And so they_indicted_me-new_deal-j_edward_jones-1938-249pgs-pol

"AND SO THEYINDICTED ME!"A Story of New Deal Persecution

by J. EDWARD JONES

1938J. EDWARD JONES PUBLISHING CORPORATION

NEW YORK

Copyright, 1938, byJ. EDWARD JONES PUBLISHING CORPORATION

SECOND PRINTING

PRINTED IN THE UNITED STATES OF AMERICA

"Arbitrary power and the rule ofthe Constitution cannot both exist."

The Supreme Court of the United States

"AND SO-THEY INDICTED ME!"

PREFACE

Nowhere in the world today is the purpose ofgovernment so dedicated to principles for the pro-tection of individual freedom and liberty againstthe tyrannical oppressions of political usurpation,as in America . The great institutions of govern-ment created by the Constitution of the UnitedStates stand as mighty bulwarks, not only for in-dividual freedom in this country, but also as out-standing examples of justice to all other peoples .

For in the ultimate, the American Individual,not the American State, is supreme . There is onlyone thing more powerful in the American De-mocracy than the American Government itself,and that is American Public Opinion-that com-posite majority of individual ideas held by the so-ciety which supports the State . As against theAmerican Government itself, American PublicOpinion will prevail-for such opinion, under ourform of government, can change the policies and

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Preface

purposes of the government and direct them at will .Before the establishment of the American De-

mocracy, the history of world affairs was a sorryrecord of constant impositions and restrictions uponhuman liberties and freedom by officialdoms whichthen held the ordinary individual to be a mere pawn,his personal rights and liberties subjected always tothe supreme rule and arbitrary power of the State .With profound wisdom and remarkable foresight,our founding fathers provided us with a govern-mental system which not only proclaimed our na-tion a haven for individual liberty, but, indeed,created a three-fold system of checks and balanceswithin our own governmental structure to defendagainst attempted encroachments upon the rightsand liberties of our own citizens even by officialsand agencies of our own government.

This book is a record of factual events which,thanks to the Supreme Court of the United States,prove that individual freedom still lives in thiscountry and that government of the people underthe American system really functions for their pro-tection. It reveals the government itself, throughits admirable system of checks and balances, actingjudicially to expel from the executive branch of itsown structure influences that would submerge hu-man liberties. In face of a tyrannical abuse of

Preface

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power arbitrarily exercised through a usurpationof unwarranted and illegally assumed authority onthe part of officials of the executive department,the record shows the American judiciary supremein its lofty purpose and firmly set against new andalien conceptions of governmental principles. Itreveals the fact, also, that political graft and extor-tion cannot control the American people by put-ting a price tag on all of their public officials-even if petty vindictiveness may absorb the men-talities of some of them .

In order to make clear the significance of theevents herein treated, I should like the reader ofthese pages to remove, in his appraisal, my own per-sonality from the J . Edward Jones about whom thefacts are recorded . It is wise, I think, for one toconsider that the things which happened to mewell might happen to anybody else . But so longas citizens of our country courageously strike backat evils encountered in the maladministration of ourgovernment, justice will prevail . A citizenry apa-thetic to conditions dangerously threatening itsown liberty is not deserving of the honor of suchsacred possession. It is un-American for a citizento fear personal consequences when he faces an at-tack upon his basic beliefs regarding his rights as acitizen.

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Preface

Many of my friends and well-wishers have advisedme against publishing this book . Frankly, they fearthat the publication of the events herein recordedmight provoke anew a series of vicious, vindictiveattacks against me by certain persons in govern-ment who might venture any lengths to accomplishmy destruction. In acknowledging, with apprecia-tion and sympathetic understanding, such splendidconsideration for my welfare, I must state that I sin-cerely feel it to be my duty, as a citizen, to revealfor public digestion, information concerning astatus of affairs I consider to be subversive of goodgovernment in this country . I believe, also, thatone possessed of information of the character ofthat with which I am possessed, is duty bound toexpose it to the end that knowledge of the condi-tions thus brought to light may aid to remedy suchconditions. How can the art of government pro-gress if evils in government be blanketed by a cloakof secrecy and shrouded with fear and trembling?

I assume full personal responsibility for every-thing stated in this book . I, myself, have writtenthe whole of it ; and I know it to be all true andcapable of being proved, if any need to prove it,perchance, should arise. If the truthfulness of thestory told in this book be seriously questioned, Ishall adduce proper evidence to support it. I have

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at hand excellent material of even more sensationalcharacter than that so far used-material whichwell could fill many other chapters ; but I believethe book, as written, will suffice to serve, what Ishall ask my readers to believe to be, a sincere ef-fort toward something constructive-not destruc-tive .

J. EDWARD JONESNew York, N. Y .March, 1938

CONTENTSChapter Page

Preface 7I "I'm for Roosevelt" 15

II The New Deal Looks to Oil 19III Introduction to the Governors' Oil

Conference 26IV First Gun 34V Meet Mr. Ickes 43VI Meet Mr. Roosevelt 55VII The Genesis of NRA-Its Character 63VIII New Deal Policeman 94IX Let the Seller Beware! 104X Mr. Flynn Goes to Town 125XI New Deal's "Most Effective Weapon" 131XII "Arbitrary Power" vs. "Rule of the

Constitution" 148XIII "Truth in Securities" 165XIV More "Truth in Securities" 176XV The Supreme Court Speaks! 193XVI New Deal at Work 201XVII New Dealirium 207XVIII Books for Sale! 222XIX Pax Vobiscum 243

CHAPTER I

"I'm for Roosevelt"

I was one of those Americans who votedfor Franklin D. Roosevelt in the Presidential Elec-tion of 1932 . I was more than that-I was oneof those enrolled Republican voters who helped himto win. I believed implicitly in his pre-electionpromises. Mr. Roosevelt, to me, gave every indica-tion of being a leader possessed of political and so-cial philosophies which I thought, could they beput into effect, would be representative of the be-ginning of a new and better era in the lives of men.

As the Governor swung into his first presidentialcampaign-attacking, as he did, the old regime forits alleged favors to the entrenched monopolies,and posing as the fearless champion of his "forgot-ten man," my enthusiasm for his seeming couragein a battle to set aright economic evils was as bound-less as was my unlimited admiration for the man-a man whom I deemed a real Crusader, soundlysupported by great ideals for that much desired

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"And So-They Indicted Me!"

"new and better social order." The genuine hopewhich Mr. Roosevelt's promises and his stated posi-tion as a candidate instilled in me became, as thecampaign progressed, a firm belief, before he waselected, that, given a chance, he certainly wouldprove to be one man upon whom the peoplecould depend to restore opportunity in life to theindividual and to restrict the practices of the power-ful in unfair exploitation of the common man. Ibelieve my thought of Mr . Roosevelt in that con-nection was the thought of millions of other Ameri-cans who had been attracted by the promises ofas charming and gracious a personality as ever hyp-notized an audience-be it street corner or con-vention hall calibre .

The ideals pictured by Mr. Roosevelt in his cam-paign appealed to all classes of the people. Both tothe intelligent voter and the unthinking masses,new visions appeared. Out of what seemed to besincere and courageous campaign battle, beautifulabstractions readily became promises of practicalrealities and-behold!-now the ravages of the de-pression were revealed clearly as the fruits of Re-publican wickedness linked, of course, to that classof society hitherto regarded as successful peoplebut now frowned upon, later, indeed, to be countedas the hated "economic royalists!"

"I'm for Roosevelt"

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On March 4th, 1933, I thrilled greatly in listen-ing to the new President's Inaugural Address as itcame over the radio. The triumphal tone and seem-ingly sympathetic understanding which character-ized that address, clearly signified to me that thepeople of America had rightly chosen a man whohad correctly analyzed their problems, who had hisfinger on their real cause and who was possessed ofthe courage, determination and ability necessaryto solve those problems in quick fashion . True-the public did not know the nature of the prescrip-tion which was to be administered to cure its ills,but tremendous confidence born by the mereexistence of the new administration produced ahypnosis which made for progress even prior toNew Deal performance .

Psychologists of the future will find rare andfertile source of interesting material in studyingthe period 1932-1933 to determine the causes whichcontributed to shape public opinion of the time .Well may they speculate upon the reasons whya great people blindly followed an undefined ab-straction dangled with soul-inspiring effect beforetheir imaginative eyes as a promised cure for themost practical of problems! Strange fiction maythey write of the readiness with which the greatAmerican Democracy gave up-and gladly-

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sweeping authority over its people, to make of itspresident the strongest, most powerful autocrat theworld has ever seen in government!

But just as the public mind was surcharged withhope and confidence-with no idea of a modus oper-andi for the accomplishment of anything-so wasthe New Deal administration equally charged andchamping at the bit for action in some direction .However, there was no signpost pointing the wayover any roads America previously had traveled .

In such state of affairs, I felt certain, now theinauguration was over, that steps quickly wouldbe taken by Washington to solve the highly con-troversial problems of the petroleum industry, withwhich I always had been identified .

CHAPTER II

The New Deal Looks to Oil

In a letter written to me during his firstpresidential campaign, Mr . Roosevelt had promisedthat while addressing the nation, he would outlinehis policies with respect to the American oil prob-lem. I thought nothing of his failure to do so,however, since the progress of the campaign re-vealed his seeming determination to restrict the un-fair privileges of big business in all lines of industry .I knew from my own exhaustive research, over aperiod of years, in the field of petroleum economics-having been commissioned to represent my homeState of Kansas in preparing analyses of petroleumproblems and having appeared before various com-mittees of both houses of Congress as a representa-tive of the so-called "independents" of the industry-that the evils in the American Economy whichMr. Roosevelt had attacked were glaringly presentin oil and representing problems demanding of solu-tion. In no industry did the individual, independent

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operator need more protection against monopolythan did the small American oil operator. As a mat-ter of fact, in 1932, the "forgotten man" in thepetroleum industry was just about ready to be bur-ied as the unknown soldier in that great Ameri-can war between the individual and the predatoryinterests in business .

And so, the New Deal Administration, takingoffice on March 4th, 1933, in one of its very firstacts, plunged headlong into the pool of oil trou-bles. Within a few days after the inauguration,the President's new Secretary of the Interior, oneHarold Loy Ickes, issued a call for a "Governors'Oil Conference" to be held in Washington on the27th day of March for the announced purpose of"solving the problems" of the petroleum industry .The principal problem to be "grappled with," saidthe Secretary in his "Call," was one of "overpro-duction" of crude oil in this country.

To any student of economics, the "solving theproblems" of any industry is a major undertakingthat should be attempted only by experts soundlygrounded not only in comprehensive knowledgeof the basic facts of the industry under study, butalso in a thorough understanding of all the elementsat play to influence the fundamental economic fac-tors of supply, demand and price . Without such


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equipment, attempt to function wisely toward thealleviation of industrial evils is pure folly . But ex-cessive vanity of man always inclines dangerouslytoward folly!

By way of giving an authoritative tone to thestatement made in the Call to the Conference, that"overproduction" of crude oil was the problemto be "grappled with," Mr. Ickes boldly stated thatthe production of crude oil in this country approxi-mated 2,500,000 barrels daily whereas, he said, thenation's consumption requirements were but 2,000,-000 barrels daily. The "Call" therefore implied abad supply and demand balance for crude oil andimmediately created an issue of first magnitude,indicating strong need for corrective and control-ling measures. And the New Deal Administrationstood ready-determined to correct and to control!

Of the forty-eight American states, twenty-oneof them produce crude oil in varying quantities .All of these twenty-one states, if not, indeed, theentire forty-eight, are vitally interested in the wel-fare of the petroleum industry and the policieswhich determine its conduct . However, in at-tempting to solve the problems of the nation's thirdlargest industry, Mr. Ickes first invited the Gov-ernors of only four states to his "Governors' OilConference." Yet my disappointment at the undue

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restriction of the proposed conference did not equalmy great dismay at what I knew to be a misstate-ment in the "Call" regarding the relationship ofsupply and demand of crude oil .

For years, in spite of great propaganda to thecontrary, production of crude oil in America hadbeen so restricted artificially under the impositionof control by the governments of the oil states, thatwe actually had an underproduction, not an over-production, of crude oil in this country. The de-ficiency, amounting to many hundred millions ofbarrels, had been supplied steadily by three or fourmajor oil concerns through the importation ofcheap foreign oils from properties owned by thoseorganizations in foreign countries, principallyVenezuela. These importations were being forcedupon the American oil industry against the strongprotests of the independent producers whose Amer-ican oil wells were forced to shut down . Of neces-sity, the supplying of the market then was handedever, gratis, to those few oil organizations in posi-tion to obtain oil from their foreign fields .

The controversy over this situation had becomesharp to a point of viciousness between the inde-pendents and the major oil concerns who bothmonopolized the markets and propagandized thepublic into the firm belief that the one big problem


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of the industry was too much oil. This was verilybelieved by the average man although, as I havestated, the fact was that we had in our country acondition of restricted production-an underpro-duction which contributed to a deficiency in ourdomestic supply so as to create a tremendous volumeof good business denied the independent producerbut reserved exclusively for those few companieswho could monopolize the importations from theirforeign holdings. Good results from an effectivepropaganda!

The old Hoover-Wilbur administration had fa-vored the major oil company side of the contro-versy . Mr. Wilbur probably best summarized hispolicy by stating that if he "were the landlord ofthis country," he would shut-in all American oilwells and force our consumption requirements tobe filled from wells in foreign countries. The policyenraged the independents of the industry and causedthem, throughout the country, to support Mr.Roosevelt.

On the day following press announcements of theConference invitation by Mr. Ickes, who, by suchinvitation, gave evidence that he intended to followwhat we independents had fought for years as mis-guided public policy toward oil, I received telegramsfrom all sections of the oil territory-as far west


as California-urging me to do something towardextending the scope of the Conference. I was urgedto set Mr. Ickes aright on the real facts concerningthe supply and demand of petroleum, and to pointout to him the disastrous influence of monopoly increating a false issue and in spreading false propa-ganda to mask its real purpose . Therefore, onMarch 16, 1933, I dispatched identical telegramsto all the governors of oil producing states, whohad not been invited to the Conference. The tele-grams read as follows :

NEW SECRETARY INTERIOR ICKES HAS CALLEDCONFERENCE GOVERNORS TEXAS OKLAHOMAKANSAS CALIFORNIA FOR MARCH TWENTYSEVENTH TO DISCUSS PROBLEMS PETROLEUMSTOP YOUR STATE IS PROSPECTIVE PRODUCEROF PETROLEUM AND IS VITALLY AFFECTED BYPROBLEMS PETROLEUM INDUSTRY STOP SUCHISSUES AS REVOLVE AROUND MONOPOLISTICPRACTICES THROUGH UNFAIR COMPETITIVEMETHODS REGULATION OF PRODUCTION PRICEFIXING GOVERNMENTAL ACTIVITY RESPECT-ING INDUSTRIAL CONDUCT ETCETERA WILLBE TREATED AT CONFERENCE STOP THESE MAT-TERS SHOULD NOT BE DISCUSSED FOR SOLU-TION WITHOUT YOUR STATE BEING REPRE-SENTED THEREFORE URGE YOU APPEAL SECRE •TARY INTERIOR IMMEDIATELY FOR REPRESEN-TATION AT THAT CONFERENCE STOP RESPECT ,FULLY

J . EDWARD JONES342 Madison AvenueNew York City


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Thereupon, something must have happened, forabout two days later the press carried announce-ments that several additional governors had beeninvited by Mr . Ickes to attend his Conference . TheHonorable Ruby Laffoon, Governor of Kentucky,appointed me to represent the State of Kentucky .Other individuals representing both independentsand majors were invited to attend as was also thepowerful American Petroleum Institute-some-times called "the mouthpiece of monopoly ."As news of the new complexion of the coming

Conference permeated the industry, a general rec-ognition matured that this first New Deal step inthe direction of oil was going to be an importantstep. Data were hurriedly collected, charts andgraphs were prepared, meetings were scheduled,and Washington became the Mecca for hundredsof oil men from all sections of the United States.We all had confidence and hope in the New DealAdministration, and were determined to lay all thefacts of the case before the Conference .

CHAPTER III

Introduction to the Governors'

Oil Conference

The crowd of oil men arrived in Wash-ington a few days prior to Monday, March 27th .They held their customary conferences and inevit-ably formed their two opposing camps. The fieldbecame one of battle-not of peace-as the forcesof the independent individual marshalled againstthe powerful phalanxes of organized big business .The Governors' Oil Conference of the New DealAdministration quickly crystallized into a picturethat represented in the concrete all the elementsof industrial strife that Mr . Roosevelt had sovividly portrayed during his campaign . The eye ofthe American public, through the lens of Mr. Roose-velt's political camera, had been focused upon theoutlines of evil influence in our economic life ; herewas the actual grouping of all the characters of amajor industry in a panoramic war film that cov-ered everything!

And there was plot in the play ; for two great26

Introduction to the Governors' Oil Conference 27

opposing forces contended with each other in al-most desperate effort, each to jockey itself into theposition most likely to impress a new and inexperi-enced political machine . One side, supported bycorporations owning and controlling billions ofwealth but fearful of the destructive competitionof myriads of "little men" businesses, desired Fed-eral control of the productive processes of the in-dustry. They desired this because the lesson hadbeen learned that unwise and unknowing official-dom, somehow or other, could be depended uponto control always in the interest of the powerfulin business . And the powerful in the oil businesswanted to choke off the production of its inde-pendent competitors. Otherwise, that deficiency indomestic production, which necessitated huge for-eign oil importations, could not be created .

The other side represented what America knowsas rugged individualism in business. And "rugged"is a good word to describe the qualities an individualoil operator must possess if he is to exist at all .Courage, strength of character, the pioneer spirit,enthusiasm, cheerfulness in face of dire trouble,hope, determination-all these one finds in the in-dividualism that has pushed the oil frontiers to suchextents that in a few years the petroleum industryhas become the country's third largest . Competi-

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tion? They meet it ; they create it; they live on itas the life of their trade. Control? What is meantby the word "control"? Rugged individualism inoil despised monopolistic control of business, wasdistrustful of any plan that vested control of theaffairs of industry in the hands of a powerful Fed-eral bureaucracy. The individual oil operator owedhis very existence to the competition he always hadbeen free to create in doing battle against "control"in business. He disliked the word and all it implied .He was a natural and genuine champion of the lais-sez-faire principle of trade . For years he had foughtmonopolistic influence and power, and Mr . Roose-velt's entire campaign had implied that he intended,if elected, to take up the cudgels and put the forceof government behind the effort to destroy "con-trol" of the affairs of industry and to permit free,competitive, individual enterprise .

At the Governors' Oil Conference the rugged in-dividualist desired that the new government be ap-prised of the facts of the oil controversy . More-over, he wanted that protection and freedom fromthe powerful monopolistic control of his affairswhich he expected the New Deal would give him-once it had learned the truth of the situation. Presi-dent Roosevelt's campaign speeches still were ring-ing in his ears . The new President, he felt sure, was


his champion. Mr. Roosevelt must not be allowed toget off on the wrong track at the very outset ofhis new administration! That was the cry through-out the ranks!

On Sunday morning, immediately preceding theday set for the opening of the Conference, Mr .Wirt Franklin, President of the Independent Petro-leum Association of America, called to order in theChinese Room of the Mayflower Hotel, a meetingwhich had been heralded as one to be attended bythe independents of the industry. It was understoodthat at the meeting the position of the independentswould be formulated so that, on the morrow, theConference could be notified of their generally ac-cepted views. If the position of the independentscould be made known and recorded in some sort ofan "official" manner at the very outset of the Con-ference, it was felt that argument and debate asto what that position was, would not mar the hoped-for success of the great meeting of the governorsand their representatives .

Such reasoning seemed logical enough . Many ofthe independents, however, looked upon the meet-ing with considerable skepticism and no little mis-givings since a rumor persisted to the effect thatthis Independent Petroleum Association of America,of which Mr. Wirt Franklin was president, and,

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which presumed to speak the independent side ofthe oil controversy was, in fact, a "decoy of mo-nopoly." Nevertheless, in a genuine spirit of co-operation we independents made it our business togo to Mr. Franklin's meeting of independent Amer-ican oil men in the Chinese Room of the MayflowerHotel on that Sunday morning preceding the open-ing of Mr. Ickes' Governors' Oil Conference-aConference called to "grapple with" a problemwhich did not, in fact, exist, and to "solve theproblems" of a major industry (presumably at onesitting, immediately following the opening speechof the new Secretary of the Interior) .

My Director of Research, Mr. William J . Kem-nitzer, a group of representatives from California,Texas and Louisiana, and I, upon entering the room,were somewhat surprised to note that nearly all theseating space of one half of the room was occupiedby representatives of major oil concerns and theAmerican Petroleum Institute, whose membershipand financial support depended upon the oil com-bine which the independents opposed as a matterof policy. Independents filled the remaining seats .It appeared to be the old story-a meeting of in-dependents packed by representatives of the majors!Mr. Wirt Franklin, as was his wont, made a long

and emotional speech. He stated that we were


present to formulate a policy that could be an-nounced to the Governors' Oil Conference as thedetermined position of the independents of the in-dustry. He wanted no discord in his meeting butinsisted upon results! And, shaking with emotion,he demanded that any person opposing the contem-plated action leave the room!

The head of Mr . Franklin's affiliated Texas con-cern which, by the way, Texas State officials laterexposed, made a speech in which he decried what heinsisted was a condition of "overproduction" in theindustry and called for more control of the produc-tive processes. Several other well-known henchmenof the "monopoly in oil" then took the floor andreiterated this demand for more "control" of theaffairs of the industry. Representatives of inde-pendents from California, Texas and Louisianabegan, now and then, to shout questions at thespeakers as, one after the other, they were recog-nized by the chair and proceeded always to claim"overproduction" and to demand "control ."

Within a short time, we were dumbfounded uponseeing the genial Mr. Bill Boyd, Executive VicePresident of the American Petroleum Institute,arise in this "independent" meeting! And, as hestood surrounded by numerous officers and em-ployees of the largest of the nation's oil concerns,

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he began to read a prepared resolution which hemoved as one to be adopted as the policy of themeeting! The resolution embodied the old thesisof the oil combine, deplored the alleged "overpro-duction" situation, called for control of the produc-tion of crude oil insofar as American oil wells wereconcerned but, significantly, made no mention ofany control of foreign operations or any cessationof continued importations of foreign oils .

Although at times I had been quietly urged to doso, I had taken no part in the proceedings that hadpreceded the offering of the resolution . At the con-clusion of Mr. Boyd's remarks, however, my friendsliterally pushed me from my seat and toward thefront of the room. Naturally, I then became in-volved in the debate .

I discussed the relationship of supply and demandof crude oil, pointed out with the aid of elaboratecharts and statistics of the United States Bureau ofMines that the "overproduction" bugaboo was amyth, revealed that attempts toward artificial re-striction of production had previously had an ad-verse effect upon price, argued against the creationof a false issue of 'overproduction" when no suchcondition existed, urged the meeting not to be aparty to the misleading of the New Administrationin that respect, challenged the oil monopoly to


meet the real issue of the industry, chided their rep-resentatives for packing an independent meetingand for taking part in a "steam-roller" proceedingto control the functioning of that meeting, pointedout the adverse effect on public opinion if the Boydresolution were to be adopted, and finally notifiedthose present that if the resolution passed, I pro-posed to take the floor at the Governors' Oil Con-ference the next day and, as the representative ofthe Governor of the State of Kentucky, notify theConference of the "packing" of the Franklin meet-ing-who was present at it, and who had proposedand forced through the objectionable resolution .

Over the angry protests of the enraged Mr .Franklin, debate degenerated into argument be-tween the two forces. Through the aid of the Chair,however, the question finally was put to the"packed" house, whereupon the California delega-tion, which occupied front rows of seats, headedby Mr. John B. Elliott, their able leader, arose andstarted to file from the room . Men from Texasand Louisiana fell in with the procession as it movedup the center aisle, and other friends, along withme, joined them. We all left the meeting in disap-pointment and in disgust .

We learned, of course, that those who remainedpassed the resolution .

CHAPTER IV

First Gun

The following morning we found that theWashington Press, and many other important pa-pers throughout the country, featured the break inthe ranks of oil men as represented by the "bolt" ofthe independents . Hotel corridors buzzed withspeculation as to what might happen at two o'clockthat afternoon when the Conference proper con-vened. Before noon, report had it that the big com-panies would seize upon the situation as an opportu-nity to throw another big oil scare about "over-production" and waste of one of the nation's impor-tant and irreplaceable natural resources . The factthat huge importations of cheap foreign oil werebeing poured by the large companies upon an al-leged "overproduced" country was to be kept asquiet as possible ; the New Deal Administration wasto be given an excellent opportunity to "control"the productive processes of a great industry and-with an eye to the times and to the ambitious marchtoward power of some of those newcomers, girded

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First Gun

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for their first time with the authority of govern-ment-a plan of control was to be suggested thatenvisaged the appointment of a dictator for thepetroleum industry!

A few of us who understood the strategy of theoil monopoly in its efforts toward moulding publicopinion and influencing the acts of public officials,realized the power of such a program. A sensa-tional speech at the Conference by some vice-presi-dent or chairman of any big oil company, could eas-ily create the news to cause public concern, and theappeal to the ego of ambitious officialdom certainlywas present in the scheme ; for what a field in whicha new official might ride-saddled on the horse ofhis imagination, charging through a nightmare offear, and saving, through the route of governmentalcontrol of production, the drowning public froma deluge of oil!

The independents of the industry had the biggestjob of their careers . It was up to them to exposethis "overproduction" myth, to reveal the truthof the situation, to unmask the false hypothesis oftheir powerful and influential adversaries, and tolay before the sympathetic New Deal Governmentthe real facts of the oil problem. And some of ushad those facts-irrefutable and unquestionably au-thentic!

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We had not considered, however, the possibilityof losing our battle through the enthronement ofvanity and foolish ambition upon a foundation ofadmitted ignorance . Neither were we suspicious oftrickery, nor did we dream of underhanded attack .

The hour for the meeting of the governors andtheir representatives approached, and a half-dozentaxicabs took a number of my close friends and meto the Department of the Interior Building, wherea great auditorium was to house several hundredmen of the oil industry .

As we walked down the corridor toward theentrance of the auditorium which already had be-gun to fill with the representatives, we noticed,gathered in a large crowd and in front of the door,many of those familiar faces who had been presenton the day before as our adversaries in the Franklinmeeting. A very noticeable bustling in this crowdwas evidenced as we pushed our way forward tothe door. I carried in my hand a letter which readas follows :

Commonwealth o f Kentucky

EXECUTIVE CHAMBERRUBY LAPFooN

FrankfortGovernor

Commonwealth of KentuckyUnited We StandDivided We Fall

To the HonorableThe Secretary of the InteriorWashington, D. C .

Sir :

Mr. J . Edward Jones, the bearer hereof, is the representativeof the Governor of Kentucky, duly appointed by him torepresent the State of Kentucky at the Governors' Oil Con-ference to be held in Washington, D. C., on March 27,1933, which has been called by the Secretary of the Interiorfor that date .Mr. Jones will be admitted to said Conference as the dulyauthorized representative of Kentucky .

Very truly yours,RUBY LAFFOON

ATTEST :

Governor of Kentucky

Sara W . MahanSecretary of State

SEAL :

March 20, 1933

37

Commonwealthof

KentuckyUnited We StandDivided-We Fall

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As I started to put my foot across the very thres-hold of the door, a young man whom I never be-fore had seen stepped quickly to the front of me,stopped me, and asked if I were J . Edward Jones .On receiving his answer he handed me a telegramand remained standing before me in my path . I fellback, as did my friends who were with me, openedthe telegram and received the surprise of my life!Governor Laffoon of Kentucky had cancelled mycredentials!

The crowd of hangers-on tittered as they watchedme read and re-read, without, at first, comprehend-ing the telegram, which was as follows :

WESTERN UNIONReceived at Interior Department Bldg . Washington, D . C .

1933 MAR 27 PM 1 01WN54 40-FRANKFORT KY 27 1141A

J EDWARD JONES CARE CONFERENCE OF OILMEN CARE SECY OF INTERIOR

I HAVE BEEN IMPORTUNED BY KENTUCKY OILMEN TO APPOINT A RESIDENT OF KENTUCKYTO REPRESENT KENTUCKY AT THE OIL CON ,FERENCE AND HAVE ACCORDINGLY APPOINT ,ED MR M W SHIARELLA OF OWENSBORO KYYOUR AUTHORITY TO REPRESENT KENTUCKYTHEREFORE IS REVOKED

RUBY LAFFOON GOV OF KENTUCKY

Delegations from several states headed by my

First Gun

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friends, Jack Blalock and Joe Danciger of Texas,Major Parten from Louisiana and John Elliott ofCalifornia, walked with me down the corridor inhurried and excited comment as to what had con-tributed to cause this humiliating slight to me . Allurged me to telephone Governor Laffoon, in Frank-fort, to obtain an immediate explanation .

I reached the Governor, told him I had just re-ceived his telegram and asked him to give me thereasons which had prompted him to dismiss me .The Governor informed me that he was not familiarwith the oil controversy ; that he had not realizedthat there was going to be any division of opinionat the Conference ; that he did not want to be putin the position of fighting the new administration ;and, finally, that since ten o'clock of the night be-fore he literally had been besieged with a deluge oftelegrams and telephone calls from at least seventowns and cities of Kentucky imploring him to ap-point as Kentucky's representative at the Confer-ence, a resident of the state!

I thanked the Governor for his explanation andfor the courtesy he had shown me in our conversa-tion and respectfully accepted, of course, his wishes .I advised him, however, that opposing the new ad-ministration was the farthest thing from my mind ;that I saw no reason for such an attitude on my

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part as I was, so he knew, a supporter of the inde-pendent side of the oil controversy ; and that weindependents were in Washington to help the ad-ministration in a proper understanding of the realoil issue, not to fight it. Governor Laffoon thenhospitably invited me to visit him the next time Ifound myself in the State of Kentucky .

My independent friends and associates thereuponrefused to take any part in the Conference and weall repaired to another auditorium of the buildingwhere resolutions were passed expressing indigna-tion for the treatment to which I had been sub-jected, condemning the non-representative charac-ter of the Conference, and appointing a committeewhich was instructed to wait upon the Secretary ofthe Interior for the purpose of requesting permis-sion to lay before him the independents' view ofpetroleum troubles .

Meanwhile the conference proper had heard Sec-retary Ickes' address, copies of which were ob-tained and distributed among those present at ourown meeting which continued in session until ourcommittee had communicated with the Secretaryimmediately after he had left the main conference.Mr. Ickes very kindly consented to meet with us atten o'clock the following morning, Tuesday the28th, and a Committee of five was appointed to

First Gun

41

confer with him, I being included on the member-ship of that Committee . A resolution was passedauthorizing the forwarding of the following tele-gram to the Governor of Kentucky :

WESTERN UNIONWASHINGTON DC MARCH 27 1933

HONORABLE RUBY LAFFOONGOVERNOR OF KENTUCKY FRANKFORT KENTUCKYYOUR APPARENTLY INNOCENT ACTION IN RE-VOKING THE AUTHORITY OF MR J EDWARDJONES TO REPRESENT YOU AT THE GOVERN-ORS OIL CONFERENCE BEFORE THE SECRETARYOF INTERIOR CAME AS A GREAT SHOCK TOMR JONES PERSONALLY AND TO ALL TRUEAND UNCONTROLLED OIL OPERATORS FROMEVERY SECTION OF THE UNITED STATES HISMASTERY OF OIL ECONOMICS TRUE BASISFACTS AND FIGURES AND FUNDAMENTALPRINCIPLES AND HIS CAPABLE AND FORCEFULPRESENTATION OF THEM BEFORE A LARGEGATHERING OF REPRESENTATIVES OF THE OILINDUSTRY GAINED THE RESPECT AND ADMIRA-TION OF HIS AUDIENCE THE TELEGRAMS ANDLETTERS SENT YOU TO THE EFFECT THAT HEWAS NOT THOROUGHLY FULFILLING HIS MIS-SION FROM ANY POINT OF VIEW INDICATESTHE VICIOUS METHODS TO WHICH THE MONOP-OLISTIC ELEMENT IN THE OIL INDUSTRY WILLSTOOP TO DISCREDIT AND DESTROY AN HON-EST AND FEARLESS REPRESENTATIVE OF THEPEOPLE WE FEEL IT A MATTER OF SIMPLE JUS-TICE AND OUR PLAIN DUTY TO INFORM YOUOF THE SOURCE OF HIS OPPOSITION AND CON-SIDER SUCH UNDERHANDED ACTIVITY ON THE

42

"And So-They Indicted Me!"PART OF PREDATORY INTERESTS THE HIGHESTFLATTERY THAT COULD BE PAID THE ABILITYOF MR JONES AS AN ILLUSTRATION OF THE EF-FICIENT MANNER IN WHICH HE WAS REPRESENTING THE GREAT STATE OF KENTUCKY WEARE SENDING YOU A COPY OF HIS ADDRESSWHICH MONOPOLY SUCCEEDED TEMPORARILYIN SUPPRESSING AS A RESULT OF THEIR MIS-REPRESENTATIONS TO YOU RESPECTFULLY RES ,OLUTION ADOPTED BY COMMITTEE REPRESENT ,ING INDEPENDENT OIL PRODUCESRS OF UNITEDSTATES ASSEMBLED IN WASHINGTONJOHN B ELLIOTT LOS ANGELES CALIF CHAIRMANJACK BLALOCK MARSHALL TEXAS SECRETARY

CHAPTER V

Meet Mr. Ickes

Mr. Ickes received us on Tuesday morn-ing in a small room of the Interior Building . He satbehind a huge desk and to his left sat Mr . E. S .Rochester, Secretary of the Federal Oil Conserva-tion Board .

Our spokesman, Mr . John B. Elliott, California'sleader, began, in most polite and respectful manner,to explain to Mr . Ickes our reasons for having madethe request for a special meeting with him. As Mr .Elliott warmed to his subject, referring to the sharp-ness of the oil controversy, he made reference tothe packing by the majors of the Franklin meetingwhich, he stated, had been called as one for inde-pendents only. He advised the Secretary of the factthat the resolutions passed by that meeting hadbeen proposed and supported, in fact, by the majorconcerns and their henchmen . He also declaredthat the Governors' Oil Conference itself was notat all representative of the rank and file of the

43

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petroleum industry, but was, on the contrary, prin-cipally composed of the dominating monopolisticorganizations of the Industry.As Mr. Ickes listened to Mr. Elliott, he very defi-

nitely began to exhibit a demeanor of anger andbelligerency. His face became drawn and almostwhite. Finally he cut short Mr. Elliott by burstingout, as he turned directly toward me, that "if ithadn't been for Mr. Jones," the Conference wouldnot have been so big anyway. "Mr. Jones," hestated, "went over my head by sending a telegramwhich implied I had slighted the governors by notinviting them all ." He said that he had thereuponinvited more governors, as well as several associa-tions of oil men, including the Executive Commit-tee of the American Petroleum Institute . He thencomplained that "you independents" had "comedown here" and caused trouble by bolting a meet-ing of oil men on Sunday so that "all the papers"on Monday morning carried news of a breakup ofthe Conference even before it had been officiallycalled to order by him . Mr. Ickes was obviously avery wrought-up and angry man as he snapped hiswords in a severe, almost lecturing style .

The very much surprised Mr . Elliott, ignorantof the point of Mr . Ickes' adverse criticism of me,mumbled that he knew nothing of the matter, that

Meet Mr. Ickes

45

he could not "speak for Mr . Jones," but that sinceI was present he would yield the floor to me .

As I arose, I faced a man whom I fully desiredto aid in what I knew to be a complex and difficultundertaking insofar as his job toward the petroleumindustry was concerned. Although I never beforehad heard of his connection with any great accom-plishments, I instinctively was most friendly andsympathetically inclined toward him because he hadbeen selected as a Cabinet officer of that New DealAdministration in which I had so much genuinehope and confidence. I was certain that, once inWashington and at the seat of our government-now newly dedicated to principles affording pro-tection and aid to the individual "forgotten man"in his long struggle toward real freedom of com-petitive enterprise' I would find all the prominentNew Deal representatives, at least, of a democraticattitude, representative of the appeal which hadwon the tremendous support of the public in therecent election .

I began, in very calm and reserved manner, toutter an expression to the effect that I did not thenrecall the exact wording of my telegram to thegovernors but that I knew I had not intended toconvey any slight to the esteemed Secretary . Mr.Ickes, with whitened face and his finger shaking at


me, exploded that he knew well what was in thetelegram and that he then had a copy of one onhis desk before him! He thereupon appeared toslump into a sulk of seeming juvenility and sat star-ing at papers on his desk, but not making any at-tempt at all to enlighten the audience as to thenature of the telegram which seemed so to haveupset his mental poise and equilibrium .

As far as dignity permitted, I gave expression tomy regrets at the circumstances . I told Mr. Ickes,however, that I felt I had been within my properprovince in my communication to the governors,particularly since he had made misstatements con-cerning facts relating to a very important matterand that by virtue of his misstatements, a false issuehad been created in the industry. I then told theSecretary that I desired to ask him two questions .He angrily nodded a sullen assent .

"First," I said, "I should like respectfully to askwhether you are an oil man and whether you arefamiliar with the statistical position of the petro-leum industry." He banged his fist as he rousedfrom his slump, almost bellowing, "I am not anoil man and I don't know a damn thing about theoil business!"

I don't know the influence which prompted it,but my mind, in a split fraction of a second, quickly

Meet Mr. Ickes

47

glimpsed, in panorama, several of our noted repre-sentatives of greatness who had sat in Washingtonduring our history-themselves famed for a wisdomwhich always was tempered with, if not, indeed, ac-tuated by calmness of mind, tolerance of spirit,mentalities open not only to helpful suggestionsbut also, indeed, to argument . The profundity ofLincolnesque thinking, for instance, did not goalong with explosive and vindictive thrusts shot outin defense of any silly vanity. What a chapter oncharacter this demonstration before me was writ-ing!

I decided to appeal-and to manhood!"My second question, Mr . Secretary, is this : If I

can show you, as a man to man proposition, thatyou made a mistake in the statistics you quoted inyour Call to the Conference and that the figuresas you used them the better could have been re-versed to come nearer facts, and if I could convinceyou that you had by your mistake created a falseissue as the very basis for your own Conference"-I continued-"I had intended to ask a question-butI will not do so : I will state to you that I believethat if I could, as man to man, so convince you, youwould retract your statement which I happen toknow was given widespread publicity by all threewire services throughout the entire country ."

48

"And So-They Indicted Mel"

Mr. Ickes' demeanor suddenly changed . His an-gry and bellicose attitude at once gave way to analmost inquiring curiosity. "What is wrong withmy figures?" he asked . I replied that he had statedto the governors and, through his publicity releaseto the American public, that the problem to be"grappled with" was one of "overproduction ;" andthat he had said that we were producing in thiscountry 2,500,000 barrels of crude oil daily where-as, he had claimed, we were consuming only 2,000,-000 barrels daily. I advised him that we had, infact, no condition of "overproduction," that thestates themselves already had the situation well un-der control and that during the whole year priorto his induction into office our production had av-eraged only 2,237,000 barrels of crude oil dailywhereas we had consumed over 2,559,000 barrelsdaily. That, I insisted, was not "overproduction,"but "underproduction," instead .Mr. Ickes then asked me this specific question .

"What is the authority for your figures?" I replied :"The United States Bureau of Mines, Mr . Secretary-a section of your own department ." I then askedthe Secretary if he cared to state the source of hisstatistics and he replied that he had procured them"from the Federal Oil Conservation Board and fromthe American Petroleum Institute ."

Meet Mr. Ickes

49

And when Mr. Ickes made that statement, heconfirmed officially what, in two days, had becomemy fear-that he was being misled by our oppo-nents.

Why should our Federal Government, I thought,go to the American Petroleum Institute, foundlingand mouthpiece of the very biggest of organizedbig business, for factual information concerningconditions directly involved in a great controversybetween such people and the independent, individualcitizen whose business life was at stake in compet-ing with monopolistic big business? Free and un-hampered competition in oil meant that the "littleman businesses" were a thorn in the side of monopo-listic price-fixers, importers and production con-trollers ; for free competition, guaranteed by aproper enforcement of our anti-trust laws-them-selves born of oil-would destroy such business tac-tics. I knew that monopoly in oil needed a powereven greater than their own to control their inde-pendent competitors. And what power, if not thatof government itself, was available? Moreover, evengovernmental power could be enlisted by monopolyonly on the showing of concrete evidence that anemergency existed because of the possibility of aviolation of some great idealistic principle .

But an issue could be created, even though it


must be bogus . Conservation of natural resourceswas an ideal readily to be supported by the public .Therefore, shout waste! Current "overproduction!"Future oil shortage! Even the scare about a de-fenseless nation in time of war! Frighten the pub-lic by misrepresenting facts ; fool the popular NewDeal Administration into acceptance of wrong fig-ures; hold out to a brand new, ambitious and inex-perienced officialdom the bait of governmental con-trol of a huge industry-and if anything was neededto usher in for America a New kind of Deal inbusiness, there it was!

Somehow governmental control might be influ-enced to perpetuate-even enhance-the monop-olistic control against which we were fighting!

Let the Petroleum Institute feed Mr. Ickes-andthrough him, a government official, the Americanpublic-the "overproduction" propaganda! Let ourgovernment fall hard as a tool to monopolisticschemes. Simply change the real production figureof 2,237,000 to one of 2,500,000-change the realconsumption figure of 2,559,000 to one of 2,000,-000, and the issue is alive! Appeal to the vanity ofa man admittedly ignorant of the entire matterand persuade that man to start his ambitious marchtoward the power of "controlling" a great Ameri-can industry! It seemed to me that our Mr . Ickes

Meet Mr. Ickes

51

was distinctly at a disadvantage in confronting thesubtle, powerful, influences of the American Petro-leum Institute. It also seemed to me, that because ofthe tendencies of our new government, the "forgot-ten man" of American oil would probably havefared better were he to fight the monopolies alone .He now appeared to be confronted with an al-liance between his adversaries and his own govern-ment.

But what about the advice Mr . Ickes had re-ceived from the Federal Oil Conservation Board?And who comprised the membership of thatesteemed body?

The Federal Oil Conservation Board had beenestablished in 1924 by former President Coolidge .Its members were the Secretaries of War, Navy,Commerce and Interior. Its duties were to conductinvestigations and to determine the responsibilitiesof the government in the conservation of our pe-troleum resources. As time progressed, much of thereal handling of the matters before the Board hadbeen done by Mr. E. S. Rochester, Secretary of theBoard.

Without laborious elaboration, it can be statedsuccinctly that, for some reason or other, Mr . Roch-ester had become very close indeed to the heads ofthe big oil concerns and, again, for some reason or

52


other, had performed satisfactorily a sort of liaisonservice between the giant oil companies and cer-tain Federal governmental officials . He had written,on December 21, 1932, a personal letter to Mr .George Creel, stating, among other things, that itwas his duty as far as the Federal Oil ConservationBoard was concerned, "to run the works, map pro-grams, arrange hearings . For eight years I juggledthis assignment, and never slipped a cog . A dozenCabinet Members were satisfied ; the oil industrywas satisfied. Coolidge and Hoover and Cabinet-officer Chairmen of this board rode grandiloquentlyup to and into the spotlight as master statesmen,insofar as adroit moves dealing with the economicconduct of the oil industry were concerned!" And-"from the time this board was created until thishour I have handled the administration job forthose Cabinet Members, and never slipped a cog."He referred to the "advantage the contacts he(Hoover) and his Cabinet enjoyed with the giantsof the oil industry," and stated that "Mr . Roose-velt cannot afford to get away from the heads ofthe nation's great oil companies." He further toldMr. Creel in his letter that "the contacts as nowmade are invaluable to all concerned, and shouldnot be disturbed ." Mr. Rochester further statedto Mr. Creel that 'I have in my possession personal

Meet Mr. Ickes

53

letters from the presidents of major oil companies. . . concerning the great value and helpfulness ofthis Government Oil Board. These men are the big-gest on earth insofar as oil is concerned . I can notuse these letters, but . . . you may see them andknow just what these men think and why they thinkso."

I, knew that for years many oil operators hadbeen exasperated by the fact that high governmentalofficials, particularly the former Secretary of theInterior, Wilbur, constantly indulged in the prac-tice of making public statements which misrepre-sented the true factual conditions of the petroleumindustry. Apparently, United States Bureau ofMines statistics were not being properly analyzed,or else somebody in the government was supplyingbogus figures which, strangely enough, supportedthe false propaganda of monopoly. A fictitious pic-ture of the industry was presented the Americanpublic and it was painted by high sources. Appar-ently the hand of monopoly actually workedthrough the medium of Mr . Rochester, the Conser-vation Board's Secretary, since that Board contrib-uted false information regarding production andconsumption.

I observed that this Mr. Rochester, who sat byMr. Ickes' side, made notes as I quoted statistics

54 "And So-They Indicted Mel"

and finally after some whispered remarks to theSecretary, arose and slipped quietly from the room .

I then warned Mr. Ickes that somebody in thegovernment had supplied him with wrong informa-tion and urged that he depend upon the highly re-spected and esteemed United States Bureau of Minesfor authentic statistics . The Secretary thereuponannounced an adjournment of the hearing to teno'clock the following morning, stating that in themeantime he would have the figures checked todetermine who was correct, he or I .

CHAPTER VI

Meet Mr. Roosevelt

The events which had occurred duringthe preceding two or three days stimulated muchdiscussion among the group of independent oil menwith whom I was identified. We regarded Mr .Ickes as unfriendly to our position and we thoughthis admitted and demonstrated ignorance of oilmatters constituted a grave danger since, throughMr. Ickes, the New Deal would act .

It is significant now to record that of all the gov-ernors invited to the Conference, only one, AlfLandon of my home state, was personally present,the remaining governors having commissioned in-dividuals to be present as their representatives . Byvirtue of the fact that Mr . Landon was the onlygovernor at hand, he, as the ranking member ofthe Conference, was made Chairman . We all knewAlf as a small oil operator, but we also knew him asone who favored, too many times, we thought, themajor companies' view of oil issues . Even then he

55

56


insisted that the government be given more controlover the productive processes of the industry, go-ing so far finally, in a telegram to the New DealAdministration, as to advocate a form of dictator-ship for the petroleum industry! (This positionwas taken, of course, long before Mr. Landon'sname even was mentioned as a possible presidentialcandidate, and later, in campaign battle, Mr . Ickesthrew at him the record of his former expressions .)

But we independents, following our first meet-ing with Mr. Ickes, felt greatly perturbed over themanner in which affairs seemed to be drifting. Wemet therefore, at the Mayflower Hotel the nightof that Tuesday, March 28th, and after full discus-sion formed the "Independent Petroleum Associa-tion Opposed to Monopoly," and banded ourselvestogether to carry the matter, if necessary, to promi-nent members of Congress as well as to the Presi-dent of the United States . All were insistent thateverything possible should be done, and quickly, toprevent the new Roosevelt Administration fromstarting its career with a misunderstanding of oilproblems.

We eagerly and hopefully, therefore, awaitedMr. Ickes' expected announcement on the followingmorning. We thought that he would admit thathe had been wrongly advised as to the facts of the

Meet Mr. Roosevelt

57

oil issue. Such admission would destroy the dangerof governmental control of oil production in theinterests of monopoly as against the principle offree and competitive enterprise .

The meeting of the next morning was short andsweet. Mr. Ickes, in the presence of our commit-tee and other independents, appeared to be just alittle nervous, somewhat irked at the business athand, and considerably preoccupied with numerouspapers that cluttered his desk. After a considerablepause he finally greeted us. His manner was pained,reserved and condescending .

I arose and asked the Secretary whether he hadconfirmed the correctness of the figures I had quotedon the preceding day. Mr. Ickes answered : "I havehad the figures you used checked and they are cor-rect. Figures, however, are subject to interpreta-tion!"

The demeanor of the Secretary, his accentuationand emphasis of his last remark, were so indicativeof a mind closed to our purpose that, on his ob-vious desire to conclude the matter without anyfurther ado-much less an acknowledgment by himthat his use of wrong statistics in his Conferenceinvitation had been in error-I, nonplused, an-swered :

"Well, if the government is desirous of `inter-

58


preting' figures which represent actual facts, it willbe privileged, I presume, to interpret them in itsown way.

One or two other individuals, including my ownResearch Director, Mr. Kemnitzer, attempted todiscuss more fully the facts in question, but Mr .Ickes showed great belligerency and even anger ashe raised his voice, ignoring, in insulting manner,Mr. Kemnitzer, who attempted vainly to speak .Needless to say, the meeting broke up in quickfashion, the disheartened and chagrined oil menwondering what next was to be done .But Mr. John B. Elliott, Chairman and spokes-

man of our newly formed "Independent PetroleumAssociation Opposed to Monopoly," quickly threwhimself into action . Through the two CaliforniaSenators, appointments were made with other Cabi-net officers and one also with President Roosevelt .I was one of a committee selected to lay our prob-lem before the President. We did this the follow-ing day .

I shall not soon forget the hour and ten minutesat the White House. In his study, Mr. Rooseveltgreeted us with great charm and cordiality . I hadknown him since 1923 and was pleased at his per-sonal word to me as he shook my hand . Chairs hadbeen arranged in a semi-circle about his desk and

Meet Mr. Roosevelt

59

we seated ourselves at his very hospitable suggestion,in quite informal fashion .

Being in the presence of Franklin D. Rooseveltwhen he is at his best is something to remember .He has a graciousness of manner that seemingly cap-tivates and influences everybody about him to in-cline to his view . He, also, very politely and gal-lantly, agrees with everything that is said. One isimpressed, and immeasurably so, with the firm be-lief that the President not only, agrees with, butpromises to do everything that is desired . He doesn't"hypnotize ;" he doesn't "electrify ." His graciousmanner, his natural poise, his democratic and socialmanner of meeting people and of discoursing withthem, win the day for Mr. Roosevelt .

The President reclined easily before us, his leftelbow on the arm of his chair, his head leaning onhis left hand with its long middle-finger stretchedalongside and deeply imbedded in his left cheek .He was almost boyish as he asked us to reversein our minds the ordinary conception that "oneteacher usually teaches many pupils ." Today,he laughingly declared, he was the pupil-we werethe teachers. What could we teach him, what didwe want and what could the pupil do for us?

Out of the good-natured, intimate atmospherewhich the President's personality so easily created,


we told him first of the regrettable fact of Mr.Ickes' error in oil statistics. We stated our suspi-cions concerning the Secretary of the Federal OilConservation Board (Mr . E. S. Rochester) . Westated the import of the use of wrong informationto create a false issue in petroleum . (We-did notmention the E. S. Rochester "never-slipped-a-cog"letter to Mr. Creel, although we had caused a copyof that letter to be handed the President on thepreceding night) .

The President, still in his "pupil" role, most play-fully, said, "Well, I don't know who the fellow is,but, since last night, there ain't no Secretary of theFederal Oil Conservation Board and there ain't noFederal Oil Conservation Board neither . That hasbeen abolished ."

We presented to him the several recommenda-tions which the "Independent Petroleum Associa-tion Opposed to Monopoly" had made as its contri-bution to the Governors' Oil Conference . He ac-cepted our offering with most kindly and sympa-thetic gesture. We spent about fifteen minutes indiscussing the supply and demand condition ofcrude oil, I leaving him, at his request, some chartsand material which my research department hadprepared. We also spent about fifteen minutes indiscussing our recommendation for a divorcement

Meet Mr. Roosevelt

61

of oil pipe-lines from their present major oil com-pany ownership .

Of all our recommendations, each of which weconsidered to be of major importance, Mr . Roose-velt, strangely enough, seemed intrigued at the pipe-line divorcement suggestion and showed the great-est and most avid interest in our argument regard-ing the matter. To my surprise, on our concludingthe pipe-line presentation, the President, with arather grandiose, flourishing toss of his head, said,and very seriously, "I think you are right . I amgoing to recommend it ."

As we left the White House, following our longdiscussion of oil problems, I could not but feel puz-zled-almost frightened, at the possibilities I feltmight have been revealed by the expression of Mr .Roosevelt and his attitude about the pipe-line di-vorcement proposal. I championed divorcementof pipe-lines, but only after long and careful studyof the effect of their ownership, as constituted, uponprice control in the industry and their being used,as I knew to be the case, as an instrumentality ofmonopoly. But, the divorcement from presentownership of any kind of assets valued at $895,-000,000 (as the pipe-lines were), regardless of theissues involved in any controversy, is a matter ofgrave moment. Surely decision regarding such a

62


matter should come only from profound delibera-tion following most complete analysis of the prob-lems involved . The President had been at his newjob of many and arduous duties for less than fourshort weeks. Could he have given great study tothis matter? I knew of no work by any govern-mental department that had resulted in any con-clusions regarding that important subject . Couldthe President-and I almost shuddered at thethought-be so constituted as to pass snap judg-ment, involving such tremendous considerations,following only fifteen minutes of discussion of justone side of the question? I did not then permit my-self to go too far in visualising the possible conse-quences to the nation, were its Chief Executiveso constituted as thus to handle large industrialmatters .

CHAPTER VII

The Genesis of NRA-Its Character

The Governors' Oil Conference of March,1933, should go down on the record as an importantchapter in New Deal history . It lasted for onlythree days, but it represented the first attempt ofa new and inexperienced officialdom to solve anacute industrial problem.

The petroleum industry was the first one tackledby the Roosevelt Administration in an effort tograpple with a real big economic problem. It is mybelief that the Governors' Oil Conference first sowedthe seed that stirred the New Deal toward the NRAprogram which followed.

At the time of the Conference, events showedthat the President was still "pushing" or promotingthat old abstraction dangled before the voters in1932 simply as the undefined "New Deal ." Outof the Conference came ambitious notions thatfinally bore fruition in the famous codes of indus-try.

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The original motivating force that created thisgreat and novel experiment was supplied not bythe young brain trusters-as many believe-but bythe so-called "leaders" of the oil industry, in theirdrive to enlist the aid of the Federal Governmentin their struggle to monopolize and to control theirindependent competitors. It was, in fine, the grand-est scheme ever attempted to legalize monopolyand to destroy competition. The codes which fol-lowed proved that point-and the very first thingdone in the scheme was the writing into the In-dustrial Recovery Act itself, an abrogation of theanti-trust laws, always the great fear of the mo-nopolist! In oil, therefore, the New Deal theoryof Federal control of American industry was born,and the oil code, naturally, was the first code ofindustry to be adopted by the government .

The administration, at the Governors' Oil Con-ference, had nothing to offer and came forwardwith no original constructive recommendations.The major oil concerns urged Federal Governmentcontrol of the production of all crude oil . Theindependents were primarily concerned with op-posing the proposed imposition of such artificialregulation upon the productive processes of indus-try. Other recommendations collateral to the "con-trol" issue were made, but that was the basic con-


65

troversy. The significant outcome of the Confer-ence was, I have always believed, the planting ofthe ambitious idea in the mind of Harold Ickes thathe should, in some manner, so play his hand as toplace himself in position to "run" the petroleumindustry-to be its dictator, in fact .

It seemed to me, also, that the Conference re-vealed a tendency on the part of the President forgrandiose action and hasty and inconsiderate judg-ment.

On April 3rd, Mr . Roosevelt referred to the gov-ernors of seventeen oil states the reports and recom-mendations of the Main Conference and of the "In-dependent Petroleum Association Opposed to Mo-nopoly." The President approved of only one rec-ommendation from each of many submitted bythose two bodies-selecting from the Conferencereport that calling for legislation by Congress pro-hibiting transportation in interstate and foreigncommerce of oil produced in violation of state law ;and from the recommendations of the independents,he selected and approved the pipe-line divorcementproposal stating that "such legislation should beenacted at as early a date as possible ." It is signifi-cant to note here that the approval by the Presidentof the monopolist recommendations regarding inter-state shipments of oil later was embodied in legis-

66


lation passed by Congress as the famous ConnallyAct ; that regarding pipe-line divorcement andrecommended by the independents, was introducedas a bill by Senator Borah, from Idaho, but neverpassed, Mr . Ickes advising Congress against it, stat-ing that the President had been "ill-advised" at thetime the subject had been presented to him . Re-peated efforts of Mr . Borah in this connection havebeen of no avail and Mr . Roosevelt has not pursuedthe matter further .

No favorable mention whatsoever was made bythe President, in his letter to the governors, of thecontroversial subject of the Federal control of oilproduction, although this was the Number Oneand most important of the recommendations of themajor oil company group, which, by the way,was signed by Governor Alf Landon, as Chair-man.

There is nothing on the record to indicate thatthe President, at that time, really entertained a se-rious notion concerning a centralized governmentalregulation and control of the economic elements ofindustry. As a matter of fact and of record, thePresident, in his own letter to the Governors, re-fused to follow the Conference recommendationthat he use the power of the Federal Governmentto regulate development of oil pools, to control pro-

The Genesis of NRA Its Character

67

duction or to force even a temporary shutdownof producing oil wells. He stated, "It is obviousthat the action proposed to be taken in these para-graphs is within the sole authority and jurisdictionof the interested States," and that "he might beregarded as infringing on the sovereignty of theStates" if he should even make such a "suggestion"to the Governors of the States. Such a categoricalstatement of position seems strangely in contrastto the sweeping policy of NRA Codes, adoptedshortly thereafter, by virtue of which citizens ac-tually were jailed in prosecutions which Mr. Ickeslater directed in enforcing the closing in of produc-ing oil wells .

Following the conclusion of the Governors' OilConference and the failure of the protagonists of"Federal control" to obtain President Roosevelt'ssanction to the plan then presented, a dogged andpersistent effort was undertaken by representativesof major organizations toward bringing about someform of Federal control of the oil industry.Mr. Roosevelt, during the first several weeks at

his White House desk, had no thought of exercisingFederal control over the productive processes orother economic elements of industry or business,believing genuinely that under the Constitution andthe American system of government such exercise

68


of power would be considered an illegal and unwar-ranted encroachment upon State sovereignty, and,as such, unconstitutional and void . Otherwise, howcan one interpret his letter to the Governors, writ-ten on April 3rd, 1933, and in which, in commentingon the suggestions and recommendations which hadbeen made by the oil monopolists that the FederalGovernment should take a hand in regulating themanner of development of oil pools and controllingthe production of oil wells in the States, he statedexpressly that in such circumstances, "The Presi-dent of the United States has no (such) author-ity . . . " and "he might be regarded as infringingon the sovereignty of the States if he should make(even) the - suggestion" which was contained in therecommendation .

The historical fact reveals, however, that power-ful, albeit quiet, influences were set to work imme-diately following the Governors' Oil Conference,by the big oil concerns, to put over on the Adminis-tration their idea for Federal Control of the oilindustry. This idea finally took hold with Mr. Ickes-it appears that the ambitious brain-trusters andyoung radicals then resident in Washington leapedavidly toward it, and although it originated in theminds of the economic royalists against whom thePresident himself railed in 1932, the American Na-


69

tion had the dose handed to them shortly afterwardunder the sponsorship of the President's "NewDeal."

The anomaly of it all seems now to be that thegreatest of all ideas which the New Deal seized uponas its modus operandi were offered to it by the hatedeconomic royalists whom the presidential candidatehad attacked with such great fervor in the cam-paign. And, shortly, the new administrator of thePetroleum Code was to appoint the captains of theoil industry, the heads of the greatest of all monopo-lies, to positions on his Administrative Boards andCommittees, to rule under an enthronement ofadmitted ignorance, the entire kingdom of oil, writ-ing the regulations to control the business methods,aye, even the opportunities of the independents,the competitors of monopoly . Under NRA, mo-nopoly was, indeed, entrenched-and in the verysubstance of the National Government itself!

The press of the country soon carried reports tothe effect that Congress was to be asked to passlegislation providing for Federal control . Shortlyafter, a bill was introduced making the Secretaryof the Interior a virtual dictator of the entire in-dustry, insofar as exports, imports, production, etc .,were concerned. Secretary Ickes supported andsponsored the proposed legislation, appearing later

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before Congress and even writing newspaper arti-cles in favor of the plan .

An Ickes propaganda article entitled "The Crisisin Oil : A Huge National Problem," appeared inthe Sunday New York Times of June 11, 1933, inwhich despite his having been informed previouslyto the contrary, he stressed the "waste" scare andreferred erroneously to the "enormous quantitiesof excess production." In spite of the informationwhich had been given Mr . Ickes at the Governors'Conference and his own admission that he hadchecked the information and had found it to be cor-rect, he, nevertheless, told the public in his Timesarticle that "for the present our problem is oneof coping with an overproduction which is moreserious than perhaps ever before ." That statement,of course, was untrue.

I, for quite some time, had published regularlythe "J. Edward Jones Monthly Petroleum State-ment," in which publication statistical data andcomment regarding the fundamental economicfactors of supply, demand and price were present-ed to the industry. When I began to realize thatMr. Ickes was working, along with the oil combine,for national legislation to enforce a Federal controlof the petroleum industry, I started, in my publica-tion, to analyze the problem and to oppose, quite


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forcefully-though, of course, in respectful man-ner, the lines of policy Mr . Ickes was pursuing. Suchan attack on his program was made quite formidablesimply by the publication of statistical data, au-thoritatively adduced, that contradicted flatly andcompletely the position Mr . Ickes took and therepresentations he made both to the American pub-lic and to various committees of both Houses ofCongress as well.

Came the NRA and the Oil Code (now all de-funct) . Mr. Ickes, the man who, with a bang ofhis fist in a moment of rising anger, had exclaimedin admitted ignorance, "I am not an oil man andI don't know a damned thing about the oil busi-ness," was made Administrator of the PetroleumCode!

Some quality of human nature-not knowledgeor intelligent understanding of the "oil business"-suffered Mr. Ickes to accept the job of "running"a great industry concerning which he knew not a"damned thing ." But, in life we find that the per-formance of a novice, is, of course, just exactlylike that of a novice. Nothing else is expected . Thelaws of nature-a Houdini-even a New Deal-can't make a sophisticate of a novice and still retainthe novice. Mr. Ickes, as the Petroleum Adminis-trator, never demonstrated anything in his official

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acts, that belied his first and most authentic state-ment about oil-that he wasn't "an oil man" anddidn't "know a damned thing about the oil busi-ness."

I continued my opposition to Mr. Ickes, point-ing out his inconsistencies, his errors, his favoritismin the administration of the oil code toward theoil monopoly, until in February, of 1934, I pre-sented to the Members of the Congress of the UnitedStates a Memorial regarding problems of the pe-troleum industry. In my Memorial, I paid hightribute to President Roosevelt and, along withvoluminous statistical data pointed out what I re-garded as the errors of Mr. Ickes, opposed his poli-cies and made recommendations to the Congresswhich were directly opposed to the Ickes' program .I appeared before the Committee on Mines andMining and the Finance Committee, both of theUnited States Senate, and the Committee on Inter-state and Foreign Commerce of the House of Rep-resentatives in opposition to legislation sponsoredby Mr. Ickes which would have placed even moredictatorial power in his hands than that alreadylodged there by the Petroleum Code. At such hear-ings, Ickes appeared, noticing me, but never speak-ing to me. I steadfastly presented analyses and fac-tual information in opposition to him, although the

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record will show my position to have been alwaysa respectful one .

I have never sympathized with the publicly ex-pressed views of Mr. Ickes in his blustering opposi-tion to the power of monopoly and "big business."My attitude toward him in this regard has alwaysbeen prompted by the fact, known to those havingintimate knowledge of his acts as Administratorof the Petroleum Code, that when he had the greatpower of a code dictator, he actually surroundedhimself with the heads of the huge oil combinesthat always opposed the interests of the indepen-dents of the industry! On his Planning and Coor-dination Committee, that important policy deter-mining Committee for Mr. Ickes as the Code Au-thority, the principal personages on the Commit-tee * were the heads and representatives of the na-tion's largest oil organizations : Standard Oil Com-pany of New York, Standard Oil Company of Cali-fornia, Pure Oil Company, Tide Water Oil Com-pany, Barnsdall Oil Company, Standard Oil Com-pany of New Jersey, etc . There were also a fewother men on this Committee : henchmen of mo-nopoly, but little known as independents .

And then, too, I have had little respect for theprinciple demonstrated by Mr. Ickes when he hasattacked "high prices ." I knew that under the Code,

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when he had real power in his hands, his own or-ganization actually fixed prices in the petroleum in-dustry, not at the lowest competitive price of theindependent, but at the highest monopolistic priceof the major companies . In this connection, I wasamazed to learn the benevolent attitude of Mr .Ickes toward monopoly and high prices, when amember of his Petroleum Administration Board,Dr. John W. Frey, in charge of marketing for theCode Authority, Mr. Ickes, testified in September,1934, at Hearings before the Committee on Inter-state and Foreign Commerce of the House of Rep-resentatives at Washington, D. C. In that testi-mony, Congressman Wolverton of New Jersey, byskillful questioning, established the fact that thehigh price of gasoline was actually fixed by officialWashington and that Mr . Ickes' code organizationexerted influence to keep the price up to levels de-sired by the big companies!Mr. Wolverton asked Dr. Frey whether the big oil

companies met the low competitive prices of in-dependent dealers in Camden, New Jersey. (I quotefrom the Congressional Record.)

Mr. Wolverton : Well, did they meet it in Cam-den?

Dr. Frey : They did not meet it in Camden becauseI asked them not to .


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Mr. Wolverton : Asked who not to?Dr. Frey : The major companies.Mr. Wolverton : You mean, you as an official of

the Government, asked them not to decreasetheir price?

Dr. Frey: I did .Mr. Wolverton : Well, now we are getting down to

where the prices are fixed. The gentlemen whopreceded you did not know anything about itand I had gathered that somebody was thefixer and that the rest by some means of men-tal telepathy were able to find it out, but nowI find that it is done here in Washington andyou are the man who does it, and you are theman who is responsible for what I pay forgasoline in Camden!

Dr. Frey : Not entirely . I have done it in hundredsof cases .

Mr. W olverton : But the big operators are main-taining prices just the same . Did you ask themnot to come down in price?

Dr. Frey : We asked them not to meet that com-petition .

Mr. Wolverton : That surprises me. I have nothingmore to say when I find that the major com-panies in my locality are charging me whatthey are at the request of an official in Wash-ington. That is interesting indeed . I do nothave anything more to say at this time.

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Dr. Frey : We have done that in hundreds of in-stances .

To give some idea of the manner in which thetruth was represented or misrepresented (the read-er may take his choice) to the Congress of theUnited States about exactly what was or what wasnot done in the matter of price fixing by the gov-ernment under the direction and responsibility ofMr. Ickes, the following record of the hearingsreferred to is reproduced :

Mr. Wolverton : Then you would not favor a price-fixing policy?

Secretary Ickes : Not at the present ; no. Underthe present code we have not attempted tofix prices. We have not up to the present,and I do not think that is the way to approachthis problem. We must approach it from along-range viewpoint .

Mr. Wolverton : Mr. Secretary, if the authorityunder the code has not fixed the price for gaso-line, how does it happen that in many locali-ties there is no difference in price between thatcharged by one company and that charged byanother?

Secretary Ickes : There is no differentiation in price?Mr. Wolverton : Not in the locality in which I live

nor any other in which I have bought gasoline .


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I can go to a Standard station, an American,Sun, Purol, Atlantic, or any other, and thereis no difference, not as much as one-tenth ofa cent in the price .

Secretary Ickes : That may be just a coincidence.

The following is also enlightening :

Mr. Wolverton : I am interested to know how thesame price is arrived at unless the code au-thority has determined it .

Secretary Ickes : We have not had a hand in that.

Having in mind the testimony of the esteemedSecretary of the Interior, Mr . Ickes, the followingtestimony of his marketing expert before the samecommittee and in the same hearings, only two dayslater, is most interesting:

Mr. Wolverton : When the Secretary of the Inter-ior was present I asked him about the questionof price-fixing, and he said that he did not be-lieve in it .

Dr. Frey : Yes .Mr. Wolverton: I would like to know the names

of the big companies you requested not to re-duce their price .

Dr. Frey : Well, in that particular instance you aretalking of, that is, Camden?

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Mr. Wolverton : Yes.Dr. Frey : The Company that was going to cut and

I asked not to cut was the Sun .Mr. Wolverton : When you heard that the Sun was

going to cut, you asked them not to do it ; isthat right?

Dr. Frey : That is right.Mr. Wolverton : Is that a policy of the board or

you as an individual?Dr. Frey : It is a policy of the board .

And further, a startling negation of the repre-sentations of the Interior Secretary, Mr. Ickes, wasgiven as follows :

Mr. Wolverton : I want to know the responsibilityfor this policy that you speak of, and I want toknow whether Secretary Ickes knows that youhad pursued the course which you did in thisparticular instance?

Dr. Frey : I make a report to him every week ofwhat I do .

Mr. Wolverton : Was this in accord with his wishes?Dr. Frey : If it was not, he did not tell me it was

not.Mr. Wolverton : Did you tell him you had done it?Dr. Frey: I did .Mr. Wolverton : Did he disapprove of it?Dr. Frey: No.


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Mr. Wolverton : Then we can assume that the re-sponsibility is with him?

Dr. Frey: I suppose so.

In my fight against the bill which would createFederal control of business in the petroleum indus-try, I stated in September, 1934, before the Inter-state and Foreign Commerce Committee the fol-lowing, in opposition to the price-fixing of Mr .Ickes' Administration :

"A piece of information, startling in its effect,was that elicited here Thursday of this week whenquestioning developed a fact that other witnesseshad not divulged, to the effect that under such Fed-eral control as is already lodged in the Interior De-partment, price-fixing by the government itself isresulting. The intelligence, so brought to light,reveals the government made a tool of monopolyin the infliction of a high price upon the consumingpublic that free competition would reduce and re-duce legitimately at profit, no doubt, to the inde-pendent marketer . Governmental price-fixing was,in this instance, set not at the lowest, but at thehighest price.

"Here is not one case but `hundreds of cases' inthe testimonial words before you here of a govern-ment official wherein the matter of monopolisticprice-fixing actually has obtained the services of thePetroleum Administrative Board, with the full offi-

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cial knowledge of the Administrator himself, inplacing the influence of our Federal Governmentbehind the monopolist in maintaining a higher priceof identical quality to the consuming public thanthat which free competition on the part of the in-dependent marketer legitimately would give . Whenthe Petroleum Administrative Board, wittingly orunwittingly, in its concept of government com-municates with major organizations with which ithas such close and intimate contact, and, apparentlytoward which it has such beneficent inclinations,advises that organization, confronted with a healthyindependent competition, to maintain its high pricelevel to the consumer while the Board proceeds touse the weight of Federal power and influenceagainst the purpose of the independent to inducethat independent to fall in line and to raise his price,that particular governmental agency demonstratesits futility, as a governmental agency, in the per-formance, yea, even, may I say, in its conception,of a proper governmental function. Such failure,if far extended in our government, spells the failureof government itself in respect to its duty to thepublic which supports it. It follows the principle,argued here, of Federal control . The adoption byour national legislature of that fallacious notion,born of the vanity of man in a stubborn march todictatorial power, will not conform to the princi-ples of American government, will not constitutea wise and necessary move as an emergency measure,will not be based upon justifiable facts, and, finally,


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will be objectionable both to the industry itself andto the public at large.

"America is not yet ready for the institution ofdoctrines that take the white stripes, and the bluefrom out the Star Spangled Banner ."

Although Mr. Roosevelt had placed the proposedOil Bill on his "must" list, the Bill eventually failedof passage .

During the summer, I appeared before the Na-tional Recovery Review Board, of which the cele-brated Clarence Darrow was Chairman . At thishearing, which lasted several days, Mr . Ickes senta special young lawyer to represent him and a con-certed, deliberate attempt was made before Mr .Darrow to damage my reputation in a scurrilousattack upon my personal business .

The attack was not founded upon any justifiablefacts and it therefore amounted to nothing. It didserve to prove, however, that the only refutationof my position with respect to the problems of thepetroleum industry, was, henceforth, to be a per-sonal attack upon me . Mr. Darrow was incensed atsuch tactics and warned me that he feared that Iwould be persecuted by litigation of some kind . Hestated that, although he had retired from the prac-tice of law, he would be glad to defend me if Iwere attacked by the Administration .

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In the fall of 1934, Mr. Ickes, the Oil Adminis-trator, addressed a Convention of the AmericanPetroleum Institute at Dallas, Texas. In his speechhe dwelt at length in lecturing and chiding oil menfor the manner in which they ran their businesses,made great fun of the architecture of filling sta-tions, referred to the "three foci" of iniquity in theoil industry-designating the localities as California(home of my friend Mr. John B. Elliott), EastTexas (home of my friend Mr. Jack Blalock) andNew York (I live in New York) but not callinganybody's name-and finally threatened national-ization of the petroleum industry!

The American Public recently has been shockedat the action taken by the Mexican Governmenttoward the nationalization of the Mexican Petrol-eum Industry. Great and adverse criticism of oursouthern neighbor's action has resulted. The chargeof Communism has been leveled at what most po-litical economists would characterize as a distinctly"red" policy. Be it remembered, however, thatour own New Deal Administration at Dallas, Texas,in 1934, through the person of Harold L . Ickes,actually made a similar "red" threat toward theAmerican Petroleum Industry almost four yearsbefore the Mexican coup was effected .

My studies of Mr. Ickes' connections with and


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support of various radical movements and associa-tions in Chicago before his having been called intopublic notice, warned me against his possible pur-poses. When he boldly threatened the nationaliza-tion of the American Petroleum Industry, there-fore, I was not so greatly surprised although I sensedthe urgent need of some action toward curbinghim .

The radical threat of the esteemed Secretary ofthe Interior and Administrator of the PetroleumCode, alienated what had been support of Mr . Ickesby major oil concerns in the industry. Oil publica-tions editorially attacked him and he began quicklyto lose prestige .

(The New Deal Administration later indicted alarge number of the so-called leaders of the indus-try, many of whom actually had sat on Mr . Ickes'Code Boards and Commissions, which under his di-rection and rule, had fixed petroleum prices . Theseself same individuals, now fallen from his benignfavor, were indicted, along with their companies,for an alleged conspiracy to fix prices ; herded to aselected section of the "Union" to be tried beforea selected jury of country folk ; and finally purgedby conviction in the now famous Madison, Wis-consin, oil trial!)My mail became heavy with demands that some

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step now should be taken to rid the industry ofthis man and I accordingly forwarded a numberof editorials together with a letter to the Presidenton November 24, 1934, in which I set forth reasonsto support a request which I made of Mr . Rooseveltto remove Ickes as Administrator of the PetroleumCode. I did this in the following letter :

The PresidentThe White HouseWashington, D . C.My dear Mr. President :

As an American Citizen who has given all of hisfifteen years of business career to operations in thepetroleum industry and to profound and extensiveresearch studies of the economics of petroleum, I,with great respect, invite your attention to a matterwhich I deem of such seriousness to the welfare ofthe country as to require frank discussion of it .

The petroleum industry, as a result of an appoint-ment you have made, since the inception of its Codein September 1933, has been under the administra-tion of a man, Mr . Harold L. Ickes, who, on hisown admission knew nothing at all about it . He hassurrounded himself with a group of young acad-emicians with no oil experience who seem incapableof properly assisting him either in the administra-tion of the industry or in a thorough understandingof its problems.


85

Mr. Ickes, as Administrator of the Code of FairCompetition for the Petroleum Industry has (in ad-dition to his admissions), by his acts revealed anincapacity for efficient performance of his dutiesand an utter lack of comprehension of the real issuesof the industry that have lost for him the confidenceand respect which the industry, under the influenceof your own leadership, placed in him as your ap-pointee. I enclose herewith editorial comment fromimportant publications confirmatory of this state-ment. The editorials enclosed are only a few frommany, but they indicate a definite trend of opinionand are taken from oil trade publications such as the"National Petroleum News," the "Oil Weekly,"and "Oil and Gas Journal," and from one of ourgreat Metropolitan dailies, the "New York World-Telegram."

Among a great many improper acts and short-comings of Mr . Ickes, I refer to the following asrepresenting some of those of which I believe youshould be informed .

1 . Mr. Ickes apparently is imbued with an in-ordinate ambition for more and more power to dic-tate the course of the industry's conduct, and inan attempt to influence Congressional legislationdesigned to confer that power upon him, upon oc-casion has appeared before Committees of Congressand has misrepresented before such committees im-portant phases of the industry's problems . Thesemisrepresentations have been made by him after hisattention had been called to the real facts which

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he later obscured so completely and contradictedso flatly by his misstatements of fact that intelligentopinion must conclude his position was deliberatelytaken for the purpose of deceiving and misleadingCongress in an attempt to influence the legislativeacts of our National legislature. Such conduct onthe part of a member of your own Cabinet cannotbe described only as unbecoming a Cabinet officerbut should be recognized as a danger to representa-tive government .

Before the Committee on Interstate and ForeignCommerce of the House of Representatives on May30, 1934, for instance, Mr . Ickes, painted a dolefulpicture of reckless overproduction and extravagantwaste in the petroleum industry which do not exist .His statements when analyzed, convey the clearimplication of a production of crude oil in thiscountry much beyond our normal needs and stressthe dangers of "waste" resulting from overproduc-situation and, if regarded as true, is particularlyIckes is at variance with the facts of the petroleumtion which he claims prevails . This position of Mr .dangerous because, being represented officially toCongressional agencies it might result in nationallegislation based upon a false premise . It appearsthat no person other than the President of theUnited States is in position to arrest or to curb suchpractice .

2 . Mr. Ickes has issued false statements to thepress of the United States thereby causing the Amer-ican public to become incited to a feeling of appre-


87

hension concerning possible danger that might arisefrom petroleum conditions of supply and demandalleged by Mr. Ickes but which, in reality, were notas he represented them. At the very outset of hiscareer as Secretary of the Interior, for instance, 'heissued a call for the Governors' Oil Conference inMarch, 1933, in the invitation for which he statedthat the problem of the petroleum industry to be"grappled with" was one of "overproduction ." Heeven cited statistics which were incorrect and whenI personally called the matter respectfully to his at-tention, proving by the U. S. Bureau of Mines thathe was wrong and asked that he retract his state-ment because it raised a false issue, he refused tocorrect his position and indicated a belligerent at-titude of stubbornness in holding to the false posi-tion he had created for the Administration . In sub-sequent public utterances and before official agen-cies he has, throughout his career as Oil Adminis-trator, persistently maintained a similar false posi-tion with respect to the facts of petroleum supplyand demand and alleged waste. I am in position tosupply you with copies of memoranda issued to thePress and with statistical proof which confirm thestatements above made .

3 . By Mr. Ickes' own admission and by his ownacts and those of many of his subordinates, he hasdisplayed himself and his administration before theindustry, over which he rules, as incompetent, in-experienced, unqualified, temperamentally unfitted,unfair, biased, and as lacking in a proper conception

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of real government functions. He exhibits a poorand ridiculous management of the industry's affairsand plays upon public opinion by frightening thepeople about false issues such as an impending andimminent oil shortage, waste and war-all of whichnotions are not based upon substantial knowledgeof actual conditions of fact . These are factorswhich have contributed, in material fashion, to theloss of confidence which the industry had in Mr .Ickes as Oil Administrator .4. Instead of applying himself to the business

of learning the basic factors contributing to thereal and great problems of the industry and result-ing in the controversial issues which so distract it,Mr. Ickes in Don Quixote fashion, "grapples" withfalse and imaginary issues, small and relatively un-important to the basic problems, and, by exaggerat-ing the importance of his little notions about theinconsequential matters which apparently absorbhis thoughts, makes his administration ridiculousand puerile in its ineffective attempts to aid recov-ery. The lack of cooperation and respect whichcharacterizes Mr . Ickes' administration is splendidlyin evidence currently as represented in the utter-ances of the leaders of important factions of the in-dustry, by prominent editors who speak the opinionof the industry's rank and file and by prominentState officials who oppose his program.

It is not too much for one to say (certainly it issomething concerning which you should be in-formed) that Mr. Ickes stands today as having lost


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the confidence of the industry as a whole, and thathe is now taking issue with responsible leaders of theindustry. In taking that issue he disports himself asa vituperative lecturer, violent and insulting in hislanguage, cheap and shallow in his conceptions ofthe merit of his opponents, unbending in his atti-tude, vain in his ambitious demands for more andmore power to be given one who has not demon-strated a capacity for the exercise of the power de-sired. His address made before a convention of oilmen in Dallas, Texas, on 14 November, 1934, lis-tened to in silence by thousands and broadcast byradio in which he childishly "poked fun" at the in-dustry and compared the policies of our leadingorganizations to the prolific antics of guinea pigsalong with threatening nationalization of the indus-try as a public utility is an excellent example ofan attitude that bespeaks such lack of comprehen-sion of the industry's problems that intelligent opin-ion cannot further interest itself in futile effortsto work in cooperative spirit under his direction .

Mr. Ickes' Dallas threat of nationalization ofthe petroleum industry as a public utility was inpoor form and without his province as a high gov-ernment official since no such development in in-dustry in this country could become possible merelythrough the frightened whim of an official of theExecutive Branch of our government, because ofthe necessity for Congressional action . His threat,therefore, was unwise and indiscreetly made with-out any evidence whatsoever of authoritative Con-

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gressional approval. It is very questionable whetherany such drastic and extreme action would be takenby Congress regarding any of the major industriesof our country and such an expression, by an offi-cial of Cabinet rank, is almost impertinent in itsdisregard for proper etiquette toward Congress .This country is not yet under any delusions whichpermit a dictatorial concept of government of ourpeople .

5 . Mr. Ickes has failed, in a misguided policy, toassist the recovery program by adopting a "shut-in"policy of restricting the production of crude oil topoints far below the normal needs for such, therebycreating huge deficiencies in our domestic produc-tion which, under his orders, can not legally be sup-plied by American oil producers but which, onthe other hand, can only be supplied exclusivelyeither by a monopoly which draws upon foreignsources of supply through imports and withdrawalsfrom stocks built up from imports, or by producersin this country who are willing to produce in ex-cess of his abnormally low "allowables," thereby be-coming outlaws (according to Mr. Ickes), andbootleggers of oil in the supplying of a natural,normal and legitimate demand of our Americanmarkets. Such a policy does not "put more menback to work," it keeps them away from work .

6 . Although Mr . Ickes has taken credit for sta-bilizing price conditions within the industry, hisacts have created instability inasmuch as they haveenhanced a condition of inequitable relationships


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between the fundamental price factors of the in-dustry. Under his administration the marketingbranch of the industry has suffered, without allevia-tion on his part, the greatest, most severe, most de-structive and most costly price war ever experi-enced in its history.

Although before the subcommittee of the HouseCommittee of Interstate and Foreign Commerce,Mr. Ickes denied having any hand in price-fixing,he concealed a fact of startling nature, later broughtout by Congressman Wolverton in questioning asubordinate member of Mr. Ickes' own staff, that hisadministration was and had been guilty in "hun-dreds of cases" of using the influence and power ofhis office to fix the price of petroleum productsto the consuming public and that that fixed pricewas fixed by his staff-not at the lowest competi-tive price of independent operators but at the high-est price of dominating major organizations . Suchacts of price-fixing on the part of Mr . Ickes' ad-ministration have been done deliberately, accordingto the testimony of a government witness, with thefull official knowledge of the Oil Administrator .They have been detrimental to the welfare, not onlyof the hapless consumer, but also to free and inde-pendent competition and to the advantage of majormonopolistic organizations .

7. Mr. Ickes, as Oil Administrator, has shown,by avoidance of the issue and by inaction, disrespectof the Presidential recommendation for divorcementof oil-pipe lines from their present ownership,


thereby fostering a harmful monopolistic practiceand continuing the existence of a concrete instru-mentality of monopoly .

8 . In answering, in his Dallas speech above re-ferred to, charges of failure in his administrationof the Petroleum Code, Mr . Ickes admitted failurebut excused such failure on the ground that theCode was a faulty mechanism, promulgated with-out his having been consulted regarding its consti-tution, and thereby implied direct and adverse criti-cism of the President of the United States who didactually promulgate the Code. By so construingthe Code and its manner of promulgation, Mr . Ickesclaimed, in effect, that he now is engaged in a dif-ficult attempt to administer the Nation's third larg-est industry through faulty and defective Codemechanism. Such admission alone, challenges hisavailability for Code administration .

Because of the acts and inabilities of Mr . Ickesfor his position as Oil Administrator, several in-stances of which have been recited above and addi-tional supporting data for which can and will besupplied if you desire, and because also of a verystrong and wide-spread feeling persisting that hehas lost the confidence of the industry which hedirects, I most respectfully ask, because of my gen-uine solicitude for the welfare both of the petroleumindustry and of the public, that you remove himfrom the office of Administrator of the Code forFair Competition for the Petroleum Industry. Thedestiny of your administration, of the petroleum

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industry and of the American public itself, de-mands it .

With my highest consideration, I amMost respectfully,

(Signed)

J. EDWARD JONES

The request for Mr. Ickes' removal was givenwidespread publicity throughout the country, andfrom the date of my sending the letter to the Presi-dent, there was set into motion the strangest possiblechain of events to affect my destiny that could pos-sibly occur in this so-called free country of ours .

I very promptly received an acknowledgment tomy letter from the White House and was advisedthat the President would give further answer when"the investigation" had been concluded . I still amin doubt as to just what was meant or whetherirony was intended in the words "the investigation ."Nothing in the White House letter specified theobject of "the investigation" or hinted as to whoor what was to be investigated .

I do know that whatever in the way of furtheranswer was given to me came not in the form of aletter from the President, but rather in the formof a strangely new kind of "Deal."

CHAPTER VIII

New Deal Policeman

My business operations in New York areconducted from my office at 342 Madison Avenue,the one business address I have had in New Yorksince I arrived from Kansas, in January, 1920,to start my business career . For fifteen years I haddevoted my entire business life to selection andpurchase in the oil fields of the great Mid-Conti-nent region, of landowners' royalties on the pro-duction of oil lands, operated chiefly by the larg-est of the oil operating companies . I distributedthese royalties to a substantial clientele which Ipersonally had built up in the Eastern part of thiscountry and in certain parts of Europe. My NewYork office was the headquarters of the businesswhich I had established, and from that office, op-erations were conducted from four of my branchoffices-a distributing office in Boston, Massachu-setts, as well as one in Dresden, Germany, and fieldoffices in Independence, Kansas and in Tulsa, Okla-homa.

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New Deal Policeman

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In addition to our regular commercial activitiesa Research Department was maintained at consid-erable cost, studies were made and research conduct-ed in the field of petroleum economics, including,of course, the problems of the industry . I person-ally was intrigued by the interesting phases of pe-troleum problems and gave considerable time tothis work, contributing, as best I could, to enlight-enment regarding the too little known elements ofit.

Possibly two hundred individuals made up my en-tire organization-unincorporated, and known asthe J. Edward Jones Organization-and it was rec-ognized throughout the country as reputable, suc-cessful, expert, and foremost in its particular andspecial line of business activity .

Although our volume of business was comfort-ably in the seven figure class and was supported byseveral thousand clients, we never had been con-fronted by any complaint on the part of any officialof either the Federal or of any State Government .No complaints had been filed against us by any ofour clientele and none was pending at the time myrequest for removal of Mr. Ickes was made onNovember 24th .

At that time, I enjoyed most cordial relationshipswith the Securities and Exchange Commission and

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with the Federal Trade Commission, its predecessorin the administration of the Securities Act of 1933.Immediately following the passage of that Act byCongress, I had gone directly to the Federal TradeCommission to register a "Royalty Trust" whichbore my name and which we were regularly distri-buting to our clientele . I had the pleasure of beingcongratulated by Mr. Baldwin B. Bane, of the Fed-eral Trade Commission, on having formulated, in1930, a trust, the provisions and principles of which,so he advised me, met the strict requirements of theNew Deal Securities Act of 1933 and earned theexemptions provided for registrations. Mr. Banetold me, that, since my trust earned the exemptionsfrom registration I should not clutter his files byleaving with the Commission the material descrip-tive of our offerings which I personally carried tohis offices, and furthermore advised me to "take itback to New York."

I followed the suggestions made and confirmedin writing my understanding of the exempted privi-leges earned and of our intention to proceed withour business as theretofore.

I was requested to visit with one of Mr. Bane'saides, to advise him of the fundamental nature ofthe business which I sponsored and to assist himin the formulation of additional rules and regula-

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tions for its conduct. I have in my files today roughdrafts of proposed rules and regulations which theCommission forwarded to me along with requestsfor my recommendations and comment regardingtheir ideas for regulating the oil royalty business .I gave my views and assisted them in their work .

And when the Securities and Exchange Commis-sion was established, obedient to provisions of theSecurities Exchange Act of 1934, that Commissiontaking over the Securities functioning and consid-erable of the personnel of the Federal Trade Com-mission, I continued to collaborate with and to aidMr. Bane, and his assistants, in their new capacities .In this work, a very .cordial and friendly attitudewas the rule, always, and I was glad of the oppor-tunity afforded to be of some constructive ser-vice .

Within a few days following the dispatch of myIckes removal request to the President, there walkedinto my New York office my old friend, Dr . IrvingPerrine, a prominent and widely known petroleumgeologist of Oklahoma City, Oklahoma, and withhim a young man of heavy build and shaggy coun-tenance, whom Dr . Perrine introduced as John L .Flynn, a lawyer newly on the staff of the Securitiesand Exchange Commission. I knew that Dr. Per-rine had joined the staff of the Commission as their

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expert advisor on oil matters and he informed methat he, with Mr. Flynn, were desirous of "gettingacquainted" with the oil royalty men by way ofharmonizing the efforts of the Commission in thedirection of the regulation of their businesses as abranch of the Securities business, and that he hadfelt pleasure in bringing Mr . Flynn first to me, as,so he stated, I was recognized as heading the fore-most organization in the business under survey .

I was, of course, pleased at the call and, afteran exchange of the usual courtesies, offered the fa-cilities of myself and my organization toward anygood purpose, stating my admiration for the prin-ciples which prompted Congress in the establish-ment of the Commission and making some briefcomment concerning what I regarded as a real needfor some such agency of government .Dr. Perrine thanked me in polite and familiar

manner and proceeded to outline some of his viewsregarding the good results he expected to accom-plish for the government by virtue of his wide ac-quaintanceship among oil men. He stood actuallyaghast, a few seconds later however, and I was seizedwith complete amazement, when young Mr . Flynn,in most impolite, hostile and even menacing man-ner, launched into a series of swift and curt ques-tions which he directed at me regarding most inti-

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mate details of my own business methods, particu-larly as to our cost and sale prices, my profits, etc .Dr. Perrine stood this sort of thing for a few min-utes, whereupon he informed me, as he frownedupon Mr. Flynn, that he had been sent to NewYork to interview people, and that Mr . Flynn hadsimply accompanied him. Also, that on coming intomy office, he had not intended any such examina-tion as Mr . Flynn had started, that he thought thetactics were impolite and improper, that he wassorry for the incident and that it had interruptedhis conversation with me and his plans-for whichhe was regretful .

The two gentlemen then departed, having in-vited me to come to Washington to meet with someadditional new personnel of the Commission forthe purpose of discussing with such personnel meansby which the purposes of the Commission in theregulating of the Royalty Business could best beattained. We set a date for such meeting withina few days following .

When I arrived at the offices of the Commissionin Washington, I felt no longer the ease of congenialatmosphere which always previously had character-ized the place. I was received with an air of for-mality (a girl secretary or receptionist directingme to an outsideish-like small office, where I sat

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on a hard bench for a seemingly interminably longperiod) . Finally, I was ushered through a door anda passage into a small room which, on entering, Iperceived to be fairly well filled with personageswho somewhat stiffly acknowledged my introduc-tion to them.Dr. Perrine was present as was also the Mr. Flynn

who had visited me in New York. Among others,I met Commissioner Landis, of the Commission,and a Mr. John J. Burns, General Counsel of theCommission, who sat, authoritatively, at the bigdesk, centered in the room and surrounded by chairswhich the others present occupied.

I had not understood that the meeting was to beof the nature of a formal hearing, but, nevertheless,a court stenographer was called and an atmospherethat should have been lightened by so many brightyoung faces present, became stilted with enforcedformality as Mr. Burns, a young Irishman with adecided Harvard accent began to speak for the bene-fit of the record!

At the outset of his remarks, Mr . Burns alleviated,in some small degree, the tension which I had begunto feel at the stiff and unnatural setting that hadbeen provided. He stated that he wanted me tounderstand that it was now the practice of theCommission to make a record of all conferences

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but that the Commission had no complaint what-soever against me and was not holding the meetingfor any such purpose. On the other hand, Mr .Burns complimented me by advising me that theCommission regarded me as heading the "premierorganization" of its kind, and they wanted to solicitmy cooperation to aid the Commission in what theyall recognized as a difficult problem in the regulationof the business which I sponsored, since such busi-ness was somewhat technical in nature . He statedthat the Commission could benefit if it could havethe assistance and cooperation of myself and my en-tire organization.Mr. Burns, explaining the necessity for his imme-

diate departure, thereupon arose and left the room .On his leaving, Mr. Flynn, who had sat perfectlyquiet but watching me closely, immediately tookMr. Burns' seat at the desk and, once again, with-out even any polite deference to the thoughts justexpressed by Mr. Burns, began a vigorous and ob-viously hostile, almost brutal style of questioningwhich plainly indicated an antagonism toward meand my business. He drove hard at field costs,stressed the urgent need to be supplied with infor-mation regarding my profits in my business, de-manded, in the court-room style of a prosecutingattorney of some homicide bureau, to be informed


as to my abilities to assess values of oil properties,insisted upon being supplied, and in quick order,with the names and addresses of my clients and, ingeneral, opened what an up-to-date Chinamanmight have regarded as hostilities in an undeclaredwar .Dr. Perrine arose and protested the treatment to

which I was being subjected. He stated that I wasan individual of wide experience in oil field buying,that I was a man of reputation so far as my abilitiesto judge oil property values was concerned, thathe objected to a line of questioning about theprofits which were made in business, and that, ashe considered it an honor to know me and my or-ganization, he would be embarrassed to remain anylonger in the room. Dr. Perrine thereupon strodefrom the room. I promised to supply Mr . Flynnwith the information he desired and the meetingwas concluded .

On returning to my New York office, I startedthe work of accumulating the data demanded byMr. Flynn and notified the Commission that thematerial would be forwarded at the earliest possiblemoment. My extreme bewilderment, therefore, canbe. imagined when, only a few days before Christ-mas, I received a telegraphic notice from the Gen-eral Counsel of the Commission, the young Mr .

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Burns, summoning me to be present at a hearingto be held at the New York office of the Commis-sion on December 26th, the day after Christmas,for the announced purpose of conducting an in-vestigation into my personal business activities!

CHAPTER IX

Let the Seller Beware !

The wrath of the American Governmenton the warpath against any particular individual,is something with which to cope . When orders "toget a man" originate at the top and go down theline through all the cogs of governmental machin-ery, there is a force, a power, an influence let loosethat almost baffles opposition. The only thing thatcan successfully withstand it is the might of truth,ably and, of course, expensively presented, and sup-ported by those fundamental principles of theAmerican Governmental system which still standas mighty bulwarks against tyrannical abuses ofpower to the detriment of individual freedom inthis country.

If there is any great weakness in the AmericanDemocracy, such lies in the idealism of it. For con-stitutional government in this country is built uponprinciples of honor, sometimes to be subverted bythe acts of man.

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Let the Seller Beware!

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The acts of government which fall in any cate-gory other than that of honor are not the legitimateacts of American Government but rather those of"little men dressed in brief authority" who, bysome quirk of fate, find themselves within the gov-ernmental machinery and clothed with a power theyknow not how to wield. And such acts eventuallywill run afoul of those protective provisions of ourgovernment which guarantee to us, in the end, thatfreedom which makes us admire the principles, re-spect the majesty and love with patriotic fervorthe justice of our government .

And just so far as our government is a govern-ment of laws, based upon the highest principles ofhonor written in the Charter of our very existence,the Constitution of the United States, to that exactdegree it is not a government of men, whose actsmay be motivated by all the influences, great andsmall, that sway human emotions and preju-dices.

The long two and one-half years of struggle foreverything I hold dear in this world, into which Iwas thrown by the action announced by the tele-gram I received from the Securities and ExchangeCommission, was a struggle, proved by the record,not against the legitimate acts of my government,not in violation of any of the valid laws of the land,

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but against the unwise acts of unwise officialdom,an officialdom which, in the celebrated words ofthe Supreme Court of the United States in its de-cision later handed down in my own case found"no support in right principle, or in law . It is whol-ly unreasonable and arbitrary . It violates the cardi-nal precept upon which the Constitutional safe-guards of personal liberty ultimately rest-that thisshall be a government of law-because to the preciseextent that the mere will of an official or an officialbody is permitted to take the place of allowableofficial discretion or to supplant the standing lawas a rule of human conduct, the Government ceasesto be one of law and becomes an autocracy ."

Knowing that I ever had been zealous in directingmy business, to the best of my ability, along scrupu-lous lines of conduct with due regard always toevery legal requirement, having in mind my oft-re-iterated expressions of willingness to abide by what-ever rules the Commission might make with regardto my business, recalling my pleasant relationshipwith the Commission and their complimentary at-titude and their assurances to me, I was greatlypuzzled at the definitely hostile attitude of theirnew lawyer, Flynn, as well as the launching of theinvestigation of my business activities. I telephonedMr. Burns, the general counsel, in an effort to


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learn the reasons for the obvious shift in the Com-mission's attitude, but met with a cold, non-com-mittal, and hostile reception that did me no good .

I realized that somebody in the government wasdetermined to cause the machinery of governmentto be turned against me, although, at first, I couldnot sense the real source of my trouble . I hiredlegal services, spent a miserable Christmas in tryingto conceal my worry and anxiety from my familyand my friends, and awaited the morning of the26th with puzzled concern .

The hearing that started ; its method of conduct ;the indignities to which I was subjected, in spiteof my rights as a citizen ; and the knowledge gainedas to the high source of origination of the case whichhad been launched-all contributed, along with thesequence of events that followed, to a long and bit-ter struggle for my individual freedom, my liberty,my very existence! Eventual victory for me-cost-ly beyond a measure never to be realized-came intwo great legal actions : one culminating in a finaldecision of the United States Supreme Court andone ending in the final verdict of a jury of twelvemen of my peers. In the Supreme Court's ownwords, my victory proves that in America "arbi-trary power and the rule of the Constitution can-not both exist. They are antagonistic and incom-

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patible forces ; and one or the other must of ne-cessity perish whenever they are brought into con-flict." That ruling alone is so basically important tothe safeguarding of freedom for individual citizensas against the tyrannical acts and despotic powerof usurpers in government in this country, that thesacrifice made is willingly laid down .

Arriving at the offices of the Commission at 120Broadway, with my counsel, Mr. George S. Leisure,I found the Commission represented in its actionagainst me by their new lawyer, the hostile, youngMr. Flynn, supported by a staff of assistants .

I was informed by another lawyer of the Com-mission's staff, who acted as the judge, or trialexaminer, that the investigation was to be con-ducted by authority of an "order" of the Securitiesand Exchange Commission. At the very outset Iasked to be apprised of the nature of the complaintwhich I was advised, for the first time, the Commis-sion had against me.

Strange as it may seem, the Securities and Ex-change Commission insisted upon conducting its in-vestigation of me, but refused to advise me of thenature of its complaint, if any of such it had . Idesired to know, of course, what it was I shoulddefend myself against and I therefore said : "This be-ing the first time that I have heard from the Com-


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mission that there was any complaint whatsoeverlodged against any of my operations, I do not knowwhether I am within my rights to ask the natureof the complaint . . . I am not aware of any com-plaint. I do not know the nature of it. I wouldask you to let me know what that is. . . . I appearto have been summoned here to give you informa-tion, and I would think-my instinct would tell me,at least, that I should be apprised of the nature ofthe complaint ."

But the trial examiner advised me that he himselfdidn't know what the complaint was! He said, "Asto the nature of that complaint, I am not advised .I do not know what the information is!"

I then asked, "What is the nature of the viola-tion alleged or otherwise?" The trial examiner an-swered, "That I am not informed of, other thanwhat is stated in the order . I would not be informedas the Trial Examiner!"

I therefore was compelled to subject myself to asearching, brutal and hostile investigation of manycomplicated aspects of my private and personalbusiness affairs without knowing of any chargeagainst me except that the Commission had "or-dered" the investigation. The Supreme Court later,in my own case, condemned "fishing expeditions"and the Commission, saying : "The Citizen when

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interrogated about his private affairs, has a rightbefore answering to know why the inquiry is made ;and if the purpose disclosed is not a legitimate onehe may not be compelled to answer ." The Courtfurther stated that, "An investigation not basedupon specified grounds is quite as objectionable as asearch warrant not based upon specific statementsof fact. Such an investigation or such a search, isunlawful in its inception ."

I was handed, at this first appearance before thetrial examiner, a subpoena requiring the productionby me of voluminous books, files and records, amongwhich particularly was demanded the names andaddresses of my clients.

I knew of no reason why I should not make suchrecords available to the Commission and I thereuponagreed to a stipulation which permitted the Com-mission "to examine" such records "at" my officefor my "convenience" (in not being compelled tobring such voluminous material to the offices of theCommission) . The stipulation, which was signedby counsel of both parties, specifically stated theexamination of my books and records was to takeplace "at" my office-no provision at all being in-corporated for their removal .

There followed an examination at my offices ofbooks and records, such examination being con-


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ducted by one William H . Rabell, Assistant ChiefInvestigating Accountant for the Commission, un-der the immediate and personal direction of Flynn .Five or six accountants worked in my offices underRabell's direction, the entire procedure, of course,completely demoralizing and disorganizing my ownoffice staff, and disrupting my business operationsas well .

The names and addresses of my clientele wereobtained by Flynn and the destruction of my stand-ing in my business started in as deliberate an at-tempt to destroy and to ruin as possibly could beput into motion. Telegrams were sent promiscu-ously to a satisfied clientele to shock, to warn, toshatter confidence. The following words, tele-graphed to my uncomplaining clients, was their firstnotice that something was wrong :

"Please arrange to be at office of the Securitiesand Exchange Commission One Twenty BroadwayRoom Nineteen Eleven New York City at yourearliest convenience this afternoon or tomorrowand bring with you all your correspondence litera-ture and records relative to your purchase of roy-alty trust certificates from J. Edward Jones .

Securities and Exchange CommissionBy John L. Flynn."

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Interviews with the clients followed, at whichFlynn made insinuations and categorical statementsto create apprehension concerning the safety of theinvestments which had been made with me . Heeven dictated his own version of complaints hewished to be made, following his talks with myclientele, submitting such to the clients in an en-deavor to have the complaints signed. Refusal tosign such dictated complaints was given by severalof my clients, but others, influenced as they wereby an officer of the government, and frightened, ofcourse, signed as directed .

Some of my clients who signed the complaintsdictated by Flynn, later came to me and told methey had signed such affidavits because Flynn hadfrightened them concerning the soundness of theirinvestments and had told them that if they wouldsign the complaints he would have their money re-turned to them. Numerous statements along thisline were made to me and I possess evidence to thateffect .

A particularly insidious situation which seemeddeliberately designed to take from me the businesswhich, through long years of effort, I had estab-lished as my own, developed almost immediately onthe taking from my office of the confidential listof my valued clientele. Those clients thereupon


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began to be solicited by at least three concerns, ofnew and unknown standing, who set themselves upas my "competitors ."

I have affidavits from clients, who, on interview-ing one concern which, in some manner, becamepossessed of the names of my clients, were advisedby the head of that concern, one Mr. Bush (wholater was put into jail by the Attorney General ofthe State of New York) that the Securities andExchange Commission had "pulled a van" up tomy office door and had taken all my books andrecords from me. He slandered me and my busi-ness, referring constantly to the Commission's ac-tion against me, and finally telephoned one Oster-weil, of the Securities Commission's staff, withwhom he conversed on most cordial basis and towhom he addressed a letter of introduction, whichhe gave to the clients who were present, askingthem to go down to the Commission and to file acomplaint against me. I have evidence of this mat-ter, including photostatic copies of the letters ofintroduction given. I was later advised, and by amember of the Commission's own staff (as will berevealed herein), that Osterweil passed out thenames and addresses of my valued clients to personswho thereupon circularized them for attemptedsales of other offerings.

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The examination continued "at" my office in ac-cordance with the written stipulation until on Sat-urday, January 5, 1935 . On this day, at about 2 :30in the afternoon, I returned to my office from lunch-eon, to find strange men, under the direction ofRabell, carrying armloads of my books and re-cords, including files of correspondence, from myoffice.

With indignation and emphasis, I protested thisaction to Rabell, calling his attention to the pro-visions of the stipulation to the effect that the ex-amination was to be conducted "at" my office andstating that I objected to the seizure and removalof my records, insisting that such action consti-tuted violations of my constitutional rights. Myobjections, however, met with an attitude of scornon the part of Rabell, who scoffed at my statements,threatened me with arrest in case I interfered with"Federal men," and refused to cease the seizure andremoval of my books, papers and files .

These records were taken to the Commission'soffices at 120 Broadway, later indeed, to be removedto Washington, D . C., and not to be returned to myoffices until the following March 11th .

The hearings at the Commission's offices contin-ued throughout the greater part of the month ofJanuary. I spent many days in giving testimony,

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confronted by an irate and bellicose Mr . Flynn, who,at all times, employed a brutal method, questioningme as if I were a convicted horse thief .

As this thing proceeded I was naturally verymuch perturbed and distracted. I could not un-derstand why "the investigation" should have beendirected against me and I accordingly dispatched toWashington, one of my counsel, a gentleman ofeminent standing, and one of my regular officestaff, a man who, prior to his coming with myorganization, had done duty in the intelligence ser-vice of the State Department . I instructed both ofthe gentlemen to ascertain, if possible, the reasonfor the attack against me.

To my great amazement, I was advised that Mr .Ickes, following my request to the President for hisremoval, had instructed the head of the Secret Ser-vice of the Interior Department, one Mr . Glavis,to obtain information concerning my business ac-tivities and to supply such to the Securities andExchange Commission. I learned, from the samesource, that Mr. Glavis had communicated with aMr. Montgomery, then with the Commission, con-cerning certain information about our operationswhich Glavis had obtained through the tapping ofthe telephone wires of my New York office!

And, what hurt me more, I was advised-author-

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itatively, from an unimpeachable source-(later,indeed to be confirmed in a statement by a memberof the Securities and Exchange Commission's staff-as will be noted herein) that a member of the Presi-dential Secretariat had gone from the White Houseto the Securities and Exchange Commission withthe request that the Commission "get a case" onme and that it "make it a cinch!"Young Mr. Flynn, the new legal addition to the

Commission's talent was, I also learned, the nephewof Mr. Ed Flynn, Democratic leader of New YorkCity's great Bronx and probably the President's clos-est political friend and confidante . Mr. Flynn wasassigned to the Commission and his very first jobwas the "J. Edward Jones Case ."The Hon. Bainbridge Colby, former Secretary

of State under President Wilson, and an old ac-quaintance of mine, went before the Commissionat Washington in my behalf, and obtained fromMr. Burns, the General Counsel, an oral stipulationand agreement that for and in consideration of mygoing before the Commission and cooperating, Iwould be given the privilege, following the conclu-sion of the presentation by Mr . Flynn, of present-ing refutation in my own defense. I, therefore,even in the face of the forcible seizure of my booksand records, continued with the hearings which

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did not conclude with Flynn's presentation untilJanuary 23rd, 1935 .

In spite of the agreement had with my counsel,Mr. Colby, and although I had proceeded in theunderstanding arrived at by him with the GeneralCounsel, the Commission refused to permit of suf-ficient time for the presentation by me of my sideof the case, or to call witnesses in my behalf . TheCommission, on a Saturday afternoon, with rainpouring, suddenly closed its side of the case withoutany warning having been given prior to that day,and, in such circumstances, catching us, of course,without any witnesses present.

My counsel for the hearing, Mr . George S . Lei-sure, asked for time to call a few witnesses-petro-leum engineers-to testify regarding values of" oilproperties in Oklahoma. The hearing however, wasadjourned, subject to call at the will of the Com-mission, which never reopened it again . The officialstenographer recorded the following: "Whereupon,on January 23, 1935, at 3 :20 P.M., the hearingwas adjourned subject to further notice of resump-tion." And to this day no further notice has beengiven of any resumption of the hearings thus closed .

Throughout the hearing, on numerous occasions,as the record will show, the trial examiner repeat-edly promised me opportunity to bring out certain

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facts on "cross-examination." The record alsoshows however, that although I had fully compliedwith their wishes, I was refused that opportunity .

In addition to the fact that the Commission, inspite of their agreement with Mr . Bainbridge Colbyand the promises made on the record by the trialexaminer himself, denied me the privilege of pre-senting my defense and to refute the allegationsmade, a thing was done in the conduct of the inves-tigation of my books and records that, because ofsubsequent happenings, is worthy of special men-tion .

In the words of Rabell himself, later to be quotedin a following chapter concerning a most extra-ordinary episode, Flynn ordered Rabell to "chopoff" my books at a certain date, December 27, beforefinal entries had been made by my Auditing De-partment, and to ignore information at hand inmy files, in order to "frame" a case against me bycharging an untrue state of affairs in my business .

Following the conclusion of the formal hearingsby the Commission, on January 23rd, Flynn andRabell, with an assistant by the name of Bouchet,rushed the preparation of a formal affidavit to beused as the basis of a complaint against me. Anaffidavit was prepared, covering various pointswhich Flynn desired be made, and both Rabell and


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Bouchet, as accountants for the Commission, wereasked by Flynn to sign it . Bouchet later testifiedunder oath that he refused to sign the affidavit,even in face of urgings by Flynn, who carried theargument to Washington, D . C. Bouchet based hisrefusal on the stated grounds that he did not be-lieve the affidavit could be proved . Rabell, however,on Bouchet's refusal, swore to and signed the affi-davit which had been prepared and Mr . Flynn thenand there had his "case!"

The affidavit of Rabell was made a supportingvoucher for a complaint which Flynn and the trialexaminer-the "Judge"-prepared against me . TheGeneral Counsel of the Commission came down toNew York from Washington, and proceedings wererushed to file charges against me as soon as possibleand before I could think of any defense prepara-tions .

In such circumstances, and on advise of counsel,I consented to a temporary injunction of verystrange nature. The injunction did no more thanrestrain me from acts already forbidden all per-sons by the laws themselves . It, for instance, forbadeusing the mails and the facilities of interstate com-merce in any scheme to defraud . It forbade, in ef-fect, the selling of any securities in interstate com-merce unless there was "in effect a registration


statement as to such securities," provided, how-ever, that "such registration statement is required"by the Securities Act .

As I intended to do none of the things outlinedin the order, and as I had no opportunity to pre-sent a defense at that time, I consented to a tem-porary order, only to realize that much was to bemade of the case by the route of newspaper publi-city, and by speeches and "statements" on the partof members of the Commission's staff who felt calledupon to make very damaging remarks about me.

For my part, to inform my clientele and the pub-lic of the background of the action, I published thefollowing advertisement in prominent New York,Boston and Oklahoma newspapers :

An Open LetterTo My Clientele

and the General Public

During the past year and a half it has fallen tomy lot to oppose Secretary Ickes in his oil policy . Inthis opposition I have memorialized Congress .andhave appeared before various Congressional Com-mittees in presenting factual information whichcontroverted the position which Ickes sponsored .By such action, I have incurred his animosity .

Although my attitude in the petroleum contro-versy has been displayed in open and public oppo-

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sition to the Ickes oil policy-which only recentlyhas been condemned by Supreme Court decision-Ilately have been subjected to secret and underhandedpractices designed, apparently, to damage my repu-tation and pursued in a way to cause the ruinationof my private business .In November, 1934, I respectfully asked the

President of the United States to remove Ickes asOil Administrator-citing as reasons, among otherthings, the misrepresentation of oil facts by Ickesbefore Congress and to the press in order to inducethe passage of oil legislation practically giving dic-tatorship powers to him for the absolute control ofthe petroleum industry. I have been advised thatIckes instructed Mr. Glavis, head of the secret ser-vice of the Interior Department, to "go out andbuild up a case against J . Edward Jones." I alsohave been informed that within one week from thedate of my letter to the President the telephonewires to my office in New York as well as to myhome in Scarsdale were tapped . Any such lowpractice I resent with all the emphasis of patrioticcitizenship .

Publicity in dozens of papers throughout theUnited States has been to the effect that Ickes hasbesought the Securities and Exchange Commissionto "turn on the heat" in my personal direction . Iam reliably informed he has stated that "I will putJ. Edward Jones in cold storage and keep him theretill the next Ice Age ." I understand that Ickesappealed, through Glavis, to the Securities and

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Exchange Commission for action against me .Following these threats and Ickes' direction to

Glavis, the Securities and Exchange Commissionhas instituted an investigation of my business ac-tivities . On the flimsy ground of an alleged "corn-plaint"-the nature of which the Commission re-fused to divulge-I have been subjected, for morethan three weeks, to an exhaustive examination ofthe books, records and files of my offices and evenhave suffered the indignity of having vital files andrecord books taken from my offices . I have beenforced to reveal the names and addresses of my cli-ents, to whom the Commission has sent telegramsand letters which have grossly reflected upon meand which tend to shatter the confidence of a sub-stantial clientele built up from fifteen years of hon-est effort from my present address. I am threat-ened with all manner of court action and have beendenied an opportunity of putting on the record mat-ters of refutation, explanation or correction .

I have attempted to cooperate both with theFederal Trade Commission and with the Securitiesand Exchange Commission and am willing and de-sirous of following scrupulously any rules whichthey may promulgate. My business operations areconducted to the best of my ability in that direc-tion. I have had a satisfied clientele, no one of whomwas making complaint to me . If any complaintor charge against me does exist, I desire to knowwhat it is so that I can defend myself. All my per-sonal responsibility is behind my business practices .


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In the present instance, I have had no opportunityeven to learn what "complaint" exists-therefore,no opportunity for defense. I am forced to subjectmyself, however, to an "Ickes Inquisition" which Ifeel is deliberately directed toward the destructionof the business which over a period of many yearsI have built with painstaking care and effort .

Congress created the Securities and ExchangeCommission and gave it wide powers for construc-tive purpose. It seems now to have been made aweapon of a high governmental official for the de-struction of an individual who dared oppose thatofficial .

The J. Edward Jones Organization brands suchpractices as representative of a despotic tyrannydangerously threatening to the very fibre of ourgovernmental structure . The Organization willfight this tyranny in the genuine belief that in itsattempts to eradicate an evil from our governmentit is performing a real public service. It will makethis fight in the open regardless of consequences .It believes the best way to fight such underhandedand low practices is to raise the curtain of secrecyfrom them. Full details of this "grudge" fight willbe revealed in subsequent statements in this and inother newspapers .

J. EDWARD JONES

New York

Boston342 Madison Ave.

50 Congress St.

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The injunction order was signed on February 8th,and, even before it finally had been decided upon,Mr. Burns had telephoned the various New Yorknewspapers requesting them to come to the Securi-ties and Exchange Commission offices for an "im-portant statement." Mr. Burns' "statement" gross-ly reflected upon me and indulged in general repre-sentations which had not then and have never sincebeen proved.

The New Deal had started a ball rolling in my di-rection, but the boomerang, even then, was on theway!

CHAPTER X

Mr. Flynn Goes to Town

Since the date of my letter to the Presi-dent requesting the removal of Mr . Ickes as Ad-ministrator of the Petroleum Code, I had encoun-tered personal opposition on the part of those con-nected with the Government . This oppositionseemed to me a definite personal antagonism, a vin-dictive spirit of pursuit . At my first and succeed-ing meetings with young John L . Flynn, for exam-ple, I had met with an attitude which, even beforeI had any knowledge whatsoever that I was to be aformal object of prosecutive purpose, impressed mewith the thought that Mr . Flynn felt the urgingsof some special commission to "get J. EdwardJones." His bullying tactics in a so-called "fact-finding" investigation that covered the minutest de-tails of my every business activity since 1930, in-cluded even the counting of pigs and chickens ona Kentucky farm I had purchased as a home for myfather and mother. He went far in the direction

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of scorn and scoffing-even asking, on the officialrecord, whether I had any pigs or chickens at myoffices at 342 Madison Avenue, New York .Mr. Rabell, who, under Flynn, was in charge of

the Commission's accountants at work in my of-fice, paraded before me and my office personnel inimpolite and disrespectful manner . His peculiarpersonal antagonism toward me was climaxed inhis bold and arbitrary attitude at the time of theseizure and removal of my records .

And on the day of the consenting to and thesigning of the temporary injunction order, Mr.Burns spurned to speak to me when we met .Mr. Joseph P. Kennedy, Chairman of the Com-

mission, speaking to the press in Chicago, supple-mented Mr. Burns' "important statement" to thenewspapers of New York, when he felt called uponto refer to the "J . Edward Jones Expose ."

These people of the Securities and Exchange Com-mission seemed to have a penchant for publicityof a type that would ruin both my business and mypersonal standing and reputation .

But human nature is revealing . Success in per-sonal effort, no matter what emotions may havepropelled such action, is very probable to resultin joy and exultation when the goal finally isreached. It is difficult, however, for one to conceive


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of an ordinary functioning of the machinery ofour government resulting in emotional demonstra-tions of its officials over the discomfiture of anindividual, stung and hurt by government attack .Of course we may expect national delirium tosweep officialdom as well as citizenry upon theoccasion of the surrender of the enemy's armies,an armistice, or what-not, but for officialdom to"cut loose" on the knockout of an individual citi-zen is strange stuff, indeed!But, Mr. Flynn, the special ambassadorial spear-

head of the New Deal attack upon me, gave way .He had a big night on that day on which theinjunction order was agreed to and signed . Hecelebrated. He apparently surrendered to a nat-ural proclivity, and how he celebrated!

If anything is needed to reveal the personal feel-ings behind the scenes in this battle, Mr . Flynn, inhis own way, and of his own kind, proceeded toshow it.

He had learned that during the hearings I hadtaken a room at the Biltmore Hotel, across thestreet from my offices which were, of course, oc-cupied by Rabell and his men . At this room, myattorneys and my special auditors worked on thecase as it proceeded .

On the night in question, numerous friends, my

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attorneys, auditors, and members of my organiza-tion were congregated in the Biltmore quarters,discussing with me the various aspects of the case .

During the course of the evening we were great-ly surprised and amused to see none other thanMr. John L. Flynn, legal representative of the Se-curities and Exchange Commission, come reelinginto the room, gloriously drunk, snorting with thestrong breath of much liquor, beaming with goodnature and friendly to a boundless degree! He stag-gered directly to me, threw his arms affectionatelyabout my neck, familiarly addressed me as "Ed,"slapped me on the back and complimented me onbeing "such a good fighter!"Mr. Flynn's diction that evening wasn't as good

as it might have been, his enunciation was just alittle bad as was also his pronunciation, but whathe lacked in his quality of speech was supplied byloud tone and raucous manner . He really held theinterest of all those present .

I hospitably asked my new social guest what Icould do for him and the answer was a clap on myback and a shout for scotch and soda, "with a littlelemon peel, please ."Mr. Flynn has large, fat, stubby fingers, and I

shall never forget how, as he drank scotch andsoda after scotch and soda, he invariably, between


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gulps, stuck his finger into the glass and stirred hismixture thoroughly, spinning it round and roundwith his big pudgy finger, as he passed the evening .As the hours wore on, to the gleeful amusement ofmy other guests, the Securities and Exchange Com-mission's celebrating counselor continued his liba-tions to a point where his moods began to change .From the good-natured hilarity of his entrancehe slumped into an unfriendly and sullen quietude .Picked up, then, by another libation, Mr . Flynngloated over what he had done to me, praised him-self for his self-recognized abilities, boasted of hisprevious experience as a prosecuting lawyer for theBronx Homicide Bureau, and, on further progress,again professed the extreme pleasure he had foundin meeting a "good fighter ."

Not until the "wee sma' hours" of the morningdid Mr. Flynn feel called upon to leave us. Uncere-moniously, then, he arose and, like a sea captainstriding his deck in a heavy rolling sea, the Protectorof the Investor started, in anti-bee-line style, to thedoor. An associate, Mr . H. Van Cortlandt Fish,who was present, arose, and in gentlemanly mannerbegan to assist Counselor to the door. Solicitousconcerning Flynn's welfare, he asked the departingguest not to hurry, whereupon Flynn pushed twovery large hands to the chest of Mr. Fish, who is


of medium stature, gave a lunging shove and ac-tually sent Mr . Fish somersaulting across the floorplump into the fireplace, which, fortunately, wasnot ablaze .

With this official demonstration of kind-hearted-ness, the Securities and Exchange Commission, asthere represented, paused only for a bleary eyedsurvey of everybody present, and passed on out ofthe room.

The celebration and the gloating, the crude ex-hibition of personal satisfaction, the boasting, theexultation of a vindictive spirit in the happy feel-ing of a job of destruction well started, had beendemonstrated .

CHAPTER XI

New Deal's "Most Effective Weapon"

The power of the printed word is tre-mendous. The New Deal Administration, early inits career, rightly appraised the value of publicityand elaborate uses have been made of it to furtherNew Deal purposes.

Herbert Hoover in a discussion of the moralquestions in public life involving intellectual hon-esty in officials and in government, recently asked,"Do you think the government which engages hun-dreds of paid publicity agents daily and hourly toeulogize its official acts, can hold the faith of thecitizen in what his government says? Wit honestor sportsmanlike to answer the argument, protestor appeal of the citizen by smearing him as the ene-my of the people?"

One of the members of the Securities and Ex-change Commission has stated publicity to be thatCommission's "most effective weapon ." But publi-city designed to ruin the standing and reputation

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of a citizen, without a fair and public trial on themerits of any controversy between that citizen andhis government, is publicity that both imposes uponthe freedom of the press and the civil liberties ofthe individual citizens as well.

Business men of American should realize that itis in the power of highly-placed officials to createpublicity by the simple and easy route of the issu-ance of "press releases," the making of speeches,etc., in a manner to kill absolutely a business or thecareer of a business man. This can be done withoutthe trouble even of bringing out the truth at atrial on the merits of any particular case . Certainly,officials of the Securities and Exchange Commis-sion have resorted to publicity for what appears asobvious purpose to damage individual citizens inthe public esteem, realizing, apparently, the credu-lity of the people on reading statements of govern-mental officials quoted in the press .

There really seems to be nothing more authorita-tive to the lay individual than a press quotation ofan official of the Federal Government . Ideas of suchan official, by the route of publicity, may becomeimportant only because of the authoritative posi-tion of the individual who utters them . Deprivedof official cognizance, the utterances might go un-noticed as chattering Main Street gossip .


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Beveridge, for instance, in his magnificent "TheLife of John Marshall," points out that the ideascontained in the great Declaration of Independencewere not at all new or,, original. They had been ut-tered many times and by many men before theyfinally were immortalized by Jefferson when hewrote the famous Declaration. Chief Justice Mar-shall, himself, in as great a legal opinion as historyhas recorded-that in Marbury vs. Madison, didnothing more than restate that which hundreds ofmen previously had declared .

Authoritative positions of speakers or writersmay lend importance to the subjects treated anddisarm the public of suspicions regarding the truth-fulness of statements made. This being so, a dan-ger to civil liberty arises when unfair advantage istaken in the making by some official of adverse pub-lic reference to reflect upon the business or stand-ing of a particular individual .

An example of what I regard as gross unfairness,is the statement released to the press by Mr . Burns,General Counsel of the Commission, on the day onwhich the temporary injunction order was consent-ed to. As I have previously stated, the principalnewspapers of New York were invited to send re-porters to his office for an "important statement ."In his statement, he referred to "700% profit" which

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he claimed I had made in my business operations .He made no mention whatsoever of the fact thatno such profits had been made by me in my regularbusiness dealings but apparently based his unex-plained reference on an instance wherein I had pur-chased a lease on prospective oil land, which hadbeen absolutely non-productive . When later, thegamble of drilling having been taken, oil was struck,I had naturally made handsome profit . This wasperfectly legitimate. It was a lucky strike madein a speculative venture.Mr. Burns, however, framed his "important state-

ment" in a manner calculated to imply that "700%profit" might be considered the rule in my ordinarybusiness operations. This, of course, was not true .Yet a statement made as a press release, coming, asit did, from the General Counsel of the FederalSecurities and Exchange Commission, was news.The publication of it, together with its impliedmeaning, was, of course, very damaging to my in-vestment business. It naturally created havoc anddestruction-as I think it was intended to do. Why,I thought, was it necessary for this "Truth in Se-curities" representative to imply, subtly, albeit ef-fectively, such damaging untruth? Why shouldthis lawyer try his lawsuit in the newspapers? Whatdecision could the reading public give him, if not,


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indeed, a "thumbs down" decision on J . EdwardJones and his business? But these young New Dealacademicians are, to a degree, bright and smart, andlogical deduction of the most elemental nature toldme that my destruction was the ultimate end ofthis new vindictive purpose in our govern-ment.

And then, Mr. Joseph P. Kennedy, Chairman ofthe Commission, close friend of the President andthe man who, in the words of a member of theCommission's own staff (later to be quoted in asubsequent chapter) had given orders to "get acase" on J. Edward Jones and to "make it a cinch,"proved that he was alive to the very latest develop-ments and availed himself of the facilities of publi-city to damage me even further. In Chicago, onthe day following my first public brush with hishonorable agency, he made reference before pressreporters to the "J. Edward Jones Expose"-what-ever that was-without defining the "expose" orstating what it might be. The word "expose,"however, carried its own obvious implications andit was, per se, damaging when used as Kennedyused it.

The Commission's zealous Chairman even wentso far as to advise a client of mine, a friend of his(according to the written word of the individual

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in question), that my office had been closed andthat I was "not allowed to sell royalties any more ."While exceedingly damaging, of course, to me and tomy business, neither of these statements was true,the injunction order to which I had consented hav-ing done no such thing . The client, however,alarmed by the advice given, brought legal actionagainst me for a return of the amounts , investedwith me.

There were other "press releases" and "state-ments" forthcoming from the Securities and Ex-change Commission, all very damaging to me andto my business . It is difficult for me to conceiveof any legitimate purpose to be served by such apolicy and the conclusion seems inescapable thatthe New Deal Administration resorts to publicity(quoting again Mr. Hoover's words) to "answer theargument . . . of the citizen by smearing him as anenemy of the people." I do know that neither Mr .Ickes nor any member of his staff ever answered,in open debate, my argument regarding the prob-lems of the petroleum industry .

The weeks following February 8th, 1935, woreon, taking their toll in the form of the ruinationof my business and the destruction of my businessorganization. Mr. Burns continued to inflict dam-age by writing letters that greatly reflected upon


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me, attempting apparently, as Kennedy had done,to stir my clients to bring suit against me .

An illustration of what one must recognize asthe extreme to which the New Dealers were pre-pared to go in their program to ruin me, is to befound in Mr. Burns' resorting to the giving of of-ficial advice to promote legal actions against me bymy clientele . One of my clients had written tothe Commission in an attempt to help me . Burnsreplied, "It is my advice that you should take imme-diate steps to get your money back from Jones,if you are able ."

The client was most favorably inclined towardme and was thoroughly happy with the performanceof the investments he had made . He accordinglyhanded Mr. Burns' letter to me .

On examining the records, we learned that myclient's investments-from December, 19 3 0, to Au-gust, 1932-had been $21,870.00. By July, 1935,he had received a return of $22,808 .67. The adviceof the General Counsel of the Securities and Ex-change Commission, therefore, for the client to sueme for "the return" of his money was ridiculous-if not, indeed, thoroughly pernicious. Mr. Burns,to give such advice over his signature and on thestationery of the Securities and Exchange Commis-sion, should be presumed to speak with the weight

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of an authority supported by knowledge of thefacts. His advice, however, belied the truth andit therefore follows that he must not have knownthe facts .

But to give advice of such character withoutbeing possessed with knowledge as to facts is todemonstrate irresponsibility! And this, to damagemy standing and reputation ; to stimulate additionallegal trouble for me ; to shatter the confidence ofmy clientele ; to bring ruination of my business!

I forwarded copies of Burns' correspondence withmy client, along with extracts from the recordsrevealing how shockingly wrong Burns had been,to the United States District Attorney _ .in NewYork City, calling upon that official for some actionto protect me, as a citizen, from such abuse . AndI received a letter from the District Attorney advis-ing me that he had forwarded my correspondenceto the Securities and Exchange Commission inWashington for action! That, of course, was thelast I heard of that one item! That was my pro-tection!

Several weeks passed and the heads of my de-partments agreed with me that an attempt on mypart to register our trust with the Commissionmight now be received favorably by them . I ac-cordingly went to Washington and sought a con-


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ference with my old friend, Baldwin B . Bane, nowin charge of Registrations for the Commission .Mr. Bane refused to see me until he had sum-

moned to the room none other than the lawyer,Mr. William Green, who had acted as trial exam-iner during my hearings before the Commission andanother member of the Commission's staff .

In the presence of these three gentlemen I re-vealed my purpose . I stated that the injunctionorder, while restraining me from the committingof no specific act, simply reiterated, in effect, thelaw itself and also prohibited the sale of securitieswhich were unregistered, "provided they should beregistered ." I recalled my first efforts to registermy trust and my having been informed that thetrust had earned exemptions from registration . Iwanted bygones, however, to be bygones, and askedwhether the difficulties so far experienced in mycontroversyy with the Commission would precludemy registering a new series of my trust .Mr. Bane assured me, in a most cordial manner,

that a new registration by me would not at all beaffected by the past controveries-that his registra-tion section of the Commission was an entirely dif-ferent section from the one that had done battleagainst me, and urged me to file a registrationstatement.

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I thereupon asked for a form which I might usein filing and was told that the Commission had neverprepared any forms suitable for my trusts . Mr.Bane, however, handed me an ordinary investmenttrust form, telling me to use it as best I couldand that if there were any changes required or anydeficiencies at all found in the registration state-ment when completed, we could together "sit downand work it out ."

I informed the gentlemen of the Commission ofmy pleasure on receiving such polite and courteousconsideration, assured them of my hope of workingconstructively with them, took the registrationforms they had given me, and departed .

On reaching my New York office, I decided tomake application for registration of a Series of myTrust and to submit it to the Securities and Ex-change Commission. I concluded that because ofthe previous controversy it would be wise for meto refrain personally from having anything what-soever to do with the preparation and filing of sucha document. Accordingly, I arranged for such workto be done by a thoroughly competent, able andeminent member of the Oklahoma Bar-an oil law-yer intimately familiar with the business which Isponsored-the Honorable E. J . Lundy, of Tulsa,Oklahoma .

New Deal's "Most E$ective Weapon"

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Mr. Lundy, a former state legislator, was widelyknown as a highly respected, honorable member ofhis profession, and, on his arrival in New York, Iassigned to him the exclusive task of meeting thenecessary requirements of the Commission in filingmy application for registration. He spent severaldays in this work, during which time I scrupulouslyavoided taking the slightest personal part in thebusiness at hand. Finally, on May 4, 193 5, Mr.Lundy, acting in my behalf, formally filed withthe Commission at Washington, the applicationwhich he, as my counsel, had prepared .

When, ordinarily, applications for registrationsare filed with the Securities and Exchange Commis-sion, such applications are examined by the Com-mission staff and if deficiencies in the papers arediscovered, the applicants are notified, within tendays of filing, that deficiencies exist and oppor-tunity thereupon is given the applicants to supply,or to make good, such deficiencies . Registrationsbecome effective by law, twenty days followingtheir filing date, provided, of course, that no actionhas been taken to deny this rule .

Reference may be made at this point to the as-surance that previously had been given to me byMr. Baldwin B . Bane, of the Commission, prior tothe filing of my application for registration, to the

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effect that if any deficiency at all in my paperswere discovered by the Commission, I would begiven opportunity to "sit down and work it out ."Such assurance accompanied Mr . Bane's cordial in-vitation to me to apply for registration . I thereforeproceeded in full confidence that I would be ac-corded "fair treatment," and that my previous con-troversy with the Commission would not mitigateat all against such treatment of me .Mr. Lundy having been given similar assurance,

wrote me a letter, after he had performed his ser-vice in filing my registration statement, and advisedme that I could expect to receive notice from theCommission within ten days of the date of filingif any deficiencies were found to exist, and, if so,I then, in accordance with established custom, wouldbe given opportunity to supply them .

As I have stated, my registration statement wasfiled with the Commission under date of 4 May,193 5 . Following the filing, the days passed and Iheard not a word from the Commission. One weekpassed, the first ten days passed-and no notice, norequests, no intelligence of any sort came from theWashington agency regarding my registration . Ithen presumed that Mr. Lundy had done a goodjob and that the Commission and I had good chanceto get along well together once again.


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I congratulated Mr. Lundy on his accomplish-ment and awaited, as the days came and went, theexpiration of the legal twenty day time limit afterwhich I might proceed with my business registeredwith the SEC!

The last few days of the time limit soon came andthe Commission had not seen fit to notify me of anydeficiencies in my registration statement . The nine-teenth, or last day before the registration becameeffective on the twentieth, passed, and I advised myorganization, at the close of business on that day,that the Commission had notified me of no require-ments whatsoever, and that, therefore, we could,on the morrow proceed with a registered issue .

After my office had closed on the nineteenth day,however, and at a late hour, I received a telegramfrom the Securities and Exchange Commission atWashington, dated 5 :35 P.M., May 23rd. The tele-gram, sent to me and received after business hourson that day, did not notify me of any deficienciesor of any opportunity to correct or to amend thestatement which I had filed. Instead, my notifica-tion from the "Truth in Securities" Commissionwas one which stated, in substance, that it "ap-peared" to the Commission that my registrationstatement included "untrue statements of mate-rial facts" and that it omitted to state "material facts

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necessary to make the statements therein not mis-leading."

The telegram further informed me that the Com-mission was going to hold an official hearing uponthe matter at its office in Washington, and advisedme that at the time of such hearing I might appearand "show cause why a stop order should not beissued suspending the effectiveness" of my regis-tration statement!

A great splurge of publicity was released by theSecurities Commission, of course, and newspaperscarried stories to the effect that J. Edward Jones wasto be called upon the carpet to face a stop orderagainst his business because he had resorted to whatthe Commission felt "appeared" to be "untrue"and "misleading" statements . Numerous clientsand friends of mine began to look upon me asthough I were Some strange, outmoded "curio,"hopelessly out of step with the smiling and confident"happy days are here again" complex in Washing-ton.

"Orders" to answer charges about "untrue andmisleading" statements in hearings held by our gov-ernment for the announced purpose of "stop or-dering" an investment business, have a bad and de-structive effect upon an investment clientele, espe-cially when pains are taken by governmental offi-


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cials to create sensational publicity on the subjectbefore even a hearing is held on the merits of thecase. My business, consequently, suffered almosttotal stagnation. Sales representatives began to re-sign, heads of departments applied themselves to thebusiness of looking for new jobs, and Mr . John G .Scattergood, my executive assistant, a splendid gen-tleman of admirable character and reputation, ac-tually became quite ill from the worry and distresscaused him by the publicity and notoriety which theattacks of the Securities and Exchange Commissionattracted to our organization. Sales volume slumpedoff practically to the vanishing point and my asso-ciates advised me that, in face of the SecuritiesCommission's attacks and the attendant adversepublicity which was being fed to the newspapers,all business effort was almost futile .

Having in mind the honest purpose and able ef-fort of the very competent Mr . Lundy, I was veryincensed at the fact that the Commission seeminglyhad resorted to deliberate planning to impute tome improper purpose in preparing the registrationstatement ; and that they intended to give me no op-portunity, as was ordinarily permitted, to meet anyrequirement they might make regarding any defi-ciency they may have felt had been disclosed . Ialso resented what I considered cheap tactics in the


delay of my notice until the zero hour shown bytheir telegram-5 :3 S P.M. of the nineteenth day .The charge of "untrue" and "misleading" state-ments, too, made so destructive of my business bybeing used as material for sensational publicity-allthis impressed me with the conviction that I wasconfronted with a powerful, deliberate attempt togive vent to vindictive purpose in wreaking de-struction of my business, my standing and a repu-tation that had been built by fifteen years of hardand honest effort .

Within a few days, I received a subpoena ducestecum commanding me again to appear, on June18th, before Mr. William Green of the Commis-sion's legal staff, at the office of the Commission atWashington, D. C., and to bring with me numerousbooks and voluminous records relating to my pri-vate business-none of which, however, was relatedto the trust that I was desirous of registering .

It appeared fairly obvious to me that I was beingsummoned down to the throne of the Commissionfor a real big publicity stunt-a proceeding whichthe Supreme Court of the United States later con-demned, in a decision in this very case, as a "fishingexpedition"-"an undertaking," said the Court,"which uniformly has met with judicial condemna-tion."


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I telegraphed instructions to Mr . Lundy to meetme in Washington and made my own way there,only to meet with a most extraordinary experiencewith a Commission that, because of its tyrannicalabuses of power in an unlawful exercise of discre-tion, seemed to me to be under the influence ofminds wholly succumbed to personal animosities .

The attitude which the Securities and ExchangeCommission was to demonstrate at the "affair"which it had ordered, was later to get for it whatlawyers have described as the most severe castiga-tion and stinging rebuke ever administered by theSupreme Court of the United States to an agencyof the executive branch of our government .

CHAPTER XII

"Arbitrary Power" vs . "Rule of the

Constitution"

By arrangement, I met my counsel, Mr .Lundy, in Washington, two days prior to the dateof the hearing, in order to have sufficient time togo over the subject matter to be treated . Almostimmediately, on his arrival from Oklahoma, Mr .Lundy unfortunately fell ill at his hotel, grewsteadily worse to the point where he required theconstant attention of a doctor and a nurse andfinally, on the day before the hearing, was com-pelled to inform me of his inability to be presentas my counsel on the following day.

I became, naturally, quite worried at the prospectof my being compelled to appear at the Commis-sion's hearing without the presence and services ofthe counsel who was intimately acquainted withthe registration statement which he, himself, hadprepared .

In such a state of mind, I received a "tip" on thatday which astonished me . A lawyer friend from

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"Aribtrary Power" vs . "Rule o f the Constitution" 149

Boston who found himself in Washington com-municated with me to the effect that he had justleft Mr. John Burns, General Counsel of theCommission, and that, from what Burns had stated,the hearing scheduled for next day was gearedto be a great publicity affair with the newsmen in-vited. Furthermore, everything already had beenarranged for formal action to be taken by the Com-mission to place a "stop order" against me. I wasadvised of the absolute futility of any attempt onmy part to satisfy those who were to be in chargeof the hearing. The entire proceeding was to be a"cut and dried" affair.As my informant was a man who held my con-

fidence, I became greatly distressed to come to therealization that, here again, the New Deal cardsseemed to be stacked against even a fair public hear-ing for me. My thoughts went, in retrospect, tothe "chopping off" of my books as of that previousDecember 27th prior to the month's-end entriesby my bookkeepers; the bullying tactics of Flynn ;the forcible seizure and removal of my books andrecords by Rabell .

"But," I thought, "what about that cordial in-vitation to register my trust which had been ex-tended to me by Mr. Bane? And his assurances offair play?"

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As I pondered these apparently conflictingthoughts, one thing became increasingly clearer tome. I decided that my attempts toward coopera-tion with the Commission were not only futile, butalso, if continued, most certainly would result inthe ruination of my business standing and repu-tation. I therefore decided to withdraw my ap-plication for registration and to abandon my hopeof offering my securities to my clientele . I accord-ingly penned the following letter to the Commis-sion and telephoned to one of my New York coun-sel, Mr. H. I. Fischbach, instructing him to fly toWashington that evening in order to be present onthe morrow to present my withdrawal to the Com-mission.

Mr. Chairman, Representatives of the HonorableCommission:-

I caused to be filed with your honorable selves,under date of 4 May, 193 S, an application for theregistration of Participation Trust Certificates ofthe J. Edward Jones Royalty Trust, Series "M" .I filed this application in genuine purpose directedtoward cooperation with the Commission in itscommendable endeavors to secure registrations ofimportant offerings of Securities to the public . Idid this, although I previously had understood thatthe J. Edward Jones Royalty Trust had earned

"Aribtrary Power" vs. "Rule o f the Constitution" 151

exemptions established by rules and regulationspromulgated by the Commission and that thereforeregistration of the Trust was not required .

In the preparation of the statement which wasfiled, I procured the valued services of an honorablemember of the Bar, one of eminent standing andesteem among a substantial profession and in a notedcommunity, the honorable E . J. Lundy, of Okla-homa. Judge Lundy wrote the indenture creatingthe Trust, prepared all the statements made in theregistration papers in question, consulted with meafter their preparation and advised me that theyconformed, in general plan, to the Indentures whichhave created previous series of the J . Edward JonesRoyalty Trust. I approved judge Lundy's work andexecuted the documents .

Preliminary to these preparations, I had visitedyour offices here, seeking a modus operandi for theregistration of my trust . In conference, I was ad-vised, in the presence of the esteemed Chairmanhere, Mr. Green, that you had no forms applicableto the registration of a Trust similar to mine butthat I could employ your regular Investment Trustform (some of which then were handed to me forthat purpose) and that I should fill out those formsas best I could, whereupon they would be acceptedand, if after study any additional information ordata were required by you, I would be given oppor-tunity to supply the deficiencies . I was advised thatwe could "sit down and work it out ."

Although I believe the Commission does, in fact,

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notify registrants of deficiencies in filings withinten or twelve days after filing has been made, andin view of the conference I had had I expectedto be notified before the expiration of the 20 dayperiod allowed by law, I was surprised to receive mynotification by telegram after business hours on thenineteenth day, the telegram being dated at 5 : 3 5P.M. of that day .

Instead of being allowed an opportunity, asothers have enjoyed, to "sit down and work it out"with you, my notification advised me of "untruestatements of material facts" and of omissions of"material facts necessary to make the statementstherein not misleading," and peremptorily set a dateat which I might appear before you in formal hear-ing to "show cause why a stop order should not beissued" suspending the effectiveness of my registra-tion statement.

I immediately communicated with judge Lundy,whereupon close study was made of copies of theregistration papers and to this day neither of uscan discern, by any possible stretch of intelligentimagination, any untrue or misleading statementcontained therein. Nevertheless, you have seen fitto issue a press release giving widespread publicityto such references as "untrue" and "misleading"statements which, to my mind, places me severely atdamage, in that my Government is, by such releasein effect notifying the public and, of course, myown clientele, that J. Edward Jones is likely to havea "stop order" placed against his Trust .


I believe such practice is subversive of honorableintentions in business, damaging to constructivepurpose, undermining of the confidence of businessmen in Governmental attempts at business regula-tion, and not capable of serving J . Edward Joneswell in the circumstances .

I, therefore, with regret and with distressful feel-ings but with respect toward you, now formallywithdraw my application for registration of theParticipation Trust Certificates of the J. EdwardJones Royalty Trust, Series "M." I do this becauseof my fear that the business which I founded fif-teen years ago and to which I have dedicated thewhole of my business career, will be made the objectof continued sabotage .

J . EDWARD JONESWashington, D . C.June 18, 1935.

Mr. Fischbach duly arrived in Washington and,after learning from me the developments in thecase, approved my plan for the withdrawal of myregistration statement . He advised me against ap-pearing personally at the offices of the Commission,stating that he wished me to avoid the publicity thathe feared would be staged by the Commission . Headvised me, further, that he, as my counsel, couldproperly withdraw my application for registra-tion, whereupon the entire proceedings, by vir-

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tue of such withdrawal, must, perforce, cease .On Mr. Fischbach's arrival at the hearing on the

following morning, he observed the presence ofseveral lawyers representing the Commission, in-cluding a very serious Mr . Burns and a very soberMr. Flynn (my February ninth early morning Bilt-more Hotel guest) . Strange as it may seem, althoughthe present hearing was in connection with an ap-plication for the registration of an entirely newTrust, Mr. Flynn had piled high on a table beforehim, photostatic copies of my books and privaterecords which Rabell previously had seized and alsothe transcripts of the previous hearing which, ofcourse, did not even make reference to the trustthat I now hoped to register. Present also, wereseveral representatives of the press-ready, appar-ently by arrangement, to report the details of ananticipated happening .

With such an obvious stage setting, my counsel,following formal opening of the hearing, promptlyinformed the Commission that he had a statementfrom me which he desired to read into the record,stating that he believed the statement would verymuch affect the proceeding under way.

But Mr. Burns immediately objected to the read-ing of my statement-even before he knew whatit was-stating that he suspected "very strongly"


that my statement was just a publicity "device" ofmine!

The examiner, Mr . Green, before permitting dis-cussion concerning the request that my statementbe read into the record, took the document fromthe hands of my counsel and read it carefully . Hethen asked my counsel whether he wanted "to in-sist upon the application to withdraw the registra-tion statement ."On Mr. Fischbach's answer in the affirmative the

Examiner asked what appeared to be a surprisedMr. Burns, "What does the Commisison have to sayto that?" Burns called for a few minutes time "toconfer."

Burns then, taking my statement with him, leftthe room and went into conference with the Securi-ties and Exchange Commissioners themselves whoconveniently were in session in an adjoining room .

Returning, after a short interval, the GeneralCounsel for the Commission advised the examinerthat the Commission, after considering the "prob-lem," had determined that "they would not exer-cise the discretion to permit a withdrawal of theregistration statement." He further stated that hewould like to state for the record that the Com-mission would "refuse to permit a registrant to goright up to the guns of a stop order proceedings

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and then seek to avoid it without establishing anysound basis for such avoidance ."

Such a statement seemed to confirm our strongsuspicions that a stop-order really was the originalpurpose of the Commission, which now seemed de-sirous of kicking me out of the hearings into acauldron of adverse publicity instead of permittingme a graceful exit by way of withdrawal .

My counsel, however, desirous of adverse char-acterization on the record of a statement which-although scrutinized by the Commission and its law-yers-had not yet even been admitted of record,said : "Before any comment can be properly madeon the record as to the soundness of the positiontaken by the registrant I think the statement oughtto be in the record, and I ask permission of theexaminer to read it into the record ." But Mr. Burnscontinued to insist that my statement be excludedfrom the record, suggesting, instead, that it sim-ply be "marked for identification ." The examiner,of course, so ruled . My counsel, however, insistedupon stating for the record the fact that I hadwithdrawn my, registration statement .

In consideration of the wide diversity of theviews on this point held by the Commission and byMr. Fischbach, and particularly since the SupremeCourt of the United States later upheld the position


of my own counsel, the following colloquy whichensued is of interest :

Mr. Fischbach : As counsel for J. Edward Jones,the registrant, I wish to note on the recordthe formal withdrawal by the registrant of-

Examiner Green : You mean request for withdrawal,do you not?

Mr. Fischbach : Well, I mean, Mr. Examiner,exactly what I said .

Examiner Green: You recognize, of course, thatyou have no. power or authority to withdrawa registration statement without the consentof the Commission.

Mr. Fischbach : Our minds do not meet on the sub-ject, Mr. Examiner, and I wish to note on therecord the formal withdrawal by the registrantof the registration statement signed by theregistrant and filed under date of the 4th ofMay, 1935, with the Securities and ExchangeCommission, identified with this proceeding asfile No. 2-1408, and I wish to state with re-spect to the withdrawal of such registrationstatement that there is no proceeding beforethe Examiner.

Examiner Green: With regard to the applicationof the registrant to withdraw his registrationstatement, I direct his attention to rule 47of the Commission which provides, amongother things :

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`Any registration statement or amendmentthereto may be withdrawn upon the requestof the registrant if the Commission consentsthereto.'In view of the rule and regulation of the Com-mission, and the action of the Commissionheretofore taken on your application for with-drawal, I will not permit a withdrawal, andwe will proceed .

Mr. Fischbach : May it be noted of record that fur-ther proceedings to be had based on the regis-tration statement, it is not my intention northe intention of my associate, Mr. Toomey, toparticipate in any of the proceedings and thatwe wish the record to show formally that al-though we may be present at some part of theproceeding, that our presence is that of spec-tators .

Examiner Green : Has the Commission anything tosay?

Mr. Burns : In view of the ruling of the ExaminerI think comment is unnecessary .

Examiner Green : Very well. The record will showthat Mr. Jones is not now appearing by coun-sel .

The hearing was adjourned until June 27th.While it proceeded, however, and before such ad-journment, I sought relaxation by visiting Washing-ton's very splendid zoo .

"Aribtrary Power" vs . "Rule of the Constitution" 159

I, for some time, had wanted to see the zoo, par-ticularly because of the fact that considerable publi-city had appeared in Washington newspapers re-garding some interesting construction work donethere under the direction of Mr . Harold Loy Ickeswith public funds supplied him by Congress . I hadbeen intrigued by the story, then being narrated inWashington, to the effect that the esteemed InteriorSecretary had accomplished what in those timesseemed to be an admirable three-fold purpose :spending public money, putting men to work anddoing a charitable thing for the mountain goats,herded within the confines of the capital city's zoo .

As the story ran, it seemed that there were nomountains in Washington's zoo and that the moun-tain goats resident in that urban center were with-out their natural habitat . No record existed of anyprotest of intelligence on the part of the mountaingoats but story again had it that sympahy hadbeen created in the minds of some of the economicradicals of the New Deal whose brain-trusting wasbeing expanded to great limits in devising schemesof all sorts which might hold promise for the spend-ing of large sums of the people's money . But enoughof that-the people are not the goats, and theWashington goats, being of the mountain variety,must have their mountains somehow!

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Should Mr. Ickes move a mountain and therebybring to the Zoo Goats a New Deal to prisoners?No-but Mr. Ickes would "figure out" some an-swer to the perplexing problem . And Mr. Ickes didso "figure." He decided to create a mountain.

Accordingly engineers, architects, brain-trusters,contractors, professors, laborers, treasury checkwriters-men of many trades were "put back towork" to build a mountain in Washington's zoodown by the corner of the place where the poormountain goats were wont to herd on the cruellevels of the rockless terrain .

Out of this purpose there grew to fruition a hugestrange something that the disrespectful habituallyreferred to as the "Ickes Monstrosity" but whichreasonable human intelligence was supposed to con-clude was a perfectly good mountainous crag, wildand real enough to appeal strongly to the naturalinstincts of animals other than humans .

On completion of this New Deal fantasy, thehumans who had built it slipped quietly away fromthe place, while the mountain goats were drivenback to it from other parts of the zoo whither theyhad gone during construction . But the goats ex-hibited great alarm and, in fear, fled the scene, ex-hibiting little gratitude for the present which hardearned public dollars had bought for them . All of


the herd, without exception, remained constantlyas far away from their New Deal home as highfences would permit .

Finally, the guide who showed me the place said,Mr. Ickes ordered some of his helpers to corner andto seize one of the goats and to take him, forcibly,to the top of the new "mountain" so that, by pres-ence enforced, the goat, might become acclimatedto the new whatever-the-goat-might-call-it . Thiswas done by the regularly employed of Mr . Ickes'staff, and when the goat's legs actually were freedon top of the ragged "cliff" which had been con-structed, the poor thing, instead of bleating itsgrateful thanks to the great White Father, sprangin terrified and fearful manner from the very high-est point straight away to the hard ground below,breaking two of its legs and necessitating its 'liquid-ation" by the merciful guns of Uncle Sam .

Such was the story, and my visit to the scene ofthe experiment, which, by the way, was then devoidof goats, would have provided pleasant relaxationexcept for my reflections, compelled by the ludi-crous sight, which were concerned with who finallymight become the real goats for all the great experi-ments now under way by virtue of the new directingof things from Washington . I, myself, at that verymoment, in a way, was being given treatment that

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might be compared, figuratively, to that which hadcost the life of that poor citizen of the wilds ofColorado.

I returned to my hotel still in a reflective mood,and, as the day was oppressively hot, on meetingMr. Fischbach, I engaged a car to drive the distanceto New York .

When we reached the city in the early hours ofthe following morning we were dumbfounded tolearn from the morning papers that the SecuritiesCommission again had scored by the use of its "mosteffective weapon." A publicity release had accom-plished another damaging purpose .

Headlines such as "J . Edward Jones eludes U . S .Marshal" screamed a story about how I had man-aged, in some way or other, to escape being servedwith a subpoena to be present at the hearing whichthe Commission had adjourned to the 27th. Thenews, however, was effective in that it implied thatJ. Edward Jones was "on the run" much in thefashion of a western hi-jacker, guilty of robbery,murder and other vicious crimes . The mere fact, ofcourse, that a process server was unable to find meafter the adjournment of the Commission's hearingwas not news of any particular moment . Its beingmade public, colored with the strong implicationthat I was eluding the United States Marshal who


might have been in mad pursuit, smacked of newsinvolving a thrilling case in which government au-thorities were chasing a real criminal . The melo-dramatic nature of such a release made news, ofcourse. Many of my clientele and even numerousof my friends showed strange reactions to this start-ling news story. Naturally, it was devastating in itseffects upon what still remained of my businessand caused great pain of embarrassment and worryon the part of myself, my family and members ofmy business organization .

At the earliest possible moment that morning, Itelephoned the New York office of the Securitiesand Exchange Commission, advising them of myinnocence in having escaped, without knowing orrealizing it, subpoena service in Washington, andexpressing my willingness to accept such service atany time at my New York office . An appointmentaccordingly was made at an hour on that very daywhen I could accept service and the subpoena wasduly served .

I immediately instructed counsel to proceed, assoon as possible, in bringing legal action against theCommission contesting the validity of their acts andrulings in order to determine whether I had beenwithin my rights in taking the position I had taken,through counsel, at the hearing at which I had at-

164


tempted to withdraw my registration statement .Inasmuch as I felt that the Commission had exer-cised tyrannical power in going far afield of itsproper legal province in heaping unwarranted abuseupon me, I instructed counsel to follow the actionwhich I proposed to institute, to the highest court,if necessary, in the establishment, once and for alltime, of the individual rights that had been deniedto me by the Commission .

But an event was to occur in the next few daysthat was so startling in its revelations, so revoltingin its suggestions and implications, that the pressof the entire nation carried stories and editorials ofa scandal that struck deeply and close to the veryroots of the real cause of my trouble .

CHAPTER XIII

"Truth in Securities"

Within the next twenty-four hours, I re-ceived a strange telephone call suggesting a mostextraordinary step for me to take. The call cameunexpectedly and, of course, entirely unsolicitedly,from the wife of William H . Rabell, the AssistantChief Investigating Accountant who had assistedFlynn in the hearing of the first action broughtagainst me by the Securities and Exchange Com-mission. It was Rabell who, I felt, deliberately andat Flynn's orders "framed" a case against me andhad seized, without any warrant or right, my books,papers and private records and forcibly removedthem from my office.Mrs. Rabell told me it was very important and

urgently necessary for me, in my own welfare, totelephone her husband at a Washington addressthat very evening at five o'clock. She gave me histelephone number and asked me to make the callfrom some telephone booth outside my office, re-

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questing specifically that I avoid the use of my ownoffice telephones . Mrs. Rabell, in answer to a ques-tion as to whether Mr . Rabell had favorable or un-favorable news for me, at once assured me mostemphatically that the information I could receivefrom her husband would be good and very favorablefrom my point of view .

I accordingly did as requested and at five o'clockheard Rabell's familiar voice at the Washingtonend of the wire. He forthwith informed me thathe had been ordered by his superiors to "pull alousy trick" on me, that he was sorry to have beencompelled to participate in a "dirty persecution,"that he desired to make amends for his part in theaffair, that he had been forced to "frame" the in-junction case against me, that he felt sure it couldbe beaten, and that if I would "lay $2,500 on theline as a starter" he would show me how I couldbeat the case which the Commission had built againstme. He advised me that he expected to be in NewYork on the coming Friday, June 21st, and askedpermission to telephone me at five o'clock on thatday so that an appointment could be made enablinghim to go fully into the plans which he had in mind .I, therefore, advised Rabell of my willingness toreceive his next call .

I immediately notified counsel of Rabell's ap-


167

proach and was warned to beware of an attemptby members of the Commission's staff to entrap mein a bribery plot. I was advised to have no conver-sation with the man whatsoever unless a full recordwas made of every word spoken, else I might facean accusation that could be made difficult for meto disprove .

For some considerable time I had been shadowedsteadily and, being greatly annoyed and worried bysuch tactics, I had employed detectives to watchme and to "shadow the shadowers." My detectiveswere expert technicians who also were assigned tocatch the persons who were responsible for tappingthe telephone wires at both my office and at myhome in suburban Scarsdale. I accordingly notifiedthese men to be prepared with appropriate appara-tus, to record, on quick notice, conversations Imight have with Rabell.

True to his promise, Rabell telephoned me on thefollowing Friday, and, as he expressed a desire tosee me at once, I made an appointment for him tomeet me at my home in Scarsdale at nine o'clockthat evening .

I immediately communicated with Mr . Fischbach,asked him to obtain the services of his assistant andtwo court stenographers and to go with them atonce to my home .


My detectives were notified of the impendingconference and were instructed to install appro-priate apparatus to permit the recording of the con-versation both by the two court stenographers andby phonograph recording devices as well .

I made arrangements with the Scarsdale policefor the stationing of officers in my home during thecourse of the evening.

I notified the District Attorney of WestchesterCounty, New York, inviting him or his representa-tive to be present . The District Attorney's officenotified the United States Attorney's office andan Assistant United States Attorney came tomy home late that night, after the conversationshad been concluded .

All the persons communicated with by me per-formed their respective functions with precisionand, along with several of my regular office staff,arrived at my home in good time to install dicta-phone and recording equipment sufficient for thejob at hand. All records were to be made on thethird floor of my home and the conversations wereto take place in my den on the first, or ground floor .When I personally arrived at my home at abouteight o'clock, I found preparations practically com-plete, with all the persons involved at their stationsin three different rooms on the third floor .


169

In due course of time Rabell appeared and wewent together into my den where we at once becameengrossed in the subject matter of his visit .

Rabell immediately referred to the hearings con-ducted in January at which he had taken suchprominent part . He unheistatingly stated, whenreferring to that case, that "I can lick it."

I asked him "how" and he replied, "Because Ihave supporting schedules to show it is not so ."

To my astonishment, he told me that the govern-ment had instructed him to "get a case" on me,and that in his examination of my books at myoffices he had rejected evidence and information hehad found in the files which, if noted by him,would have negated the case he had "framed" inaccordance with his orders . The following quota-tion from the transcript of our conversation ispertinent to this point as revealing Rabell's method :

Mr. Jones : The Government told you to make acase and you went in and fixed my books andgot the things that made the case, as I under-stand you?

Mr. Rabell: I rejected the supporting evidencewhich would help you .

Rabell then amazed me as he went on to pointout that the real purpose of the Commission in its

170 "And So-They Indicted Mel"

battle against me was to work up a criminal caseagainst me. In this connection the record revealsthe following colloquy concerning the real purposeof the Commission in holding the Washington hear-ings and their refusal to permit me to withdrawmy registration statement :

Mr. Rabell : Well, they have another thing now thathas come up, and that is your registration .

Mr. Jones: I withdrew it, but they wouldn't letme, and so I am going to have the courts makethem let me.

Mr. Rabell : The court will let you do that, I amsure.

Mr. Jones : They won't let me. They want to getme down there to razz me again .

Mr. Rabell : They want to put you on the pan again .All they are working for is to get criminal pro-ceedings. That is all they want .

Rabell then informed me that the thing I shoulddo was to permit him to compile from my books andrecords evidence he knew to exist that would refutethe charges which the Commission had madeagainst me. The record on this score follows :

Mr. Jones: You think that you can go with thebooks I have and take evidence out of them thatwill contradict the Government's evidence?


171

Mr. Rabell : To offset it .Mr. Jones : And nullify the Government's case?Mr. Rabell : The Government won't win this case .

I am willing to take a bet . Like I told youover the telephone, I don't want anything outof this case unless you win the case .

Mr. Jones : Well, what is your proposition?Mr. Rabell : Well, I have got to have some dough .

I got to have something for my time. And ifI win this case, then I want to be paid . And Ithink you should be willing to do that .

Mr. Jones : Don't you think that it is a dirty, rottenthing to do when I let you see my books andthen they weren't properly analyzed? I knowwhy you are here ; but I had very hard feel-ings against you .

Mr. Rabell : I know it; you hated me .Mr. Jones : No, I didn't hate you, but it is better

for us here to talk things quite frankly, becauseI think you did as you now say you did-buildup a case for the Government .

Mr. Rabell : I certainly did .Mr. Jones : And now then, d-n it, you tell me

that you are going to turn around and buildup another case that will kill the Government's.Well, you will destroy the Government'scase?

Mr. Rabell : Yes, sure. Because there were thingsdone there that were not right .

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Rabell then outlined to me what "investigatingaccounting" was, and again I was astonished tolearn how insidiously the cards of fate are stackedagainst a citizen when his government is out to"get a case" against him. The following conversa-tion concretely reveals the grave dangers to civilliberties resulting from tyrannical abuses of govern-mental power lodged in the hands of usurpers whoprey upon the public .

Mr. Jones: I can't understand you fellows, how youwould come into a man's books through "in-vestigating accounting" and pick out thingsthat you can prove to be violations when thereis other information in the same books which,if you took it, would offset it .

Mr. Rabell : That is just exactly what it is .Mr. Jones : That is crooked business .Mr. Rabell: No.Mr. Jones : What is it?Mr. Rabell : It is just good investigating work .Mr. Jones: In other words, you have to change

my books?Mr. Rabell : Certainly, and build it up on the other

side.

Inasmuch as Rabell had signed the affidavit forthe "Truth in Securities" Commission, I desired to


173learn from him whether he was, in fact, to be awitness against me .

Mr. Jones: You will be-however-are you notnow in the category of a Government witnessand testifying for the Government in this case?

Mr. Rabell : Yes, I will testify for the Government,but the testimony-I will give you-I will giveyou the other side, to refute it .

Mr. Jones : Offset-Mr. Rabell : Yes, absolutely refute it .

Shortly after the Commission had taken thenames and addresses of my many clients from mybooks I learned from different sources that at leastthree new royalty firms, unknown to me, had be-gun to circularize my clientele in solicitations fortheir business . I was very desirous of learning fromRabell just how the names and addresses of myclients, which, of course, always had been held inthe strictest of confidence, could suddenly be ob-tained by newcomers to the business who boldlyset themselves up as my competitors . I thereforeasked Rabell this question, 'Who gave out the namesand addresses of my clients?"

Rabell then told me the name of the man in theoffices of the Securities and Exchange Commissionat 120 Broadway, New York City, who had re-

174


leased the confidential clientele list to other dealers :

Mr. Rabell : Osterweil is the fellow who gave themout.

Mr. Jones : Did they find out that he did it?Mr. Rabell : Who, the Commission?Mr. Jones: Yes.

Mr. Rabell : Yes .Mr. Jones: They know Osterweil gave those names

to Bush? (One of the three new royalty deal-ers. )

Mr. Rabell : Yes.Mr. Jones : That is a nice thing to have a man come

in and get a man's confidential records, and-Mr. Rabell : There's another fellow who did it, too .Mr. Jones : Who is he?Mr. Rabell : Clark.Mr. Jones: Of course, if anyone will do that-what

do you think I ought to do about it?Mr. Rabell : I don't think you could do a damned

thing!

Rabell then explained to me how he would advisethe Government lawyers as to their accounting sideof the case, then, "on the side," make known to myown auditors the Government's case and collaboratewith my staff to defeat it. He continued to expresshis confidence in his ability to win my case for me


175

and stated his price as $2,500 cash payment and$25,000 following the successful conclusion of thelitigation .

The man who had represented the Federal Se-curities and Exchange Commission and on behalfof whom that Commission actually issued a publicstatement commendatory of his record and his char-acter, then left my home, with the understandingthat he would return on the morning of the com-ing Sabbath to receive the first installment of themoney he demanded to free me from a case whichhad its genesis in a deliberate and diabolic plot tobring about my ruination by means, admittedlyand now of record, foul to an indescribable degree .

I now had my first records of the statements madeby one of the conspirators . When Rabell took hisleave, however, I did not realize that a miserable andscandalous situation was to result from the nextscheduled meeting with him, on the occasion ofwhich revelations were to be made that were evenmore despicable and disgraceful than those he hadso far related .

CHAPTER XIV

More "Truth in Securities"

On the following day, Saturday, the As-sistant United States District Attorney who hadcome to my home following Rabell's departure onthe night before, asked permission of me for twoagents of the Department of justice to inspect andto test the recording apparatus at my home and alsofor them to be present when Rabell should againvisit me on the coming Sunday morning. I grantedthis, and the Department of justice agents, there-fore, were on hand early the next day, along withall the others who had assisted in the recordings ofthe Friday night preceding. They gave me definiteinstructions concerning questions to be asked Ra-bell and, furthermore, made record of the numbersof the bills which I had obtained for the purposeof presenting to Rabell as the bribe which had beendemanded .

Rabell arrived at my home at about ten-thirtySunday morning, and, on his being received, we

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177

again went directly to my den to continue our con-versations. We covered a great deal of more orless inconsequential matters, but interspersedthroughout our talks were bits of most importantinformation.

Rabell told me, for instance, that the President'sSecretary, Mr. Louis McHenry Howe, had com-municated with Joseph P. Kennedy, Chairman ofthe Securities and Exchange Commission and hadmade inquiry to determine whether the Commissionwas sure of its case against me . This surprising in-formation confirmed a report which previously hadbeen made to me by an unimpeachable source. Therecord of the conversation on this particular pointfollows :

Mr. Rabell : Kennedy used to call me every night,used to call me on the long distance telephone-they are so damned scared all the time that youare going to beat them. No kidding!Well, I will tell you this much-that whenColby (Mr. Bainbridge Colby) went downthere-I don't know who he saw-but I knowHowe called up Kennedy and Kennedy calledme up and raised hell with me .

Mr. Jones : What about?Mr. Rabeli : He wanted to be absolutely sure that

I had this thing cinched .

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Mr. Jones: Do you mean the President's Secretary?Mr. Rabell : Yes .Mr. Jones : Called Kennedy up and told him that?Mr. Rabell : Yes, asked him-"Were they sure?"Mr. Jones : He asked that?Mr. Rabell : In this business-they were raising the

devil down there .

Rabell stated that when he was called as a wit-ness in my case he would "be very dumb" insofaras his testimony was concerned. He explained howFlynn had ordered him to "chop off" my books asof a certain date, thus denying the making of properentries from records already at hand . He went intogreat detail as to how he would present informationhe knew was in my books to refute the points ofthe government's case . When I asked Rabell to in-form me who had directly ordered him to "get acase" on me, he replied as follows :

Mr. Rabell : Flynn said to "get the case ."Mr. Jones : Flynn said to "get the case" and to get

it as of the date you could get it . Is that it?Mr. Rabell: I came to him and said, "Listen, what

date do you want to get Jones at?" He said,"Go to this date ."

Mr. Jones : Which date?Mr. Rabell : I don't remember the date now .


179

Mr, Jones : Well, why did he say that?Mr. Rabell : Because the books were transcribed

that day.Mr. Jones : In other words, then-Mr. Rabell : Flynn didn't give you a chance to put

your other stuff in there .Mr. Jones : They didn't give me a chance?Mr. Rabell: No, they are not going to let you put

it in this case unless you do it yourself .Mr. Jones : Well, in other words, just from the

standpoint of moral principles-here, this manFlynn knew that my books could show a situa-tion favorable to me and he told you not totake it?

Mr. Rabell : He didn't give you a chance to dothat .

Mr. Jones : He didn't give me a chance .Mr. Rabell : He didn't give you a chance to put

your entries in . He grabbed them off as of acertain day. He made a cut off.

Mr. Jones : That he knew would be unfavorable tome?

Mr. Rabell : Oh, yes ; certainly he knew it.Mr. Jones : And he told you to "make the case" as

of that date?Mr. Rabell : As of that date .Mr. Jones : Isn't that a

trick?Mr. Rabell : And not give you a chance to put your

entries in . Every one of your supporting en-

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tries that came in before that date, they arenot in.

Mr. Jones : They're not?Mr. Rabell : They were not allowed in .Mr. Jones : I know .Mr. Rabell : You got a rotten deal .Mr. Jones : And Flynn knew that, didn't he?Mr. Rabell : Certainly.Mr. Jones : Flynn told you to cut my entries off,

and not-Mr. Rabell : Not to give them recognition .Mr. Jones : And you did?Mr. Rabell : I did not take into-Mr. Jones : Or any other information that was in

my office! Listen-isn't that a trick, itmakes me so mad I don't know what t(do!

Mr. Rabell : Holy Gee! you can't help it now.The thing is, to refute it .

Mr. Jones : And those records were on hand at thattime?

Mr. Rabell : Absolutely ; and those entries weremade by your girl at that time .

Mr. Jones : In other words, you wouldn't allow theentries to bring it up to date?

Mr. Rabell : That is correct.Mr. Jones : Well, that's dirty!Mr. Rabell : Of course, it is dirty ; that is the reason


181

I am here. Those items were not put in becausewe were told not to put them in .

Mr. Jones : Will you swear to that?Mr. Rabell : Absolutely.Mr. Jones: My God! That will ruin their case!Mr. Rabell : Of course, that is what I tell you .

Rabell went on to inform me that he had advisedFlynn, at the time both of them were in my officein the act of going through my books, that my en-tries had not all been made at the date on whichFlynn ordered my books to be "chopped off," butthat Flynn then told Rabell to ignore the informa-tion and not to allow the entries to be made .

Mr. Rabell : Flynn didn't want to know. "Thoseentries," I said, "belong in . He hasn't had achance to make them. Do I allow them, ordon't I allow them ." He said, "No, don'tmess up the deal now ."

Mr. Jones : He said not to allow me to enter them?Here he comes down here and tells you to"build up a case" and you look into my booksand you find all the information ; you say,"Here, Mr. Flynn, those books, as of this day,are not up to date ."

Mr. Rabell : That is right .Mr. Jones: "All the entries are not in. Shall I-

Shall I-"

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Mr. Rabell : (interrupting) "allow them?"Mr. Jones : (interrupting) "allow them?"Mr. Rabell : "No."Mr. Jones : He orders you then-he comes and he

says, "No, don't allow him to enter them"?Mr. Rabell : That is right .Mr. Jones : To "catch his books before they are

brought up to date"-Mr. Rabell : "Before he has a chance to bring them

up to date. Catch him right here ."Mr. Jones : "Catch him there ."Mr. Rabell : "Don't take any recognition of them."Mr. Jones : "And don't recognize them and then we

have got a case ." Now, isn't that a hot stunt?Mr. Rabell : Then he had a case .Mr. Jones : He had a case, but-Mr. Rabell : You can go into any bank and do the

same d-n thing!Mr. Jones : In other words, when I said in my ad-

vertisement that they had gone out to "get acase" on me, I was right .

Mr. Rabell : You were right, you knew you wereright .

Mr. Jones : I knew I was right, yes . But-Mr. Rabell : I don't know what the actual cause of

that was .Mr. Jones : Well, I know that . That started with

Ickes-that hard-headed Ickes .


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Mr. Rabell: I don't know that.Mr. Jones : But this is the first time that I ever had

it definite that Flynn ordered you to build thatcase against me and wouldn't permit you to dootherwise. Can you beat it!

Mr. Rabell : Do you see, they had a real case there,that way . But it was not fair, that is not fair ;it is not fair to let you take-you should beallowed to put in all of these substantiating en-tries which would have offset their case .

And so, ran the story that Rabell unfolded of theNew Deal "Truth in Securities" Commission's per-formance. It continued to maudlin details . Theconversation finally ended by my giving Rabell thefirst cash installment of his price to deceive his owngovernment. He accepted the bills, the numbers ofwhich the Department of justice agents, waitingon the third floor of my home had carefully noted,and started to take his leave .

As we passed from my den into the hall thatdivides the ground floor of the house, we observed,coming quickly down the stairway from the upperfloors, the Department of Justice Agents, my twolawyers, a Scarsdale policeman, my detectives andpossibly one or two other individuals . At this sightI stepped into the entrance vestibule of the frontdoor and Rabell immediately dashed across the hall

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and into the dining room as if he were headed forthe rear of the house and to the outdoors by wayof the butler'ss pantry and the kitchen . Confront-ing him and across his pathway, however, quite bychance, was my butler-a large, genial-natured ne-gro. Rabell, trapped, hesitated one split fractionof a second, turned half-way around, and veryquickly began to take from his pocket the bills Ihad given him, throwing them to the floor behindthe door which led from the hall into the diningroom.

As he was doing this, one of the justice agentsseized him and placed him under arrest .

Within twenty minutes following Rabell's arrest,to our amazement, there dashed across my lawn,white of face and breathless, Mr . John J. Burns,General Counsel of the Securities and ExchangeCommission at Washington! Mr . Burns' headquar-ters were in Washington-his home in Boston, Mas-sachusetts. How did he ever happen to be so nearbywhile Rabell was conducting his operations in myhome? Why did he arrive with a look of consterna-tion on his face and in obviously agitated frame ofmind?Mr. Fischbach stepped outside to greet the Com-

mission's Counsellor as he approached the door .Burns' first words, spoken almost in gasping man-


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ner-as he ignored even the giving of response tomy counsel's greetings, were: "Just how far am Iinvolved in this thing, Fischbach?"

But the General Counsel soon left my premises,as the Department of Justice Agents took Rabellto New York City . Rabell there was imprisoneduntil bail had been arranged for him, following hisindictment by a Federal Grand jury on charges ofsoliciting and accepting a bribe to influence his testi-mony as a government witness.

Having in mind that it was I who had instructedmy own men to record the Rabell conversations,that it was I who had communicated with the au-thorities prior to those conversations, that it wasI who had talked with Assistant United States At-torney Murphy of the Department of justice on thenight of Friday, June 21st, following the first re-corded conversation, and that it was I who had ar-ranged with Mr . Murphy for the two Departmentof Justice Agents to be present at my home on Sun-day for the second recording, and that I had neverdiscussed any of these arrangements with Burns orwith anybody else of the Commission, and thatBurns was not present at my home at all until abouttwenty minutes after Rabell had been arrested, Iwas greatly amazed to read a "Release in the Morn-ing Newspapers of Tuesday, June 25, 1935," issued

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by the Securities and Exchange Commission andentitled "Release No. X."

The "Release" concerned the Rabell affair . It,of course, was published in the press for the benefit,presumably, of the American public . It stated thatthe Commission, only a few days before, had re-quested the resignation of "Mr. Rabell, whose ap-plication indicated broad experience!"

I accepted that "resignation" story fairly willing-ly as about the only thing I could expect to hear .But I regarded some of the statements containedin the "Release," as strange and unusual distortionof the facts. I released no publicity statement,however, to the effect that such "appeared" to meas 'untrue statements of material facts or omissionsof material facts necessary in order to make thestatements made, in the light of the circumstancesunder which they were made, not misleading ." Af-ter all, I was dealing with the "Truth in Securities"Commission. I quote, however, the statements inquestion, with my own comment parentheticallystated as insertions within the Commission's state-ment.

"On June 22, the Commission, through confi-dential sources, received word that Mr . Rabell hadapproached one J . Edward Jones" (the "approach"had been made several days before the first


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recorded conversation on June 21st) ."The Commission immediately conferred with

officials of the Federal Bureau of Investigation (De-partment o f Justice) and requested their active co-operation . (But the assistance of the Federal Bu-reau of Investigation already had been obtained byme from Assistant United States Attorney Mur-phy.) At the interview which Mr. Jones had ar-ranged with Mr. Rabell (Rabell, not I, solicited theinterviews) at the former's home in Scarsdale, NewYork, on Friday, June 21st, and on Sunday, June23rd, complete records of the conversations wererecorded for use by the Department of justiceauthorities. ("Complete" records were made, it istrue, but they were not made by Department ofJustice authorities nor were they made expressly, asthe "Release" implied, for their use . On the otherhand, they were made at my personal direction, bymy own paid staff o f employees, for my own use andfor my own protection on advice o f counsel, andagainst what I feared was a "frame-up" againstme by Rabell, Burns and Flynn .) The Departmentof Justice Agents from the Southern District ofNew York and Judge John J. Burns, GeneralCounsel of the Securities and Exchange Commis-sion, were present at the meeting on the 23rd . (Thisimplies, of course, that the youthful "Judge" was

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on hand, bright and early, and that he personallytook part in the proceedings, attending the record-ing of the conversation and that he, of course, being"present at the meeting" also took part in the cap-ture o f his own Assistant Chief and the arrest whichfollowed. The statement made by the Commissionthat Burns was "present at the meeting" appearsto be somewhat 'misleading" since, indeed, heplayed quite a different role. He had arrived, outo f breath, twenty minutes after the arrest o f hisconfrere had been made, apparently fearing thathe himself had been involved .) Immediately afterSunday's meeting (at which time the "Release"states Burns was present) Rabell was taken into cus-tody." (But by authorities who were present, notby Burns who was absent!)

These few paragraphs concerning the Commis-sion's "Release No. X," while they may be passedover as inconsequential observations, neverthelesspertain to the Commission's "most effective wea-pon"-that of publicity, informing the great Amer-ican public of the "Truth in Securities ." Here isthe "truth" torn naked . Here is a case where thepublic may have been given "news" which strangelyimplied "facts" that I felt never existed . For onemight think, on reading the Commission's wordsabove quoted, that young Burns was a prime factor

somehow felt that I had accomplished that featand I now feel that honesty toward the public,fairness toward me and gentlemanly honor towardtheir own consciences, should have demanded fromthe Commission authorities, not cheap attempt atcredit-taking, but dignified official quietude in suchan unfortunate circumstance .

Rabell shortly was to be tried in court proceedingsthat resulted in a "hung" jury. He then was triedagain, but the "Truth in Securities" Commission'srepresentative, John Flynn, as the sole witness forthe defense at the trial, testified under oath thatthe Commission did not, after all, intend to usethis man, who, under Flynn's own urgings, hadsworn to their affidavit against me, as a witness inmy case! The judge thereupon did not allow thecase to go to the jury for decision, but, instead, dis-missed the indictment against Rabell because of thestated fact that the indictment charged him withhaving solicited and accepted money to influencehis testimony as a government witness . Flynn'ssworn testimony to the effect that the Commissionwas determined not to use Rabell as a witness,therefore saved the day for his erstwhile associateand Rabell again went free.

While I realized fully the noble purpose Con-

More "Truth in Securities" 189

in the capturing of his own lieutenant! Yet, I


gress had in mind in passing the laws that createdthe Securities and Exchange Commission, my unfor-tunate experience demonstrated the grave dangerto personal liberties in this country in the creationof political agencies of government-a New Dealpoliceman, in the present instance, if I may-whichcan be used by officials to besmear and to ruin aman who had incurred the displeasure or antagon-ism of a high governmental official .

The ideals which gave birth to the Securities andExchange Commission may be poorly served, if inthe administration of the laws, ambitious youngmen, hitherto unknown, but eager to gain a repu-tation or newspaper publicity, become, alas, imbuedwith a vindictive spirit of personal animosity toruin citizens and their businesses . The acts of theindividuals so charged with the thrill of the "chase"are quite apt to become the invalid acts of irrespon-sible and unwise public officials . Such, of course, arenot acts which were intended by the lawmakers .

Responsible officialdom, however, no matter howhighly placed, should be firm in the imposition ofrestraints upon its subordinates, lest the civil liber-ties without which this government could not, infact, long exist, be destroyed . The Supreme Courtrightly sensed this great issue in my own case and,in its celebrated decision, struck hard at such dan-


191

ger in warning against the making of our nation agovernment of men instead of one of laws . TheCourt stated in my own decision that the "Consti-tutional safeguards of personal liberty ultimatelyrest" upon the premise "that this shall be a govern-ment of laws ;" and the Court warned that "to theprecise extent that the mere will of an official oran official body is permitted to take the place ofallowable official discretion or to supplant the stand-ing law as a rule of human conduct, the governmentceases to be one of laws and becomes an autocracy."

The expressions of the Court in my case uponthe right of the individual to protection from gov-ernment bureaucracy were couched in most vigor-ous terms. The decision continued in these words :"Our institutions must be kept free from the ap-propriation of unauthorized power by lesser agen-cies," and, "if the various administrative bureausand commissions necessarily called and being calledinto existence by the increasing complexities of ourmodern business and political affairs, are permittedgradually to extend their powers by encroachments,even petty encroachments, upon the fundamentalrights, privileges and immunities of the people, weshall, in the end, while avoiding the fatal conse-quences of a supreme autocracy, become submergedby a multitude of minor invasions of personal

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rights, less destructive but no less violative of con-stitutional guarantees."

But more of the type of thing to which I hadbeen subjected was yet to come, and to an everincreasingly vicious degree .

CHAPTER XV

The Supreme Court Speaks

On June 27th the adjourned hearing ofthe Commission's "stop-order" proceedings againstme in connection with the Registration statementwhich Mr. Lundy had filed, opened in Washingtonto the usual accompaniment of complete arrange-ments for the accommodation of the press. Al-though I had been served with a subpoena requiringmy attendance at this staged "affair," I did not re-gard the proceeding as a valid one and consequentlyrefused to honor the subpoena by my personal ap-pearance.

Inasmuch as I contended that I already, at theJune 18th hearing, had effectively withdrawn myregistration statement, I refused to attend the hear-ing but, instead, dispatched my Counsel, Mr. Fisch-bach and an oil lawyer, from Enid, Oklahoma, toappear for me.

My counsel submitted formal motions to dismissthe registration statement as well as the proceeding

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itself, and to quash the subpoena which had beenserved upon me at my offices in New York . Thesemotions, in quick and decisive manner, successivelywere denied by the trial examiner of the Commis-sion. Appropriate exceptions to these rulings werenoted on the record by my counsel who thereuponagain withdrew from the proceeding .

Lately American citizens have read in the publicpress of what they have regarded as strange pro-ceedings in Russian Soviet Courts. A glance at therecords made by some of the New Deal Commissionsin their functioning as quasi-judicial bodies willbring America to the fore in the list of countriespossessing bureaucratic organs to exhibit strangeperformances in dealings with individual liberty.

Aside from the general ruthlessness of the Securi-ties and Exchange Commission in its tyrannicalabuses of power exhibited toward me, I often wasamused at the conduct of some of the young counselwho represented the Commission, and as well, theattitude of the "Judge" or trial examiner as hedemonstrated his judicial temperament and dignityin the dispensation of his particular brand of "jus-tice." In appraising the nature of the hearings, or"trials" that are accorded those whom the Com-mission summons before it, and the press, as well,it is advisable to remember that the trial examiner

The Supreme Court Speaks!

195

is, in fact, simply a member of the legal staff of theCommission itself. He is subject, of course, to theorders of the Commission, on the payroll as such,but charged with the duty of rendering decisionsregarding controversies between citizens and theCommission. The trial examiner sitting as "Judge"for my hearing, strange to say, was the same trialexaminer who had sat in my first long hearings atNew York and who, also, had spent considerabletime in drawing the complaint against me, basedupon Rabell's affidavit. In the Washington hear-ing, above described, an incident occurred whichrecorded a ludicrous "judicial" practice. At a cer-tain point in the proceeding, the counsel for theCommission, a young Mr . Cohn, suddenly sprangto the bench and actually began to whisper into the"judge's" ear! The record thereupon shows thefollowing :

Mr. Fischbach ; I would like to know, Mr. Exam-iner, whether Mr. Cohn is now addressing youon any matter concerning this proceeding,and, if he is, I believe it should be on the record .

No comment is needed to emphasize an obviouspoint indicative of the danger that could flow fromsuch "judicial" business . The conclusions which

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may be drawn from such type of procedure are leftto the reader .

On the very next day, June 28th, 1935, I pro-ceeded against the Securities and Exchange Com-mission by filing a petition in the United States Cir-cuit Court of Appeals at New York, in which Iasked the Court to review the action of the Com-mission in denying the motions I had filed before it .

A few days later, the Securities and ExchangeCommission brought action against me in the Unit-ed States District Court at New York to compelme to obey their subpoena to attend their hearing.I, of course, defended myself in this action, butlost on a decision by judge Caffey who ordered meto obey the subpoena, remarking, in his decision,that, as I had not attended the hearing, I shouldnot "kick" before I was "spurred ."

As I did not wish, however, to be "spurred" anymore, I made further "kick" in the form of an ap-peal from judge Caffey's decision and his order wasstayed pending the appeal .

Arguments duly were made in the United StatesCircuit Court of Appeals on a consolidation ofthe appeal from judge Caffey's decision and theaction which I had brought against the Commission,as well. I lost both actions in a decision which againupheld the Commission .

The Supreme Court Speaks!

197

I thereupon instructed my Counsel to take thecase to the United States Supreme Court for re-view of the decision of the lower Court, and duringthe next several months work in preparing the casewent forward. My legal staff in this action com-prised the late Honorable James M . Beck, notedConstitutional lawyer and former Solicitor Generalof the United States ; the Honorable BainbridgeColby, distinguished American statesman and Secre-tary of State in the Cabinet of President WoodrowWilson; Mr. J. N. Saye, eminent oil lawyer of Long-view, Texas, and Mr. Fischbach.

In the meantime, due to the tremendous amountof adverse publicity released by the Securities andExchange Commission concerning me, my businessbecame almost wholly stagnated to a point of ruina-tion and my business organization was practicallydestroyed. I abandoned all my offices except thatone in New York and became almost submergedwith distress caused by financial worries and thegreat embarrassment that attended my struggle .My Executive Assistant, Mr. John G. Scattergood,a sensitive man of a very high sense of honor, withina few months succumbed to the public shame hefelt from the Commission's attacks, to a point where,weakened by worry, he contracted a streptococcusinfection and died in September, 1935, leaving a

198


wife and three small boys to survive him . Mrs.Scattergood, his lawyer and his doctor all attri-buted his untimely death to the acts of the Com-mission .

Arguments duly were presented before the Su-preme Court in Washington, and finally, on April6th, 1936, the great decision of the Court was hand-ed down. In this decision, the Court, speakingthrough justice Sutherland, in strong and vigorouslanguage, upheld the rights and liberties of indivi-dual citizens in this country as against the tyrannicalabuses of power on the part of officials of the gov-ernment. By a vote of 6 to 3, the Court reversedthe lower Courts in their decisions against me andheld that the Securities and Exchange Commissionbureaucratically invaded my Constitutional rights .The Court denounced, in forceful language, bu-reaucracy by governmental agencies, adding thatliberty in this country would be "submerged" inpetty tyrannies if efforts such as those which rep-resented the acts of the Securities and ExchangeCommission went unchecked.

The majority ruling held that arbitrary powerand the rule of the Constitution were antagonisticand incompatible forces, and that one or the othermust perish .

The Court further declared that "the action of

The Supreme Court Speaksl

199

the Commission finds no support in right principleor in law" and that "it is wholly unreasonable andarbitrary ."

In condemning the Commission severely for vio-lating "the cardinal precept . upon which the Con-stitutional safeguards of personal liberty ultimate-ly rest," the Court said that in the supplanting ofthe standing law by the mere will of an official, "thegovernment ceases to be one of laws and becomesan, autocracy."

"Arbitrary power and the rule of the Constitu-tion cannot both exist," said the Court which, inquoting a decision concerning a "fishing expedi-tion," further declared that : "An investigation notbased upon specific grounds is quite as objectionableas a search warrant not based upon specified state-ments of fact .

"Such an investigation, or such a search, is un-lawful in its inception," the Court held, and, con-demning specifically the action of the Commission,stated: "If the action here of the Commission be up-held, it follows that production and inspection maybe forced not only of books and private papers ofthe guilty, but those of the innocent as well, not-withstanding the proceedings for registration, sofar as the Commission is concerned, has beenbrought to an end by the complete and legal

200


withdrawal of the registration statement."The decision of the Supreme Court was handed

down on that April 6th, 1936, before a crowdedcourt room that held a group of astonished Securi-ties and Exchange Commission lawyers who werepresent as very much surprised and disappointedvisitors. Great publicity throughout the land fol-lowed the decision .

But the New Deal was not slow . On the very nextmorning, April 7th, 1936, at ten o'clock, the UnitedStates Attorney went before a Federal Grand Juryin the City of New York to indict me!

CHAPTER XVI

New Deal at Work

The Securities and Exchange Commissiondelivered to the United States Attorney at NewYork, books, records and private papers which thatCommission had obtained in the raid they conductedon my offices through the medium of their manRabell, operating under the direction of Flynn .The Commission also delivered to the United StatesAttorney the affidavit of Rabell and the complaintand papers constituting the case which they hadbuilt against me in the old injunction proceedingthat followed the operations of the Commission de-scribed in the quoted words of Rabell in a previouschapter .

The United States Attorney, Mr . Lamar Hardy,newly appointed by President Roosevelt, presentedthe case, through an assistant, to the Grand Jurors ,who, in turn, handed up their indictment on May8, 1936, charging me with violation of the mailfraud statute, a penitentiary offense, if proved .

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Great publicity resulted from this charge andpress headlines and stories carried the startling newsof an indictment that contained fifteen separatecounts against me! My children, Edward, twelve,and Cathryn, fifteen, read in the papers that fiveyears for each count, or a total of seventy-fiveyears in the penitentiary, might be their father'spenalty. On reading the indictment, however, Ilearned that each count was similar to every other,the basis for the fifteen counts being simply fifteendifferent routine letters which had been mailed bymy organization. It so happened that not one ofthese letters had been written by me personally, butby subordinates of our office in the ordinary routineof their work . But I was the only defendant, how-ever, no conspiracy of several individuals, as oftenis the case in such actions, being charged . It ap-peared as if J. Edward Jones was the only onehunted!

God forbid that any reader of these lines, throughany possible quirk of fate, should be indicted by hisgovernment! The laws of this country, lawyersand the courts themselves say, are such that oneaccused is presumed to be innocent until provenguilty. I have found the practical effect of anaccusation to be exactly the reverse ; one, indicted,really is presumed by his fellow man to be guilty

New D eal at Work

203

until proved to be innocent . And, even then, aftercomplete vindication has been fully established andinnocence proven in a public trial on the meritsof the case, the scars that remain from the deepand damaging cuts received in such encounter, arethere forever to stay as permanent labels-to dam-age one's standing ; to hurt sensitive feelings ofpride; to dampen hope and aspirations ; to questionthe sincerity of friendly encouragement even fromone's best friends ; to create doubt of all humanity ;to build bitterness in the heart against nearly every-thing "government ;" to enhance continued worry ;to develop a frantic state of mind that can visualizenothing constructive but, instead, only destructionof all ideals previously held high as the great goalsof a life. I can say that the persecution attendantsuch terrible attack as an indictment by one's owngovernment, is ruinous . This is said, now, in thematured belief that the individuals of the govern-ment who promoted my indictment never have real-ized the full extent of the consequences of theiracts.

A man can, from depths of his despair, take hismind from the ruination of a business built upona lifetime of work ; and, likewise, from the destruc-tion of his business organization which for years hasbeen his pride; he can face threatened financial ruin


-even what seems to be the destruction of all hopefor the rehabilitation of his business ; but he cannotforget his worries and the sleepless nights of floor-walking that haunt his every thought, every hopeof himself and those for whom life has made himresponsible. Even as I write these words, sickness,resulting from continued aggravations caused bymany months of worry, has weakened and destroyedhealth in my immediate family .

Immediately following the rush that brought myindictment so soon after the Supreme Court hadspoken in my favor, the United States District At-torney adopted the policy of delaying a trial of thecharges that had been made against me. Steadilyand in routine manner, on or about the first of eachsucceeding month, the government regularly ap-peared in Court, asked and was given an adjourn-ment of the case until the following month .

In the meantime, clients of mine were visited,questioned, summoned before the United States At-torney and, of course, in many cases made exceed-ingly apprehensive concerning their relations withme. My representatives in the oil fields likewisewere examined and put to such fright concerningtheir relationship with me that shortly I was abso-lutely without any direct field representation what-soever .

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205

At the time, I had undertaken the developmentof some considerable oil property in the State ofLouisiana, necessitating the drilling of several deepoil wells . I contracted the drilling of the wells withseveral drilling contractors, only to learn, to mygreat dismay, that such individuals subsequentlywere haled before representatives of the governmentand subjected to a searching line of inquisition-allto result in the cancellation of the drilling contractsthat I had negotiated. This condition of affairs de-veloped to a point where I found myself almostestopped in my efforts to do any operating in thefields at all-so concerned did my field operatorsbecome at what seemed to be an almost endless con-tinuation of "investigation" of my affairs and ac-tivities . It will be understood, too, that such in-quiries had no relation whatsoever to the chargesmade in the indictment rendered against me .

In addition to these official acts of my govern-ment, I was made the target of many persons-someof whom were highly placed in personal relation-ships either with political channels or with personsprominently identified with powerful individualsin the government. At all times, offers were madeby these individuals to have the attacks which hadbeen made against me called off and the indictmentquashed; providing, of course, I paid such sources

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substantial sums of money. My experiences in con-nection with these persons brought home to me theimportant part graft plays in the very highestplanes of activity surrounding our government .

The sorry chapters recorded by Rabell, of theSecurities and Exchange Commission, for instance,were completely eclipsed, just a little later, by twodifferent gentlemen-among others one, a "Colo-nel" Myles A. Lasker, who introduced himself-ex-hibiting as he did so, original signed contracts toprove it-as the Radio Business Manager for EleanorRoosevelt, wife of the President ; and the other, aJohn J. O'Donnell, representative of nothing lessthan the Democratic National Committee! Thequalifications which these two men of high positionadvanced to convince me of their ability to performthe services they wished to sell, the stories relatedby them designed to prove to me the power . andinfluence they wielded-all were so startling in theprofundity of their significance that they left mewith a revolting realization of a condition of affairsthat seemed to me to need, and to need badly, athoroughgoing and purefying investigation of it-self !

CHAPTER XVII

New Dealirium

During the summer of 1936, I was ap-proached by many different individuals who hadsome very strange proposals to make to me . On ad-vice of counsel, and having in mind also the valueof the recordings of the Rabell conversations, Icaused to be installed in my office recording appara-tus that could be used to make phonographic rec-ords of conversations had there .

I made these preparations as a precautionarymeasure in my own protection against what cautionsuggested might be a wise measure to forestall anypossible attempt to misconstrue the meanings of orto misquote my own words .

Accordingly, on the occasion of visits by personswhom I regarded as possible governmental repre-sentatives, as extortionists, or "fixers," I made useof the recording equipment . Without laboriouselaboration concerning many recordings made, thepurpose of this book can be served by referringonly to "Colonel" Myles Lasker, and Mr. John J .

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O'Donnell . If perchance, any serious question beraised as to the authenticity of the record as quotedby me, arrangements may be made for the hearing,on loud speaker, of the actual voices in conversa-tion. I have found that the phonographic needle,unlike, sometimes, the human tongue, does not wab-ble when actual fact is wanted, but that it relatesits story truthfully from the record . In this in-stance, I have the records .

One day, a young man I had not known before,visited me at my office and offered to introduce meto a person who, it was stated, represented himselfas having a definite contractual relationship withthe wife of the President of the United States andalso with having influence with the powerful Presi-dential Secretariat . I was urged to go to see thegentleman in question, one Myles Lasker, who, Iwas advised, wished to make my acquaintance andwho no doubt could "do something" for me . I,of course, intrigued by the suggestion, was desirousof learning how far this kind of business might go .I, therefore, went with my new found friend toMr. Lasker's office, about a block from that of myown.On meeting Mr. Lasker, self.styled "Colonel"

with big eyes, heavy, well-filled frame, and deephusky voice, I perceived a tendency on his part

New Dealirium

209

toward loquacity characterized by a free and fami-liar reference to personnel known to be identifiedclosely with the White House, obviously, as Ithought, to impress me with his high connections .He very promptly produced for my inspection

certain contracts which were sealed by the originalsignatures of Eleanor Roosevelt and himself. Headvised me that he was the "Radio Manager" forthe First Lady and that he was in position to speakwith her at any time and on any subject .

He took occasion to exhibit to me some checkvouchers showing that many thousands of dollarshad been paid to him by one of the large oil com-panies, which money, he pointed out to me, hadbeen given to him for special services he had beenable to render through his Washington connectionsin thwarting the purposes of Governmental agenciesin the making of investigations and the handling ofreports concerning the activities of the corporationin question.

With such apparent attempt to qualify for hisability to perform, our conversation naturally re-verted to my own troubles and the "Colonel," insympathetic style, held himself open to help me asbest he could, stating that it would be necessary,because of his very high connections, to "keep it onthe up and up."

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An appointment was made for the Colonel tocome to my own office, where, it was agreed, wecould have ample opportunity to go fully into thematter .

The Colonel arrived at my office at about seveno'clock on the stormy evening of August 13th .

At the outset of our conversation I asked what hisservices in my behalf would cost me and he saidthat about $2,000 would be required for "expenses,"and $25,000 was finally stated as "a fair fee ."

"I would say, offhand, if you put it up to me,"said Colonel Lasker, "that a fee of $25,000.00would be a fair fee ."

The Colonel seemed particularly desirous that Iregard his proposition to me as one made on a veryhigh level. He took special pains to warn meagainst any thought that he would be concernedwith graft .

"It's got to be above board," said the Colonel,"or I don't want any part of it . I'm getting curedof playing with fire! I don't believe in what iscalled graft, not at all!"

But, apparently sensing a way out, if any questionmight arise as to the ethics of what he had to pro-pose, the esteemed Colonel, in a striking pose ofinnocence, said, " . . . I'll even do this, if undue in-fluences were brought to bear I would allow you to

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211

hire me as your Public Relations Counsel for oneyear at a salary of $25,000.00 a year and whateverother publicity expenses there are."

In stating further how he wished me to regardhim as well as how not to regard him, Col . Laskersaid :

"I do want you to get one thought in your mindor out of your mind-either way. I don't want youto ever think of me as a `fixer,' because that's theone thing that I'm not ."

Mr. Jones : Well, I don't know anything about theway you function, I don't know you .

Col. Lasker: I mean, I just don't-I don't wantto be known as that. As big a job of publicrelations as any other is the fact of being ableto square things-to square things .

In speaking of the indictment, Colonel Laskerassured me that, through his influences, he couldhave it dismissed .

"It is going to be dismissed," declared the Colonel,"there is no question about it. I do feel, I may beall wrong, but I do feel that I can have it dismissed,but it's going to mean a lot of work ."

And then as if by way of qualifying himselffurther, Mr . Lasker related a story of amazing im-port! He told me that for a very substantial fee, he

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had been retained by a big public utility man ofChicago, who had employed him to put a stop toan investigation which the United States Senatehad launched into the utility man's affairs . And inthe relation of his story he indicated that he hadthwarted the purpose of the United States Senateby using his influence with the Presidential Secre-tariat and that, through his ability "to put in aword with Black" (then United States SenatorBlack, who headed the Senatorial InvestigatingCommittee-now Associate Justice Black of theUnited States Supreme Court) the investigation had"fizzled off to nothing ." In this connection thefollowing colloquy is pertinent :

Col. Lasker : I got Harley Clarke out of his investi-gation down there .

Mr. Jones : Who's that?Col. Lasker : Harley Clarke.Mr. Jones : Clarke Brothers Bank-that closed?Col. Lasker : No. Harley Clarke is the man who

heads big utilities, and Harley Clarke wrote mea very substantial check .

Mr. Jones : What did you do for him?Col. Lasker : Well, I connected with his investiga-

tion down there before a Senatorial Commit-tee. I was able to put in a word with Black, sothat the whole thing just fizzled off to nothing.

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213

Mr. Jones : Did you do that through the same chan-nels that-

Col. Lasker : I did it when Louie Howe was alivedown there, and Harley Clarke, as I say, paidme a very nice check, a fee which, unfortu-nately, I had to share with some other people .

The Colonel seemed to think that his perform-ance in the Clarke case had resulted in the success-ful handling of a problem much more intricate ordifficult than that which mine would represent .

Mr. Jones : How long do you think it will take toget it knocked out?

Col. Lasker : With luck, in a week .Mr. Jones : Have you ever had anything as bad as

that knocked out? An indictment?Col. Lasker : Well, I think this Harley Clarke case

was even worse.Mr. Jones : I'm not familiar with that case .. Were

they after him?Col. Lasker : Every which way!Mr. Jones : They were? Of course, my name is

"mud" with some of the people down there inWashington .

Col. Lasker : That's all right. We'll take care ofthat .

214


The Colonel urged me to go, personally, with himto the White House, at Washington, when, he stat-ed, he would take up the matter with his friend SteveEarly, who had great influence with the President .

Col. Lasker : Steve Early has charge of all the pressrelations for the President, so on and so forth .Secretary, as you know, to the President. Hehas a tremendous amount of influence with thePresident. Tremendous. Since Louie Howedied, I should say that Steve has sort of walkedinto Louie's shoes.

The Colonel then told me he would urge Mr.Early to take my matter to the President, or toMr. Cummings, in order to get my case "dropped."Then he predicted having the case knocked out "ina week."

Another sidelight on how an individual, so inti-mately placed as was Colonel Lasker, viewed thepossibility of easy "fixing" is shown by commentmade by the Colonel about one Ralph Steinberg,described as a "powerful man," connected with theDemocratic Committee .

Col. Lasker : And I'll go to a man who is verypowerful. He happens to be up here at theBiltmore. Steinberg .

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Mr. Jones : Who's that?Col. Lasker : Ralph Steinberg.Mr. Jones : I don't know him . Is he working for

the Committee?Col. Lasker : That's right. And that would prob-

ably mean that I would have to give Ralphpart of my fee, but Ralph can do lots of thingsthat I can't do, but as far as fixing is con-cerned, that all means money .

Mr. Jones: Is he connected with Cummings?Col. Lasker : He is connected with the Democratic

Committee, and has nothing to do with Cum-mings, but he can walk into any one of theCabinet offices as I can walk into the WhiteHouse.

Mr. Jones : Yeah? Well, then your plan is first togo to Early?

Col. Lasker : Yes .

The Colonel then referred to an investigationlaunched by the Black Senatorial InvestigatingCommittee of Cities Service Company, referring,also, to payments made by that company to him forhis "services"-.the vouchers for which he actuallyhad showed to me in his own office.

Mr. Jones : How did you ever keep the S .E.C. offthe Henry L. Doherty business?

Col. Lasker : Well, it was real hard work .

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Mr. Jones : The S.E.C.-I thought they landed oneverybody!

Col. Lasker : No. It was real hard work that wasdone and up to the time the Black Committeestarted investigating Cities Service I was onthat payroll for a retainer each month . A verylovely retainer at that-they used me whenthey wanted me. If they wanted me, they usedme. Three times in the first year that I waswith them. Twice the second year-twice thethird year and once the fourth .

Mr. Jones : From the check vouchers you had there-my God, you must have spent a lot of moneyfor them some place .

Col. Lasker : That was money that they gave mefor my services .

Mr. Jones : Yes?Col. Lasker : Now, they paid me as I said, one

year, $30,000, then $25,000, to $30,000 forthe fourth year.

The Colonel assured me that he knew what hecould do and that he had been and still was quiteintimate with the affairs of White House person-ages .

Col. Lasker : What I tell you is definitely what Ican put across .

Mr. Jones: Well, now, of course, you are in close,on the inside of the Roosevelt family, as I

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understand it. And what are you for EleanorRoosevelt?

Col. Lasker: I handle all of her radio broadcasts,as Public Relations Counsel.

Mr. Jones : Publicity to newspapers?Col. Lasker: No, I don't handle any of that.Mr. Jones : How do you get your influence with

Early?Col. Lasker : Well, I handled all of Louie Howe's

private business, when Louie Howe was alive.Steve and I have been friends for a good manyyears.

Mr. Jones : Well, you'd recommend that I go downthere and have a talk with him?

Col. Lasker : I would, in your case .Mr. Jones : Do you think that he will bring it to

the attention of Cummings?Col. Lasker : I do. I certainly do.

At another point in our conversation I pressed theColonel as to whether he knew that Mr . Early reallypossessed sufficient influence to do the thing Col .Lasker represented he could have done and I receivedthe most positive assurances that the White HouseSecretary definitely could accomplish that purpose .

Mr. Jones : Do you think that Early will haveenough influence?

Col. Lasker : Oh, definitely.

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Mr. Jones : . . . to bring about the dismissal of-Col. Lasker : Definitely.Mr. Jones : You're sure?Col. Lasker : Oh, positively. I have nothing to

worry about.

At the outset of my conversation with Lasker, Ireally had a desire to lay before either the Presidentor Mr. Cummings, what I regarded as the iniquitiesof a deliberate persecution of me-still thinkingthat possibly I could prevail upon someone high inauthority to call a halt to what I then felt eventuallywould result in defeat for the government, eventhough I were to be ruined . In face of such a de-sire, I, nevertheless, was suspicious of the legitimacyof the proposals which I might receive from Lasker .

While the recorded conversation was proceeding,I decided to follow, just a little further, the sugges-tions which had been made to me and to learn, ifpossible, how bold this particular new scheme mightbecome. Accordingly, I agreed to fly with Col.Lasker to Washington on the coming day .

I arranged for my counsel, Mr . Fischbach, to ac-company us and, on arriving at the Capital, theColonel promptly telephoned the White House,whereupon an appointment with Mr . Early readilywas made for him . I decided not to go to the

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White House, but sent Mr . Fischbach in my stead,instructing him to observe the treatment accordedColonel Lasker and to formulate, in his own mind,and from his own observations, plans I should fol-low and to be prepared to advise me later whetherany possible legitimate chance might exist to war-rant a continuation of my association with theColonel .

Secretary Early, of the White House, sent Col .Lasker and Mr. Fischbach to the office of the Attor-ney General of the United States, where, Mr. Fisch-bach reported, the two were advised that the mat-ter would be taken up with the United States At-torney in New York by a personal visit on the partof an assistant to the Attorney General himself .

The advice, however, which my counsel later, onour return home, gave me was for me to discontinueforthwith all further contacts with the esteemedColonel, since, Mr . Fischbach advised, no legitimatepurpose, in his opinion, could be accomplishedthrough such channel.

I, of course, promptly ended all further associa-tion with Lasker. But wonder has never since leftmy mind concerning the possible danger to goodgovernment of this country, if conditions such asLasker described could exist.

He had specifically stated that he worked through

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the White House. In emphasizing his power, hehad pointed a finger at the possibility that a genuinepurpose of the United States Senate, in investigat-ing what seemed to be important matters, hadbeen thwarted through his powerful contacts . Hestrongly implied that money had been used in sur-reptitious manner to bring about such contingency .He was closely identified, even through contracts,with very prominent personages and his statements,therefore, naturally demanded some respect .

Purely as a matter of public concern, it would, Ibelieve, be interesting, and, no doubt, helpful, aswell, if the full facts of all that Lasker related tome, could only be made known . If any Senator,no matter how highly placed at this time, ever gaveimproper heed to a "few words from the hand-somely paid Lasker, the Senate, itself, should be in-formed of all the influences-no matter from whatsource exerted-that can work in Washington tonullify genuine purpose of that body in investigat-ing matters its good conscience suggests should beinvestigated . A denial of such purpose strikes deepat the very roots of the only kind of governmentthat long can endure among a free people .

But an even more dangerous and disgrace-ful element shortly was to make itself known tome in presenting a shocking proposal that caused

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me quickly to refer the matter to the Federal Au-thorities for proper handling . Big national politicsstooped low for money wanted! Further revelationswere to be forthcoming that pictured national fig-ures indulging in practices unworthy even of thecheapest of ward politics!

CHAPTER XVIII

Books for Sale!

During the two months following theLasker proposals, the Presidential Campaign of 1936warmed to a very considerable degree. The generalheadquarters of the Democratic National Commit-tee, ensconced in the Biltmore Hotel across the streetfrom my New York offices, swarmed with loyalparty workers who shouted their praises for thepolitical purposes of the great New Dealer-a can-didate to succeed himself .

As time rolled along, I was steadily shadowed, mytelephone wires were tapped at intermittent in-tervals and, as the months went by, my trial on theindictment which had been rendered so hurriedlyagainst me, constantly was subjected to adjourn-ment, the United States Attorney requesting addi-tional postponement each month .

In the oil fields, "investigations" of my currentefforts continued . In this particular respect, how-ever, I had been enabled, through the friendly actof a good citizen, to start a substantial drilling pro-

222

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gram. Such a stroke of good fortune came from aSamaritan from Texas. On being informed by meof my difficulties in obtaining drillers because of theinsistence by governmental representatives uponscrutinizing drilling contracts and "investigating"the drillers' connections with me, this gentlemanpromptly agreed to drill 6,000 foot oil wells for meon my own word and without a "scratch of paper"between us. The cooperation in this kind of a newdeal on the part of this very splendid individualsoon permitted me to discover a new and big oilpool, and I shall always be gratefully indebted toMr. Tom Potter, of Kilgore, Texas, for the honor ofa lasting friendship with a real man .

Confronted as I was with my difficulties, causedby those persons of the government who so stoopedto snoop, I became immediately wary on receivingon one Tuesday, October 20th, a telephone call an-nounced as coming direct from the headquarters ofthe great Democratic National Committee! Thecaller introduced himself as one John J. O'Donnell,stated that he was speaking from the DemocraticNational Headquarters, 'just across the street," andasked for an appointment to see me .

Taken aback, somewhat, by this new gesture fromsuch a mighty source, I expressed my surprise that,in view of my own difficulties with the administra-

224


tion, anyone connected with the Democratic Na-tional Committee should wish to see me. I was as-sured by O'Donnell, however, that before he wouldbe through with me I would be "wearing a Roose-velt button ."

Even buttons were beginning to be somewhatscarce with me, so I told my Democrat that he couldcome over to my office . In no time at all he wasthere : rotund, tenor voice, smiles all over a pro-fessionally friendly face .

O'Donnell promptly began to reveal to me howthe Democratic Committee had devised a schemeto permit them to evade compliance with the Fed-eral law respecting contributions to political cam-paigns. Along with such information, he advancedan astounding proposal whereby I might, throughthe Committee, buy myself out of the troubles thegovernment had heaped upon me! This could bedone, he said, providing I would "cooperate" withthe Democratic National Committee by givingthem money for some old, out of date conventionbooks. The transaction, in O'Donnell's own words,being, not a campaign "contribution," but a"blind," instead!

During the whole of my life, I always had thegreatest respect for the majesty of the law and ofmy own Government. Since the days, first remem-

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bered by me, when early in infancy, I rumbledacross the Kansas state line in a prairie schooner,my parents patriotically had taught a conceptionof America that eschewed any thought other thanthat the highest of motives always guided the pur-pose and functioning of the great American Gov-ernment. The ideal of that government, in fact,was conceived by my parents to be one alwayscharacterized by the highest plane of honor ; agovernment, if you please, to respect ; to honor ;to defend, if need should arise, with one's last ef-fort .

Even now, I like to forget an experience that re-vealed to me sordid realities of a long and bitterstruggle, and, instead, still bask in the idealisticconceptions taught of a great government . Suchconceptions, I believe, absorbed the minds of thefounding fathers when they established the Ameri-can system of government, because there seems tobe little provision in our charter of government toprotect against the possibility that, perchance,through the falling into the hands of cheap politi-cians, the government, itself, might be turned topurposes other than honorable . If, indeed, any greatweakness exists in the system originally establishedas our very own, it well may be found in the factthat, in principle, an ideal founded upon a basis

226


of honor, but, through fate, allowed to be manipu-lated or administered by elements imbued with basermotives, may fall an easy tool to the destructioneven of those fundamental principles which it was,in fact, designed to perpetuate .

As I admire and love the great principles andideals upon which the American governmental sys-tem is based, I despise the invalid acts of unwise orvindictive governmental officials, and, as well, thelowly purposes of "fixers," grafters and cheap poli-ticians whose acts and practices I believe to be sub-versive of the high motives and purposes of our Fed-eral government. In that attitude, I believe, also,that good citizenship requires the exposing of any-thing at all which may prove to be inimical to thebest interests of our government . As a matter offact, in that very conviction, lies the reason forthe writing of this book .

When the representative of the Democratic Na-tional Committee first came into my private officeI at once demanded to be informed as to the pur-pose of his visit, asking these words . "What do youhave on your mind?"

Inasmuch as I personally had been indicted foran alleged scheme in violation of law, I was sur-prised to be informed that the Democratic NationalCommittee had a scheme to obtain money under

Books for Sale! 227the false pretense of selling merchandise instead ofaccepting campaign contributions, "as such." Theplan, or artifice, I was advised, had been formulatedas a means by which funds could be procured bythe Democrats in a manner to defy revelation byinvestigation on the part of the United States Sen-ate-a scheme by which the law that requires fullreports of all contributions, could be evaded, or vio-lated, by the clever subterfuge of creating a "blind"for such contributions in the form of a "sale" ofbooks or merchandise, which no law requires to bereported .

In answer to my question O'Donnell immediatelyasked me to "cooperate" with the Democratic Na-tional Committee .

Mr. O'Donnell : Well, now, here's the way thatwe'd like to get you to cooperate with us .

Mr. Jones : Cooperate with you?Mr. O'Donnell : We've got this Democratic Na-

tional Convention Book. The only reason forits being in existence is to have the committeeknow that they're with them in spirit-pur-chase books! They can buy merchandise . It'snot a contribution to the- (in confidentialtone) it's a contribution to the campaign butit isn't the type open to Senatorial investiga-tion.

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My nerves being just a little frayed by "investi-gations" of many sorts, I ejaculated :

"Gee, I don't want any Senatorial investiga-tion!"

The National Committee's "book salesman" wasthereupon quick to define the virtue of the Demo-cratic scheme and to alleviate my fear.

Mr. O'Donnell: Not anything of that sort . Acontribution, as such, to the campaign-theyhave to make a list ; but, with the books, theyjust report "so many books sold ."

Mr. Jones : Right smart of them.Mr. O'Donnell : Because we're selling them all over

the country and we have men that don't wantany publicity and that is the method in whichwe-that's the only reason for this thing beingin existence . . . .

As O'Donnell pointed out to me how a purchasershielded from Senatorial expose, avoided even thepublic eye given to those who placed advertisementsin the book, I asked,

"Why do you come to me when I've been sopursued and persecuted and hounded by theNew Deal Administration that I just-"

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229

I was interrupted by his

"Well, now, here's the point . . "

Mr. Jones: You are connected with the DemocraticNational Committee .

Mr. O'Donnell: I'm in charge of the Democratsof the metropolitan area.

Mr. Jones : How many people have you got whodon't want publicity-what kind of a dealis made?

Mr. O'Donnell : Plenty, if you ask me .

Mr. Jones: Plenty? Not in as bad a situation asI'm in, have you?

Mr. O'Donnell: Yes . . . . probably 1,000, so far .

Mr. Jones : Contributors who want a little-

Mr. O'Donnell: They buy merchandise . They say,"All right, we like the book ." It's a very fine-the book contains a history of the last four

years and we think it's a very nice thing .Mr. Jones: A nice book .Mr. O'Donnell : Yes, it's a nice book, and "we feel

that you should distribute those among theworthy Democrats in spots where it'll do themost good. I'll underwrite so many copies ofthe book." They write their own check .They're making it in the form of a contribu-tion, but actually they're buying merchandise .They get a receipt ; I give you a receipt .

230


Mr. Jones : You say that there's no Senatorial In-vestigation-?

Mr. O'Donnell : Oh, no. But-the only thing is,those records are kept very confidential . Theyhave to be because we have been-I mean, menhave given to this and they said, "Now this isabsolutely confidential." There's no one butMr. Farley and Forbes Morgan that know any-thing about this .

Mr. Jones : And they instruct you to keep it confi-dential?

Mr. O'Donnell: Oh, yes-by all means . . . Theorders go right into their office . . . and thechecks ; and it's acknowledged . . . . I'll giveyou a letter on Democratic stationery bearingFarley's and Morgan's signature .

Mr. Jones : Is that so?Mr. O'Donnell: Your check goes to the Commit-

tee. You get a receipt from the Treasurer'soffice that you have purchased so many booksfor so much money.

Mr. Jones : Treasurer of what?Mr. O'Donnell : Treasurer of the Democratic Na-

tional Committee .Mr. Jones : Well, to whom do I draw my check?Mr. O'Donnell : To the Democratic National Com-

mittee .Mr. Jones : And they keep it confidential?Mr. O'Donnell: Absolutely.

Books for Sale!

231

Mr. Jones : Then-and you say to me that that isnot subject to a Senatorial investigation?

Mr. O'Donnell : It is not because it isn't a contribu-tion to the campaign as such. You will pur-chase books.

Mr. Jones : I see .Mr. O'Donnell : You purchase merchandise, see?Mr. Jones : Who thought that one up?Mr. O'Donnell : Well, it's "one of those things . . . . "Mr. Jones : Well, that's a means of getting money

without having it made subject to-Mr. O'Donnell (interrupting) : Correct. Now,

here's the point .Mr. Jones: To a Congressional investigation .Mr. O'Donnell : Correct. And it's a nice gesture

on your part. It shows the Committee at leastyou're thinking of them in the campaign .

Mr. Jones : Don't you know what they've done tome, this administration?

Mr. O'Donnell : Yes . . . you're in a spot. I mean-it's not too bad, it's one of those-

Mr. Jones : Well, I'm certainly in a spot . You'vegot me right, there .

Mr. O'Donnell : Yes-well, I-Mr. Jones: Will it do me any good?

And so, the scheme of the Democratic NationalCommittee to get around the law in the obtain-

232


ing of money, and to avoid publicity by the routeof a Senatorial investigation had been outlined asan artifice that clearly put the Committee out ofthe business of soliciting campaign contributionsand into. the business of selling an out of date politi-cal "Convention" book that, long since, served itspurpose at the rollicking, ballyhooing Philadelphiameeting of the Democrats months before.

O'Donnell unfolded to me, in an apparent at-tempt to be confidential, the real reason why hehad come to see me. "Personally," he said, "I'll tellyou why I'm in here. I'm a very good friend ofKeith Morgan. Do you know Keith?"

Mr. Jones : No, I don't know him .Mr. O'Donnell : He's one of the closest friends of

the President in the South . He's got to be inthis picture .

Mr. Jones : He's close to the President?Mr. O'Donnell : Very close.Mr. Jones : Now, do you work through him?Mr. O'Donnell: Occasionally.Mr. Jones : And would you work through him in

my case?Mr. O'Donnell : I certainly would . I'd take it

through him. I think the more you have bat-ting for you the better off you are .

Mr. Jones : Well, can you get all of this array of

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good, powerful Democrats here to go to thebat for me? How can you do that?

Mr. O'Donnell : I'll have it worked through KeithMorgan .

Mr. Jones : Think he can do it?Mr. O'Donnell : Yes, I know he can .

O'Donnell advised me that the book purchaseplan was the way to get things done. "Have it con-firmed," he instructed, "and, the day after election,step right into headquarters and say, `Now, boys,what are you gonna do for me?"'

Mr. Jones: You said they can do something .Mr. O'Donnell : Yes, that's right.Mr. Jones : Before I give you any money, I want to

know what you're going to do for me.

O'Donnell hinted strongly that if I made a pur-chase of the books he was offering I could have theservices of powerful individuals, either of the Demo-cratic Committee or closely affiliated with it, inhaving my troubles with the government ended.He said he couldn't, at the time, promise me inwriting, but he did advise me what was necessaryfor me to do in order to obtain the powerful in-fluence he insisted would be available to me, pro-viding, of course, I made the purchase .

234


Mr. O'Donnell : Here's what I think . Here's thething that I want you to do and I think itwould be a d-ned good thing for you to do.

Mr. Jones: All right, out with it .Mr. O'Donnell : Underwrite a thousand of these

books .Mr. Jones : How much are they apiece?Mr. O'Donnell: $2.50 a copy.Mr. Jones : That's $2500.00 . Two thousand five

hundred dollars. Supposing I give you twothousand five hundred dollars . What will youdo for me?

O'Donnell told me that on the very day after theelection he would be at my services, stating it inthese words :

"Now, I will-the day after election-I'll stepright to the bat for you ."

The "book salesman" was evasive as to exactpromises, but he continued to assure me that if Iwould but advance the money he sought, I coulddepend on being taken care of immediately afterthe election . In face of my requests for a categoricalstatement from him, or a letter from somebody elseof the Committee, he insisted that he could not ac-tually go on record to the effect that "everythingwill be white-washed ."

But I asked this cog of a smooth-running, well-

Books for Sale!

235oiled machine, "Why, that's what you're implyingby this conversation ."

Mr. O'Donnell : But that can't be done in that-in so many words.

Mr. Jones: You mean you can't put it on recordthat way?

Mr. O'Donnell : That's the idea .

Following the price quotations made by O'Don-nell for the books the Democrats had for "sale,"he phrased in his own way what I could expect bystating that the Committee would be "glad to runan errand" for me .

"Underwrite a thousand of those books," saidMr. O'Donnell, "of which you want one hundredhere, or twenty, or fifty, or two hundred. TheCommittee can send the rest where it will do themost good, at their discretion ."

"After that," he continued, "if you ask the Com-mittee for a favor after election, we'll be glad torun an errand for you. Let me put it that way."

Mr. Jones : Now all right. If I give you two thou-sand five hundred, you'll be glad "to run anerrand" for me.

Mr. O'Donnell : That's right.Mr. Jones: Now, just between you and me, you'd

236


get somebody in the Committee, Morgan, orwhoever he is-

Mr. O'Donnell : That's right .Mr. Jones : . . . to do the necessary things with

Lamar Hardy down here to get my case nolleprossed-is that what you mean?

Mr. O'Donnell: I'll do my damnedest .

I was advised that the transaction would be keptso confidential that the United States Senate couldnot get at the records . And the famous Mr . Farley,along with the Democratic Treasurer, would bethe guardians of the secret!

Mr. Jones : Well, who would know that I made acontribution to this-

Mr. O'Donnell : Mr. Farley and Mr. Morgan.Mr. Jones : That I did the buying?Mr. O'Donnell : Because they would know it .

They'd know about it immediately .Mr. Jones : Mr. Farley would know it?Mr. O'Donnell : And Mr. Morgan.

And I asked this esteemed representative of thenation's dominant political party that even then, incampaign battling was condemning chicanery,hypocrisy, graft and fraud, the following :

"And you say to me, that if I do that you thinkmy case will be forced out?"

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237

And the representative of that which is good inGovernment again replied, "I'll do my damnedest!"

O'Donnell then exhibited a copy of the famousbook, exclaiming as he produced it, "It's a beauti-ful thing-if you can conceive this thing .

And as I turned the pages I observed, on viewingthe pictures of many of those Democrats who heldthe highest positions of honor capable of being be-stowed by a trusting people : "I guess it's a goodbook. There's the President of the United Statesto start it off with ."

Mr. Jones : Does he, does Roosevelt know anythingabout the way this book is merchandised?

Mr. O'Donnell : You bet your life he does, and heapproved it!

Mr. Jones : He approved it?Mr. O'Donnell : Yes, he's approved it . Why he was

sore because the liquor ads went in these andthen finally he let it go .

Mr. Jones : Does he know it's a sort of blind forcontributions?

Mr. O'Donnell : Why, sure he does. Can't be any-thing else!

And, on observing other pictures-

Mr. Jones : There's Homer Cummings. Does heknow about this book?

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Mr. O'Donnell: I should say he does . He posedspecially for that photograph .

Mr. Jones : For this photograph?Mr. O'Donnell: Yes .Mr. Jones : Posed specially for a photograph for this

"blind for contributions"?Mr. O'Donnell : (Laughing) Certainly!Mr. Jones : He shouldn't do a thing like that .

(More laughter by O'Donnell .)That's terrible.

Mr. Jones : (reading aloud)"Department of Justice by Homer Cummings,Attorney General." Posed especially for this"blind alley" book. Can you beat that?

And as we ran through the pages to beam uponmany familiar faces of those only recently madegreat-

Mr. Jones : Here's Mr. Farley. Did he pose speciallyfor that?

Mr. O'Donnell: I guess he did .

And after looking over the entire panorama ofgreatness-

Mr. O'Donnell: Now, there's the picture!Mr. Jones: You think you can do something for

me, eh?

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Mr. O'Donnell : I'll do my damnedest . I think Ican .

Mr. Jones: You think you can to the point whereyou can solicit me to pay two thousand fivehundred of my money in the hope that yourthoughts are right?

Mr. O'Donnell : That's right .

I then told the gentleman that I would thinkover his proposal and made an appointment to seehim again on the morrow . He stressed the desir-ability of keeping the matter confidential and hand-ed me a receipt for $2,500 .00 which actually hadbeen prepared prior to his coming to my office, heapparently having felt secure in the confidence ofhis salesmanship ability with respect to the realthing the Democratic National Committee had tosell to one who, in his own words, had been put "ina spot!"

The Democratic National Committee, in a man-ner unknown to me, learned of the fact that I hadmade some kind of a record of O'Donnell's conver-sation with me. Newspapermen came to advise methat Mr. Forbes Morgan, Treasurer, stated that heheld an affidavit from O'Donnell and the press car-ried that official's quotation that the affidavit wasone "repudiating that alleged dictaphone record ."

A denial of such sort struck me as really very

240


amusing . The characterization did not, of itself,deny the fact that a conversation had been held,neither did it deny the truth of what the recordstated had been said. The very strange part of thequickly prepared denial, however, was that it ac-tually had been issued prior to the time I hadmade the record public and before anyone possiblycould have known what my record was to disclose!

Thinking that perhaps the affidavit "repudiat-ing" the "record" had been made under the man'soath before the fact concerning the kind of recordI actually had made was known, and to save any-one from committing the egregious error of deny-ing the truth told by a simple phonographic needleas it took its story from a mechanical disc record, Ieliminated further squirmings and wabblings of hu-man tongues by summoning representatives of thepress to my own office where, to clear all doubt asto the "alleged" record, I reproduced, on the loudspeaker, the voices of O'Donnell and myself in theconversation. Press comment on the matter waswidespread throughout the country .

I filed transcript of the recorded conversationwith the United States Senate Committee on Cam-paign Expenditures, as well as with the UnitedStates District Attorney in New York City .

The Chairman of the Republican National Com-

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241

mittee called upon the Senate Committee for actionagainst those responsible for improper solicitationsfor campaign funds, but that Committee subse-quently held, however, that no law had been vio-lated in the premises .

The United States Attorney issued subpoena fortwo of my technicians who made the recordings,summoning these gentlemen as witnesses before aFederal Grand jury, in a specified room of the Fed-eral Building in New York . On appearing at theroom at the time designated, the witnesses found noGrand jury present. They then presented them-selves to the United States Attorney who, throughan assistant, instructed them to return on the fol-lowing day, but to telephone before coming downto his office. On telephoning, according to instruc-tions, the witnesses, on that second day scheduledfor their appearance, were told to come to theUnited States Attorney's office on the followingday, but, again, they were advised to telephonebefore making the trip .

In the afternoon, of the second day, the UnitedStates Attorney advised the press that the GrandJury had found, on investigating the evidence pre-sented, that no law had been violated .

When the witnesses telephoned on the third day,they were informed that they would not be needed .

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I personally was never even invited to appearbefore any authority in connection with any phaseof the investigation-if such, indeed ever took place .

The minority leader of the House of Representa-tives at Washington, the Honorable Bertrand H.Snell, requested a transcript of the recorded con-versation with O'Donnell, and, on its receipt fromme, filed it and other information with the Attor-ney General of the United States, asking whetherthe Department of justice had instituted an inves-tigation to determine whether Section 313 of theFederal Corrupt Practices Act had been violated bysales of books by the Democratic Committee . InMr. Cummings' reply, finally made public underdate of December 24th, 1937, Congressman Snellwas advised that :

"A comprehensive study of the law and the factshas now been completed, and the conclusion hasbeen reached that a criminal prosecution would notbe warranted."

In about two weeks following the DemocraticCommittee's book-selling attempt, President Roose-velt, at the zenith of his popularity, was reelectedand swept into office by a huge vote in that Novem-ber Election of 1936.

CHAPTER XIX

Pax Vobiscum

My counsel and I had thought, duringthe fall of 1936, that possibly, for political reasons,the administration had been delaying deliberatelymy trial until after the November election . When,therefore, on the first of 'December, the trial againwas postponed for another thirty days, my patiencebecame thoroughly exhausted and I instructedcounsel to oppose with his greatest vigor any fur-ther delay.

Accordingly, on the first of January, 1937, whenthe government once more asked further adjourn-ment, my counsel demanded an immediate trial,pointing out to the judge the devastating effectupon me of the policy of delay which characterizedthe action of the United States Attorney . The trial,nevertheless, on the desire of the government, againwas postponed for another thirty day period .

We concluded that surely we now would be giv-en the privilege of a trial on the merits of the issue

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that had been created by the charges in the indict-ment, which, strangely, had so quickly followed myvictory in the United States Supreme Court . Wetherefore, at considerable cost, made full arrange-ments to proceed when the case next should becalled in the first week in February .

During all the intervening time, it should beremembered that the "investigating" of my everyactivity in the oil fields and elsewhere continuedwithout abatement. My clients were constantly in-terviewed, my personal movements closely watched,and the general "grind" of my business destructionwent forward with cruel effectiveness .

I was present and ready to proceed with my coun-sel in February when my case was again called .To my amazement, anger and disgust, however, theUnited States Attorney again requested adjourn-ment for the traditional thirty days. Spirited clash-ings between the attorneys of the respective sidesenlivened, for me, the short period of time it re-quired for the judge, again, to allow another ad-journment until the first week in March!For one who never has been subjected to the

treatment suffered by me in my long struggle forjust an opportunity to prove my innocence of theserious charges made against me by the government,it must be difficult to realize the terrible effect of

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such continuous delay. The worry incident to theunusual ordeal ; the great expense of it all ; the tan-talizing effect of hope destroyed, courage shattered,confidence in all justice doubted-all combine toweaken even one's determination for strong de-fense against seemingly insuperable odds . "Youcan't lick the government" dins into the conscienceof one so pressed, to write futility as answer toevery question arising from one's own communionwith one's own thoughts .

Additional burdens must be shouldered, however,and preparations anew went forward to what we,again, felt sure would be, as the columns call it,"My Day." When March rolled around, therefore,we were on hand in every expectation that my case,long under intensive preparation by several differentagencies and departments of the government andwhipped by the fury of several tempestuous squallsof publicity, would be called for trial .

When, again-and I thought to the very shameof the government-the United States Attorney,once more, with bland countenance, asked theCourt to postpone my trial for still another thirtydays, my counsel, Mr. Fischbach, goaded by hisrealization of the devastating effect upon me andmy family of such seeming torture, eloquently de-manded a surcease from the delaying tactics of the

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government. The judge once more, however, al-lowed the adjournment but, at this time, he notifiedthe United States Attorney that if another requestfor delay beyond the April term of court were tobe made, he would entertain a motion by my coun-sel to dismiss the indictment on the ground of "lackof prosecution ."

The April term, therefore, saw my trial finallyunderway-one whole year following the decisionof the Supreme Court in my favor, and the GrandJury proceeding that produced the indictmentwhich immediately thereafter was brought againstme.

At the trial, my legal staff was headed by theHonorable Lloyd Paul Stryker, of New York, asChief of Counsel-a gentleman characterized by avery high sense of honor ; sincere and earnest inhis endeavors; most capable in every detail of prep-aration and presentation; thoroughly genteel as anassociate ; tireless and fearless as well, in his work.He had as associates Mr. Fischbach and an Oklahomaoil lawyer .

If a perfect description of my trial were possibleto flow from my humble pen, no outstanding orsensational occurrence would be related to quickenthe pulse of the reader . It had been rumored thatJ. Edward Jones was to be convicted by "atmos-

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phere"-and, as the history of the trial was record-ed, "atmosphere" was about all that was offered inthe way of incriminating evidence .

Government witness after government witnesscame forward-a crippled man exhibiting hideousphysical deformities, a deaf witness, an elderly, poorlady nearing the century mark, a blind gentleman-a parade to excite the sympathy of a jury oftwelve men!

But cross-examination of the government wit-nesses by Mr. Stryker, brought out the fact, timeand again, that such witnesses had no quarrel withme-always had been dragged into the case by thegovernment itself and forced to appear against me!

The trial went on, day after day, and week afterweek, until the United States Attorney had con-sumed three weeks of time in his efforts to convincetwelve men that I was a criminal and that theworld would be the better were I to make myhome in a penitentiary . 'Atmosphere," however,instead of thickening into something concrete, di-luted itself perceptibly into nothing more substan-tial than very thin air. Indeed, my counsel advisedme at about three days before the governmentfinally rested, that if nothing were to be forthcom-ing of a nature more damaging than that whichalready had been presented, they would be prepared

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to advise me that the government's case had col-lapsed!

When, therefore, the United States Attorney ac-tually rested his case without having unearthed any-thing to cause concern, my counsel, one and all,took the view that, since two and one-half yearshad been spent in preparing the case against meand three weeks had been required to present it, and,in their opinion, the government had failed evento "make a case," we could, in confidence, leave thematter to the jury without putting on even onecharacter witness or one scrap of paper in my de-fense .

I, at first, opposed the strategy recommended bymy counsel as I was absorbed with the desire torelate to the jury a long list of items I had preparedfor my defense. On listening to the analysis of thegovernment's presentation which my counsel out-lined to me, however, I came to the realization ofthe wisdom of the conclusion of my lawyers . Mycounsel, thereupon, surprised the courtroom audi-ence, by permitting my case to be decided by theJury from the one-sided presentation that threeweeks of effort had produced for it .

With the record the government had made, there-fore, punctuated only by cross-examination of thegovernment's own witnesses, the jury, after clos-

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ing arguments, went out to decide my fate . Theyretired at exactly twenty minutes to twelve o'clockon the morning of April 30th, took plenty of timeout for lunch and returned to their box preciselyat twenty minutes past three that afternoon . In afew seconds thereafter, the foreman speaking to enda year old suspense, gladdened my heart and thoseof my counsel and many friends there present byuttering the words, "Not guilty!"

A full sense of all my responsibilities toward thosein this life who look to me for happiness and sup-port came upon me as I listened to the words thatmeant so much. My thoughts and feelings at thatmoment, however, are not for record .

Counting the decision in my case made by theSupreme Court of the United States as my first,the conclusion of my trial represented the secondgreat victory in my long and costly struggle forindividual rights and for my personal liberties .After April 30, 1937, only one major legal actionwith the Government remained for disposal-theold original injunction suit brought against me bythe Securities and Exchange Commission in Febru-ary, 193 5 . This suit resulted from the extraordinaryexploits of John L . Flynn, together, of course, withhis comrade, Rabell, whose good name had been


protected when Flynn of the Securities and Ex-change Commission took the stand as the sole wit-ness for the defense at Rabell's trial. Be it remem-bered that Rabell it was who had sworn to theaffidavit supporting the complaint the Commissionhad made against me . But Flynn, of the "Truthin Securities" Commission, under oath solemnlyadministered, swore before fellowman and Maker,that the honorable Commission did not intend tous the "affiant" as a government witness, therebypaving the way for the saving of his brother incrime-hunting, whose indictment thereupon wasquickly dismissed by the honorable judge.

As preparations now were begun by me for a trialon the merits of the old complaint the Commissionhad brought against me, the contacts naturally hadbetween my counsel and those of the Commissionbrought about discussions that led to proffers ofsettlement of that case . Without needless discussionof a rather insipid and protracted series of negotia-tions, suffice to say that this legal action fromwhich had come both the Supreme Court andmy indictment cases, died a somewhat ignominiousdeath. This occurred when the Securities and Ex-change Commission signed, with me, a stipulationwhich, on whereasing the fact that certain allega-tions had been made by the Commission and also

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the fact that such allegations had been denied byme, carried an agreement that, because of suchprofundities, the legal action instituted by the Com-mission was to be discontinued! This was done withthe agreement on my part also, that I would notdo in the future, that which I denied ever havingdone in the past and which I never had professed adesire to do at any time or at any place .

The stipulation was filed at New York on Jan-uary 3rd, 1938, thereby ending without trial acostly litigation and dissolving the temporary in-junction to which I had voluntarily consented andfor the glory of which Mr . Flynn had celebratedin such hilarious manner in my Biltmore quarterson that famous night described in a previous chap-ter .

The "most effective weapon" was resorted to inthe following words announcing the event and is-sued as a publicity release in Washington by theSecurities and Exchange Commission .

"The Securities and Exchange Commission an-nounced yesterday that a stipulation had been filedin the United States District Court for the South-ern District of New York in which J. Edward Jonesand four of his business associates agreed not to en-gage in acts and practices alleged in an injunctionsuit brought against them by the commission in

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February, 193 5, which allegations were denied byMr. Jones and his associates .

Upon the filing of the stipulation the Securitiesand Exchange Commission discontinued the pro-ceedings."

Thus ended three years of hard struggle in a bat-tle of individualism against the arbitrary powersof a despotic tyranny in America . In a land gov-erned by principles dedicated to freedom and lib-erty, petty vindictiveness ran riot to violate thecardinal precepts of such treasures . In a nationwhose very foundations were built around the pil-lars of justice, political extortion and graft playedhide-and-seek in the shadows of the White House.In a government that governed through agenciestouted in "holier-than-thou" fashion as "truth"agencies, crookedness and "framings" were theweapons to besmear reputations honestly earnedthrough years of effort . In a regime of men whousurped authority to write their own rules andregulations and who arbitrarily enforced such asthough they were the legitimate laws of the land,"government by men" became the new Americana.

In circumstances such as these, it fell to my lotto fight the battle . It might well have been thereader of these lines who thus was honored . Indeed,

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he may, even yet, face, unexpectedly, that whichcame to me. But I sincerely hope that no powerever shall long exist in America, to smother opposi-tion to evil forces that would destroy her heritage .

As I now weigh the results of my three victories,won with such great cost, never, I feel sure, to befully measured-I regard the value of the principleswritten in the decision of the Supreme Court inprotecting the rights of individuals in this countryand, as well, the protection of individual libertyepitomized in the two words spoken by the fore-man of my own Jury, as worth the sacrifices whichI have made. The Latin inscription on the GreatSeal of my home state of Kansas best representsthis feeling-"Ad Astra Per Aspera."

And so they_indicted_me-new_deal-j_edward_jones-1938-249pgs-pol

Education

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