The career of J. Howard Marshall II (1905–1995) is one of the most diverse in the history of the U.S. petroleum industry. His autobiography Done in Oil (Texas A&M University Press, 1994), an inside-out view of the oil business from the 1930s through the 1960s, describes his professional life as an academic, government regulator, and industry executive.
Marshall’s introduction to the oil industry began in the academy. As assistant dean of the Yale Law School, from which he graduated in 1931, the Pennsylvanian coauthored “Legal Planning of Petroleum Production” for the Yale Law Journal, describing the legal issues involved in controlling the “overproduction” of crude oil under the rule of capture. Secretary of the Interior Harold L. Ickes recruited Marshall to deal with this very issue. Marshall left academia for good in 1933 despite a later offer to return with a full professorship, tenure, and the inside track to become Dean of Yale Law School.
The new Assistant Solicitor immediately got involved with the East Texas “hot oil” war. The discovery of the largest oil field in the U.S. cratered prices, and violence erupted as state and federal authorities tried to limit production to “market demand.” Marshall escaped a few bullets (literally) while giving the Texas Railroad Commission federal help to implement a strict quota system that sought to attain “dollar oil” (from a low of several cents per barrel).
During this period, Marshall drafted two measures for the Interior Department: The Code of Fair Competition for the Petroleum Industry (1933), which he called “hell on wheels,” and the Connally Hot Oil Act of 1935. Ickes asked him to establish nationwide price floors throughout the industry, but Marshall abandoned the effort, admitting that “we didn’t know enough to write a price-fixing order which would have any chance of operating effectively.”
In “one of the hardest decisions of my life,” Marshall forwent a return to academia to join Standard Oil of California (now Chevron) as Special Counsel and, a year later, he became partner-in-charge of the California Standard account at Pillsbury, Madison & Sutro (now Pillsbury).
Ken Kingsbury, then head of California Standard, was a great among the second generation of Standard Oil executives. After Kingsbury’s sudden death in 1937, William H. Berg succeeded him as president. Following Berg’s death in June 1940, a majority of the board chose Ralph K. Davies as president, with Marshall being Davies’s pick for second-in-command. But the company’s largest stockholder, John D. Rockefeller Jr., intervened and persuaded the board to reverse its decision. Harry Collier became president in July 1940. Marshall’s six-year association with California Standard ended.
With World War II looming and Interior Secretary Ickes in charge of petroleum planning, Marshall returned to Washington to serve as chief counsel for the Office of the Petroleum Coordinator for National Defense, under Deputy Coordinator Ralph K. Davies. Although his annual salary fell from well over $100,000 to $8,600, he found the work exhilarating. Central planning, involving 16-hour days, seven days a week, gave him an invaluable understanding of the oil industry from the wellhead to the service station. By sharing three daily meals with industry leaders, Marshall even qualified for what was blithely called the Eat on Industry club.
In September 1944, after three years in Washington, Marshall left his wartime post and shortly thereafter became president of Ashland Oil & Refining Company in Kentucky. His new job was interrupted when President Harry S. Truman asked Paul Blazer, Chairman of the Board of Ashland, to release Marshall temporarily to serve as counsel for the U.S. delegation to the Allied Commission on Reparations, soon to meet in Moscow.
Back at Ashland, Marshall found time to draft a letter for President Truman instructing the Secretary of the Interior to create an advisory board, the National Petroleum Council, through which oil company heads came together to advise the federal government. Marshall served as a director of the NPC and as a director of the American Petroleum Institute.
Marshall’s seven years at Ashland were highly educational, not only in his “first love” of exploration and production but also in petroleum refining. Ashland became a near-major through internal growth and acquisitions during Marshall’s tenure, but a falling out with Blazer put Marshall back in the job market.
In 1952, he returned to California with Signal Oil & Gas, where company head Sam Mosher allowed his new Executive Vice President to spend a third of his time on personal ventures. The most notable side venture was co-founding the Great Northern Oil Company and its subsidiary, the Minnesota Pipe Line. Great Northern’s refinery profitably turned heavy Canadian crude oil into oil products serving the upper Midwest under long-term arbitrage contracts.
In 1959, Fred Koch (via his private company Rock Island Oil and Refining Company) acquired a 35 percent interest in Great Northern, joining Marshall’s 16 percent. A decade later, Marshall helped Fred Koch’s son, Charles Koch, gain control of Great Northern, exchanging his Great Northern interest for stock in Koch Industries and calling it “the best deal I ever made.” Marshall’s holding in Koch Industries proved decisive in defeating an early-1980s effort to take the private company public.
In 1961, Marshall relocated to Houston, Texas, as president of Union Texas Petroleum. After Allied Chemical acquired the company in 1962, Marshall became a director of Allied Chemical and, in 1967, its executive vice president. Retiring from corporate life in 1969, he pursued private ventures that he consolidated as Marshall Petroleum in 1984.
Looking back at his career, Marshall stated: “Many times I wondered whether I was a lawyer in the oil business or an oil man in the law business.”
Notable Profiles and Episodes
Marshall’s autobiography Done in Oil brings to life once-prominent industry figures, some now forgotten and others simply less remembered. Among them were Ken Kingsbury of California Standard; F. W. “Big Fish” Fisher, the colorful country lawyer representing “hot oil” producers in East Texas; Jesse Jones, head of FDR’s Reconstruction Finance Corporation during the Great Depression and Secretary of Commerce during World War II; Sam Mosher, founder of Signal Oil and Gas, the largest independent in California; J. R. Parten (“the strongest independent oilman I ever met”); Everette DeGolyer, recognized as “the father of American geophysics”; Paul Blazer of Ashland Oil; oil woman Bettye “Tiger” Bohanon, who worked with Marshall in California and Washington, D, C. and later became his wife; and Oscar Wyatt, the founder and head of the Houston oil and gas firm Coastal Corporation.
Major industry episodes included the East Texas “hot oil” war of the 1930s; New Deal petroleum planning under FDR; intense competition in the California oil market under the “rule of capture” (replete with fistfights); the Madison trial of 1937–38, which resulted in the conviction of major oil companies for price fixing under the Sherman Antitrust Act; World War II petroleum planning; and the dispute between four brothers over the future of Koch Industries in the early 1980s; and novel legal production contracts in Venezuela and Argentina.
Quotations and Observations
As a regulator, Marshall was at the intersection of government and industry. A few quotations follow, the first being facetious.
“The Germans never bombed Washington because it would increase efficiency if some of the dozens of overlapping agencies were destroyed.”
“The hook has to be baited with the chance to make a buck if things are to get done.”
“Many big shots in the business, who later denied it, literally prayed for us amateurs in government to ‘save us else we perish.’ A few years later, when most of them found salvation, few sinners remembered their prayers. Such is human nature.”
Sources:
J. Howard Marshall II, Done in Oil: An Autobiography (College Station: Texas A&M University Press, 1994)
History of the Yale Law School: The Tercentennial Lectures, ed. Anthony T. Kronman (New Haven, CT: Yale University Press, 2008)
Otto Scott, The Exception: The Story of Ashland Oil & Refining Company (New York: McGraw-Hill, 1968)
Walker A. Tompkins, Little Giant of Signal Hill: An Adventure in American Enterprise (Englewood Cliffs, NJ: Prentice-Hall, Inc., 1964)
In “Selected Readings” in Done in Oil (pp. 271–72), 15 sources are listed.
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