In the late 1800s and early 1900s, Texas’s natural resource industries were booming. Texas oil industries had been slowly on the rise since the late nineteenth century, and were super-charged on January 10, 1901, when the Spindletop oil field was discovered (Wooster, “Spindletop Oil Field”). The discovery of Spindletop completely revolutionized Texas industry, producing around 100,000 barrels of oil a day (Wooster)! This caused Texas industry to explode and begin to focus on petroleum and mining in 1937, however, backdropped by the Great Depression and FDR’s New Deal programs, sales taxes on natural resources were being created and increased – sometimes even doubling – to tax industry and create government revenues to fund new ventures for the Texas government.
John Knott’s political cartoon “Legislator With the Sales Tax Complex,” published on March 24, 1937, depicts a small legislator holding a weight labeled “Sales Tax Token” which he is attempting to hang on a much larger man labeled “Texas.” The old man was a popular political cartoon character of Knott’s, known as “Old Man Texas:” a hardy old man created in 1906 that “[symbolized] rural Texas, [its] honesty in government, [its] low taxes, and [its] property ownership” (“Knott, John Francis”). In the cartoon, “Old Man Texas” is walking out of the frame, and the legislator is closely following him – tiptoeing in an attempt not to be noticed – trying to hang the weight on “Old Man Texas,” who shouts, “Don’t you hang that thing on me!” when he realizes what the legislator is attempting to do (Knott). In the editorial accompanying Knott’s cartoon, “Taxing Natural Resources,” a new sales tax on sulfur is described, which would provide the Texas government with increased revenues for new ventures. This new sales tax, however, would drastically increase production costs in the sulfur industry and significantly damage its ability to produce profits (“Taxing Natural Resources”). The cartoon and its accompanying editorial express that increasing sales taxes on industries’ natural resources will benefit the state in the short-term, but harm its long-term development.
Much like petroleum drilling, sulfur mining had slowly been on the rise in the late 1800s, thanks to new mining methods like the Frasch process, where superheated water was pumped into previously drilled wells, melting the sulfur and forcing molten sulfur to the surface. Unfortunately, the Frasch process proved to be impractical and very expensive, which led to its eventual discontinuation (Kleiner, “Sulfur Industry”). Sulfur was (and still is) a valuable natural resource in the production of matches, gunpowder, insecticides, skin treatments, and glass (“Sulfur Mining & Processing”), and during the mid to late 1930s its demand was rising (Wasson, “Solons Rap Business…”). Fortunately, the discovery of Spindletop not only ignited a new oil and gas industry in Texas, but breathed new life into the sulfur industry as well. The expensive, inefficient Frasch Process was replaced with a much more cost-effective method: using the newly affordable, abundant oil supply in the state as fuel for extracting sulfur from the ground. Additionally, sulfur deposits were being found more frequently, due to the growing oil and gas industry, because sulfur deposits were typically located in the same salt domes that miners explored for oil (Kleiner). These changes led to Texas producing around eighty percent of the United States’ sulfur supply (Kleiner).
Around 1937, Texas’s industries were booming; however, many industries related to natural resources were becoming the subjects of increasingly expensive sales taxes on natural resources. These taxes were being levied to help generate government revenue for Texas to fund health care reforms for those with disabilities such as deafness and blindness, expand schooling and educational systems within the state, and other governmental obligations (“Legislature Told By Allred…”). Since the early 1920s, the sulfur industry had been the target of increasing taxes, and until the mid-1930s, the taxes had been causing increased revenue for the state government. In 1923, taxes on the sulfur industry produced $73,900 of government revenue; in 1924, they produced $244,796; in 1929, they produced $901,125; and in 1931, they produced $1,237,701. Moving into the mid-1930s, however, the government tripled the sales tax on sulfur, which led to a decrease of almost half a million dollars in government revenue, providing only $764,532 in 1932 (Wasson, “Solons Rap Business…”). This sudden decrease in revenue was due to the increasing sulfur tax hindering sulfur industries to the point that they could no longer generate as high a profit as they used to, on account of higher operating costs. This led to a net decrease in tax revenue.
The editorial accompanying the cartoon uses the sulfur industry as a lens through which to shed light on the effect of these increasing taxes on natural resource production, arguing that setting the sales tax on sulfur at $1.28 per ton – an increase of almost seventy-five cents from past rates (Wasson) – the government is “[gouging] for revenue” rather than “[encouraging] development” of industry (“Taxing Natural Resources”). In doing so, the editorial argues that while it may seem a conservative adjustment in the sulfur tax, the increased government revenue isn’t really needed, and the state is too focused on its own short-term benefit to consider long-term growth of Texas industry – which will provide much more for the state in the long run. The editorial also argues that conservative policy in regards to taxing industry would be wise, as it would allow industries to grow and continue to support Texas more in the long run – moving towards an “era of industrial development,” rather than “killing the goose that lays the golden eggs” (“Taxing Natural Resources”).
The aforementioned ideas are all embedded in Knott’s “Legislator with the Sales Tax Complex” cartoon: Texas and its industries being represented by “Old Man Texas,” the increasing sales taxes on those industries being represented by the “Sales Tax Token,” and the Texas government being represented in the small and impish legislator (Knott). In the cartoon, “Old Man Texas” is pictured walking out of frame. He is twice as tall as the legislator, towering over him with his massive fist clenched, yelling “Don’t you hang that thing on me!” “Old Man Texas” represents Texas and its industries, not only because of how massive, powerful and willing to fight for their development they were, but also because he is walking out of frame, towards an “era of industrial development” which Texas industries were progressing towards (“Taxing Natural Resources”). The “Sales Tax Token” in the cartoon is a heavy weight plate, which, if hung on “Old Man Texas,” would impede his progress towards his “era of industrial development.” The legislator is described as having a “sales tax complex,” because he is obsessed with hanging the “Sales Tax Token” on “Old Man Texas,” a metaphor for Texas government being fixated on taxing natural resource industries in the late 1930s. This is why he is portrayed as small and impish, because he is selfish, on account of only being focused on the short-term benefits of hanging the weight on “Old Man Texas,” or taxing industries; rather than the long-term gains of allowing “Old Man Texas” to move toward his goal, and allowing Texas industries to grow.
In 1935, the Connally Hot Oil Act was created in to combat independent oil distributors from driving industries’ profits down. The act was scheduled to expire on June 15, 1937; however, on January 14, 1937, the act was extended and written into permanent law (Goodwin, “Connally Bill Gets Approval for Extension”). The Connally Act and other legislation continued to support industrial growth in in the late 1930s, showing that in the end, industrial development was prioritized by the government, as advocated in the cartoon and accompanying editorial. Even in today’s society, the debate of prioritizing governmental revenue versus prioritizing industrial development still rages on, shown by the Australian Mining Tax controversy. This tax was introduced in 2012 and would take thirty percent of Australian mining profits, for government revenue. Much like the Texas government of the late 1930s, the Australian government also supported industrial development, later repealing the mining tax in 2014 (“Australia’s Mining Tax Repealed”). As they say: history truly does repeat itself.
“Australia’s Mining Tax Repealed.” BBC News, BBC, 2 Sept. 2014, www.bbc.com/news/business-29009479. Goodwin, Mark L.
“Connally Bill Gets Approval For Extension.” Dallas Morning News, 15 Jan. 1937, p. 9., phw02.newsbank.com/cache/ean/fullsize/pl_010162017_2314_26789_194.pdf. Web. 15 Oct. 2017.
Kleiner, Diana J. “Sulfur Industry” Texas State Historical Association, 14 June 2010, tshaonline.org/handbook/online/articles/dks04. Web. 9 Oct. 2017.
Knott, John F. “Legislator With the Sales Tax Complex.” Dallas Morning News, 24 Mar. 1937, p. 2. Web. 26 Sept. 2017.
“Knott, John Francis.” Texas State Historical Association, 15 June 2010, shaonline.org/handbook/online/articles/fkn05.
“Legislature Told By Allred to Halt Its Tax Remission” Dallas Morning News, 25 Mar. 1937, p. 2., http://phw01.newsbank.com/cache/ean/fullsize/pl_010162017_2121_48289_672.pdf. Web. 13 Oct. 2017.
“Sulfur Mining & Processing: What to Know.” General Kinematics, 17 Sept. 2014, www.generalkinematics.com/blog/sulfur-mining-processing-know/. Web. 10 Oct. 2017.
“Taxing Natural Resources.” Editorial. Dallas Morning News, 24 Mar. 1937, p. 2. Web. 26 Sept. 2017.
Wasson, Dean. “Solons Rap Business With One Hand, Then Invite It With Other” Dallas Morning News, 25 Mar. 1937, p. 3., http://phw01.newsbank.com/cache/ean/fullsize/pl_010102017_0211_29652_4.pdf. Web. 9 Oct. 2017.
Wooster, Robert, and Christine Moor Sanders. “Spindletop Oil Field.” Texas State Historical Association, 15 June 2010, tshaonline.org/handbook/online/articles/dos03. Web. 15 Oct. 2017.