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The Oil Depletion Allowance


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#1 Tim Gratz

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Posted 20 April 2005 - 08:04 AM

I was researching the oil depletion allowance on-line and encountered this information.

It would appear the elimination of the oil depletion allowance may have had unintended consequences.

DISCUSSION:


>2. No new refinery has been built in the US in 17 years.

It's worse than that. Between 1977 and 2002, the number of refineries operating
in the US fell from 282 to 153. There are 129 refineries sitting idle. They can
be purchased for 20% of the cost of building new, so why would anyone want to
build a new one?

To understand why that's so, you have to understand the Oil Depletion Allowance
and how it influenced oil company accounting. Big oil companies have four major
business units -- Exploration and Production, called Upstream, and Refining,
Transportation and Marketing, called collectively Downstream. (I'm ignoring
Chemicals here.) The Oil Depletion Allowance used to allow them to deduct 15% of
upstream *gross profit* from corporate income tax, which is based on *net
profit*. The four divisions 'sell' product to each other for intracompany prices
that are easily manipulated to move profit from one division to another. The Oil
Depletion Allowance gave them a strong incentive to move as much as possible
upstream. To see this, look at any oil company's P&L. For instance, Exxon Mobil
in the first quarter of 2004 reported (in millions)::

US upstream *net* income $ 1,154 75%
US downsteam *net* income 392 25% (up from 174 same quarter 2003)
Total US income 1,546

Prices are artifically set so that refineries and transportation lose money,
retail operations make a little, most profit is in production and exploration.
On $1,154 *net* profit, the *gross* profit is at least double. Thus corporate
income tax would be (1546 * .35) - (2500 * .15) = 166 or 11%.
If refineries lose money, why build new ones? Better to shut them down (129
above) or sell them to Valero for 20% of new (they're fully depreciated).

In 1975, the Depletion Allowance was limited to small producers who do not
operate a refinery (I used to be one). That was intended to stop the 'tax break
for the rich.' In its place, Big Oil got the 'intangible drilling cost
deduction', which produced an even bigger deduction by letting them deduct 70%
of the cost of drilling a well in the first year, and the rest over five years.
They also got the 'enhanced oil recovery credit', which pays them for operating
stripper wells (marginal, almost played out) and for pumping out-of-spec oil
(high sulphur, high viscosity). Something for everyone -- new wells and old.
Profits were still moved upstream; refineries still lose money.


Worth considering. Of course, the controversy over the oil depletion allowance had nothing to do with the assassination of JFK, unless he was the first political leader ever murdered over a provision in the tax laws!

#2 John Simkin

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Posted 20 April 2005 - 09:55 AM

Worth considering.  Of course, the controversy over the oil depletion allowance had nothing to do with the assassination of JFK, unless he was the first political leader ever murdered over a provision in the tax laws!

<{POST_SNAPBACK}>


This issue needs to be seen in the context of the history of the oil industry in Texas.

The most prolific oil reserves in the United States was not discovered until October, 1930. The East Texas Oilfield included Rusk, Upshur, Gregg and Smith counties. The first small company to find oil in East Texas was Deep Rock Oil Company. The first investor to take advantage of the discovery was Haroldson L. Hunt. He bought 5,000 acres of leases and an eighty-acre tract for $1,335,000. Hunt soon owned 500 wells in East Texas.

The discovery of oil in Texas made a small group of men a great deal of money. They decided to join together in order to maintain their profits. This included strategies for keeping the price of oil as high as possible. The rich East Texas field caused problems as it initially caused the price of oil to fall.

Ross Sterling, the former owner of Humble Oil, was elected governor of Texas and took office on 20th January, 1931. The Texas Railroad Commission, under the control of the large oil producers, attempted to limit the production of oil (prorationing) in the new fields of East Texas. On 31st July, 1931, the federal court in Houston sided with a group of independent oil producers and ruled that the Texas Railroad Commission had no right to impose prorationing.

Large oil companies in Texas such as Humble Oil were in favour of prorationing and Sterling came under great pressure to intervene. On 16th August, 1931, Sterling declared martial law in Rusk, Upshur, Gregg and Smith counties. In his proclamation Sterling declared that the independent oil producers in these counties were "in a state of insurrection" and that the "reckless and illegal exploitation of (oil) must be stopped until such time as the said resources may be properly conserved and developed under the protection of the civil authorities".

Sterling now ordered the commander of the Texas National Guard, Jacob F. Wolters, to "without delay shut down each and every producing crude oil well and/or producing well of natural gas". Wolters who was the chief lobbyist of several major oil companies in Texas, readily agreed to this action. Wolters used more than a thousand troops to make sure that the oil wells in East Texas ceased production. The Texas Railroad Commission was now in firm control of the world's most prolific oil fields. It now controlled the supply of the oil in the United States. As a result, the price of oil began to increase.

The courts ruled that Sterling had exceeded his authority by the declaration of martial law and he was easily defeated by Miriam A. Ferguson when he attempted to be elected for a second term as governor.

When Franklin D. Roosevelt gained power he attempted to push a bill through Congress that would give his Secretary of the Interior, Harold Ickes, the authority to regulate domestic oil production. However, Sam Rayburn, a politician from Texas, as chairman of the House Committee on Interstate and Foreign Commerce, was able to kill the bill. It was left to another powerful Texan, Tom Connally, to sponsor the Connally Hot Oil Act. This gave the Texas Railroad Commission the authority to proration oil.

Texas oil millionaires also fought hard to maintain its tax concessions. The most important of these was the oil depletion allowance. It was first introduced in 1913 and allowed producers to use the depletion allowed to deduct just 5 per cent of their income and the deduction was limited to the original cost of their property. However, in 1926 the depletion allowance was increased to 27.5 per cent.

As Robert Bryce pointed out in his book, Cronies: Oil, the Bushes, and the Rise of Texas, America's Superstate (2004): "Numerous studies showed that the oilmen were getting a tax break that was unprecedented in American business. While other businessmen had to pay taxes on their income regardless of what they sold, the oilmen got special treatment."

Bryce gives an example in his book how the oil depreciation allowance works. "An oilman drills a well that costs $100,000. He finds a reservoir containing $10,000,000 worth of oil. The well produces $1 million worth of oil per year for ten years. In the very first year, thanks to the depletion allowance, the oilman could deduct 27.5 per cent, or $275,000, of that $1 million in income from his taxable income. Thus, in just one year, he's deducted nearly three times his initial investment. But the depletion allowance continues to pay off. For each of the next nine years, he gets to continue taking the $275,000 depletion deduction. By the end of the tenth year, the oilman has deducted $2.75 million from his taxable income, even though his initial investment was only $100,000."

Such a system was clearly unfair and only benefited a small group of businessmen in Texas. It seemed only a matter of time before Congress removed this tax loophole. However, these oilmen used some of their great wealth to manipulate the politicians in Washington.

1932 several politicians from Texas assumed important positions of power in Washington. John Nance Garner became Speaker of the House of Representatives. Texans also became the chairmen of some very important committees. This included Samuel Rayburn (Interstate and Foreign Commerce), Joseph J. Mansfield (Rivers and Harbors Committee), Hatton W. Sumners (Judiciary Committee), Marvin Jones (Agriculture Committee) and Fritz Lanham (Public Buildings and Grounds Committee).

As the historian, Robert A. Caro has pointed out in Lyndon Johnson: The Path to Power (1982): "Texans were elected on December 7, 1931, not only to the Speakership of the House but to the chairmanship of five of its most influential committees, Lyndon Johnson's first day in the Capitol was the day Texas came to power in it - a power that the state was to hold, with only the briefest interruptions, for more than thirty years."


Sam Rayburn as chairman of the Interstate and Foreign Commerce Committee, played an important role in the establishing the and the Federal Communications Commission. In 1937 Rayburn became majority leader and held the post for the next three years.

Several of these Texas politicians became involved in the Suite 8F Group, a collection of right-wing political and businessmen. The name comes from the room in the Lamar Hotel in Houston where they held their meetings. Members of the group included George Brown and Herman Brown (Brown & Root), Jesse H. Jones (multimillionaire investor in a large number of organizations and chairman of the Reconstruction Finance Corporation), Gus Wortham (American General Insurance Company), James Abercrombie (Cameron Iron Works), William Hobby (Governor of Texas and owner of the Houston Post), William Vinson (Great Southern Life Insurance), James Elkins (American General Insurance and Pure Oil Pipe Line), Albert Thomas (chairman of the House Appropriations Committee), Lyndon B. Johnson (Majority Leader of the Senate) and John Connally (Governor of Texas). Alvin Wirtz and Edward Clark, were two lawyers who were also members of the Suite 8F Group.

Suite 8F helped to coordinate the political activities of other right-wing politicians and businessmen based in the South. In this way they were able to prevent the oil depletion allowance removed. This sometimes meant that they supported the Republican Party in elections. For example, Dwight D. Eisenhower received considerable funds from Texas oilmen in the 1952 presidential elections.

Soon after being elected, Eisenhower stopped a grand jury investigation into the “International Petroleum Cartel” citing reasons of “national security”. Eisenhower had already starting paying back the generous support he had received from the oil industry.

In 1954 Paul Douglas began making speeches in the Senate about the need for tax reforms in order to eliminate special privileges such as the oil depletion allowance. Douglas attempted to join the important Finance Committee. He held seniority priority and should have been given one of the two available seats on the committee. Johnson had to apply considerable pressure on Harry Byrd, the chairman of the Finance Committee, to stop this happening.

In 1955 LBJ became majority leader of the Senate. LBJ and Richard Russell now had complete control over all the important Senate committees. This was proving to be an expensive business. The money used to bribe these politicians came from Russell’s network of businessmen. These were men usually involved in the oil and armaments industries.

According to John Connally, large sums of money was given to LBJ throughout the 1950s for distribution to his political friends. “I handled inordinate amounts of cash”. A great deal of this came from oilmen. Cornel Wilde worked for the Gulf Oil Corporation. In 1959 he took over from David Searls as chief paymaster to LBJ. He testified that he made regular payments of $10,000 to Walter Jenkins.

In 1956 there was another attempt to end all federal price control over natural gas. Sam Rayburn played an important role in getting it through the House of Representatives. This is not surprising as according to Connally, he alone had been responsible for a million and a half dollars of lobbying.

Paul Douglas and William Langer led the fight against the bill. Their campaigned was helped by an amazing speech by Francis Case of South Dakota. Up until this time Case had been a supporter of the bill. However, he announced that he had been offered a $25,000 bribe by the Superior Oil Company to guarantee his vote. As a man of principal, he thought he should announce this fact to the Senate.

LBJ responded by claiming that Case had himself come under pressure to make this statement by people who wanted to retain federal price controls. LBJ argued: “In all my twenty-five years in Washington I have never seen a campaign of intimidation equal to the campaign put on by the opponents of this bill.”

LBJ pushed on with the bill and it was eventually passed by 53 votes to 38. However, three days later, Eisenhower, vetoed the bill on grounds of immoral lobbying. Eisenhower confided in his diary that this had been “the most flagrant kind of lobbying that has been brought to my attention”. He added that there was a “great stench around the passing of this bill” and the people involved were “so arrogant and so much in defiance of acceptable standards of propriety as to risk creating doubt among the American people concerning the integrity of governmental processes”.

Senators called for an investigation into the lobbying of the oil industry by Thomas Hennings, the chairman of the subcommittee on Privileges and Elections. LBJ was unwilling to allow a senator not under his control to look into the matter. Instead he set up a select committee chaired by Walter F. George of Georgia, a member of the Southern Caucus. Johnson had again exposed himself as being in the pay of the oil industry.

Drew Pearson of The Washington Post picked up on this story and wrote a series of articles about LBJ and the oil industry. Pearson claimed that LBJ was the “real godfather of the bill”. Pearson explored LBJ’s relationship with George Brown and Herman Brown. He reported on the large sums of money that had been flowing from Brown & Root, the “big gas pipeline company” to Johnson. He also referred to the large government contracts that the company had obtained during the Second World War. Pearson also quoted a Senate report that pointed out there was “no room for a general contractor like Brown & Root on Federal projects”. Nevertheless,LBJ had helped them win several contracts including one to build air-naval bases in Spain.”

LBJ was now in serious trouble and sought a private meeting with Pearson. He offered the journalist a deal, if Pearson dropped the investigation, he would support Estes Kefauver, in the forthcoming primaries. Pearson surprisingly accepted this deal. He wrote in his diary: “I figured I might do that much for Estes (Kefauver). This is the first time I’ve ever made a deal like this, and I feel unhappy about it. With the Presidency of the United States at stake, maybe it’s justified, maybe not – I don’t know.”

The decision by Eisenhower to veto this bill angered the oil industry. Once again Sid Richardson and Clint Murchison began negotiations with Eisenhower. In June, 1957, Eisenhower agreed to appoint their man, Robert Anderson, as his Secretary of the Treasury. According to Robert Sherrill in his book, The Accidental President (1967): "A few weeks later Anderson was appointed to a cabinet committee to "study" the oil import situation; out of this study came the present-day program which benefits the major oil companies, the international oil giants primarily, by about one billion dollars a year."

During the 1960 presidential election JFK gave his support for the oil depletion allowance. In October, 1960, he said that he appreciated "the value and importance of the oil-depletion allowance. I realize its purpose and value... The oil-depletion allowance has served us well."

However, two years later, JFK decided to take on the oil industry. On 16th October, 1962, JFK was able to persuade Congress to pass an act that removed the distinction between repatriated profits and profits reinvested abroad. While this law applied to industry as a whole, it especially affected the oil companies. It was estimated that as a result of this legislation, wealthy oilmen saw a fall in their earnings on foreign investment from 30 per cent to 15 per cent.

On 17th January, 1963, JFK presented his proposals for tax reform. This included relieving the tax burdens of low-income and elderly citizens. Kennedy also claimed he wanted to remove special privileges and loopholes. He even said he wanted to do away with the oil depletion allowance. It is estimated that the proposed removal of the oil depletion allowance would result in a loss of around $300 million a year to Texas oilmen.

After the assassination of JFK, LBJ dropped the government plans to remove the oil depletion allowance. Richard Nixon followed his example and it was not until the arrival of Jimmy Carter that the oil depletion allowance was removed.

#3 Mark Knight

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Posted 20 April 2005 - 01:31 PM

My understanding of the way that the tax code is changed in the United States is that a bill originates in the House of Representatives, and it is first considered by the House Ways and Means Committee. After passage by the committee, the bill is then considered by the entire House, where it is subject to amendment; if passed by the house, the bill then goes to the Senate. In the Senate, after a similar committee hearing, the bill must be considered by the entire Senate. If the bill then passes the Senate, it next travels to a joint House-Senate conference committee, where any differences between the House-passed version and the Senate-approved version are worked out. It is only after this rigourous procedure that the President has the option to sign the bill. Often the bill presented to the President for signature bears little resemblance to the bill the President initially pushed the introducing House member to sponsor.

In light of that, I would tend to agree with Tim, that Kennedy's advocacy of eliminating the oil depletion allowance would seem to have scant chance of being the PRIMARY motive for the assassination. After all, Kennedy's tax bill, which provided a tax CUT for most Americans, was bottled up in Congress at the time of his assassination, with little chance of passage. Surely this group of rich and powerful oil men could lobby/wine and dine/outright bribe enough Senators and Representatives to have a similar effect on any changes to the oil depletion allowance? Sure, the stakes were in the millions of dollars; but with 535 members of Congress, odds are that the elimination of the depletion allowance could have been scuttled without a single shot being fired, and without a single life lost.

#4 John Simkin

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Posted 20 April 2005 - 04:02 PM

I would tend to agree with Tim, that Kennedy's advocacy of eliminating the oil depletion allowance would seem to have scant chance of being the PRIMARY motive for the assassination. After all, Kennedy's tax bill, which provided a tax CUT for most Americans, was bottled up in Congress at the time of his assassination, with little chance of passage. Surely this group of rich and powerful oil men could lobby/wine and dine/outright bribe enough Senators and Representatives to have a similar effect on any changes to the oil depletion allowance? Sure, the stakes were in the millions of dollars; but with 535 members of Congress, odds are that the elimination of the depletion allowance could have been scuttled without a single shot being fired, and without a single life lost.

<{POST_SNAPBACK}>



Of course the Texas oil lobby could have bribed politicians not to have passed JFK’s legislation. After all, that it what they had been doing for 30 years. The problem for the Texas oil men was that JFK was determined to make an issue of this subject.

Samuel Rayburn made it clear to the oil industry that his primary objective was to keep the subject locked inside the committees he controlled. Once a president managed to get it debated on the floor of the Senate, it would mean the beginning of the end of the oil depreciation allowance. As Rayburn told one senator. If the issue came to a vote in the Senate: “they’d cut it to fifteen, ten, five per cent – maybe even take it away altogether. Do you think you could convince a Detroit factory worker that the depletion allowance is a good thing? Once it got on the floor, it would be cut to ribbons.”

That is why JFK posed a threat to the oil industry. If he was willing to take on the oil industry, maybe he would be willing to look at those large armaments contracts that were going to companies in Texas and California (the arrival of John McCone as head of the CIA heralded the financial interests of these two states coming together).

#5 Nathaniel Heidenheimer

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Posted 18 February 2006 - 08:29 PM

In watching part of the 1956 movie Giant last night I was surprised at an explicit mentioning of the Oil Depletion Allowance in the script. The Liz Taylor character even mentions the 27% figure.

Was the O.D.A. a much discussed issue during this period or was it obscure? Would a majority of americans have heard about it in say, 1956?

#6 Royce Bierma

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Posted 18 February 2006 - 10:44 PM

I was researching the oil depletion allowance on-line and encountered this information.

It would appear the elimination of the oil depletion allowance may have had unintended consequences.

DISCUSSION:


>2. No new refinery has been built in the US in 17 years.

It's worse than that. Between 1977 and 2002, the number of refineries operating
in the US fell from 282 to 153. There are 129 refineries sitting idle. They can
be purchased for 20% of the cost of building new, so why would anyone want to
build a new one?

To understand why that's so, you have to understand the Oil Depletion Allowance
and how it influenced oil company accounting. Big oil companies have four major
business units -- Exploration and Production, called Upstream, and Refining,
Transportation and Marketing, called collectively Downstream. (I'm ignoring
Chemicals here.) The Oil Depletion Allowance used to allow them to deduct 15% of
upstream *gross profit* from corporate income tax, which is based on *net
profit*. The four divisions 'sell' product to each other for intracompany prices
that are easily manipulated to move profit from one division to another. The Oil
Depletion Allowance gave them a strong incentive to move as much as possible
upstream. To see this, look at any oil company's P&L. For instance, Exxon Mobil
in the first quarter of 2004 reported (in millions)::

US upstream *net* income $ 1,154 75%
US downsteam *net* income 392 25% (up from 174 same quarter 2003)
Total US income 1,546

Prices are artifically set so that refineries and transportation lose money,
retail operations make a little, most profit is in production and exploration.
On $1,154 *net* profit, the *gross* profit is at least double. Thus corporate
income tax would be (1546 * .35) - (2500 * .15) = 166 or 11%.
If refineries lose money, why build new ones? Better to shut them down (129
above) or sell them to Valero for 20% of new (they're fully depreciated).

In 1975, the Depletion Allowance was limited to small producers who do not
operate a refinery (I used to be one). That was intended to stop the 'tax break
for the rich.' In its place, Big Oil got the 'intangible drilling cost
deduction', which produced an even bigger deduction by letting them deduct 70%
of the cost of drilling a well in the first year, and the rest over five years.
They also got the 'enhanced oil recovery credit', which pays them for operating
stripper wells (marginal, almost played out) and for pumping out-of-spec oil
(high sulphur, high viscosity). Something for everyone -- new wells and old.
Profits were still moved upstream; refineries still lose money.


Worth considering. Of course, the controversy over the oil depletion allowance had nothing to do with the assassination of JFK, unless he was the first political leader ever murdered over a provision in the tax laws!


Tim, whether the oil depletion allowance is a good or bad thing is irrelevant to the Kennedy assassination. The point John makes is valid. Persons in the oil industry in Texas, as well as Robert Kerr in Oklahoma felt threatened by its withdrawal, and therefore became angry with JFK, who proposed doing just that. Therefore, I don't think you can say that the issue had nothing to do with the assassination. It WAS an issue, along with other policy issues taken by the president which you can't summarily dismiss as motivation for assassinating him. I'm not taking the position: Hunt and the oilmen killed Kennedy. It's too simplistic. There were probably various motivations involved among the people responsible for the assassination, including the withdrawal or reduction of the oil depletion allowance.

Roy Bierma

#7 John Simkin

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Posted 18 February 2006 - 11:19 PM

In watching part of the 1956 movie Giant last night I was surprised at an explicit mentioning of the Oil Depletion Allowance in the script. The Liz Taylor character even mentions the 27% figure.

Was the O.D.A. a much discussed issue during this period or was it obscure? Would a majority of americans have heard about it in say, 1956?


From my reading of the subject, very few people outside of Texas were aware of the oil depletion allowance. However, some politicians did make a fuss about it. In 1933, Henry Morgenthau, Roosevelt's treasury secretary, made attempts to get it removed. His attempts were blocked by powerful figures in Congress.

A study done by the U.S. Treasury Department in 1949 revealed that Texas oil millionaires were saving a fortune from the oil depletion allowance. The following year President Harry Truman attacked it by saying "I know of no loophole... so inequitable." However, he was unable to do anything about it because of the activities of Sam Rayburn and Lyndon Johnson.

Dwight Eisenhower made no attempt to bring it to an end. This is not surprising. A key figure in his administration was Robert B. Anderson (Secretary of the Navy, Deputy Secretary of Defense and Secretary of the Treasury). Before joining the government, Anderson was president of the Texas Mid-Continent Oil and Gas Association.

As Robert Sherrill points out in the Accidental President: “Anderson, a resident of landlocked Fort Worth, knew nothing of naval affairs before he got the post, but that hardly matters; all he needed to know was that Texas is the largest oil-producing state and that the Navy is the largest consumer of oil as well as leaser of valuable lands to favored oil firms. From this producer-consumer relationship things work out rather naturally, and it was this elementary knowledge that later made John Connally (who had for several years, through the good offices of his mentor Lyndon Johnson, been serving as Sid Richardson's attorney and who later became executor of the Richardson estate) and Fred Korth, also residents of Fort Worth, such able secretaries of the Navy, by Texas standards.”

The most important critic of the allowance was William Proxmire. He did not enter the Senate until 1957. The following year he began "criticizing the oil depletion allowances enjoyed by Johnson’s friends in Texas." Johnson’s reaction to this attack was to prevent Proxmire from getting a seat on the Finance Committee.

Proxmire was now determined to expose Johnson. On 23rd February, 1958, he made a speech claiming that “there has never been a time when power has been as sharply concentrated as it is today in the Senate.” This was followed by another speech where he accused Johnson of “one-man rule”. Johnson reacted by making a speech in the Senate on 28th May where he claimed that “this one-man rule stuff is a myth”. He added: “I do not know how anyone can force a senator to do anything. I have never tried to do so.” As Alfred Steinberg pointed out: “Most members, conservatives as well as liberals, enjoyed a burst of laughter involving Johnson’s pious declaration to Proxmire”.

It was only when Kennedy became president that attempts were made to deal with this tax loophole. The oil depletion allowance saved a small group of men millions of dollars every year. If anybody had a motive to kill JFK it was the Texas oil millionaires.

#8 Tim Carroll

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Posted 18 February 2006 - 11:58 PM

In watching part of the 1956 movie Giant last night I was surprised at an explicit mentioning of the Oil Depletion Allowance in the script. The Liz Taylor character even mentions the 27% figure. Was the O.D.A. a much discussed issue during this period or was it obscure? Would a majority of americans have heard about it in say, 1956?

From my reading of the subject, very few people outside of Texas were aware of the oil depletion allowance. However, some politicians did make a fuss about it. In 1933, Henry Morgenthau, Roosevelt's treasury secretary, made attempts to get it removed. His attempts were blocked by powerful figures in Congress.... President Harry Truman attacked it by saying "I know of no loophole... so inequitable." However, he was unable to do anything about it because of the activities of Sam Rayburn and Lyndon Johnson. Dwight Eisenhower made no attempt to bring it to an end.... It was only when Kennedy became president that attempts were made to deal with this tax loophole. The oil depletion allowance saved a small group of men millions of dollars every year. If anybody had a motive to kill JFK it was the Texas oil millionaires.

I've also noticed the mention of the Oil Depletion Allowance in the movie, Giant. There was an earlier mention of the O.D.P. in the 1954 Humphrey Bogart-Ava Gardner movie, The Barefoot Contessa. In the pertinent scene, a wealthy South American businessman launches into a tirade about what hypocrites American businessmen are - how they don't pay their fair share of taxes and benefit from subsidies which amount to corporate welfare, most particularly the Oil Depletion Allowance.

Speaking of the movie Giant, it was in the news this week with regard to the Cheney shooting. It seems that the Armstrong Ranch would be analogous to the James Dean ranch in Giant, in contrast to Rock Hudson's character's ranch being the "model" for the King Ranch. Sydney Blumenthal wrote the following excerpt in his article, Shoot First, Avoid Questions Later:

Katharine Armstrong is linked to two family fortunes -- those of Armstrong and King -- that include extensive corporate holdings in land, cattle, banking and oil. No one in Texas, except perhaps Baker, but certainly not latecomer George W. Bush, has a longer lineage in its political and economic elite. In 1983, Debrett's Peerage Ltd., publisher of "Debrett's Peerage and Baronetage," printed "Debrett's Texas Peerage," featuring "the aristocrats of Texas," with the King family noted as the "Royal Family of Ranching." The King Ranch, founded by Richard King in 1857, is the largest in Texas, and its wealth was vastly augmented by the discovery of oil on its tracts, making the family a major shareholder of Exxon. The King Ranch is the model for Edna Ferber's novel of Texas aristocracy, "Giant."

John B. Armstrong, a Texas Ranger and enforcer for the King Ranch, founded his own neighboring ranch in 1882, buying it with the bounty of $4,000 he got for capturing the outlaw John Wesley Hardin. In 1944, almost inevitably, the two fortunes became intertwined through marriage. Tobin Armstrong's brother John married the King Ranch heiress, who was also a Vassar classmate of Tobin's wife, Anne, who came from a wealthy New Orleans family....

While the incident continues to unfold, the Bush administration is pressing a new budget in which oil companies would receive what is called "royalty relief," allowing them to pump about $65 billion of oil and natural gas from federal land over the next five years without paying any royalties to the government, costing the U.S. Treasury about $7 billion. For Texas royalty like the Armstrongs, it would amount to a windfall profit.

The curiosities surrounding the vice president's accident have created a contemporary version of "The Rules of the Game" with a Texas twist. In Jean Renoir's 1939 film, politicians and aristocrats mingle at a country house in France over a long weekend, during which a merciless hunt ends with a tragic shooting. Appearing on the eve of World War II, "The Rules of the Game" depicted a hypocritical, ruthless and decadent ruling class that made its own rules and led a society to the edge of catastrophe.

http://www.salon.com...eney/print.html


T.C.

#9 John Simkin

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Posted 19 February 2006 - 09:03 AM

In their book, The Case Against Congress, Drew Pearson and Jack Anderson claim that “Robert S. Kerr, oil millionaire, uranium king, cattle baron and Senator from Oklahoma… dominated the Senate’s back rooms in the late 1950s and early 1960s.” (1) Pearson and Anderson point out that Kerr main concern in Congress was to preserve the oil depletion allowance.

According to Bobby Baker, Kerr was furious when he discovered that Johnson had agreed to be Kennedy's running-mate in 1960. In “Wheeling and Dealing” Baker described what happened when Kerr arrived at the meeting in Johnson’s hotel room: “Kerr literally was livid. There were angry red splotches on his face. He glared at me, at LBJ, and at Lady Bird. ‘Get me my .38,’ he yelled. ‘I’m gonna kill every damn one of you. I can’t believe that my three best friends would betray me.’ Senator Kerr did not seem to be joking. As I attempted to calm him he kept shouting that we’d combined to ruin the Senate, ruin ourselves, and ruin him personally.”

Johnson responded to this outburst by telling Baker to take Kerr in the bathroom and “explain things to him”. Baker did this and after hearing about the reasons for Johnson’s decision to accept the post, “Senator Kerr put a burly arm around me and said, “Son, you are right and I was wrong. I’m sorry I mistreated you.”

What did Baker tell Kerr that dramatically changed his mind on this issue? According to Baker, he told Kerr: “If he’s elected vice-president, he’ll be an excellent conduit between the White House and the Hill.” What is more, if Kennedy is defeated, Johnson can blame it on Kennedy’s religion and be the likely victor in the attempt to be the Democratic Party candidate in the 1964 election. (2)

Kerr would have been well aware of this argument before he entered the bathroom with Baker. If Kerr did change his mind about Johnson’s becoming Kennedy’s running-mate, then Baker told him something else in the bathroom. Maybe he explained that Johnson would become president before 1964.

What we do know is that Kennedy’s close political advisers were shocked when Johnson accepted the post. They, like Kennedy himself, expected him to reject the offer. Why would Johnson give up his position as the second most powerful position in the country? Kenneth P. O’ Donnell was highly suspicious of Johnson’s motives. When he mentioned this to Kennedy he replied: “I’m forty-three years old, and I’m the healthiest candidate for President in the United States. You’ve traveled with me enough to know that. I’m not going to die in office. So the Vice-Presidency doesn’t mean anything. I’m thinking of something else, the leadership in the Senate. If we win, it will be by a small margin and I won’t be able to live with Lyndon Johnson as the leader of a small majority in the Senate.” (3)

The problem with this argument is that Johnson was also aware that as Vice President he would lose his political power. This is why Kennedy told his aides that Johnson would turn the offer down. Yet there is evidence that Johnson was desperate to become Kennedy’s running-mate. One of Kennedy’s most important advisers, Hyman Raskin, claims that Kennedy had a meeting with Johnson and Rayburn early on the morning after his nomination. According to all other sources, at this time, these two men were strongly opposed to the idea of Johnson becoming Kennedy’s running-mate. However, Kennedy told Raskin a different story. Johnson was very keen to join the ticket and “made an offer he could not refuse”. Raskin took this to mean that Kennedy was blackmailed into offering Johnson the post. (4)

This view is supported by another of Kennedy’s close advisers. Pierre Salinger was opposed to the idea of Johnson being Kennedy’s running-mate. He believed that the decision would lose more votes than it would gain. Salinger believed that Kennedy would lose the support of blacks and trade unionists if Johnson became the vice-presidential candidate. Although Johnson would deliver Texas his place on the ticket would mean Kennedy would lose California. A few days after the decision had been made, Salinger asked Kennedy why? He replied, "The whole story will never be known. And it's just as well that it won't be." Salinger also got the impression that Kennedy had been blackmailed into accepting Johnson. (5)

Kennedy must have been very concerned about this development. Why would Johnson blackmail him into accepting a post that had less power than the one that he already had? It only made sense if Johnson was going to continue using this strategy as vice president. Maybe this was only the first of many threats of blackmail. Would Johnson use his position to force Kennedy to appoint his friends such as John Connally and Fred Korth to important positions in his administration?

Kennedy must also have considered another possibility. Did Johnson plan to replace him as president? This seems to have been on Kennedy’s mind when he told Kenneth O’Donnell that he did not intend to die in office.

Given these events, it is possible that the assassination of John F. Kennedy was considered as early as 1960. If so, it is important to look closely at those people who played important roles in obtaining for Johnson the post of vice president.

Notes

1. Drew Pearson & Jack Anderson, The Case Against Congress, 1968 (page 132)

2. Bobby Baker, Wheeling and Dealing, 1978 (pages 126-127)

3. Kenneth P. O’Donnell & David F. Powers, Johnny, We Hardly Knew Ye: Memories of John Fitzgerald Kennedy, 1972 (page 221)

4. Seymour Hersh, The Dark Side of Camelot, 1998 (page 126)

5. Pierre Salinger, With Kennedy, 1966 (page 87)

#10 John Simkin

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Posted 20 February 2006 - 05:06 PM

Some relevant facts about the possible link between the oil depletion allowance and the assassination of JFK:

The House Ways and Means Committee (which writes tax policy) was under the control of Sam Rayburn (1937-1961). He personally interviewed members of Congress who applied to join this committee. As the historian, Robert Bryce pointed out: “If the congressmen didn’t agree with Rayburn on the oil depletion allowance, they didn’t get on Ways and Means”. (1)

Texas was at the heart of American oil development in the 1930s and 1940s. All the great names of the oil industry, J. Paul Getty, H. L. Hunt, Sid Richardson, D. H. Byrd, R. E. Smith, John Mecom and Glenn McCarthy, “belong to Texas” (2)

In the 1930s and 1940s Texas was virtually a one-party state. Therefore it was necessary for the oil industry to control the local Democratic Party. As one historian has pointed out: “Every phase of the state’s election machinery from precinct tally clerk to the State Board of Canvassers was in the hands of… the Democrats.” (3)

Sam Rayburn was the most important supporter of the oil industry in Congress in the 1930s and 1940s. Rayburn was Lyndon Johnson’s mentor. For example, during his 1948 election campaign, Johnson called for the oil depletion allowance to be raised to 30%. (4)

However, the situation began to change in the 1950s. The Democratic Party had moved to the left under Roosevelt. This trend was maintained under Truman. Therefore, in 1952, the oil industry backed Dwight Eisenhower. This was reflected in his appointment of Robert B. Anderson as Secretary of the Treasury. Before his appointment, Anderson was president of the Texas Mid-Continent Oil and Gas Association. In this post he introduced legislation beneficial to the oil industry. (5)

One of Eisenhower’s first actions as president was to stop a grand jury investigation into the “International Petroleum Cartel”. Eisenhower justified his action as the need to maintain “national security”. Eisenhower’s behaviour had an impact on the oil lobby. “In 1956, officials at the nations biggest oil companies gave nearly $350,000 to Republicans while giving less than $15,000 to Democrats.” (6)

Eisenhower was personally rewarded by the oil industry. Drew Pearson and Jack Anderson reported that Eisenhower’s farm was paid for by three wealthy oilmen, W. Alton Jones, Billy Byers and George E. Allen. The Internal Revenue Service discovered that these three oilmen gave Eisenhower more than $500,000 at the same time he was making decisions favourable to the oil industry.

In their book, "The Case Against Congress", Pearson and Anderson point out that on 19th January, 1961, the day before he left the White House, “Eisenhower signed a procedural instruction on the importation of residual oil that required all importers to move over and sacrifice 15 per cent of their quotas to newcomers who wanted a share of the action.” One of the major beneficiaries of this last-minute executive order was a company called Cities Service. The chief executive of Cities Service was W. Alton Jones, one of the men who helped pay for Eisenhower’s farm.

Three months later, Jones flew in a small plane to visit the retired president. The plane crashed and Jones was killed. In his briefcase was found $61,000 in cash. No one was ever able to explain why Jones was taking such a large sum of money to Eisenhower. (7)

As a U.S. senator, John F. Kennedy voted to reduce the depletion allowance. (8) Texas oilmen were obviously concerned when Kennedy became the front-runner in the 1960 presidential election. It is true that Lyndon Johnson and Sam Rayburn were in a position to try and block the move in Congress. However, Kennedy had the potential to draw attention to this unfair tax loophole. As Sam Rayburn pointed out, if the oil depletion allowance was debated in Congress: “They’d cut it to fifteen, ten, five percent – maybe even take it away altogether. Do you think you could convince a Detroit factory worker that the depletion allowance is a good thing? Once it got on the floor, it would be cut to ribbons.” (9)

In order to win votes in Texas, Kennedy changed his position on the oil depletion allowance. This was probably something that was negotiated by Johnson. In October, 1960, Kennedy wrote a letter to his Texas campaign manager outlying his policies on the oil industry. He said he wanted to make “clear my recognition of the value and importance of the oil depletion allowance. I realize its purpose and value… The oil-depletion allowance has served us well”. (10)

Kennedy was to change his mind on this issue when he became president. One study showed that the depletion allowance was saving oilmen in the region of $300 million a year. (11) An investigation by “representatives on Capitol Hill estimated that the depletion allowance had cost American taxpayers $140 billion in revenue” (over 700 billion in today’s prices). (12)

In 1963 Kennedy announced his intention to close a number of corporate tax loopholes, including the depletion allowance. Was this the policy that got Kennedy killed? What we do know is that Johnson cancelled Kennedy’s tax reforms and the oil depletion allowance remained in operation. (13)

Despite LBJ’s protection of the oil industry, Texas and most of the Deep South began to support the Republicans in elections. This of course had more to do with LBJ’s civil rights policies than his support of the oil industry and the Military-Industrial-Congressional-Intelligence Complex.

Conservatives and the far right now united under the banner of the Republican Party. When Richard Nixon was elected to power he showed no interest in removing the oil depletion allowance. This is not surprising when one considers the amount of money the oil industry paid into Nixon’s campaign funds. (14)

In 1966 George H. W. Bush was elected to the House of Representatives. He represented Houston’s Seventh District. This included River Oaks, the place where all the city’s oil barons lived. Bush’s campaign funds mainly came from the oil industry. Understandably, he was one of the most significant supporters of the oil depletion allowance. (15)

Support of the oil depletion allowance now became associated with right-wing Republicans. (Maybe that is why Tim Gratz seems so keen to protect the oil industry?) As Herbert S. Parmet wrote when discussing Bush’s lobbying on behalf of the oil industry: “In an era when civil rights became the great moral issue that galvanized liberals, the targeted oil depletion allowance was not far behind.” (16)

In 1969 a debate began in Congress about the removal of the oil depletion allowance. On 12th November, 1969, Bush arranged a meeting between David Kennedy, Nixon’s treasury secretary and leading oil barons from Texas. In February, 1970, Nixon decided that the oil depletion allowance would stay at 27.5 per cent. In a letter Bush wrote to the treasury secretary. He thanked him for meeting his oil friends: “I was also appreciative of your telling how I bled and died for the oil industry.” (17)

In 1975, a Democrat-dominated Congress repealed the bulk of the oil depletion allowance. In 1979 Jimmy Carter introduced a windfall profits tax, which placed an extra levy on the oil industry’s enormous profits. (18)

In 1980 George Bush became vice president under Ronald Reagan. The following year Reagan signed a bill giving $6 billion in tax breaks to the oil industry. The oil depletion allowance was back in another name.

Notes

1. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 50)

2. Kirkpatrick Sale, Power Shift, 1975 (pages 33-39)

3. Victor Lasky, It Didn’t Start With Watergate, 1977 (page 58)

4. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 50)

5. Robert Sherrill, The Accidental President, 1967 (pages 142-147)

6. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 91)

7. Drew Pearson & Jack Anderson, The Case Against Congress, 1968 (pages 438-440)

8. Jim Marrs, Crossfire, 1989, (page 277)

9. Anthony Champagne, Congressman Sam Rayburn, 1984 (page 151)

10. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 92)

11. Jim Marrs, Crossfire, 1989, (page 277)

12. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 93)

13. Jim Marrs, Crossfire, 1989, (page 277)

14. Kirkpatrick Sale, Power Shift, 1975 (pages 228-232)

15. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 91)

16. Herbert S. Parmet, George Bush: The Life of a Lone Star Yankee, 2000 (page 126)

17. Daniel Yergin, The Prize: The Epic Quest for Oil, Money and Power, 1991 (page 754)

18. Robert Bryce, Cronies: Oil, the Bushes, and the Rise of Texas, 2004 (page 159)

#11 Dawn Meredith

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Posted 21 February 2006 - 04:00 PM

[quote name='John Simkin' date='Feb 20 2006, 06:06 PM' post='55841']
Some relevant facts about the possible link between the oil depletion allowance and the assassination of JFK:


Great post John. Connects the dots. This is precisely why the 63 coup is even more relevent today.

Dawn

#12 John Simkin

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Posted 24 February 2006 - 06:23 PM

One of the things that has always puzzled me is that if Lyndon Johnson was behind the plot to kill Kennedy, there are probably some FBI or CIA documents around that provides evidence to back this up. Therefore, why have Republican administrations not ordered the release of these documents?

Under existing guidelines, government documents are supposed to be declassified after 25 years unless there is particular reason to keep them secret. See:

http://educationforu...?showtopic=6187

However, a large number of documents that relate to the JFK assassination remain classified. Could it be that these documents implicate both political parties in the assassination? This is definitely the case if one goes for the “oil industry theory”

#13 John Simkin

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Posted 25 February 2006 - 04:44 PM

Of course, the controversy over the oil depletion allowance had nothing to do with the assassination of JFK, unless he was the first political leader ever murdered over a provision in the tax laws!


One study under JFK showed that the depletion allowance was saving oilmen in the region of $300 million a year. An investigation by “representatives on Capitol Hill estimated that the depletion allowance had cost American taxpayers $140 billion in revenue” (over 700 billion in today’s prices).

As you can see, a lot of money was involved in the oil depletion allowance. It seems to me that you could afford to pay for a good team of marksmen from only a couple of weeks benefit from the oil depletion allowance.

I have just been reading Anthony Champagne’s biography of Sam Rayburn (1984). He provides a detailed account of Rayburn’s support for the oil depletion allowance. Champagne quotes the chairman of the Democratic State Executive Committee in Texas, Robert W. Calvert in 1947 saying: “It may not be a wholesome thing to say, but the oil industry today is in complete control of the state government and state politics.” (1)

Champagne pointed out that Rayburn was closely linked to the Suite 8F Group. Apparently, the group, via James Elkins and James Abercrombie, ensured that Rayburn never had any serious opposition when he came up for re-election. Champagne quotes a letter in 1943 from Abercrombie to Rayburn explaining how he was arranging for him to be re-elected. Rayburn was also close to Sid Richardson. Abercrombie and Richardson were among the world’s richest people. Abercrombie eventually sold his oil properties for $450 million. (2)

According to several sources, including George Norris Green (3), Jimmy Banks (4) and Dwayne L. Little (5), this oil money was distributed by Rayburn to other leading politicians to keep the oil depletion allowance.

1. Anthony Champagne, Congressman Sam Rayburn, 1984 (page 154)

2. John Bainbridge, The Super Americans, 1961 (page 78)

3. George Norris Green, The Establishment in Texas Politics, 1979

4. Jimmy Banks, Money, Marbles and Chalk, 1971

5. Dwayne L. Little, The Political Leadership of Speaker Sam Rayburn 1940-1961, 1970

#14 John Simkin

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Posted 18 November 2006 - 06:50 PM

John J. McCloy has some interesting connections to the oil industry? In 1945 McCloy was invited by Nelson Rockefeller to join the family law firm, Milbank, Tweed, Hope & Hadley. He accepted the offer and the firm became known as Milbank, Tweed, Hadley & McCloy. The law firm's most important client was the Rockefeller family's bank, Chase National. As John D. Rockefeller Jr. told his personal lawyer, Thomas M. Debevoise, "McCloy knows so many people in government circles... that he might be in the way to get information in various quarters about the matter without seeking it, or revealing his hand."

The family's main concern was the threat posed against their interests in Standard Oil of California. John D. Rockefeller Jr. owned almost 6 per cent of the stock of the company, making him the single largest shareholder. In 1946 Harold Ickes claimed that Rockefeller was violating the terms of the 1911 dissolution decree. Two other anti-trust lawyers, Abe Fortas and Thurman Arnold, joined forces with Ickes to petition the Justice Department to investigate the matter. John McCloy, was asked to sort the matter out and by the autumn of 1946, he had persuaded Ickes, Fortas and Arnold to drop the matter.

After leaving Germany in 1953 McCloy became chairman of the Chase Manhattan Bank (1953-60) and the Ford Foundation (1958-65). He also continued to work for Milbank, Tweed, Hadley & McCloy. The company was owned by the Rockefeller family and therefore McCloy became involved in lobbying for the gas and oil industry.

McCloy remained close to Dwight D. Eisenhower and according to Kai Bird (The Chairman: John J. McCloy: The Making of the American Establishment): "On at least one occasion, in February 1954, he (McCloy) used a Chase National Bank plane to ferry himself and the rest of Ike's gang down from New York in order to keep a golf date with the president at the Augusta National range."

It was Eisenhower who first introduced McCloy to Sid Richardson and Clint Murchison. Soon afterwards, Chase Manhattan Bank began providing the men with low-interest loans. In 1954 McCloy worked with Richardson, Murchison and Robert R. Young in order to take control of the New York Central Railroad Company. The activities of these men caused a great deal of concern and the Interstate Commerce Commission (ICC) eventually held hearings about what was described as "highly improper" behaviour. The takeover was a disaster and Young committed suicide and New York Central eventually went bankrupt.

In 1950 Eisenhower had purchased a small farm for $24,000. According to Drew Pearson and Jack Anderson (The Case Against Congress), several oil millionaires, including W. Alton Jones, B. B. Byers and George E. Allen, began acquiring neighbouring land for Eisenhower. Jonathan Kwitny (Endless Enemies) has argued that over the next few years Eisenhower's land became worth over $1 million: "Most of the difference represented the gifts of Texas oil executives connected to Rockefeller oil interests. The oilmen acquired surrounding land for Eisenhower under dummy names, filled it with livestock and big, modern barns, paid for extensive renovations to the Eisenhower house, and even wrote out checks to pay the hired help."

In 1956 there was an attempt to end all federal price control over natural gas. Sam Rayburn played an important role in getting it through the House of Representatives. This is not surprising as according to John Connally, he alone had been responsible for a million and a half dollars of lobbying.

Paul Douglas and William Langer led the fight against the bill. Their campaigned was helped by a speech by Francis Case of South Dakota. Up until this time Case had been a supporter of the bill. However, he announced that he had been offered a $25,000 bribe by the Superior Oil Company to guarantee his vote. As a man of principal, he thought he should announce this fact to the Senate.

Lyndon B. Johnson responded by claiming that Case had himself come under pressure to make this statement by people who wanted to retain federal price controls. Johnson argued: “In all my twenty-five years in Washington I have never seen a campaign of intimidation equal to the campaign put on by the opponents of this bill.” Johnson pushed on with the bill and it was eventually passed by 53 votes to 38. However, three days later, Dwight D. Eisenhower, vetoed the bill on grounds of immoral lobbying. Eisenhower confided in his diary that this had been “the most flagrant kind of lobbying that has been brought to my attention”. He added that there was a “great stench around the passing of this bill” and the people involved were “so arrogant and so much in defiance of acceptable standards of propriety as to risk creating doubt among the American people concerning the integrity of governmental processes”.

The decision by Dwight D. Eisenhower to veto this bill angered the oil industry. Once again Sid Richardson and Clint Murchison began negotiations with Eisenhower. In June, 1957, Eisenhower agreed to appoint their man, Robert Anderson, as his Secretary of the Treasury. According to Robert Sherrill in his book, The Accidental President: "A few weeks later Anderson was appointed to a cabinet committee to "study" the oil import situation; out of this study came the present-day program which benefits the major oil companies, the international oil giants primarily, by about one billion dollars a year."

According to Jonathan Kwitny (Endless Enemies) from 1955 to 1963, the Richardson, Murchison, and Rockefeller interests (arranged by John McCloy) and the International Basic Economy Corporation (100% owned by the Rockefeller family) gave "away a $900,000 slice of their Texas-Louisiana oil property" to Robert B. Anderson, Eisenhower's Secretary of the Treasury.

#15 Terry Mauro

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Posted 19 November 2006 - 10:07 PM

John J. McCloy has some interesting connections to the oil industry? In 1945 McCloy was invited by Nelson Rockefeller to join the family law firm, Milbank, Tweed, Hope & Hadley. He accepted the offer and the firm became known as Milbank, Tweed, Hadley & McCloy. The law firm's most important client was the Rockefeller family's bank, Chase National. As John D. Rockefeller Jr. told his personal lawyer, Thomas M. Debevoise, "McCloy knows so many people in government circles... that he might be in the way to get information in various quarters about the matter without seeking it, or revealing his hand."

The family's main concern was the threat posed against their interests in Standard Oil of California. John D. Rockefeller Jr. owned almost 6 per cent of the stock of the company, making him the single largest shareholder. In 1946 Harold Ickes claimed that Rockefeller was violating the terms of the 1911 dissolution decree. Two other anti-trust lawyers, Abe Fortas and Thurman Arnold, joined forces with Ickes to petition the Justice Department to investigate the matter. John McCloy, was asked to sort the matter out and by the autumn of 1946, he had persuaded Ickes, Fortas and Arnold to drop the matter.

After leaving Germany in 1953 McCloy became chairman of the Chase Manhattan Bank (1953-60) and the Ford Foundation (1958-65). He also continued to work for Milbank, Tweed, Hadley & McCloy. The company was owned by the Rockefeller family and therefore McCloy became involved in lobbying for the gas and oil industry.

McCloy remained close to Dwight D. Eisenhower and according to Kai Bird (The Chairman: John J. McCloy: The Making of the American Establishment): "On at least one occasion, in February 1954, he (McCloy) used a Chase National Bank plane to ferry himself and the rest of Ike's gang down from New York in order to keep a golf date with the president at the Augusta National range."

It was Eisenhower who first introduced McCloy to Sid Richardson and Clint Murchison. Soon afterwards, Chase Manhattan Bank began providing the men with low-interest loans. In 1954 McCloy worked with Richardson, Murchison and Robert R. Young in order to take control of the New York Central Railroad Company. The activities of these men caused a great deal of concern and the Interstate Commerce Commission (ICC) eventually held hearings about what was described as "highly improper" behaviour. The takeover was a disaster and Young committed suicide and New York Central eventually went bankrupt.

In 1950 Eisenhower had purchased a small farm for $24,000. According to Drew Pearson and Jack Anderson (The Case Against Congress), several oil millionaires, including W. Alton Jones, B. B. Byers and George E. Allen, began acquiring neighbouring land for Eisenhower. Jonathan Kwitny (Endless Enemies) has argued that over the next few years Eisenhower's land became worth over $1 million: "Most of the difference represented the gifts of Texas oil executives connected to Rockefeller oil interests. The oilmen acquired surrounding land for Eisenhower under dummy names, filled it with livestock and big, modern barns, paid for extensive renovations to the Eisenhower house, and even wrote out checks to pay the hired help."

In 1956 there was an attempt to end all federal price control over natural gas. Sam Rayburn played an important role in getting it through the House of Representatives. This is not surprising as according to John Connally, he alone had been responsible for a million and a half dollars of lobbying.

Paul Douglas and William Langer led the fight against the bill. Their campaigned was helped by a speech by Francis Case of South Dakota. Up until this time Case had been a supporter of the bill. However, he announced that he had been offered a $25,000 bribe by the Superior Oil Company to guarantee his vote. As a man of principal, he thought he should announce this fact to the Senate.

Lyndon B. Johnson responded by claiming that Case had himself come under pressure to make this statement by people who wanted to retain federal price controls. Johnson argued: “In all my twenty-five years in Washington I have never seen a campaign of intimidation equal to the campaign put on by the opponents of this bill.” Johnson pushed on with the bill and it was eventually passed by 53 votes to 38. However, three days later, Dwight D. Eisenhower, vetoed the bill on grounds of immoral lobbying. Eisenhower confided in his diary that this had been “the most flagrant kind of lobbying that has been brought to my attention”. He added that there was a “great stench around the passing of this bill” and the people involved were “so arrogant and so much in defiance of acceptable standards of propriety as to risk creating doubt among the American people concerning the integrity of governmental processes”.

The decision by Dwight D. Eisenhower to veto this bill angered the oil industry. Once again Sid Richardson and Clint Murchison began negotiations with Eisenhower. In June, 1957, Eisenhower agreed to appoint their man, Robert Anderson, as his Secretary of the Treasury. According to Robert Sherrill in his book, The Accidental President: "A few weeks later Anderson was appointed to a cabinet committee to "study" the oil import situation; out of this study came the present-day program which benefits the major oil companies, the international oil giants primarily, by about one billion dollars a year."

According to Jonathan Kwitny (Endless Enemies) from 1955 to 1963, the Richardson, Murchison, and Rockefeller interests (arranged by John McCloy) and the International Basic Economy Corporation (100% owned by the Rockefeller family) gave "away a $900,000 slice of their Texas-Louisiana oil property" to Robert B. Anderson, Eisenhower's Secretary of the Treasury.


***************************************************************

Maybe, this news is the forecast of what's to come: the dismantling of McCloy's oil lobby debacle

FOCUS | Democrats Aim to Repeal Tax Breaks for Big Oil
http://www.truthout....6/111906X.shtml
House Democrats are targeting billions of dollars in oil company tax
breaks for quick repeal next year. Incoming House Speaker Nancy Pelosi,
in an outline of priorities over the first 100 hours of the next
Congress in January, promises to begin a move toward greater energy
independence "by rolling back the multibillion dollar subsidies for Big Oil."




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