BLESS THE PURE AND HUMBLE: TEXAS LAWYERS AND OIL REGULATION, 1919-36, by Nicholas George Malavis. College Station, TX: Texas A & M University Press. 322 pp. Cloth $44.95.

Reviewed by Kenneth Lipartito, Department of History, University of Houston
 

On October 3, 1930, in the midst of the nation's greatest economic depression, "Dad" Joiner's gusher opened the greatest oil rush in the nation's history. At the 140,000 acre East Texas field, piney woods became a forest of derricks overnight. Real estate values skyrocketed, royalties filled the pockets of drought-stricken farmers, prostitutes and gamblers roamed the streets of small towns, and preachers prayed to God for "oil, more oil."

The last boom, as it has been called, was also the last gasp for free spirited, unregulated production in the United States, at least until the Arab oil embargoes of the 1970s. Flush production in Depression times drove the price of oil to near zero. More crude came out of the ground than could be shipped away or profitably stored. And the proliferation of tiny wells threatened to drain needed pressure from the field, making efficient recovery of this valuable reserve impossible. In the wake of what many oil men called chaos, Texas Governor Ross Sterling sent in 1,300 Texas National Guards to shut down the field. The unprecedented action was the turning point in a long string of events that began in the 1920s and ended finally with mixed state and federal regulation of oil production in the 1930s.

The history of the development of oil regulation has been told many times before. Nicholas Malavis brings a somewhat different perspective to this story, focusing on the law and on Texas lawyers. Texas, as the nation's largest producer, was the linchpin of regulation. In the 1920s, oil producers in Texas had attempted to control production through informal, cooperative methods. With the Depression, the Texas Railroad Commission issued "pro-rationing" orders that limited the amount of oil that could come out of the ground, dividing this quota among producers. These efforts, however, ran up against interest group conflict and constitutional challenges. Large, integrated oil producers wanted to control production in accord with "maximum efficient recovery" principles proposed by petroleum engineers. Small independent producers and wildcatters wanted no limits on the amount of oil they could competitively pump out of the ground. Judges accepted "legitimate" conservation measures, but looked askance at regulation which aimed to prop up prices.

Initially, legal doctrines, especially the "rule of capture," tended to favor free market production. The rule of capture treated oil like a wild animal. The one who captured it owned it. That meant that producers, whose wells penetrated a common pool of oil, were allowed to draw off as much of the black stuff as they could, even if in doing so they depleted reserves for others. Under such conditions, competitive drilling became a producer's nightmare. Each leaseholder had incentive to drill as many wells as possible, before someone else captured the oil. Proliferation of wells led to inefficient production, not to mention low prices.

Gradually, with the help of astute Texas lawyers, these common law rules were modified in accord with modern notions of efficiency. Texas Railroad Commission orders, which were struck down by conservative justices, gained acceptance. Congress finally capped the gusher when it passed, and the Supreme Court upheld, the Connally Hot Oil Act, which prohibited interstate transport of oil produced in violation of state mandated quotas. Coordinated regulation between the major oil producing states, combined with this federal law, created the regulatory system which would endure for decades to come.

Malavis argues that oil regulation was at heart a legal issue. Before effective regulation and efficient production were possible, legal notions and doctrines had to change. He believes that the Texas lawyers for big oil companies were particularly important in this regard. With rare access to the legal files of the giant Houston law firm, Vinson and Elkins, he traces his thesis right to the boardroom, placing us at the scene of meetings between lawyers and their clients. Especially prominent is James Elkins, whose law firm grew enormously rich and powerful on the basis of Elkins' and his partners' representation of Texas oil companies like Humble and Pure.

Though I have little doubt that Malavis is right in his contention, the book is unfortunately least convincing where it is at its most original. The sort of strategic legal decision making that took place between clients and their counselors seems to have been less important in effecting regulation than the moves of other actors in the legal system. These others included attorneys for federal bodies like the Department of the Interior, members of the Texas Railroad Commission, and the pro-regulation sponsors of federal legislation. Many different lawyers participated in cases involving constitutional law, of course, including the attorneys of firms like Vinson and Elkins. But oil regulation may not be the best case to study the behavior and contributions of corporate attorneys.

In this shadowy world, historians have as yet offered little light. Who would deny that corporate counselors are powerful or that large law firms can be very effective in shaping the worlds of both law and business? They may, however, be at their most effective in less dramatic situations, in the routine of actions and decisions that, firm by firm, reshape the economy and force a response from the law. When it comes to making new laws and regulations, private attorneys can be important as members of corporate decision-making teams. Or they may serve as lobbyists, especially before state or local representative bodies skeptical of corporate power. James Elkins played this latter role quite effectively. But as lobbyists, lawyers draw on no special legal skill or talent. And as decision makers, lawyers offer crucial, but highly specialized advice.

Perhaps where lawyers are at their most powerful is in using the law to reshape public knowledge. One interesting issue, not addressed in this book, is how technical concepts like the petroleum engineer's maximum efficient recovery helped alter public understanding of oil, from wild animal to resource needing conservation. Making use of such knowledge to change laws, regulations, behavior and most broadly perceptions, may be what lawyers really can do better than anyone else. Such changes develop slowly, as individual lawyers advise their clients, present arguments to the courts, and their ideas get passed on to other attorneys, representing either similar parties, or competitors with different agendas.

Malavis provides little in the way of social and economic context, which makes it difficult to understand these sort of slow developing changes. Lawyers work for clients, and clients have interests, often in conflict with other clients represented by other lawyers. To understand the legal battlefield, one needs a clear appreciation of the players and their positions. We get very little of this sort of information--about the structure, operation, or position of Vinson & Elkins compared to other law firms, or about the exact place of oil companies like Humble in Pure in the complex oil industry.

It is good to see a book come out making use of records historians rarely get to see. Bless the Pure & Humble certainly adds to our understanding of the legal process and business regulation. It provides an almost blow-by-blow account of the steps leading up to full scale regulation. But it would have been an even stronger contribution had the author stepped back a bit from the fray and assessed just what it was that he learned from his perspective inside of the law firm. Perhaps we will have to wait for such an assessment, after more secrets from the temples of the corporate lawyers find their way into history.