Stabilization - Governmental Regulation of Oil Production

The subject of this paper implies three questions: whether regulation is necessary; if so, what sort of regulation is wise; and, finally, by what government the power to regulate is to be exercised. In the year 1937 emphasis falls on the third of those questions. This contrasts with the situation prevailing a dozen years ago, when the question was whether regulation was necessary at all; and with the situation a few months ago, when the third question seemed answered by the Supreme Court decisions on the National Recovery Act, Agricultural Adjustment Act and Guffey Coal Control Act, and by the ratification of the Interstate Oil Compact. It then appeared settled that the State and not the Federal Government possessed the regulatory powers and, granting that conservation measures are a recognized necessity, the problem seemed to be to develop the wisest kind of regulation that the Constitution would permit. Today, by virtue of developments during the first months of 1937, the oil industry is faced again by the question of whether the Federal Government is to have power to control its operations, along with those of the other basic industries. Developments in Governmental Control There have been three recent developments. The dominating one is the President's proposal that he be authorized to increase the size of the Supreme Court to 15 members. The implications of that plan ought to be perfectly plain to the oil industry. This suggestion is made in lieu of offering an amendment to the Constitution, to reverse the Supreme Court decisions mentioned. In those decisions the Court held that production does not constitute commerce, and hence that the Federal power to regulate interstate commerce does not extend to the regulation of production. These holdings were contrary to the Government's contention that the stream of commerce begins in the factory and ends with the consumer and may be regulated at any point from beginning to end. That position was urged in the Government briefs in Amazon Petroleum Co. v. Ryan, defending the petroleum code, and repeated as late as Feb. 10, 1937, in the case of National Labor Relations