Oil, Arms & Economics

Martial law was matched against economic law in Oklahoma last week. The State's oil industry was the object of a dramatic experiment to see if rifles and machine guns can replace supply and demand as price fixers. Conductor of the experiment was Governor William Henry ("Cocklebur Bill") Murray, fresh from his Red River bridge war with Texas (TIME, Aug. 3).

Last month when crude oil prices melted down to 22-c- per bbl. and independent operators clamored for a voluntary shutdown, Governor Murray dug up a half-forgotten Oklahoma law passed in 1915 which prohibited oil production when its sale price dropped below its intrinsic value. On the strength of this law the Governor announced that Oklahoma oil was worth $1 per bbl. and that unless the big refiners posted $1 as their purchase price by Aug. 1, he would order shut in all the flush wells in the State's 27 great pools. Oil prices, under this threat, climbed to 50-c- within a week. There they remained as Aug. 1 came and went. When no shut-in order was forthcoming, oilmen opened pipe-line valves at their gushers, started their pumps to get as much of their August quota as possible above ground and catch any price rise. To their charge of bluffing Governor Murray retorted: "I won't be rushed into this. When I'm ready to shoot, I want to give a lot of these people a lesson in constitutional law."

Early last week the Governor was "ready to shoot." He issued an executive order closing down 3,106 Oklahoma oil wells and proclaimed martial law for 50 ft. around each. Guardsmen were called out to enforce with shot & shell, if necessary, the Murray edict.

Affected were all the wells (except salt water producers) in the State's prorated area. Exempt were "strippers" which produce less than 25 bbl. per day. Hardest hit by the order were the flush fields of Oklahoma. City (30 sq. mi.) and Greater Seminole (40 sq. mi.). With one pen squiggle Governor Murray had reduced the daily flow of Oklahoma oil from 425,000 bbl. to less than 150.000. To newsmen he declared: "The State's natural resources must be preserved and the price of oil must go to $1. Now don't ask me any more damned questions."

When told the oil operators might seek relief in the U. S. courts, Governor Murray exploded: "Just let 'em try to pull that old Federal court injunction stuff on me. It'll be like a jackrabbit trying to tree a wild cat ... Some of these quill suckers-said my action was bad precedent and that if I could do that for oil, it could be done for cotton and wheat. They don't understand that an executive order must invariably follow the law and there's no law to control cotton or wheat production when the price is less than its value."

On the day Governor Murray issued his shut-down order, he called in Cicero Irvin Murray, his second cousin and oil representative, commissioned him a lieutenant-colonel in the Oklahoma guard, sent him forth in command of the oil field troops. No military man, Lieut.-Colonel Murray was ably assisted by Major Abe Herskowitz. About 200 youngsters in khaki made up their military force. Major Herskowitz, in a final "fight talk" at their armory, told them: "Now, boys, you're going on a bivouac. Don't forget to keep your rifles clean." At the Oklahoma City field Lieut.-Colonel Murray picked out an old barn as his headquarters and assigned Major Herskowitz one of its stalls as an office. Then he went outside, climbed the crownblock of an oil well, began to rap out orders to the two companies lined up before him:

"I am acting under orders from the Governor. We're ready to stay here in this field 90 days if necessary. Sergeant, take six men and close down these five wells of the Champlin Company over yonder. Lieutenant, take a squad and shut in those Sinclair wells. . . ."

In three days 90% of the State's prorated wells had ceased to flow. Oil operators offered no resistance to the Murray order. Not a single shot was fired. So tame was the oil war that two young guardsmen were caught dozing under a Sinclair derrick. But despite martial law, economic law held its ground and the price of Oklahoma oil did not rise above 50-c- per bbl.

To help personalize his fight Governor Murray had singled out for attack in his executive order Harry Ford Sinclair, board chairman of Sinclair Consolidated Oil and one of the biggest Oklahoma operators. Oilman Sinclair was accused of exerting a "monopolistic control" on the State's oil industry, of trying to "overthrow the State Government and overawe its legislators," of "filching from the school children's legacy" and intriguing to have Governor Murray impeached because he blocked repeal of the State's oil laws. Retorted Oilman Sinclair: "If the absurdity and injustice of the Governor's proclamation is not clear to all, anything I might say about it would be wasted breath. All the proclamations and troops in the world can't add one cent to the price of oil. It verges on the ridiculous.

Meanwhile the Federal Government did not raise a finger against the Murray order in Oklahoma, but, instead, pointed one of scorn and reproach at Texas and its unregulated oil production. The new East Texas field was bringing in close to 600.000 bbl. per day. Operators there were selling their product at 10-c- and 15-c- per bbl., so low that Oklahoma refiners could buy and transport it to their plants at less than the local price (50-c-) which Governor Murray's order was designed to double. Declared Assistant Secretary of the Interior Joseph M. Dixon:

"There would be no situation in Oklahoma if Texas would cooperate with other states to control her new oil pools. Her failure to do so has dragged the whole industry down, ruining thousands of independent producers, driving them bankrupt into the hands of the great companies, creating great unemployment and hardships."

But even in Texas last week there seemed to be a change of heart. More than half of 60 East Texas oil pool operators, meeting at Tyler, opened a campaign for a voluntary shut-down until prices rise again. They denounced their colleagues who were nullifying Governor Murray's efforts at price-upping by offerering oil to Oklahoma refiners. This week at a large conference a general shut-down agreement for the whole field will be sought.

At Austin sat the Legislature, called in special session by Governor Ross Shaw Sterling to deal with the oil emergency after a Federal court had voided the State's regulation law. But the legislators made small progress toward enacting new statutes. Defeated was an administration bill for a commission to control oil production. Dolefully declared Governor Sterling: "If the Legislation defeats our conservation measures, the oil industry will receive no relief and I don't know what will happen. You may have a corn crib with enough corn in it to feed your hogs all winter, but if you open the crib door and let the hogs run wild inside, your corn will be gone in a couple of days. That's what's happening in the oil burners."

-Governor Murray's definition: "A fellow who sits down to write, sticks a pen in his mouth and finally proceeds to write without thinking."

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