This report has been published in book form and, thinking it would be of interest to you, I am sending you a copy under separate cover…”
Begun in Pennsylvania and expanded into Ohio and Texas, Sun Oil Company was founded by Joseph Newton Pew and, after his death, his sons, including J. Howard Pew, took over its management. The company went public in 1925, which might explain the interest of Stotesbury, a banker at Drexel, Morgan & Co., at the time one of the world’s largest banks. (Incidentally, Stotesbury had become Douglas MacArthur’s stepfather-in-law in 1922 when the brigadier general married his stepdaughter, Louise Cromwell Brooks.)
In December 1924, at the urging of petroleum industry executives, President Calvin Coolidge (1872-1933) established the Federal Oil Conservation Board (FOCB) made up of his secretaries of War, Navy, Interior, and Commerce, as noted in our letter. At the time, the oil industry had been devalued by oversupply from a California oil boom. The FOCB was formed to investigate federal oversight of oil production justified by the Constitution’s clause that Congress “provide for the common defense” with the idea that a deficit of oil would leave the nation at a disadvantage during times of war. Specifically, some in the industry proposed the establishment of oil districts to “limit drilling to the minimum number of necessary wells. Presumably, this would have put an end to oil fields (like the Los Angeles Basin) where the derricks were almost interlocking at the bases,” (“Origins of Federal Oil Regulation in the 1920’s,” The Business History Review, Nordhauser).
However, by the time the body conducted its inquiries, the oil industry had stabilized and, when questioned, “most executives [stated there was] no possibility of a future shortage, no significant waste in present oil operations and no need for any laws to alter property rights in oil fields… In May 1925, the API [American Petroleum Institute] issued the findings as a book, American Petroleum: Supply and Demand, which, like the replies to the Board’s questionnaires, concluded that there was no urgent need for new laws. The Institute report predicted that there was an oil reserve in the United States sufficient for national defense purposes and other essential uses until the time when science would develop new sources of energy or substitute sources of oil, such as coal, lignite, or shale,” (ibid.). In our letter, Pew concurs with this conclusion.
The FOCB held public hearings the following year and, eventually began, “at the behest of oil executives… to compute and publish estimates of the national market demand for petroleum for the next six months, and to divide this forecasted demand among the leading oil-producing states… By 1933 an oil control program was beginning to function, and the New Deal continued that program, improved upon it, and made it permanent. Within industrial circles, the focus of discussion had completely shifted since the 1920’s when the majority of oil men had opposed planning and production control. The central issue during the New Deal was to what extent should federal regulation replace state programs in order to make oil control even more effective,” (ibid.). In 1934, the FOCB gave way to the Petroleum Administrative Board.
Folded with some paper loss to the first page at the corners. Pencil note in the upper margin of the first page and a printed bust portrait of Pew pasted to the lower portion of the second page. In very good condition.
