map shows at a glance the rapid expansion and the great spread of area covered by this industry. Going back a little further we find that in 27 years the quantity of natural gas marketed in 1933 had quadrupled and its value had multiplied eight times, since 1906. You will find that set out in part 84-A, on page 20.

Coming now to the Federal problem. First, of conservation.

Until 1918 the production and distribution of natural gas was largely a local intrastate problem, and was confined almost entirely to what is known as the Appalachian field, which appears on the map as confined to western Pennsylvania, parts of Ohio, Kentucky, and West Virginia. In 1918 began the development of the Texas Panhandle which soon became what is still the largest source of supply in the United States, its reserves being variously estimated from 14 trillion cubic feet to figures much higher.

Part 68, page 823: In 1927 Mr. William McKnab drilled the first well in the Hugoton, southwestern Kansas field, which has become the second largest (by some claimed already to be the largest) reserve supply with reserves estimated variously from 6 or 8 trillion cubic feet upward. During the same period the Monroe and Richland, La., fields were opened. There are also gas fields in California, and some smaller ones up and down the Rocky Mountain region, as well as a new one in Michigan of undetermined extent and value.

Obviously, with a very large major fraction of the country's reserves situated in two adjacent areas less than 200 miles in combined length and varying widths.

Part 68, page 823, In southwestern Kansas and the adjoining Texas Panhandle, the markets for the greater portion of such gas are across several or many State lines to the distant populous communities, big cities, and industrial centers. The numerous red lines on this map radiating from this rich producing center, show that Panhandle and Hugoton gas is now available to most large centers to the southeast, east, and northeast, clear through to within 100 miles of the Atlantic seaboard in New Jersey, except for certain southeastern States.

When I say available I do not mean that it would be piped or carried there ordinarily, because the cost per hundred miles for transportation, estimated at about 12 to 22 cents, would mean the price of gas would be plenty high at these remote parts. But gas could be so piped, if it were necessary.

In other words, what was as recently as a decade ago, or until the advent of the seamless pipe, largely a local matter, now is a matter of national concern. It seems to me that the present gas situation is a similar situation to the railroad situation when the Government found it had to take hold and step in when a large number of local railroads became systems. Then it was found that something had to be done, because the State could not handle the problem.

This recent rapid expansion from a local to a national industry explains why the whole subject is so lacking in regulation. Until quite recently even the big producing States had little or no regulation. As in some other matters, State efforts have received set-backs at the hands of the courts, and laws have had to be revamped and retested. Nor has this all been completed.

With such a sudden gushing forth of a bountiful new fuel and power source, with no pipe lines, then in existence to transport the

supply to the distant markets for consumption, in what is generally referred to as the more proper and economical uses, it is not to be wondered at that well owners at once put their overflowing supply to any use for which any compensation could be had. But on top of this there was also an utter waste, which was large. "Sweet gas", as well as sulphur gas was used for carbon black, for stripping operations and other so-called "baser" uses, where the results or recovery or conversion value was very small for the amount of gas consumed. The pity is that has continued even after pipe lines have been built. Some State conservation efforts were also balked by court decisions. The net result after such set-back was the resumption, and even the acceleration, of waste and wasteful practices. These still continue. Witnesses with expert knowledge (see pt. 84-A, ch. XIII, p. 606) testified that in one field alone the daily waste through actual blowing into the air and uneconomic use amounts to a billion and a half cubic feet per day, or sufficient to supply the needs of the domestic and commercial users of natural gas in the entire United States. The testimony also is that wells and fields under present wasteful practices, which may be exhausted in 10 or 11 years, would, under proper conservation with compelled economical use, last 50 years or more. It seems definitely to be a fact that under restricted flow the actual total production is increased.

Without the aid of the Federal Government to act as an impartial arbiter under compacts entered into among the producing States, it is easy to see how individual States may well continue a race for immediate production, markets, and profits, rather than attempt to hold in leash, in the name of conservation and proper economic use. You will find in volume 84-A, page 13, a table that shows the unwarranted deviations and variations in the rates, from high to the low. There are some excuses, always, but that table shows what is the result of no regulation. And it would seem that this is the kind of an industry which would seek some regulation of this sort. Further facts indicating need of Federal regulation are stated by the Commission in its report in part 84-A, page 609.

Next I shall speak about interstate commerce.

As you may well imagine where a vast new source of fuel and energy like this development in natural gas has suddenly sprung into existence, the big utility interests were not long in taking hold and acquiring a dominant position. I am not saying this was either sinister or unexpected. Three reasons, it seems to me, chiefly ac

count for this:

First, they were in the utility field, and all sources of energy, light, and fuel are, to a certain degree, substantial. Quite naturally, those largely interested in other sources of energy would be watching keenly and seek to control any new such source.

Second, these same interests had or could command resources both to exploit the fields and to construct the big long pipe lines required to take this gas supply to the distant profitable markets. Third, independent or smaller producers with less command of means soon negotiated with these interests for their lands or for outlets for their gas, as far as such negotiations could be carried. At present natural gas is transported only through pipe lines. Therefore, those who control pipe-line systems control both ends of the industry, the producing as well as the distributing end.

And of course the control of interstate pipe-line transportation is beyond the power of any or all of the States, separately, and is definitely a Federal function.

Although the gas-pipe-line industry as a sizable interstate and sizable proposition is scarcely more than a decade old-some of the eastern companies are much older-the development has been such that already four holding company groups control more than 55 percent of the total pipe-line mileage of the Nation's natural-gas transportation system. (See pt. 84-A, ch. II, p. 28.) These four groups are:

The Columbia Gas & Electric Corporation, known as a Morgan group; Cities Service, Co., the Doherty group; Electric Bond & Share Co. group, and Standard Oil Co. of New Jersey.

The first three are also large holding companies in the electrical field. The fourth, Standard Oil Co., New Jersey, is somewhat older in the natural-gas field. Its entrance in that field was in considerable part due to the close physical association between oil and natural gas. In the matter of natural-gas production these four companies control over 53 percent of the total natural-gas supply for pipe-line transportation. You will find those figures all set out in volume 84-A.

In each of the recent years the Cities Service Co. and Standard Oil Co. (New Jersey) transported more natural gas in interstate commerce than they produced. This is accounted for by the fact that in addition to their own production they also purchased considerable natural gas, which they transported interstate. Electric Bond & Share transported interstate over 46 percent of the amount which it produced. And the Columbia Gas & Electric system transported interstate over 83 percent of the amount which it produced (pt. 84–A, p. 42).

The above four, sometimes referred to as the Big Four, plus the Standard Gas & Electric Co. group, in 1933, transported a quarter of a billion M cubic feet, or 64.6 percent of all natural gas transported interstate in the United States (pt. 84-A, ch. II, p. 38).

Further interesting facts on production and control of production and interstate movement are discussed in sections 4 and 6 of chapter XII of part 84-A, pages 586-599.

I have here maps of the United States showing for each of these Big Four companies not only the lines owned by them but the lines in which they have an interest. This, of course, makes overlapping where two or more of these four own an interest in the same line.

This first map is an enlargement of the Commission's exhibit no. 6623, shows the Columbia-owned system and those in which they have an interest. You will see that they are operating largely through Ohio, West Virginia, and Pennsylvania, and this line [indicating] indicates their interest in the line which goes through here from the Texas Panhandle to Indiana, with connections through to southern New York and into New Jersey.

Mr. COLE. How far can you transport natural gas?

Mr. CHANTLAND. That is a money proposition entirely; there is no physical obstacle; it is not physical; and the money proposition depends upon the costs of a pumping station, and the length of the line, because there must come a point when it would not be advantageous to transport.

Mr. COLE. If you have already touched on that, it is not necessary to cover it again.

Mr. CHANTLAND. I will just repeat this, very shortly. The figures given for transportation vary from 12 cents to 212 cents per 100 iniles per thousand cubic feet. Based upon that you can get some idea of what it would cost, and what it actually has cost to transport gas from the Panhandle field of Texas to the Twin Cities, and to Chicago, to the Indiana-Illinois line, and negotiations are pending to take that gas on into Detroit. That latter line would be something over a thousand miles long; the cost would be-2 times 8, 16, to use the figures I have referred to, so that could be done; that would mean around 16 cents to the Twin Cities and Chicago and about 20 cents to Detroit. And when you can buy gas in the field from 3 to 6 cents, you are still well inside manufactured-gas prices, with its heating value of only about one-half that of natural gas.

Mr. COOPER. May I ask you a question? I do not like to interrupt you.

Mr. CHANTLAND. I think you have been very generous.

Mr. COOPER. A few moments ago you spoke about the Big Four as having control of more than 60 percent, I believe you said?

Mr. CHANTLAND. Whatever the figures were.

Mr. COOPER. Well, that shows those men were willing to invest their money; anybody could go in there and invest their money? They had a perfect right to go there?

Mr. CHANTLAND. Yes; I said there was nothing sinister about it. I spoke of the situation as it is now.

Mr. COOPER. If men are willing to invest their money and take a chance on a big enterprise like that on which they may have to take a heavy loss, why do you classify them as a monopoly?

Mr. CHANTLAND. I did not classify them as such. I simply referred to the fact that the Big Four is handling this dominant portion. And once they have been established in a territory, there is a monopoly in that area, and that should be so. We do not want two gas concerns serving a community, any more than we would be willing to go back to the days when they had two telephone systems and we had to pay two telephone rates. There would be nothing desirable about that. But that does not obviate the fact or the need for regulation within that area.

Mr. COOPER. I agree with you on that. You spoke something about the great variety of rates in the different sections.

Mr. CHANTLAND. Yes; you will see that on the page to which I made reference, which shows the big variation that is not justified by anything except their ability to charge all the traffic will bear.

Mr. COOPER. What is there in this bill that will regulate that rate? Mr. CHANTLAND. I did not intend to discuss the bill; that was Mr. DeVane's task. I was sent here simply to give you a history and the facts, but I think there is considerable in this bill on that subject.

Mr. COOPER. You mean with respect to wholesale rates, the control of which will have its effect on the retail rates?

Mr. CHANTLAND. I think so. Let me say this, Mr. Cooper, that some of these companies are producers as well as distributors, while other companies buy their gas at the well and both transport and distribute it. And on this page to which I called your attention,

page 213 in the large volume which is before you, is shown the great variation in price. For instance, in New York the lowest rate reported was 27 cents, and the highest rate reported is 70 cents; those are pipe-line rates, and we have to look pretty hard to find a justification for that. And yet it is easier in trying to find a justification for that than for some of the retail rates for natural gas of $2.61 existing right in the midst of a gas field, when we know that another company has a schedule of around 45 cents. Both are near gas fields. Now, the next map is that of the Standard Oil Co. (New Jersey). It is not complete, I see, because it does not show the line which runs into southern New York and up to Buffalo, but, apart from that, it is substantially complete. Their biggest area is in western Pennsylvania, West Virginia, Ohio, and up to Cleveland, Ohio; and here is the line in which they are interested in sending gas to St. Louis and down to Baton Rouge and New Orleans, La. In this section [indicating] in which they have an interest a line extends up to Denver, Colo., and Colorado Springs. This takes gas to their Colorado Fuel & Iron Works, at Pueblo. It is jointly owned with Cities Service. The next is the map of Electric Bond & Share system. Their operations, you will see, are confined entirely to the Southern States, although they have an interest in the line to St. Louis. They have gas extending into Pensacola, Fla., and down here across the Rio Grande, and some other lines out in this direction [indicating] not connecting with the Panhandle.

Now, the last map is that of Cities Service; they are interested in this line [indicating] from the Panhandle up into Colorado, and this line of theirs comes up into about the middle of Missouri. They also have an interest in certain of these Arkansas properties down here [indicating].

All these maps show how every pipe line of any length crosses State lines and becomes an interstate carrier.

In the Appalachian field, the Columbia Gas & Electric group and standard Oil group are dominant but friendly. They own jointly certain pipe lines, and other pipe lines are owned by one or the other. In this field the Columbia Gas & Electric group alone sells about half as much natural-gas energy as the entire commercial sales of electric energy in the United States.

In connection with this dominant position in the eastern field of Columbia, it is of interest to know that recently the Department of Justice has obtained a consent decree against Columbia, by which it is to divest itself of its control of the Panhandle Eastern Pipe Line Co., which was the one independent line built toward the Middle West and eastern industrial centers. It is the only pipe line from the Texas and Kansas fields that extends east of Chicago and has a connection carrying as far as New Jersey. Its strategic value to Columbia as a factor in control is apparent.

At the Indiana-Illinois State line the Panhandle Eastern connects with the Columbia & Standard Oil eastern line so that Kansas and Texas gas could be piped under one control to within about 100 miles of the eastern seaboard.

An interesting situation of which this committee, I believe, heard something at the time of the hearings last year, is that of the city of St. Louis. The Standard Oil of New Jersey has controlling man