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type of Spellacy, were asking themselves what would become of the independent oil men who had deeded their properties to the agency, if the agency fell into the grip of the General Petroleum, and the General Petroleum turned out to be controlled by the Standard Oil.
They accordingly refused to turn their properties over to the Independent Producers' Agency. There was therefore no practical way open for them to get their oil to market.265 They capped their wells.
But these oil men didn't propose to sit idly by while over-head charges ate up their properties. They accordingly went before the Legislature asking legislation to declare pipe lines common carriers, and to place them under the jurisdiction of the State Railroad Commission.
Francis J. Heney, before the Senate Judiciary Committee, stated the case of the proponents of the measures.
“The Standard Oil Company,” said Heney, "has monopolized the oil industry of the rest of the United States. It is moving now on California. The time has arrived when we must either declare that this great natural energy of oil must remain free and independent or consent to its monopoly. A Wall street financier has said that after the eggs are once scrambled, you cannot unscramble them. The eggs have not yet been scram
265 They could, of course, have sent their oil out by rail at a cost of 42 cents a barrel. It was held before the committees, that the oil carried by pipe line could be put down in San Francisco for eight cents, and in Los Angeles for five. The average cost of producing a barrel of oil is 35 cents. This, plus rail transportation charges, made the cost of putting a barrel of oil into San Francisco or Los Angeles, 77 cents. The selling price of oil was 75 cents. To have sent the oil out by rail would have meant a loss of two cents on every barrel shipped.
bled in California. We must prevent their being scrambled. We must meet this monopoly at the State line and say to it in unmistakable language that it shall not destroy this great industry of California."
And to this end, Heney urged that the pipe lines within the State be made common carriers.
On the other hand, the opponents of the common carrier bill were positive in their statement that Standard Oil was back of the measure. They admitted that the pipe line is the corner stone of monopoly, but they insisted that it is likewise the cornerstone of successful competition. They denied that the General Petroleum Company was in any way connected with the Standard Oil, E. J. De Sabla, Jr., president of General Petroleum, making affidavit to that effect. They held that the bill, so far as it attempted to make the pipe lines of the Standard Oil common carriers to be unconstitutional; that even though the Standard pipe lines were made common carriers, nevertheless, the Standard would be benefited by enactment of the measure; that the effect of the passage of the bill would be to fill the pipe lines of the Standard's competitors up with low gravity oil, unfit for refining, and thus prevent successful competition with the Standard in the gasolines and other distillates.
Such was the problem upon which the Legislature was called to act. It was a problem upon the solution of which the industrial independence of the State in large measure hung. It was closely akin to the Conservation problem. That the Senators and Assemblymen who attempted its solution had the machinery for collecting correct data bearing upon it, or had the time to deal with it, or the expert training and knowledge, none pretended to say.
After weeks of argument the Legislature, acting with the best light it could secure, decided to make the pipe lines common carriers. Bills to that end were enacted. Governor Johnson signed the common carrier measures.
Another measure (Assembly Bill 52) bearing directly upon conditions in the oil fields, passed both Houses. It provided for organization and government of districts for the purpose of protecting lands producing gas or oil from damage from intrusion of water.
Oil men declared that the oil sands should be protected against such water intrusion. But the point was also made that the enactment of the bill as presented would place the small producer at the mercy of the larger. Generally speaking, oil men who were urging legislation to make pipe lines common carriers did not support this bill. The charge was openly made that its passage, especially in Kern county, would place the small producer at the mercy of the Standard and Southern Pacific companies.
Governor Johnson did not sign this measure.
THE MORAL ISSUES.
During the years California was under the rule of the Southern Pacific, the tenderloin element-brothel keeper, saloon keeper, gambler-made one of the machine's most dependable groups. This group was permitted to control Committees on Public Morals, to the end that measures striking at gambling, saloon or prostitution exploiting interests could be blocked in committee. 26 But with the breaking down of the Southern Pacific machine, the tenderloin lost its grip on the State Legislature,287
At the 1909 session, when the movement against the machine was given its first pronounced expression, an Anti-Racetrack Gambling bill was passed, which was the beginning of the end of that form of gambling in California.268
At the 1911 session, another step forward was made in the passage of a Local Option law, which gives every community power to decide at the polls whether or not saloons shall be licensed in that community.26
266 See Story of the California Legislature of 1909, Chapters VI and VII.
267 See "Story of the California Legislature of 1911," page 28, organization of the Senate Public Morals Committee.
268 A partial exception must be made to this statement. At San Francisco, owing to the inability of the authorities to enforce the law, this form of gambling has continued.
269 See “Story of the California Legislature of 1911," Chapters XV, XVI, XVII. The fight made against the Local Option bill at the 1911 session was one of the most remarkable in the legislative history of the State.
Under this law, nearly a thousand saloons have been closed in California. This is important. But the best effect of the Local Option law has been that it has rendered investment in saloon properties insecure. Formerly such investments were, from a dividend-returning standpoint, regarded highly. Exploiting capital invested largely in such enterprises. But under the Local Option law, the saloon-backing capitalist may at any time have his investment made useless by an adverse vote of the community. Instead of promoting the groggeries, therefore, capital, unashamed of such investments but realizing their insecurity, naturally seeks to withdraw from them.
The third blow at tenderloin interests was delivered at the 1913 session, when the Redlight Abatement act was passed.
The exploitation of the unfortunate women of the underworld offers to the investors in dirty enterprises, and to the corrupt politician, the most profitable of all opportunities. The political and financial exploiters of the social evil have millions of unclean profits at stake. Their opposition to legislation which may interfere with such profits is even stronger than that offered to antigambling measures and the Local Option legislation.26va
Through its domination of the Legislature during the days of machine rule, the tenderloin element had been able not only to block legislation adverse to its interests, but to make itself fairly secure in its activities. Controlling Legislatures and Boards of Supervisors, mu
269a The passage of the Abatement act will be considered in another chapter.