex-

change Commission signed, with me, a stipulation

which, on whereasing the fact that certain allega-

tions had been made by the Commission and also



Pax Vobiscum 251

the fact that such allegations had been denied by

me, carried an agreement that, because of such

profundities, the legal action instituted by the Com-

mission was to be discontinued! This was done with

the agreement on my part also, that I would not

do in the future, that which I de nied e ver having

done in the past and which I never had professed a

desire to do at any time or at any place .

The stipulation was filed at New York on Jan-

uary 3rd, 1938, thereby ending without trial a

costly litigation and dissolving the temporary in-

junction to which I had voluntarily consented and

for the glory of which Mr. Flynn had celebrated

in such hilarious manner in my Biltmore quarters

on that famous night d escribed in a previous chap-

ter .

The "most effective weapon" was resorted to in

the following words announcing the event and is-

sued as a publicity release in Washington by the

Securities and Exchange Commission .

"The Securities and Exchange Commission an-

nounced yesterday that a stipulation had been filed

in the United States District Court for the South-

ern District of New York in which J . Edward Jones

and four of his business associates agreed not to en-

gage in acts and practices alleged in an injunction

suit brought against them by the commission in




February, 193 5, which allegations were d enied by

Mr. Jones and his associates

.

Upon the filing of the stipulation the Securities

and Exchange Commission discontinued the pro-ceedings . "

Thus ended three years of hard struggle in a bat-

tle of individualism against the arbitrary powers

of a despotic tyranny in America . In a land gov-

erned by principles ded icated to free dom and lib-

erty, petty vindictiveness ran riot to violate the

cardinal precepts of such treasures . In a nation

whose very foundations were built around the pil-

lars of justice, political extortion and graft played

hide-and-seek in the shadows of the White House .

In a government that governed through agencies

touted in "holier-than-thou" fashion as "truth"

agencies, crookedness and "framings" were the

weapons to besmear reputations honestly earned

through years of effort . In a regime of men who

usurped authority to write their own rules and

regulations and who arbitrarily enforced such as

though they were the legitimate laws of the land,

"government by men" became the new Americana.

In circumstances such as these, it fell to my lot

to fight the battle . It might well have been the

reader of these lines who thus was honored . Indeed,



Pax, Vobiscum 2 53

he may, even yet, face, unexpecte dly, that which

came to me. But I sincerely hope that no power

ever shall long exist in America, to smother opposi-

and so they indicted me-new deal-j edward jones-1938-249pgs-pol

Documents