any more than an individual should demand a pound of flesh. These people are citizens of these United States; we are looking after them just as much as we are looking after any department of the Government like the Navy Department. These men go out there by invitation of this Government, under an act of Congress. The Government has knowledge that there is no discovery of oil on the surface and in the nature of things there will not be; the Government has knowledge that they will have to go to a great depth to validate their claim.

I say this, that irrespective of any technical construction as to diligence, the Government has no right to cut off that right, so long as men are doing their best, I do not care what that consist in, whether it be what we call " diligence" or not, as long as men in good faith are doing their best to develop mines. If a fellow is a bona fide prospector for oil, if he is sick for six months, and can not work, would you hold that against him? I would not. Suppose, for instance, he is snowbound for three months, would you hold that against him? Would you hold anything against him that was beyond his control if you were satisfied that he was bona fide attempting to go after that oil and get it?

Senator PHELAN. The placer-mining law does not require diligence or continuous operation?

Senator CLARK. The whole thing, Senator, that upsets and does to-day upset your view, and the only thing that upsets your view is because that fellow is going to discover something valuable, and the degree of diligence to which he is held-the technical obedience to the law to which he is held-depends upon the value of the discovery. If he is going to make a discovery that will return him $1,000,000 in profit, the law is held against him a good deal stronger and a good deal more to the letter of the law than if they think he is going to get a little.

The CHAIRMAN. Undoubtedly.

Senator CLARK. That is the theory. I am not speaking now of naval reserves, you understand, but that is the theory upon which the public judgment and the action of the various departments of the Government are now very largely based. The propaganda of the conservationists about which you speak is that the man who goes in and does this thing is going to get a very large amount of pecuniary benefit for nothing, except his own individual exertion; and if they would repay him at all for individual exertion, they would "How much could he earn in a day," and pay him that.

say,

Mr. KEARFUL. I think there is a fundamental misconception that goes to the entire argument that you are making, and that is that when a man enters upon a claim for the prospect of oil he does not enter upon it in accordance with the old custom with regard to locating a placer-mine claim for ore, but he enters upon it knowing that any work properly and reasonably leading to discovery must be the sinking of a well, and if he enters upon it for any other purpose than the idea of preparing for the sinking of a well and continuing that work of preparation to sink a well, he does not and can not be held to have entered upon it in good faith; he is held to have entered upon it

The CHAIRMAN. For the purpose of sinking a well?

Mr. KEARFUL. For the purpose of sinking a well and selling it to somebody else. If he enters upon it for the purpose of sinking a well in good faith, then he can only justify his good faith by carrying out that intention to the sinking of the well.

The CHAIRMAN. Suppose he is sick for three months?

Mr. KEARFUL. And he must be held to have contemplated that it cost money to sink a well.

The CHAIRMAN. Or labor?

Mr. KEARFUL. You can not sink a well for oil by digging with a pick and shovel.

Senator CLARK. Sometimes you can.

Representative TAYLOR. Then all prospectors would have to be millionaires, if Mr. Kearful's construction of the law is correct.

Mr. KEARFUL. The Supreme Court of California has announced a rule that has been followed by the department and by the Supreme Court of the United States, held that in order to demonstrate good faith on the part of the locator who enters upon public lands for the purpose of acquiring them, as petroleum lands, he must demonstrate his good faith by the expenditure of whatever money is necessary to that end, and must continue in such operations as are reasonably diligent toward the end of sinking a well, and if he has not the money, or can not get it, then he has demonstrated that he is not in good faith.

Senator CLARK. May I just ask a question there? Then you would bar every man from making a location of oil land under the Placer Mining act that did not have at least $10,000 in cash, and from that up to $60,000, $70,000, $80,000, $90,000, or $100,000 in cash, or the ability to produce and interest men who would give him that money? Mr. KEARFUL. And why should he not be barred?

Senator CLARK. And men ordinarily are not interested to the extent of $10,000 or $15,000 or $20,000 unless they are well satisfied there is something at the end. The man who goes into the development ordinarily does not know whether he is going to get a duster or a producing well.

Mr. KEARFUL. I think every man should be barred who has not the ability, financial and otherwise, to sink a well, because, unless he can sink a well and has available funds sufficient to sink a well, he can not be held to have entered upon that land for the purpose of sinking a well.

Senator CLARK. Let me ask you, is that the holding of the Department of Justice?

Mr. KEARFUL. That is the holding of the Supreme Court of California.

Senator CLARK. Answer the question.

Mr. KEARFUL. And confirmed by the Supreme Court of the United States.

Senator PHELAN. If it is the holding of the Department of Justice it is a good time to change the law right now.

The CHAIRMAN. That is what we want to get at. There is no question but what there has been, under the intensive efforts to acquire this land by certain departments, a harsh construction placed upon the law, and it is certainly legal if the Supreme Court says so; but if the law as interpreted by the Supreme Court is harsh on any

t

body, then Congress is the body that will change the law to assist the courts in giving a decision that is equitable. We understand the Department of Justice's theory is that no man shall be held to be a bona fide locator of an oil claim that has not the money, the means. on hand to get it or available-use any word you want to

Mr. KEARFUL. That is what the Supreme Court of California has held.

The CHAIRMAN. That is not the point I want to get at. If that is the meaning of the law I want to change it.

Senator CLARK. It seems to me there ought to be some opportunity given for a man who is not a rich man to go on and make a location that will hold in some way until he ascertains whether he can get any help or not.

Mr. KEARFUL. That would preclude others who have got the means from going on and developing it.

Senator CLARK. Are you not going to give the fellow of limited means an opportunity? That is the object of the law.

Mr. KEARFUL. He has it to sell.

Senator CLARK. No; he does not have it to sell. For instance, I was out, and I saw what I thought was a promising oil field. I am an oil expert, but I may not have any money. I may not have the present opportunity in view where I can get the money. But I discover that indication that I am sure will lead to a profitable_investment. Therefore I go on with my preliminary work, and as I go on with my preliminary work I go to the commander or the Secretary or some other men who may have been interested in oil heretofore or who may not have been interested in oil heretofore, and I present the matter to them in such a way that after due consideration they may be able to furnish the money to go on with the work. You bar me from making that location until after I have made this arrangement with the commander or the Secretary to furnish the money. It does not seem to me that is right.

Mr. KEARFUL. That is not exactly it. If you make a location and then go and make an arrangement for money and are successful and then proceed to the work you are protected.

The CHAIRMAN. Suppose the prospector is not successful in six months, and the man supporting him goes broke. The prospector expected to go down 2,000 feet, and he has to go down 4,000 feet? Mr. KEARFUL. He would have to quit.

The CHAIRMAN. Suppose before going down 2,000 feet he had gone to a friend and borrowed the money, and that friend is financially exhausted? The prospector says, "I want to go down 2,000 feet. more," and he strikes out to hunt up more and more friends. Then he is gone?

Mr. KEARFUL. Yes; that is what the courts have held, based upon the moral consideration.

Assistant Secretary ROOSEVELT. As a practical consideration, do you suppose, in these oil lands under consideration, any claims based on the poor man who went in there and worked for a while and his money gave out and then he quit work because he could not get any more?

The CHAIRMAN. There are some.

Assistant Secretary ROOSEVELT. I guess there are mighty few.

Senator CLARK. One or two.

Mr. FINNEY. Those were decided outside the naval reserve; that is the law.

Commissioner TALLMAN. That is based upon a little different proposition from what Senator Pittman has in mind. The first proposition is that there is no claim at all until there has been a discovery made. The courts of California generally have decided that where a man is in possession of a claim-just simply possession—and working on it with reasonable diligence, no mere interloper can come in and take it away from him, and the courts have protected that fellow in possession who is doing work leading to discovery as against an outsider. But this is the case where the law comes in, under this withdrawal act of June 25, 1910, and proposes to take this land for the Government or withhold it from anybody else. I do not understand that after there is an existing claim more diligence is required than $100 worth of work a year.

The CHAIRMAN. Not after discovery; we admit that. We are discussing now the right, which has simply been an issue, and the consummation of that right has been cut off by the Government itself. Now, what should the Government do itself?

Representative TAYLOR. We are floundering around in a "twilight zone" of hypothetical speculation.

Representative FERRIS. Let me make a suggestion, which may or may not meet with the approval of anyone. It is very apparent that it is impossible to get the three departments to agree here upon any method of handling these lands. Why not adopt this course: Let this conference come to an end. Let the three Senators acting for the Senate Committee on Public Lands report back to their full committee this entire record we have made here-let somebody brief it down so it may be known what has transpired. Then proceed to go through the Senate. If Senator A wants to elaborate some theory, and has some amendment worked out that he insists upon, take it, and get through the Senate with something. Let the department understand that every paragraph of this bill will be in conference. This is of enough importance for President Wilson to call together the six members of the two bodies that will finally make this bill; call in the Navy Department, the Department of Justice, and the Interior Department, and some night have this out; and if you can get together on a bill that the President will stand for, that the three departments will stand for, that the six conferees will stand for, we can come back and get it adopted; and if we can not get something concrete, that all will stand for, I do not think there is any hope.

Senator CLARK. Mr. Ferris, the purpose of the Senate committee, as I understand it, was to make it possible to eliminate a good deal of the superfluous work along the line you describe. We rather felt that unless we could agree on a proposition that would at least not meet the active opposition of the various departments that it was rather useless going on. That was my feeling.

Senator PHELAN. Mr. Chairman, you remember there was a conference among some people interested before we met, and there were two amendments suggested to H. R. 406. They were never introduced into the record, and I think they ought to be.

The CHAIRMAN. Do you propose them now?

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Senator PHELAN. I propose them now, and it might meet the approval of some of these gentlemen. They have never had a chance to see them. I have them in my hand.

(The documents here presented by Senator Phelan are as follows:) Amend by striking out all of section 9, after the word " further," line 19, page 33, and insert the following:

“That upon relinquishment to the United States within ninety days from the date of this act, or within ninety days after final denial, withdrawal, or dismissal of application for patent, of any claim asserted under the mining laws to any unpatented oil or gas lands included in an order of withdrawal or naval petroleum reserve, the claimant shall be entitled to a lease for each asserted mineral location of one hundred and sixty acres or less upon which such claim is based and upon which said claimant, his predecessors in interest, or those claiming through or under him, have drilled one or more producing oil or gas wells, such lease to be upon a royalty of one-eighth of the production of oil or gas produced and saved therefrom after first deducting from the gross production such oil or gas as may be used in developing or operating said lands, and otherwise on the same terms and conditions as other oil and gas leases granted under the provisions of this act: Provided, That within ninety days from the date of this act, or of final denial, withdrawal, or dismissal of application for patent, the applicant for a lease shall pay to the United States for one-eighth of the oil or gas produced and saved from the lands included in said claim subsequent to February 23, 1915, at the current field price at the time of production, which shall be in full satisfaction for all oil or gas extracted from said land prior to said lease. The privilege herein provided shall extend to claims involved in pending proceedings instituted in the courts of the United States. The Secretary of the Interior is authorized and empowered to make and enforce rules and regulations to carry out this section."

Amend by striking out section 10 and insert in lieu thereof the following: "SEC. 10. That where public lands containing deposits of oil or gas were prior to withdrawal thereof from mineral entry occupied or claimed under the placer mining laws of the United States, and the occupant or claimant thereof had prior to such withdrawal performed or commenced to perform a substantial amount of work, either within or outside of such claims, intended for, adapted, and clearly related to the physical development of the lands as mining claims, and was at date of withdrawal, and with reasonable diligence thereafter to the discovery of oil or gas upon each location involved, in good faith, prosecuting such improvement and development in an efficient manner, and in accordance with good mining practice, such occupant or claimant is hereby declared to have been in diligent prosecution of work leading to discovery of oil or gas upon such claim or claims from the date of such withdrawal and upon application shall receive a patent therefor."

Representative FERRIS. The thing which comes back to me is this: Suppose we did agree, every Senator in the United States Senate and on the Public Lands Committee has a chance to change and modify and sweep it all away and start over again. It seems to me, Senator, if you could get through the Senate with anything that would then put us in conference where we could do something.

Senator CLARK. There comes up the practical proposition that there are a good many members of the Senate who are in favor of some portion of this bill, but opposed in principle to other portions; and, on the other hand, there are some who are in favor of some portions of the bill, but who are not in favor of other portions of the bill. They would not be in favor of either one without the other being attached, a sort of a give and take proposition.

Representative FERRIS. But you Senators would still be able to interrupt the conference and refuse to bring back anything. As we are now acting, the Senate has passed nothing and, of course, to agree in advance to bind the House committee and the Senate of the United States is something we can not do, and it seems to me if those oil