Senator WALSH. Did you see the letter from the President in relation to the matter? Mr. KENYON. Yes, sir. Senator WALSH. Have you that? Mr. KENYON. I have the file here. We made no copy. Senator WALSH. Will you let us have that? Colonel Donovan, I would like to ask you just this question: Does the suit to which you called our attention, for the basis of recovery from the Sinclair Oil Co., reach back to the time of the original contract? Mr. DONOVAN. That is the purpose, the theory being, Senator, it being fraudulent in its conception, that we are entitled to that relief. Senator WALSH. Even if it were not fraudulent in character, the infirmity arising from the divergence between the proposal and the contract itself would reach back, would it not? Mr. DONOVAN. Yes. Senator WALSH. So that we would be able to recover even on that ground Mr. DONOVAN (interposing). Exactly. Senator WALSH. The market price from the time the contract was originally made, if that was higher than the contract price? Mr. DONOVAN. Yes. Mr. KENYON. Senator, I have before me the letter of the President to which you refer. Senator WALSH. Will you read it? WHITE HOUSE, Washington, March 2, 1928. MY DEAR MR. ATTORNEY GENERAL: Inclosed are some papers relative to what are known as Salt Creek oil lands. I wish that you would take this matter up with the Department of the Interior, have a thorough investigation made of it, and also have some one consult Senator Walsh to see if he has any information with relation to any violation of law. Any action that you find warranted by the facts and the law should be taken in order to protect the rights of the United States. Very truly yours, CALVIN COOLIDGE. The CHAIRMAN. The committee will stand in recess until Tuesday morning at 10 o'clock. (Whereupon, at 12.10 o'clock p. m., Friday, December 14, 1928, the committee recessed until 10 o'clock a. m., Tuseday, December 18, 1928.) SALT CREEK OIL FIELD, WYOMING TUESDAY, DECEMBER 18, 1928 UNITED STATES SENATE, COMMITTEE ON PUBLIC LANDS AND SURVEYS, Washington, D. C. The committee assembled, pursuant to recess, at 10.30 o'clock a. m. in the room of the Committee on Privileges and Elections, Capitol, Hon. Gerald P. Nye presiding. Present: Senators Nye (chairman), Glenn, Ashurst, Wagner, and Larrazolo. Also present: Senator Charles S. Deneen, of Illinois. The CHAIRMAN (at 11.20 a. m.). The committee will be in order. Owing to the absence of Senator Walsh, who desires to question the witnesses who are here this morning, it is deemed advisable to postpone this recessed meeting until 2.30 to-morrow afternoon. However, the Chair desires to announce an executive session of the committee for 2.30 this afternoon to further consider the West appointment. (Whereupon, at 11.22 o'clock a. m., Tuesday, December 18, 1928, the committee recessed until 2.30 o'clock p. m., Wednesday, December 19, 1928.) 359 SALT CREEK OIL FIELD, WYOMING WEDNESDAY, DECEMBER 19, 1928 UNITED STATES SENATE, COMMITTEE ON PUBLIC LANDS AND SURVEYS, Washington, D. C. The committee met, pursuant to recess, at 2.30 o'clock p. m., in the room of the Committee on Elections and Privileges, Capitol, Senator Thomas J. Walsh presiding. Present: Senators Nye (chairman)-(appearing at 2.50 p. m.), Glenn, Kendrick, Walsh (of Montana), Ashurst, Wagner, and Larrazolo. Senator WALSH. Mr. Kenyon, you may come forward. Gentlemen of the committee, the chairman told me that he would be detained for a while and asked me to go on. He said that he would be detained but a very few minutes. STATEMENT OF W. HOUSTON KENYON, JR., SPECIAL ASSISTANT TO THE ATTORNEY GENERAL, WASHINGTON, D. C.-Resumed Senator WALSH. What was the last question asked Mr. Kenyon? [Examining record.] I see you were telling us, Mr. Kenyon, about your connection with that matter. Mr. KENYON. You asked me the last time when I entered the Government service. I have looked that up and find that I was appointed by Attorney General Sargent as a special assistant United States attorney on September 8, 1925; that I was attached to the United States attorney's office in New York and have been ever since, except that on March 12, 1927, my designation was changed to special assistant to the Attorney General, my duties remaining approximately as they had been theretofore; that is, handling matters that were sent to me by Colonel Donovan. Now, I find that I was called by long-distance telephone at New York on March 27 by Colonel Donovan's chief administrative assistant, Mr. Williamson, to come to Washington the next day-that there was a new assignment for me. At that time I had been working principally on the so-called Joyce case in New York, which is a civil action arising out of another matter. I came to Washington on March 28 and was there handed papers in this matter, which at that time included the letter from the President, which I read at the last hearing, the many papers attached to it, some of which had come to you, and also data which had been accumulating at the Department of Justice about the investigation. I think it included considerable data from Judge Finney, a long memorandum by Mr. Williamson, and I think that data had been furnished from the Interstate Com merce Commission regarding freight rates, and so on. Mr. Chandler and I both came over to Washington that day. We went back on the train that afternoon with a file of papers, not knowing much of what it was about. We took a stateroom on the train and had a table put in and spent the afternoon on the train deciding what we were up against. The next day in New York we continued speculating on what this new job was going to amount to; what it would involve; and the second day in New York we decided that we would have to have help. We got two stenographers and a boy transferred to us for this case; and about that time we had come to the conclusion that the matter was going to develop itself into three heads. In the first place, the letter of the President conveyed a very broad authority to investigate and to take action. It involved, we felt, an investigation of the question of whether the leases issued by the United States Government in the Salt Creek field had been procured from the United States by fraud-fraud existing there at the time of the applications for those leases under the mineral leasing act of 1920 or preexisting fraud imputed to the people who applied for those leases, dating back we do not know how far. The second phase or head of the investigation had to do with the distribution of the nonroyalty oil. We felt that the nonroyalty presented a problem in distribution, because the papers seemed to indicate that the most of this nonroyalty oil went to the Mid-West Refining Co., which was a subsidiary of the Standard Oil Co. of Indiana. So that we thought there was a problem there of possible violation of the Sherman law or of the antitrust provisions contained in section 27 of the mineral leasing act. The third question or head of inquiry, we thought, involved the sale of the royalty oil. The first thing to do was to interview the complainant, W. G. Williams, with whom you had correspondence. We interviewed Mr. Williams and as a result of that interview decided we would first tackle the question of the sale of the Salt Creek royalty oil. Now, the papers indicated that that oil had, as you know, Senator. previously been sold to the Shipping Board; that the contract of sale had been allowed to run out without renewal, and the oil had thereafter been sold to the Sinclair interests. Secretary Finney had sent to the Justice Department a file of photostats which gave us the skeleton or foundation regarding that sale, and we concentrated on that. Very soon after we had gotten into the situation we saw that we ought to move to Washington, and I suppose it was about the 2d or 3d-I can give you the exact date [examining file]-on the 3d of April, Chandler and I moved the whole staff to Washington, where we set up an office. We were given a room and began to work on the Sinclair fraud proposition. Now, our method of attack was this: We first wanted to assemble the documentary story, so we went to the Interior Department and asked to see every file that would in any way relate to the sale of this royalty oil. They brought us a great pile of files-they gave us a room; and we determined at the outset that no papers should be removed from their files, nor files removed from the department in which they were located, nor did we trust stenographers to make |