Mr. STACK. For Mr. Schuyler to bring an action would be quite embarrassing to him. Mr. Schuyler having orignially been an officer of the Pioneer, and Mr. Schuyler having been general counsel for the Midwest and the Pioneer, it would have necessitated his bringing an action against everyone of his associates, the men he had brought into the business.

Naturally, when he told me to accept the offer of $50,000 I thought perhaps he was prejudiced and trying not to bring an action against his friends. So I went to Mr. Bonfils, and Mr. Bonfils said to me that he would go through with this thing, and put up the money, and for us to hire this lawyer. But when it came to hiring the lawyer we hired Mr. Schwartz, of Casper, Wyo. I went to Casper simply for the reason that almost every attorney of renown in Denver was on the staff of the Midwest Co.

The CHAIRMAN. And Mr. Schwartz took employment on a contingent fee?

Mr. STACK. Yes, sir.

The CHAIRMAN. So it did not take any money to employ Mr. Schwartz?

Mr. STACK. Oh, yes. He had to put up expenses, traveling, and

so on.

The CHAIRMAN. What did you hire Mr. Bonfils to do?

Mr. STACK. I did not hire him to do anything. I went into partnership with Mr. Bonfils for the purpose of his putting up the money and fighting this cause for me.

The CHAIRMAN. What did you consider the value of this contract at that time?

Mr. STACK. On the announcement made by the Interior Department at that time for the entire Teapot, and the incorporation of the Mammoth Oil Co., I figured my contract was worth at least $5,000,000. The CHAIRMAN. You figured that it was worth $5,000,000? Mr. STACK. Yes, sir.

The CHAIRMAN. And how much money did you expect it was going to take to prosecute this action?

Mr. STACK. Well, I did not know, did not have the least idea. I figured I was going up against the greatest legal lights in that country, and I figured that they could keep me in court for years and years, and I did not know how long it would take, and I wanted somebody who was a fighter and who would go through with me on the financial line.

The CHAIRMAN. You were willing to give him $2,500,000 in order to have him put up money to prosecute the lawsuit?

Mr. STACK. Yes, sir.

The CHAIRMAN. Go ahead.

Mr. STACK. We immediately started in and prepared our complaint. I stated on yesterday the reasons I advanced for the idea of conspiracy and fraud against me.

The CHAIRMAN. Now, let us see about that. You charged, and I want your own interpretation and what was in your mind with reference to conspiracy as set out in your complaint. What did you think it consisted of?

Mr. STACK. The conspiracy as I thought at that time consisted of the Midwest and the Pioneer and Sinclair having conspired together to gyp me out of my interest.

The CHAIRMAN. To gyp you out of it?

Mr. STACK. Yes; to gyp me out of my interest; that they could so easily state that they got $1,000,000, and that my 5 per cent interest on it was $50,000, when I felt that the contract was worth more to them than $1,000,000 that they claimed to have gotten in oil. That million dollar contract that they said came to them in oil when and as produced, taken together with the fact that they offered me the cash, naturally aroused my suspicion. And I figured that they had absolutely conceived the idea of getting me out of the entire way. The CHAIRMAN. Now, let us see for a moment about that. If you were to get $1,500,000 profit from these offset wells it would have been because there was a profit to the Pioneer and Belgo companies of $30,000,000, would it not?

Mr. STACK. Yes.

The CHAIRMAN. And you think that they could pay a profit of over $25,000,000 to gyp you out of $1,500,000?

Mr. STACK. Oh, no; I did not say that. Do not misinterpret me; I did not say that.

The CHAIRMAN. As I understood it.

Mr. STACK. You understand that the Pioneer is owned by the Midwest?

The CHAIRMAN. Yes.

Mr. STACK. And when you understand that the Midwest is owned by the Standard?

The CHAIRMAN. Yes.

Mr. STACK. And you understand that the Standard owns a 50 per cent interest in the Sinclair Oil Co. ?

The CHAIRMAN. No; I do not understand that.

Mr. STACK. In the Sinclair pipe line.

The CHAIRMAN. In the Sinclair pipe line and the Crude Oil Purchasing Co.; yes.

Mr. STACK. Do you understand that?

The CHAIRMAN. But do either of those companies have any interest in the Teapot Dome?

Mr. STACK. Yes; the Sinclair Co. is operating the Teapot Dome under the title of the Mammoth Oil Co.

The CHAIRMAN. That is the Mammoth Oil Co.

Mr. STACK. They are building a pipe line under the name of Sinclair.

The CHAIRMAN. Does the Standard Oil Co. have any interest in the company that has this lease?

Mr. STACK. Not that I know of.

The CHAIRMAN. Does the Standard Oil Co. get any profit on account of this lease?

Mr. STACK. They get a profit out of the pipe line. That is where they get a profit.

The CHAIRMAN. And there was oil enough in that field to keep that pipe line running to its full capacity?

Mr. STACK. Yes, sir.

The CHAIRMAN. Whether a gallon of oil was taken out of Teapot Dome or not?

Mr. STACK. Yes, sir; that is so.

The CHAIRMAN. So there would have been some profit there?
Mr. STACK. Yes, sir.

The CHAIRMAN. So this lease could not have anything to do with profits to the pipe line, could it? Because the pipe line could be used to its full capacity even though every well in Teapot Dome was shut down?

Mr. STACK. Yes, sir.

The CHAIRMAN. Then you will have to find some other reason, will you not?

Mr. STACK. I do not have to find any other reason even on that one point, the pipe line. The pipe line has a capacity of what? The CHAIRMAN. Twenty thousand barrels a day.

Mr. STACK. How much is the production of Salt Creek field?
The CHAIRMAN. How much is it?

Mr. STACK. The Salt Creek field will produce 80,000 barrels a day.
The CHAIRMAN. All right.

Senator KENDRICK. You are mistaken about that. It will produce 180,000 barrels a day.

Mr. STACK. Yes; 180,000 barrels a day. Now, as to the contract for the pipe line that the Government entered into with the Sinclair people, to take their royalty oil through the pipe line, that removes that pipe line from the class of common carriers. The producers in the Salt Creek field are not benefiting by this pipe line to bring their oil to the Missouri River.

Senator WALSH of Montana. How do you get that idea?

Mr. STACK. Simply for the reason that the minimum production of Teapot and the royalty oil of the Government in the Salt Creek field will fill this pipe line to its capacity.

Senator WALSH of Montana. How do you get the idea that the Government has a preference on it?

Mr. STACK. Under the contract with Sinclair that the Government had made.

Senator WALSH of Montana. But the law covers that.

Mr. STACK. Which law?

Senator WALSH of Montana. The interstate commerce law makes it a common carrier.

Mr. STACK. It might make it a common carrier, but after they take care of the Government end where does the independent oil producer come in?

Senator WALSH of Montana. Well, the law makes it a common carrier.

Senator KENDRICK. I call your attention to the terms of that Sinclair lease, Senator Walsh, which provides, as I recall, for the transportation-first, of prior right for the transportation of royalty oil before any independent producer has a chance to send any oil through the pipe line.

Senator WALSH of Montana. That is the contract; but, nevertheless regardless of anything in this contract the law makes the pipe line a common carrier.

Senator KENDRICK. Well, do you suppose that the law would supersede this contract?

Senator WALSH of Montana. There is a serious question, Senator, as to whether in the face of a law of that character the Government may not have a priority right, but that does not depend at all upon the provisions of this contract. If the law gives them a priority

right they have that priority right in the use of the common carrier, and the contract does not either make it or change it.

Senator KENDRICK. I recall that at the time the lease was let that our independent producers assailed the terms of the lease very bitterly on the ground that it gave them no opportunity whatsoever to transport their oil because by the time the pipe line had taken care of the Mammoth Oil Co.'s production of 20,000, barrels and then 5,000 barrels we will say for royalty oil, there would be no capacity left for the independent producer.

Mr. STACK. That has been our general impression.

Senator KENDRICK. That was their argument I know.

The CHAIRMAN. You did not understand, Mr. Stack, that this Sinclair lease gave any franchise for the construction of a pipe line, did you?

Mr. STACK. I understood that the Sinclair lease practically contracted that a pipe line should be built.

The CHAIRMAN. It was a contract under certain circumstances to build a pipe line?

Mr. STACK. Yes; with, of course, the assurance of always having a production that warranted the bulding of a pipe line.

The CHAIRMAN. But you say there is a production quite outside of the Teapot Dome that will fill the capacity of that pipe line? Mr. STACK. That is true, absolutely.

The CHAIRMAN. So there could be no question of profit on the pipe line as a consideration for the lease?

Mr. STACK. There could be, from the fact that the Standard Oil Co. is in with them on this pipe line that will handle this royalty oil. The CHAIRMAN. Exactly. But that is quite apart from the lease when there is plenty of oil to go through the pipe line anyway.

Mr. STACK. There is plenty of oil volume to go through the pipe line, but the pipe line will cost Mr. Sinclair $25,000,000, and when he has it finished he must have assurance that there will be, say, 4,300 barrels daily production for the pipe line, and the assurance must come from the Salt Creek section, from the Standard Oil Co.

The CHAIRMAN. It has been shown here that in all probability a pipe line would have been constructed anyway because of the production of Salt Creek by outside people. Do you agree with that? Mr. STACK. Oh, yes; I agree with that.

The CHAIRMAN. Go ahead with your statement.

Mr. STACK. What point do you want me to take up?
The CHAIRMAN. You said you went to Mr. Bonfils.

Mr. STACK. Yes, sir. Mr. Bonfils agreed to go in with me, and that Mr. Bonfils, at his suggestion

The CHAIRMAN (interposing). What conversation did you have with Mr. Bonfils when you went there?

Mr. STACK. I showed Mr. Bonfils my contract that I had with the Pioneer people. I told him I was absolutely convinced, when they offered me the $50,000, that they were gypping me out of my interest. Mr. Bonfils turned the contract over to his attorney, Mr. John T. Bottom, and Mr. Bottom's opinion was that I had a just contract, a contract that should be met. And when Bonfils told me that I said, "Well, how do you feel on the thing?" "Well" he said "I feel you have got some claim. I feel that they should deal with

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you, and I feel that to get them to deal you will have to sue them, because I think they have the idea that the $50,000 offered is plenty under the 5 per cent provision of your contract. But Bottom is of opinion that the first part of the contract did not give them that right.

The CHAIRMAN. Did not give them what?

Mr. STACK. Did not give them the right to sell without my consent. So we talked then about an attorney

The CHAIRMAN (interposing). Did not give them the right to sell without your consent, or that they would have to account to you for the profits?

Mr. STACK. Without my consent. Whether those lawyers were wrong in their interpretation I do not know, but it was without my consent, that was the point we hinged on.

The CHAIRMAN. Was this contract recorded?

Mr. STACK. No, sir; it was not recorded.

The CHAIRMAN. Did they take the position that Mr. Sinclair did not get title from the Pioneer and Belgo companies?

Mr. STACK. Did the Pioneer Co. take the position that Mr. Sinclair did not get title?

The CHAIRMAN. No. Did your attorneys take the position that Mr. Sinclair did not get title?

Mr. STACK. Oh, they took the position that the Pioneer Co. had no right to settle with Mr. Sinclair without my permission.

The CHAIRMAN. Yes; as between you and the Pioneer and Belgo companies?

Mr. STACK. Yes.

The CHAIRMAN. But did they take the position that Mr. Sinclair did not secure any rights?

Mr. STACK. Oh, no. They did not take that position.

The CHAIRMAN. That is, that Mr. Sinclair did secure all there was, but that the Pioneer and the Belgo companies would have to account to you?

Mr. STACK. Yes.

The CHAIRMAN. I see. Now go ahead with your statement.

Mr. STACK. And we engaged Mr. Schwartz, as you know, on the 7 per cent. Mr. Schwartz came to Denver. He camped at my office and we prepared the complaint.

The CHAIRMAN. And you gave him the facts upon which it was prepared?

Mr. STACK. I gave him the entire history of same, as I am giving it to you now.

The CHAIRMAN. You set up the contract in that complaint?

Mr. STACK. Oh, yes.

The CHAIRMAN. And you alleged conspiracy?

Mr. STACK. Yes, sir.

The CHAIRMAN. Including Mr. Sinclair?

Mr.STACK. Yes; for the purpose of defrauding me out of my interest. We included Mr. Sinclair on the ground that Mr. Sinclair should have known of the existence of this contract. Whether he did or not we did not know, but we had hopes of proving it when we got him on the stand.

The CHAIRMAN. Why should he know?