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Senator WALSH. Of course, that could be gauged with some degree of accuracy from the extent of the throw, could it not?

Doctor SMITH. Oh, yes.

Senator WALSH. If you have a throw which just displaces the strata by a few inches of ground, you would not think that it goes to a great depth; but if it was a thousand feet, you would think it was rather profound.

Doctor SMITH. Of course, depending on the amount of displace

ment.

Senator WALSH. So it depends on the structure of the surface as to how far it goes?

Doctor SMITH. If this had been discussed by different geologists writing on the subject, I might be able to form some opinion. But I think you might do better to get that from a man who was on the ground.

Senator WALSH. Take quartz mining, Doctor, when we find a fault, and the throw is limited, the miner thinks that is as far as it goes?

Doctor SMITH. Certainly.

The CHAIRMAN. And the miner is very much disappointed sometimes. I know from experience.

Senator LENROOT. I want to ask Doctor Bain one or two questions. Senator NORRIS. If everybody is through with Doctor Smith, I want to ask him two or three questions. Doctor, are you familiar with the land in reserves Nos. 1 and 2?

Doctor SMITH. Somewhat familiar; I could talk in terms of sections 12 years ago; that was 12 years ago, I was most familiar. Senator NORRIS. The land is all there yet?

Doctor SMITH. Yes; but I am not.

Senator NORRIS. You have been over it?

Doctor SMITH. Yes; I was over it in those days.

Senator NORRIS. Now, it appears that the Government does not own much land in No. 2, and it does own a great deal in No. 1. Doctor SMITH. That is the reason it is No. 1 and No. 2.

Senator NORRIS. And that is the reason No. 1 is more valuable? Doctor SMITH. That is the reason it was chosen first and was labeled No. 1.

Senator NORRIS. Yes; I understand that. Now, the privately owned land in No. 1 is owned by the Southern Pacific Railway, is it not?

Doctor SMITH. Well, it has passed into another company.

Senator LENROOT. The Standard Oil.

Senator NORRIS. They have a subsidiary company, but it is the Southern Pacific.

Senator LENROOT. And the Standard Oil.

Doctor SMITH. The Standard Oil already had some land there. Senator NORRIS. How much land did the Standard Oil have, compared with the Southern Pacific?

Doctor SMITH. It was small, but they were in there early and had

some.

Senator NORRIS. On the map there, Doctor, there seems to be in No. 1 privately owned eight full sections, two quarter sections, one half section, and another piece a little more than a quarter section. So that there are a little more than nine sections of land in

the aggregate not owned by the Government. Does the Southern Pacific own all of the full sections indicated on the map?

Doctor SMITH. Except 36.

Senator NORRIS. Except 36?

Doctor SMITH. Yes, sir.

Senator NORRIS. They have practically all of it ?

Doctor SMITH. Yes, sir.

Senator NORRIS. How about these smaller quarter sections, and

half sections?

Doctor SMITH. Those were claimed, I believe.

Senator NORRIS. By private parties?

Doctor SMITH. Yes; I believe so.

Senator NORRIS. Originally, now, there was litigation between the Government and the Southern Pacific Railway that involved title to all that land in that reserve owned by the Southern Pacific? Doctor SMITH. Yes, sir.

Senator NORRIS. And until that litigation was finally determined in the Supreme Court it was not known just exactly what the value of that whole reserve was going to be to the Government?

Doctor SMITH. That was appreciated from the very start, but we believed that the Government claim was the better claim.

Senator NORRIS. Now, after reserve No. 1 was set aside, while this litigation was pending, or perhaps before the litigation was begun-I do not know-reserve No. 2 was set aside?

Doctor SMITH. Yes, sir.

Senator NORRIS. At the time that was set aside it was known that most of the land in it was privately owned, was it not?

Doctor SMITH. Yes; at least under claim, and it was not regarded by those who recommended its setting aside as much of a reserve.

Senator NORRIS. Now, as I understand it, there was a time when the Government could have exchanged its holdings in No. 2 for the Southern Pacific holdings in No. 1?

Doctor SMITH. I am not sure regarding the legal phases whether there was a legal authority for such exchange.

Senator LENROOT. On the part of the Government?

Doctor SMITH. On the part of the Government.

Senator LENROOT. There was not; it would depend on congres

sional action.

Senator NORRIS. No; but there was opportunity

Doctor SMITH (interposing). There was opportunity to make those exchanges.

Senator NORRIS. To make those exchanges.

Doctor SMITH. Yes, sir.

Senator NORRIS. It would have been necessary for Congress to pass the necessary legislation to carry it out.

Doctor SMITH. Yes, sir.

Senator NORRIS. The people in charge of the reserve at that time did not want it at that time?

Doctor SMITH. They thought they would have it without the exchange.

Senator NORRIS. If they could have looked ahead and seen what the Supreme Court was going to do, they probably would have been willing to make the exchange.

Doctor SMITH. Well, they were taking the advice of the Department of Justice in the matter.

Senator NORRIS. I remember when the case was pending, and from what little I knew about it I thought the Government was going to win it.

Doctor SMITH. Yes, sir.

Senator NORRIS. I think yet we should have won it.
Doctor SMITH. I agree with you, Senator.

Senator NORRIS. Now, it develops, after we lost that suit and lost all that land in there that Mr. Mendenhall recommends again that we exchange what we have in No. 2 for what they have in No. 1. Do you think it would have been possible to do that then?

Doctor SMITH. I do not think on as favorable terms as we could have exchanged earlier.

Senator NORRIS. Well, from your knowledge of the richness of the oil-bearing lands in No. 1 and No. 2, do you suppose at the time Mr. Mendenhall wanted to do that it would have been a practical proposition?

Doctor SMITH. I did not look into it at that time. Of course, when we say exchange, it might not have been on an acre for acre basis, of course.

Senator NORRIS. No; we probably could not have exchanged that

way.

Doctor SMITH. We would not have had the opportunity that we had earlier.

Senator NORRIS. Of course, it is easy to criticize an executive officer for taking a certain course and say, 8 or 10 years after, that he should have taken a different course.

Doctor SMITH. We can criticise ourselves under those circumstances.

Senator NORRIS. We never do that, however. The official, if he is a Republican, can criticise the Democrat, and the Democrats can criticise the Republicans that they are not able to have their foresight as good as their hind sight.

Doctor SMITH. Yes, sir.

Senator NORRIS. I think there may be some of that here in these naval reserves. Which is the better, in your judgment now, as a scientist, so far as producing oil is concerned; is there more oil in 1 than in 2, or more in 2 than in 1?

Doctor SMITH. Senator, I have forgotten the details. I very much preferred No. 1 on account of the ownership.

Senator NORRIS. Yes; I can see that..

Doctor SMITH. But some splendid land was in No. 2, and it was proved.

Senator NORRIS. You would not be able to tell us now

Doctor SMITH (interposing). Oh, no.

Senator NORRIS (continuing). Whether a section in 2 that we own would be more valuable than a section in No. 1 that the Southern Pacific owns?

Doctor SMITH. No; and if I told you it might turn out the other way.

Senator NORRIS. And that is one reason why the officials, both the Secretary of the Navy under a Democratic administration, and the Secretary of the Interior under a Republican administration,

would hesitate very much to make a trade, because if they guessed wrong and it would be a guess-they would never hear the last of it, of course.

Doctor SMITH. If I may be allowed to generalize on the bureau chief sand department heads, I think their prevailing weakness is timidity; they are afraid to do things, because of the very facts that you have set forth, that it may not turn out 10 years later as they anticipated.

Senator NORRIS. That is all.

(The witness was excused.)

Senator WALSH. Senators, I want to call your attention to the fact that 16 and 36 in the reserve, of course, never belonged to the Southern Pacific but to the State.

Senator NORRIS. They were school lands. But the Southern Pacific got one of them, did they not, Senator?

Senator WALSH. The Standard Oil.

The CHAIRMAN. The Standard Oil.

Senator WALSH. I expect to have some testimony with respect to that presently.

Senator LENROOT. I would like to ask Mr. Bain one or two questions.

FURTHER STATEMENT OF H. FOSTER BAIN.

Senator LENROOT. Mr. Bain, if I remember correctly, you stated yesterday that not only was the present estimate of the quantity of oil in reserve No. 3 very much less than you expected but that also the production from wells, so far as it had been tested, was less than expected?

Mr. BAIN. Yes, sir.

Senator LENROOT. Can you tell us anything about how much less than was expected?

Mr. BAIN. Oh, very materially less.

Senator LENROOT. Can you give us any idea in barrels?

Mr. BAIN. Mr. Ambrose estimated that the wells which would be in production the first year would have an average of 1,200 barrels, and the actual production now is just under 100 barrels per well.

Senator LENROOT. Then at the time the lease was made, if the production had been as estimated, the royalty received by the Navy would have been 50 per cent?

Mr. BAIN. Yes, sir; it is over 1,000 barrels, as I remember it.

Senator LENROOT. So that this reduction in the percentage of oil actually received by the Navy is due to the disappointment in production.

Mr. BAIN. Oh, decidedly.

Senator LENROOT. And when the lease was made it was expected that the royalty would amount to 50 per cent, according to your statement?

Mr. BAIN. In the first year, and perhaps after that. The amount would depend on the number of new wells which were brought in and the size of those wells.

Senator LENROOT. As against a percentage of-what was it you stated-sixteen and a fraction?

Mr. BAIN. Yes; just under 17.

Senator LENROOT. As against 17 that is now being received, it was expected at the time the lease was made that the royalty would have been 50 per cent?

Mr. BAIN. Yes, sir.

Senator NORRIS. Senator, I did not get the first question. What wells were you asking about?

Senator LENROOT. The wells on reserve No. 3.

(The witness was excused.)

Senator WALSH. I will call Mr. Benton.

TESTIMONY OF MR. J. E. BENTON, EL PASO, TEX.

(The witness was duly sworn by the chairman.)

Senator WALSH. Mr. Benton, what is your full name?

Mr. BENTON. J. E. Benton.

Senator WALSH. You live where?

Mr. BENTON. El Paso, Tex.

Senator WALSH. What is your business there?

Mr. BENTON. With the First National Bank.

Senator WALSH. What position do you hold with the bank?

Mr. BENTON. Vice president and cashier.

Senator WALSH. How long have you filled that place?

Mr. BENTON. Well, I have been with the bank about 20 years, but was elected cashier of the bank about eight or nine years ago.

Senator WALSH. Did you bring with you the checking account of Senator Fall for the year 1922 ?

Mr. BENTON. Yes, sir.

Senator WALSH. I wish you would tell us whether you find on that a deposit during the month of December, 1921.

Mr. BENTON. 1921?

Senator WALSH. Yes.

Mr. BENTON. December 7.

Senator WALSH. What is the deposit?

Mr. BENTON. $7,500.

Senator WALSH. What is the deposit next preceding that one, Mr. Benton?

Mr. BENTON. It is a correcting entry of $1,575.

Senator WALSH. That was not a deposit, but a correction?

Mr. BENTON. Yes, sir.

Senator WALSH. And the one next preceding that?

Mr. BENTON. That was April 17, 1920, $20,000.

The CHAIRMAN. 1920?

Mr. BENTON. Yes, sir.

Senator WALSH. Do you remember what that transaction was? Mr. BENTON. Yes; that was money deposited with our escrow department in connection with the sale of a newspaper, I think, in New Mexico.

Senator WALSH. The Albuquerque Journal?

Mr. BENTON. I don't know the name of the newspaper. We call it the Carl C. Magee transaction.

Senator WALSH. In New Mexico?

Mr. BENTON. Yes, sir.

Senator WALSH. What is the next deposit after December, 1921? Mr. BENTON. It is June 1, 1922, $2,209.

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