Doctor SMITH. Yes, sir. Senator LENROOT. And your theory is that water may come in and shut off the oil? Doctor SMITH. Yes, sir. Senator LENROOT. But so far as there is oil in the saddle, that is subject to drainage the same as any other oil in the field, subject to the law of drainage? Doctor SMITH. I would not say the same as any other part of the field, because there is that dip in the rock. Senator LENROOT. There is pressure on the rock? Doctor SMITH. No; there is pressure on either side of that saddle, that I think if you would draw the oil out of the saddle, I think there is more chance of water in immediate contact encroaching there than there is of oil traveling over long distances from the south. But that is just general theory that I have, based on other places. The CHAIRMAN. That would depend somewhat on the pressure of the gas back of the oil, would it not? Doctor SMITH. I would rather, as a geologist, not talk about the gas pressure. The thing I think is more powerful here is the water pressure. I think that is what moves the oil. The CHAIRMAN. That is all. Senator WALSH. Just a few more questions, Doctor. You spoke about the Government suit, and if the Government won its suit. It had some expensive litigation with reference to naval reserve No. 2, did it not? Doctor SMITH. More than No. 1, where there must have been 10 or 12 sections involved, I believe, in controversy with the Southern Pacific. Senator WALSH. Well, the number is shown there, sections 1, 2, 3, 4, 5, 6, 7, and 8, with some others. Senator LENROOT. Did the Government win? Doctor SMITH. No, sir. Senator LENROOT. Some of them? Doctor SMITH. No, sir. Senator WALSH. They did have litigation there? Doctor SMITH. Yes, sir. Senator WALSH. And they lost that? Doctor SMITH. Yes; I think so, but it was not so much in amount as was involved in No. 1. Senator WALSH. This proposition, for making the exchange, I want to find out about that. That is, there was that proposition, Doctor? Doctor SMITH. I don't think I can qualify as a witness on that. I was not directly involved in that. I knew of it at the time. Senator WALSH. The records would speak rather more accurately than you can? Doctor SMITH. Oh, absolutely. I was very much interested. Senator WALSH. But, anyway, this proposition for exchange was made while the litigation was pending? Doctor SMITH. Yes, sir. Senator WALSH. And the Government afterwards, the Department of Justice and the Navy Department, felt so confident that they would win the lawsuit that they declined to make the exchange? Doctor SMITH. At the time; yes, sir. Senator WALSH. Being a proposition of settlement. Senator WALSH. Now, who was chief geologist of the bureau during the years 1921, 1922, and 1923 ? Doctor SMITH. Well, up to November, 1922, for a period of 10 years, I believe almost exactly, the chief geologist had been David White. In November, I think it was, or October-about the time. I left the bureau-Mr. Mendenhall was made chief geologist. Senator WALSH. What position did Mr. Mendenhall hold under Mr. White? Doctor SMITH. He had never held any position under Mr. White. He held a position as chief of the Land Classification Board. Earlier he had been a geologist in the geologic branch. Senator WALSH. Do you remember the Executive order transferring the naval reserves from the Navy Department to the Interior Department? Doctor SMITH. I heard of it. I do not remember the order. Senator WALSH. Well, when that was done, to what branch of the Interior Department was the administration sent? Doctor SMITH. I think at that time it was put in the Bureau of Mines. At some time, possibly not much before that, Mr. Mendenhall had been consulted and given some indefinite assignment by Secretary Fall in acting as his representative of Senator WALSH (interposing). Well, really, Doctor, was not the administration sent to your office, and was not Mr. Mendenhall authorized to act for the Interior Department in the matter? Doctor SMITH. Well, that was a matter between Secretary Fall and Mr. Mendenhall. He was not assigned as a member of the survey, but as a member of the Interior Department, if I remember correctly, although he was, of course, a member of the survey. Senator WALSH. I call your attention to this order [reading]: DEPARTMENT OF THE INTERIOR, ORDER. Under the provisions of the acts of Congress approved February 25, 1920 (41 Stat. 437), and June 4, 1920 (41 Stat. 912), relative to naval petroleum reserves, the President has committed to the Secretary of the Interior the administration and conservation of the oil and gas bearing lands in said reserves. Mr. W. C. Mendenhall, of the Geological Survey, is hereby designated, subject to the supervision of the Secretary and the First Assistant Secretary of this department, to have charge of matters pertaining to and arising in connection with the case and administration of these reserves, with the cooperation of the office of the solicitor as to legal matters, of the General Land Office as to plats and records, and with the Bureau of Mines as to drilling and production of oil and gas therein. (Original of above given to Mr. Mendenhall to-day by Secretary Finney. June 7, 1921. M.) Doctor SMITH. I was consulted in that matter, and I knew of it at the time. My approval was not asked, but I did approve of it as an assignment, but it was not an assignment made by me, but, as you will of Mr. Mendenhall acting with the Secretary and directly under him. 68161-24-PT 5-2 Senator WALSH. In this connection, I offer the following letter from Mr. Mendenhall to the Assistant Secretary of the Interior: DEPARTMENT OF THE INTERIOR, MY DEAR JUDGE: You have recently informed me that you are holding, pending Secretary Fall's decisions as to policy in the naval reserves, certain applications for rights in those reserves. I have also been holding here for the same reason a few applications referred to me by you or by Mr. Safford. Action on all of these applications should, of course, be based uniformly on whatever general policy may be decided upon. Meanwhile the applications should be kept together so that none may be overlooked when the time comes for action. I think, therefore, that you will desire to have the applications that are here to place with those that you have. I am therefore inclosing applications of Frank R. Stewart, for leases in T. 30 S., R. 23 E., M. D. M.; R. J. White, for a lease in T. 31 S., R. 24 E., M. D. M.; American Oil Engineering Corporation, to undertake drilling operations in the Elk Hills; R. D. Clark, for lease in Ts. 30 and 31 S., R. 24 E.; General Petroleum Corporation, to drill in T. 31 S., R. 24 E. I am also attaching as possibly suggestive to yourself or Secretary Fall in considering policies, a program for the Naval Reserves sketched out some time since to clear my own mind in the matter. Very cordially, Hon. E. C. FINNEY, First Assistant Secretary of the Interior. And the following memorandum: W. C. MENDENHALL. PROGRAM FOR NAVAL RESERVES. 1. Secure legislation authorizing exchange of lands. 2. Decide Honolulu case. 3. Do not grant additional drilling rights, except in particularly meritorious cases, pending (1) and (2). 4. Determine what lands in reserves Nos. 1 and 2 are available for exchange. 5. If Honolulu case is decided in favor of the company, abandon No. 2 as a future reserve, using it (a) for exchange to eliminate private holdings from No. 1; (b) to supply current needs of Navy for oil by adopting a slow-drilling program and developing this program by granting leases from time to time on the fractional tracts remaining to the Government. 6. If the Honolulu case is decided in favor of the Government, (a) hold eastern part of No. 2 as naval reserve, or (b) follow plans 5(a) and 5(b), as may seem best. W. C. MENDENHALL. The CHAIRMAN. What date is that? Doctor Smith. I think, Senator, that is in part development of the original policy, as mentioned by Senator Lenroot, of the exchange and getting into compact bodies the lands reserved for the use of the Navy. Senator WALSH. Well, Doctor, do you know how successful the plan for making these exchanges was carried out? Doctor SMITH. I do not remember that I had any conferences, even with Mr. Mendenhall, on that. I was not called in conference, I am quite sure. Senator WALSH. Well, you don't know whether any attempt was made to exchange lands in naval reserve No. 2 for lands held in private ownership in No. 1, as suggested in the program outlined by Mr. Mendenhall? Doctor SMITH. No, sir; I do not know regarding that. Senator WALSH. I now offer the following [reading]: DEPARTMENT OF THE INTERIOR, ORDER. Subject to the supervision of the Secretary, the Director of the Bureau of Mines will have charge of matters pertaining to and arising in connection with the care and administration of naval petroleum reserves, including the drilling and production of oil and gas therein. The Bureau of Mines will, of course, cooperate with other bureaus as to matters falling peculiarly within their province, so that there shall be no duplication of work performed or records kept. ALBERT B. FALL, Secretary. DEPARTMENT OF THE INTERIOR, March 6, 1922. Respectfully referred to Mr. Reichard for his information. JNO. HARVEY, Chief Clerk. That, apparently, was a decapitation of Mr. Mendenhall. Doctor SMITH. Senator, it may look like that on the record. I did not realize it at the time, however. My opinion was not asked in that matter, but if it had been, I would have indorsed that order; and I say that because I think it is in the interests of the proper coordination of the work of the department. Some organizations are created for one purpose, and some for another, and if the purpose is kept in mind and the functions carefully distinguished, I think we get better working together. I think that the Bureau of Mines, by reason of the fact that the administration is more directly connected with the drilling part of such a program than it is with the original classification, the Bureau of Mines is much better fitted to serve the Secretary directly in the administration of such a reserve than is the Geological Survey. But as set forth in the order that does not debar either the General Land Office or the Geological Survey from participating therein with their advice. Senator WALSH. Of course, the original order was the same; he confided it to Mr. Mendenhall, but with such advice and cooperation as he could get from the Bureau of Mines; and now Mr. Mendenhall is deposed and it is given to the Bureau of Mines, with such advice and cooperation as he can get from the other departments. Doctor SMITH. With this distinction, Senator, that a person in the Department of the Interior was practically to assist him in a special duty; not as a chief of the land board in the Geological Survey, but Mr. Mendenhall as Mr. Mendenhall, not as an official, but as an individual in the department. I think it was better to assign it to the Director of the Bureau of Mines as the head of that bureau, rather than, for instance, to Mr. Tough as a member of the Bureau of Mines. Senator WALSH. Of course, Doctor, if the policy was determined upon to drill up the reserves and take the oil out, it was perfectly proper to assign that work to the Bureau of Mines and not to the Geological Survey? Doctor SMITH. Yes; somewhat following the procedure in the work in coal, for instance, where there isn't any controversy; the making of land classifications is under the Geological Survey, and the routine office work on application is done by the Land Office. But following up to the administration of the coal leases, setting up the terms under which they shall operate, is done by the Bureau of Mines the technical administrative branch of the Interior Depart ment. Senator WALSH. That is all. The CHAIRMAN. That has always been the practice, has it not, Doctor? Doctor SMITH. That is the way it has grown up. The CHAIRMAN. And that is the way it ought to be. Doctor SMITH. I think so. The CHAIRMAN. In the past when there has been a question of titles to land involving minerals of any kind, those questions have always been referred to the Geological Survey for their opinion, have they not? Doctor SMITH. Both for an opinion as to the character of land, and these are in some cases reported to the Secretary of the Interior and the Commissioner of the General Land Office. We have become in the past 14 or 15 years, you might say, the technical adviser as to mineral character of the land to both the Land Office and the Secretary's office. The CHAIRMAN. So far as any administration of any activity upon Government-owned land, the Geological Survey has never been called upon to act for them? Doctor SMITH. I should say the only exception to that is that we receive certain reports, at the Secretary's request, from power companies that are operating on publicly owned power sites. We receive those so that we can the better advise the Secretary of the Interior whether they are meeting the requirements. We do not collect the moneys. Senator LENROOT. Doctor, when a fault is found in a geological structure, how is the depth of that fault determined, if at all? Doctor SMITH. The extent to which it goes? Senator LENROOT. Yes. Doctor SMITH. Why, that is a matter of inference, as most geological work is. If it is a fault of large throw, and continuous in its extent across the country, why we think there is greater expectation of its extending to a considerable depth than if it was just a slight fault. Senator LENROOT. What have you to say about this particular fault? Doctor SMITH. I don't know anything about it, Senator, Senator LENROOT. It is merely a case as to how far it goes? Doctor SMITH. A fault, as you understand, passes into a fold, and sometimes there is another fault where the fold again becomes more pronounced. Senator LENROOT. Whether this fault extends to the Lakota sand you do not know, without drilling down on the Lakota sand on each side, and perhaps not then? Doctor SMITH. I think a geologist that has been on the ground would have a better opinion than I, sitting here. Senator WALSH. Doctor, is it not true that you can sometimes measure the throw of a fault to a great extent? Doctor SMITH. Oh, yes; the throw, but not the extent of it. Senator WALSH. You mean the depth of it? Doctor SMITH. Yes; the depth to which the fault plane extends |