facts concerning the essential self-liquidating character of these loans from rentals and bonuses now being paid on pooled tracts regardless of any production of oil. Collateral for the loan sought would be deeds representing a one-fourth interest in royalty acres acquired by all pools or shares of stock representing those deeds in the two title holding companies for that one-fourth interest. Against this collateral there are no overhead charges. The basis on which the loan would be made would be a full per acre royalty value and would be approximately 4 percent of the 1930 appraisal of Huntley & Huntley, world famous petroleum acreage appraisers, of Pittsburgh. It would not exceed 20 percent of any appraisement under present conditions. With production now obtained in the new Conroe field. of Texas we expect to show for the pools earnings several times the interest requirements of the loan we will seek. The actual intrinsic value of collateral will be several times the amount of the loan. We will be prepared to back up our application with endorsements of soundness of loan bankers, geologists, leaders in the oil industry, and others. Determination of the merits of this loan will prove extraordinarily simple, far simpler than almost any other type of loan. Our request is so modest as compared to our acreage values and earnings as hardly to require expert testimony.

Under normal "conditions banks consider this style of collateral excellent, and the manner in which pooling liquefied frozen farm assets cannot be given greater support than the record of consideration which banks gave to this type of collateral in the days when banks were recognizing any collateral and were making loans. By liquefying these frozen farm assets the Government will not be out any money. The money loaned will not be used for any other purpose than the payment of organizing expenses, thus putting large numbers of farm organizers to work, and the payment of minor overhead expenses in supervising this work. The loan is purely permissive and not mandatory. Farmers who join this movement can be assured of a regular income and of collateral which will tide them over periods of inability to pay interest and taxes which threaten their tenure.

The CHAIRMAN. I thank you very much, Mr. Chamberlain.
Mr. Pennington desires to make a statement.

STATEMENT OF HARRY PENNINGTON. PRESIDENT SAN ANTONIO INDEPENDENT PETROLEUM ASSOCIATION, SAN ANTONIO, TEX.

Mr. PENNINGTON. You are dealing with properties now of intrinsic value of more than all the allied debts due to our Nation. Those allied debts to our Nation do not equal one half the amount you are dealing with now.

I am going to ask the most serious consideration of two pointsjust two points in this measure. One is that I am presenting a brief on which you will find the names of four associations. The organization of these associations was not brought about in concert. It is the nature of men, as they have acted in all times, in banding together for defense, and we are not on the offensive, so these organizations arose spontaneously in all these districts, and they are all brought together here now for one common end of defense.

I think that will answer the question of why there are so many associations.

Stripper wells: In the first place, stripper wells are wells that have already been taken out. We will answer as to stripper wells, that they have already had their day. Some of them have had their day at $4 per barrel. Now they do not want anybody else to have a day. That is not the answer. The answer is, even if the wells are shut down, it is fact that they are not lost, and we certainly will develop, through engineers and scientists, a method of going down there to get it when we need it, and the price will justify it.

The next one is this: The price charged for transportation does not carry them up to 600 percent that would be back on the stripper wells, and those gentlemen would have their just relief.

I have presented in this brief a situation, without using invectives, that I think would cause any Congress, any legislature, as it were, to invest sword and buckle and protect each individual each individual protect his rights against all the Nation, if need be.

This story I am telling in this brief, we have been subjected to it for 2 years, and the pressure is getting more intense. We will be driven out of the oil business which our industry has started and brought up to its present state. We defy any industry to show that it is using more of the collateral resources and natural resources than we find associated with oil below the ground.

We challenge any industry to show more.

The next is the price of motor fuel in our industry and in so-called controlled countries. In foreign countries, the price of gasoline averages twice what it does in our country. It goes as high as 60 and 70 cents per gallon of gasoline produced in the United States, from 10-cent oil. I ask if that situation appeals to any fair-minded man as being fair. I do not think anyone would say it is fair, and the results which affect our commerce, our oil industry, is that in many foreign countries because of extortion practices. through extortionately high prices, the major companies have been pushed completely out and oil rights have been taken over under eminent domain proceedings, including all the properties distributing it, and we have lost our foreign trade exactly that way. Senator GORE. What countries have done that?

Mr. PENNINGTON. Spain first-Spain appropriated all the property of the Standard Oil Co. Probably she has paid them by now, but she is distributing the property. France is doing it now, Chili is demanding a similar contention.

The CHAIRMAN. Mr. Warner wishes to make a statement.

STATEMENT OF W. W. WARNER, REPRESENTING OKLAHOMA STRIPPER WELL ASSOCIATION, MILWOOD, OKLA.

Mr. WARNER. I represent the Oklahoma Stripper Well Association, the North Texas Oil & Gas Association, and the Kansas Stripper Well Association.

Gentlemen, I would like to answer that the oil business may be good in east Texas, it may be good in California, it may be good up in New York, but it is bad in Oklahoma, and I want to appeal to you. I have no argument on economic or conservation grounds, but

I want to explain a personal point, my intimate contact working in the field and men that are not working. I am sorry our fellows have not sent a lawyer here. I am what they call a stripper well operator. We feel we have a place in the sun. We feel that our condition is serious, and for that reason a group of men in Oklahoma formed this small association. It covers a whole State. We asked the men from Kansas if they would join us and they were unable to do it, and a group from northern Texas came in and they paid my way to come here and paint our picture. Here is the situation. We have-oil went to 25 cents per barrel in Oklahoma, and we cannot produce it from our wells at that price. In order to keep our wells operáting we have cut these men down to $20 a month from $30 a month. On top of that we have many barrels of oil under these wells, and, in my opinion, it is a criminal economic waste to allow conditions to exist that will prevent the future recovery of that oil. I cannot go into the details of this, but I want to tell you one more thing, and I hope it will impress itself on the members of the committee.

In addition to being a stripper well operator I was chairman of the Government's flour distribution committee in our county. In addition to that I am the mayor of a small town down in Oklahoma, for which I get $1 a year. My work in the past year has been confined almost exclusively to try to run our town on practically no money and to take care of these oil men who are on the bread line. That is the reason I am here. I am sorry I cannot tell you the story like it should be told.

We have wells that ought to be worked on that have not been worked on for 3 years for the reason we could not afford to work them. When oil was 15 cents a barrel, as it was a little while ago. we told our men "You have got to work for $20 a month ", and when oil went up we raised our men. Now oil is down again and we

had to lower them.

Senator CONNALLY. Was that a flush field?

Mr. WARNER. It was 25 years ago; yes, sir.

Senator GORE. Can you give us the lifting cost on that oil?

Mr. WARNER. The lifting cost is based entirely on what we pay our men. That is the major item of expense.

Senator GORE. I thought maybe you worked it out on the average. Mr. WARNER. Well, it is pretty hard to tell. We have a lower lifting cost than some of the big companies. In fact, there are very few big companies left. Most of these stripper wells belong to stripper well men. The big companies cannot operate these wells at a profit. We have no overhead.

The CHAIRMAN. Mr. Sandefer has a statement he wishes to put into the record.

STATEMENT OF J. D. SANDEFER, JR., BRECKENRIDGE, TEX.

Mr. SANDEFER. Mr. Chairman and gentlemen of the committee. I would like to have just a few minutes. I appear before you as an independent oil operator of central and western Texas, as president of the Middle West Texas Oil & Gas Association, consisting of 300 members, who are all operators, and, unlike other associations that

D

claim they are independent, we do not have any representative of major crude-oil industry in our organization.

I also appear before you as a representative of the Northern Texas Gas & Oil Association, of north Texas. I represent Mr. J. S. Bridwell, who appeared here recently and who has gone back to Texas. I represent approximately 20,000 stripper wells.

I want to disagree with the statement made by the gentleman a while ago that at one time stripper wells were big as flush wells and that they got $4 a barrel for it. Many wells were small at the time they were drilled or immediately became stripper wells.

I further want to disagree with the gentleman from Texas. I personally have had wells ruined by shutting them down on account of water.

For the benefit of you gentlemen that are not familiar with the stripper well business, one third of the wells in my country make stripper wells, and it is necessary to operate them continuously to keep them from ruining. I have not a single well running in the west Texas field at this time, and I am wondering at this moment whether I will be able to recover them again when I start.

We are unable to lift oil at 25 cents a barrel. We are unable to pay our employees, and there is only one reaction and that is to shut them down; and that is the reason I am here telling you an emergency does exist, in order to conserve that natural resource and, furthermore, in order to help us along in our community with the unemployment situation.

I could talk with you for hours. I have a number of wires here from Wichita Falls Chamber of Commerce and various other chambers of commerce, but I had eight to come in this morning from those localities in my State, asking me to do all in my power to have the situation relieved from what it is as exists in Texas.

I live at Breckenridge, Tex.

The CHAIRMAN. Mr. I. C. Grimm wishes to make a statement.

STATEMENT OF I. C. GRIMM, REPRESENTING THE GOVERNOR
OF THE STATE OF OHIO

Mr. GRIMM. The Pennsylvania delegation might allot me their time. How much time may I have?

The CHAIRMAN. Do you want 10 minutes?

Mr. GRIMM. It might take 15.

The CHAIRMAN. If you want 10 minutes you may go ahead. We are going to stop in a few minutes, and we are going to close this oil hearing this morning.

Senator CONNALLY. Where are you from, Mr. Grimm?

Mr. GRIMM. From Ohio, representing Governor White.

Mr. Chairman and gentlemen, I represent Governor White, of the State of Ohio, his personal representative here, and the oil and gas associations of Ohio, with probably a thousand or fifteen hundred members, and I believe that you people are just beginning to hear the story of the stripper wells from the last two or three witnesses. I would like to show you our condition as it exists in Ohio today. We have some 36,000 wells producing some 18,000 barrels of oil per day. Out of the 330,000 to 350,000 barrels from wells in the United

States, we have about one ninth of those wells. About 250,000 of those wells produce one half barrel or less per day. Three hundred thousand of them produce around one barrel. We feel that the stripper wells are the greater portion of the wells in the United States. Almost 300,000 of them produce less than a barrel of oil out of 350,000 wells in the United States. Certainly those wells employ an awful lot of men and buy a lot of material and keep a lot of factories up.

In my State, I want to disagree with Mr. Jones. He said that the proration gives you more drilling. Our drilling in Ohio dropped from 600 wells, or 1,936 in 1930, down to 695 wells in 3 years on account of proration. Our production prorated there from 7 million barrels down to 42 million in Ohio.

The principal factor in oil production today is the overproduction in flush pools and breaking down of proration orders, many of them which are fatal.

Senator CONNALLY. Overproduction in flush fields or overproduction everywhere?

Mr. GRIMM. Absolutely not.

Senator CONNALLY. You produce all you can get when you produce in your field, do you not?

Mr. GRIMM. Absolutely not.

Senator CONNALLY. I am talking about a well-if you have a stripper well, you produce all you can get out of it, do you not?

Mr. GRIMM. No, sir. We produce one half we can get. We cannot sell it. East Texas has come to Cincinnati and is crowding us out of the picture. We cannot compete with it any more.

Senator CONNALLY. A stripper well never can compete with a flush well.

Mr. GRIMM. We should do it in our own district.

Senator CONNALLY. I say it cannot do it.

Mr. GRIMM. We have been the backbone of the industry for the last 73 years.

Mr. Blalock stated, and I think it was a reflection on my name, and I happen to be one of the five members of the subcommittee and one of the Committee of Fifteen. When we made those recommendations we stated clearly that we suggested the production be held to 2,000,000 barrels a day pending further investigation of the oil business and proper allocation to the different States. We did not say 2,000,000 barrels a day was the market demand and did not intend it to mean such. Furthermore, Mr. Blalock, of Texas-and I tell you gentlemen right here I have never seen a more selfish set of men in the United States than I have run across here in a few of these States that are testifying here.

Senator CONNALLY. I do not think that is a proper matter for discussion for you.

Mr. GRIMM. Mr. Blalock stated that he feels the properties in Texas are being confiscated. They are being allowed six tenths of 1 percent of the production estimated on 120,000,000 barrels per day. Gentlemen, if any States or any properties are being confiscated, it is the properties in the small producing States and not in the State of Texas. They are producing today 60 percent of the market demand of the United States. Still they want more.