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fornia upheld the Federal power to control production under the commerce clause of the Constitution; but while this case was on appeal the Supreme Court decided the Schechter Poultry case, holding that the code-making machinery of the National Industrial Recovery Act also constituted an unlawful delegation of legislative power to the President. As a result of this decision the Petroleum Code, along with all other codes, was invalidated.

In the case of United States v. Eason Oil Co. the United States District Court for the Western District of Oklahoma held that the provisions of the code relating to plans for the development of new fields were invalid as not within the power of the Federal Government under the commerce clause. It was not possible to raise either in production or new pool cases the question of the Federal power under the war powers to prevent waste due to the fact that the National Industrial Recovery Act was not based on this power.

There were a number of marketing cases .pending at the time of the Schechter decision. The lower courts had divided on the question of the effect on interstate commerce of such marketing provisions as the prohibition against special inducements in connection with the sale of gasoline.

Since the invalidation of the codes by the Schechter decision, the Petroleum Administrative Board has worked on a curtailed program and with a reduced staff. It has continued its duties in connection with the administration of the Connally law and is engaged in research along the lines laid down by the President under the National Industrial Recovery Act, as amended.

The Board is making and completing a series of specific studies, including the following:

(1) Completion of the study of the cost of production of crude petroleum.

(2) A study of the marketing structure of the representative area of Allen County, Ind.

(3) A study of the effect of the abandonment of the code upon production, refining, and trade practices.

(4) A study of the benefits of the new pool section of the code and the results of the abandonment of the code on new pool plans.

(5) Appraisal of the operations of the Pacific coast petroleum agency agreement and the effects of its abandonment.

In addition to these specific studies, the Petroleum Administrative Board is preparing a complete final report on the operations of the code which will, in fact, be a history of the petroleum industry during the 2 years in which the code was operative, supplemented by studies subsequently made.

204S1—35 4

During the year and in cooperation with other divisions and bureaus of the Department of the Interior the Board furnished a considerable volume of statistical and technical data to the subcommittee of the Committee on Interstate and Foreign Commerce of the House of Representatives, which made a very thorough investigation of the petroleum industry with a view to recommending legislation. This data was published in volumes I and II of the Hearings Before a Subcommittee of the Committee on Interstate and Foreign Commerce, House of Representatives, Seventy-third Congress, House Resolution 441.

BUREAU OF RECLAMATION

(elwood Mead, Commissioner)

The acute drought of 1934 in the West brought into bold relief the benefits that accrue from irrigation and especially from operation of the Federal reclamation policy. In a year when all through the arid region farmers and ranchers who were dependent upon the natural rainfall were suffering losses aggregating hundreds of millions of dollars, Federal reclamation projects were green and flourishing. On these projects no crops were lost, no stock died. Indeed, these projects mitigated the effects of the drought in their surrounding areas, supplying feed for range stock and provisions for the cities.

There never has been a clearer illustration of the stabilizing effect of stored water on the agriculture of the West. There has been no better demonstration of what Federal reclamation contributes to the economy and welfare of the arid States. The fact that normal crops were harvested on these fields, when in large areas no other green thing was left, enabled western communities in many instances to avoid what otherwise would have been complete disaster. Irrigated crops provided traffic for railroads, saved important industries, bolstered county and State finances, and buoyed the morale of the entire section.

An experience such as the drought, however, was bound to point out ways by which Federal reclamation might be strengthened. It served to emphasize the need for closer contact between the Bureau and the water users on Federal projects in order that maximum usefulness of the land and water might be obtained. To bring this about the projects were divided into five divisions for supervision so that the problems of water users might have more immediate and intimate attention. The direction of operation and maintenance projects was centered in Washington. Preliminary reports of division superintendents have sketched a rough outline of work to be done in this regard.

Some of the problems the supervisors encountered were the need for introduction of better and more economical irrigation methods in areas where wasteful methods are practiced; control of noxious weeds; prevention of soil erosion on steep lands of some projects; and the need for planning on the part of water users' organizations to meet maintenance and repair expenditures.

Problems individual to each district were found by the supervisors. Progress is being made toward their solution. This is a major step forward and will result in permanent improvement in the relationship between the Bureau and the water users. It will solidify the Federal program by providing a better means of presenting needs for their immediate consideration, and by improving the condition of the farmers under the canals.

Little definite information was available generally concerning the place of the Federal reclamation projects in the national economy, and concerning the condition of the projects. These subjects were in controversy, and widely differing assertions had been made. The Secretary selected John W. Haw, director of the agricultural development department of the Northern Pacific Railway Co., St. Paul, Minn., and F. E. Schmitt, editor of the Engineering News-Record, New York City, to make an independent study of typical Federal projects for the purpose of ascertaining the true conditions. After a careful investigation of many of the Bureau's projects, Mr. Haw and Mr. Schmitt made a detailed and valuable report from the summary, of which these paragraphs are quoted:

Reclamation by irrigation of lands in the arid and semiarid western half of the United States is shown by its results to be a sound and desirable national undertaking. It represents a constructive policy of social development.

Reclamation should be continued by the Federal Government as available means may permit. It has little relation to the problems of surplus agricultural production, while, on the other hand, by reason of its high degree of stability, it aids in making the country's food supply more regular, which in turn tends to reduce the fluctuations of the agricultural price level.

Except for the influence of the present depressed farming conditions throughout the United States, the operating projects are in the main excellently developed and represent strong, prosperous communities.

As a result of construction begun several years ago, about 100,000 acres of land on three projects will be available for irrigation for the first time this year. These projects are Riverton, in Wyoming, and Owyhee and Vale, in Oregon and Idaho. The proper settlement of these new areas assumes a grave importance to the communities that will be created, the States in which they are located, and the Federal Government.

Agriculture by irrigation is a skilled industry. Intelligence, resourcefulness, and technical skill are required of the successful pioneer under a canal. To protect the investment of the Federal Government in these projects the Bureau must select its settlers. Since the Bureau has no means of financing settlers and subjugation of new land requires some capital, the selection problem becomes even more important. There is no doubt that qualified settlers, anxious to relocate in more promising neighborhoods, can be found in number. The Bureau proposes to offer this national opportunity in such a way as to attract them. This will be done through public announcements, through cooperation with the colonization agents of the railroads and Government agencies, and through State authorities. While these methods have been used in the past, a more intensive campaign seems to be indicated.

The Bureau now is engaged in the largest construction program in its history. The program makes up the greatest conservation campaign as yet undertaken by a single agency of the United States Government. Experience gained in the past places the Bureau in a good position, and although the Bureau will have to expand its technical staff it is well equipped otherwise to carry out the work.

A total of $175,000,000 is available for the Bureau's construction work during the year. Of this $100,000,000 was set aside by the Works Progress Administration and $75,000,000 remained from allocations made by the Public Works Administration.

As in the past, the majority of the projects now under construction are designed to supplement the water supplies of established irrigation communities. Eleven storage dams were under construction at the close of the fiscal year on projects that will bring in no new land. They will provide a stable supply to irrigators who had felt the pinch of drought. This protection was being supplied for some of the. oldest settlements in the West, notably in Utah, where the Mormons initiated irrigation by whites on the continent.

These improvements will provide a balance wheel for the stabilization of whole communities and even whole States. On the other hand, some new projects have been undertaken. These have been planned carefully so as to give a well-integrated development in areas where the demand is present. The Casper-Alcova project in Wyoming, now under construction, is a case in point. Ultimately this development will provide water for about 35,000 acres of land now unirrigated. This area is intended to assist in the stabilization of the livestock industry of that section of Wyoming, and to provide hay for the herds and produce for the urban centers.

A revealing commentary on the work of the Bureau is to be found in the fact that despite the launching of a great construction program, only a small percentage of the requests for new projects received from States and communities could be considered.

During the year Boulder Dam, the principal structure authorized in the Boulder Canyon Project Act, was completed. The last bucket of concrete was poured in the dam May 29, 1935. On that date this great Colorado River barrier already had stored enough water to supply for a year the irrigation needs of the Yuma Federal reclamation project and the Palo Verde and Imperial Valley developments in California, which lie below it.

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