Senator PHELAN. And my recollection is that the President stated it was to give "opportunity to Congress to legislate" on account of the uncertainties which had arisen as to claims.

Mr. FINNEY. That is my recollection.

Commander RICHARDSON. But the President himself stated that one of the purposes of the withdrawal was to create the reserve of oil for the Navy.

Senator CLARK. In the 1912 order?

Commander RICHARDSON. In 1909, not in the order, but all the correspondence leading up to the withdrawal shows that that was one of the prime considerations, and the man who really caused the order of withdrawal is the Director of the Geological Survey, Dr. George Otis Smith, who stated that the first consideration leading to the order of withdrawal of September 27, 1909, was the need of the American Navy for oil. He stated that in the hearing on the Pickett bill in 1910 before the House Committee on Public Lands.

Senator CLARK. At that time the question had not arisen, I think, for open discussion as to the distinction between general withdrawals and withdrawals for Governmental purposes; that did not come up until the discussion on the Pickett bill.

Senator PHELAN. Completing my statement, I desire to state that the Oil Industries Association of California handed me the following memorandum as a reason why we should confer with the Navy Department, and I also desire to have printed in the record a letter of Dr. George Otis Smith, Director of the Geological Survey, of August 8, 1912, describing naval reserve No. 1.

(The documents referred to by Senator Phelan are 6996 a and b, and are here printed in full as follows:)

MEMORANDUM FOR SENATOR PHELAN.

The following suggestion was made to the representatives of the oil men this week by Commander Richardson, the oil expert of the Navy:

He suggested that it might be a compromise which possibly would be acceptable to the Secretary of the Navy.

It is suggested that the Standard Oil Co. and the Associated Oil Co. cede and give clear title to all their lands in Naval Reserve No. 1. This would give the Government that large reserve intact, and the oil could be left indefinitely stored in the ground. It is further suggested that the oil which would accrue to the Government under leases which would be provided for in the Phelan amendments should also go to the Navy for its use. It is admitted by the Navy that Naval Reserve No. 2 no longer is valuable as a reserve for the reason that there is so much patented land in the reserve that it is being rapidly drained and the oil can not be kept for naval or other use. By this suggested compromise the Navy would be able to keep in storage the vast quantities of oil in reserve No. 1 and would receive enough oil for current uses from that which would accrue to it from the leased lands in reserve No. 2. The suggestion was that if the lands of the Standard and Associated Cos. in reserve No. 1 were ceded to the Government that the Navy Department would withdraw its opposition to the conservation bill.

NAVAL RESERVE No. 1.

August 8, 1912.

The honorable the SECRETARY OF THE INTERIOR. SIR: * * * the reserve created by this order will include the most compact body of public lands in California known to the survey in which the presence of oil in large quantity is sufficiently certain to warrant placing dependence upon it as a naval reserve. The survey geologists believe that the oil in this territory will prove to be a good fuel oil with an asphaltic base, the two successful wells thus far developed there yielding a supply superior to the average oil in California fields, but that it will lie at considerable depths,

probably from 3,000 to 5,500 feet. This latter condition, although increasing the cost of the development, is favorable to the preservation of the supply.

It may be said in summary that in the opinion of the survey, based on present knowledge, there does not exist in the United States a tract of land better fulfilling the requirements of a naval reserve in respect to (a) probable existence of a large supply of oil, (b) favorable conditions for the preservation of that supply, (c) ready accessibility of lines of transportation to the seaboard, and (d) a position protected from the danger of foreign invasion.

Very respectfully,

(Sgd.)

GEO. OTIS SMITH,

Director.

The CHAIRMAN. Mr. Roosevelt, you desire, if possible, to obtain the whole of Naval Reserve No. 2 as a permanent depository for this oil; that is the theory of the department, is it?

Ássistant Secretary ROOSEVELT. Probably in No. 2 as a permanent and current depository.

The CHAIRMAN. To what extent would it be necessary to avoid the patents of the Southern Pacific Railroad Co. in that reserve to accomplish your purpose?

Assistant Secretary ROOSEVELT. To void the patents?

The CHAIRMAN. To void the patents.

Assistant Secretary ROOSEVELT. All we seek at the present time is to have determined as quickly as possible, either by the present method of legal procedure, or by some quicker method, the definite title that the Navy has in those alternate sections. Then, as to the future it is impossible now to say just how for the Navy Department would seek to condemn the other sections which are now claimed by the Southern Pacific. Of course, it would depend on the determination of these suits.

The CHAIRMAN. Would you consider it suitable as a permanent depository for your oil for future use if the patents to the Southern Pacific were sustained?

Assistant Secretary ROOSEVELT. If they were what?

The CHAIRMAN. If the patents were sustained by the courts? Assistant Secretary ROOSEVELT. It is hard to look so far into the future. At the present time the amount which has been actually set aside for the Navy; that is, the alternate sections, would be sufficient. The CHAIRMAN. Could you preserve that in the ground, I mean, with them pumping out of the alternate sections?

Assistant Secretary ROOSEVELT. In most cases, yes; where we get a full section, a good part of the oil in that section would remain in the ground, even if they were pumping out in the alternate sections. Representative LENROOT. Of the 3,526 acres now in private ownership, I would like to ask whether that is scattered through the reserve or whether in a compact body.

Assistant Secretary ROOSEVELT. There are four complete sections and quarter sections in several other places.

Representative FERRIS. You mean sections of 640 acres?

Assistant Secretary ROOSEVELT. Four full sections, two quarter sections, and two half sections; in other words, five and one-half sections, total.

Representative LENROOT. Of the remaining lands, upon which patents have not been issued but which are being claimed, has the Interior Department acted favorably upon any of those claims?

Assistant Secretary ROOSEVELT. Only in the case of the Honolulu Consolidated.

Representative LENROOT. And how much of that?

Commander RICHARDSON. Recommended for clear listing or all clear listing.

The CHAIRMAN. See if these figures are correct, which will answer your question: Patented, Southern Pacific, 15,360 acres; patented to others, 3,360 acres; patent order issued, 2,240 acres.

Commander RICHARDSON. Yes, sir; that is Honolulu.

The CHAIRMAN. Making a total of 9,760; lands in reserved, unclaimed, 2,240 acres ; land in reserve affected by the bill, 7,520 acres. Commander RICHARDSON. There are apparent discrepancies there, caused by the fact that in one case they state a section contained 640 acres, where in the other case they take actual acres, which in some cases is in excess of 640.

The CHAIRMAN. But that is approximately correct, is it?

Commander RICHARDSON. Yes; except so far as the records of the Navy Department show as to all the land; the whole 11,000 acres are claimed.

Representative LENROOT. According to your records, there are 2,240 acres as to which there is no claim at all.

Commander RICHARDSON. That grows out of the fact that those wells were drilled and no oil discovered, and therefore the work was abandoned.

The CHAIRMAN. Now, Mr. Roosevelt, if you desire that reserve for two purposes for current use and for a reserve for future use-and this leasing bill only affected 9,760 acres out of the total of 30,720 acres, and you should prevail in your suits against the Southern Pacific Co., would you not then be in a position, under this bill, to obtain your current oil through the leasing process and retain the rest of the oil for your permanent reserve?

Assistant Secretary ROOSEVELT. We do not know whether, under the bill as drafted at the present time, any of the titles would be established by leasehold.

The CHAIRMAN. What I am getting at is this: This bill does not deal or attempt to deal with the patented land at the present time. You are attacking the patent lands.

Assistant Secretary ROOSEVELT. No; we are trying to hold on to the Navy lands.

The CHAIRMAN. You are attacking the title to the patented lands in the naval reserves.

Assistant Secretary ROOSEVELT. We are not attacking the title to the land which is held by private ownership by unassailable title; in other words, 3,500 acres.

The CHAIRMAN. But you are attacking the railroad lands.

Assistant Secretary ROOSEVELT. We are attacking 15,000 acres of railroad land and attacking the 11,230 acres which are unpatented, to which the title is under dispute, but are not attacking any patented lands except those of the Southern Pacific.

The CHAIRMAN. Then, I am submitting this question to you in the interest of the Navy-and I take it that all of us here are more or less interested in the Navy, probably very much so you stated a while ago that there was a double purpose in having Naval Reserve No. 2, partly for current use and partly for future reserve. If you

had all of the land in that reserve you would be drilling and operating on part of it?

Assistant Secretary ROOSEVELT. I think I might state that if we obtain the title to the 11,000 acres of unpatented land and in addition to that prevail in the Southern Pacific suit, it will give us 26,500 acres out of the total of 30,000; and in that case we should probably not use the oil for current use, if we could help it; in other words, we should prefer to get the oil from other fields, privately owned, either in this country or in Mexico, in order to conserve this as a permanent reserve. That depends largely on what percentage of the whole we get.

The CHAIRMAN. You would buy oil outside of the country, then, for the Navy?

Assistant Secretary ROOSEVELT. Yes, that has been suggested and, I think, agreed to by almost everybody who has gone into it, that it is better for this country that we should buy oil outside for our current needs, in order to conserve our own supply; in other words, to use the Mexican fields or the South American fields for current supply, depending largely on price.

Senator CLARK. Has the Navy ever considered the possibility of any other fuel, in view of the great danger of the oil supply being exhausted?

Assistant Secretary ROOSEVELT. There is no other fuel except coal. Senator CLARK. Not now.

Assistant Secretary ROOSEVELT. Not now.

Senator CLARK. But I ask if they have ever gone into the possibility of any other fuel; has there been any experimental action taken?

Assistant Secretary ROOSEVELT. I do not think any other fuel is known.

The CHAIRMAN. Then, carried to its ultimate conclusion, if you are going to look forward to indefinite future, there will come a time in the indefinite future when all the oil in the United States will be exhausted.

Assistant Secretary ROOSEVELT. Yes.

The CHAIRMAN. Under that theory of the thing all the oil in the United States should be reserved, should it not, for the Navy?

Assistant Secretary ROOSEVELT. No; if the Navy could obtain reserves Nos. 1 and 2, after all the rest of the oil in the United States is exhausted this would keep the Navy going for a great many years. The CHAIRMAN. What would you do after these are gone?

Assistant Secretary ROOSEVELT. After those have gone, then we would fall back on these shale lands and use them for another period of years. That practically will take care of the fuel for the Navy for two generations to come, at least.

The CHAIRMAN. Then you do have in mind falling back on these shale reserves?

Assistant Secretary ROOSEVELT. Only after every other source of supply has gone.

The CHAIRMAN. What will be the effect in the price of oil to the people of this country if the supply is decreased by reserves that will not be used for hundreds of years; is that a problem we should consider?

74260-17-2

Assistant Secretary ROOSEVELT. These reserves?

The CHAIRMAN. No; supposing the Navy, looking ahead for a hundred years, proceeds to withdraw and hold in the ground indefinite quantities, large areas of oil reserves, will it not have a tendency to create a monopoly, and cause the price of oil in this country to be greatly enhanced to the people?

Assistant Secretary ROOSEVELT. I should say certainly not, because the total of the oil in reserves Nos. 1 and 2 and 3, and the possibilities of the shale reserve, are such a small percentage of the total oil supply of the country at the present time that it would not have any effect.

Senator CLARK. You do not think this creation of naval reserves has ceased, do you?

Assistant Secretary ROOSEVELT. I think so. I think we will do pretty well with what we get out of this.

The CHAIRMAN. Where are the other oil fields?

Assistant Secretary ROOSEVELT. This is only a very small section of the California field. In addition to that, of course, there are the Texas fields, Oklahoma fields, Louisiana fields, a certain amount of the Wyoming fields, and the southern Montana fields.

Representative TAYLOR. They are prospecting all the time, and maybe some time oil will be discovered in Nevada.

Assistant Secretary ROOSEVELT. Besides there are the Pennsylvania fields.

Commander RICHARDSON. Just using the estimates of the Geological Survey for the total amount of oil that is producible in California and the estimate of the amount producible in this reserve No. 2, No. 2 is less than 8 per cent of the amount of oil that will be produced in California alone.

The CHAIRMAN. Then do you figure that the oil outside of these reserves will last the people of this country many generations?

Commander RICHARDSON. The Geological Survey stated that the oil estimated to exist in known fields was only about 30 times the annual consumption of oil in the United States.

The CHAIRMAN. Then, in 30 years from now the people of the United States will not have any oil?

Commander RICHARDSON. They never can get it out in 30 years; they will not produce it in 30 years.

Senator CLARK. Where are you going to get it?

Commander RICHARDSON. Mexico.

Assistant Secretary ROOSEVELT. And they have found oil up in Alaska now.

Commander RICHARDSON. In regard to raising the price of oil, even if the reserve of this small percentage for the Navy did raise the price of oil, it ought not to be a bad thing for the oil men, because the Commissioner of Corporations reported that on the average all of the oil had been sold in the United States for less than it cost to produce it.

The CHAIRMAN. As a matter of fact, I am not representing the oil men, but representing 100,000,000 people.

Commander RICHARDSON. It is a bad thing for any industry to sell a product for less than it cost to produce it.

The CHAIRMAN. The people of the country have to be taxed to keep up the Navy, and a part of the upkeep of the Navy is its use of