Usually the letter had brief history of the case, rather brief. Sometimes they were long. That letter and the record with it came over to the office of the Secretary of the Interior and passed into the office of the solicitor; that is, the law board. It was reviewed usually by an attorney on the board, always by one or more members of this board of appeals. It then passed to the solicitor himself-at that time it was Charles D. Mahaffie-and then, finally, after it passed the gantlet, it went to the Secretary of the Interior for approval. If the Secretary and all were satisfied that a lease should issue, there was a little form at the bottom of this letter of recommendation, "Approved, Secretary of the Interior," and the date.

Then the case and the letter of approval went back to the General Land Office and a lease in several copies, triplicate or quadruplicate, was issued in the General Land Office upon the general lease from which had been previously prepared to fit the respective cases and those lease forms were sent out to the applicant for his signature and execution.

After having been signed, executed by him, they were then returned to the General Land Office and from the General Land Office sent over again to the solicitor's office and reviewed by this same board of appeals and by the solicitor, and then went to the Secretary for signature.

Senator KENDRICK. And the leases were not let on the basis of the highest bidder as they were afterwards?

Mr. FINNEY. Oh, no; these sections 18, 18A, and 19

Senator WALSH. We thought it advisable to take the relief leases first.

Mr. FINNEY. Those were all based upon claims which Congress regarded as equitable and as having, every one of them, bottomed on mining locations made under the prior mining law, the original location having taken place before any of these withdrawals.

Senator KENDRICK. Since you have touched upon this, I will ask you to suggest the form of notice that was published in connection with each lease.

Senator WALSH. He has already given that.

Mr. FINNEY. I read that. You probably thought I was reading the regulations, but I read the form of notice too, Senator.

Senator KENDRICK. All right.

Mr. FINNEY. I have not quite finished, Senator. After the lease was signed by the Secretary, the record and the executed leases were returned to the General Land Office and of course one executed copy delivered to the lessees, of course care having been taken to see that he had paid up all back loyalty.

Senator WALSH. Well now, what attention was paid in this inquiry, Mr. Finney, to the matter of the validity of the location which became the basis of application for the lease?

Mr. FINNEY. We gave it a good deal of attention because in addition to the reports of our own special agents, to which I have referred, we had several reports or memorandums from the special assistants to the Attorney General, who had been in Salt Creek for several years investigating these cases with the idea, I presume, of bringing suits, and these gentlemen had filed several reports, I will

call them, with the Attorney General or the Interior Department. One was dated March 1, 1920. That was supplemented

Senator WALSH. Have you that report with you?

Mr. FINNEY. Yes. That was supplemented and additional matter added on August 20, 1920, and appears to have been received in the General Land Office, Department of the Interior, on September 20, 1920. That was a report of a Mr. A. B. Bouton, special assistant United States attorney. Then there were other letters and reports filed.

I have one letter signed by Mr. Bouton, dated November 15, 1920, and addressed to the Commissioner of the General Land Offices. I also have a copy of a report signed by Mr. R. C. Bell and Mr. A. B. Bouton. That bears on its face the date of January 15, 1921.

All of these reports suggested in substance, I think, that certain mineral locations upon which the Midwest Oil and other companies were applying for leases were based upon so-called dummy locations. I refer specifically to the Fitzhugh-Henshaw location, although some of the reports might have mentioned others. I may say that there were a great many locations on this Salt Creek field. Some locations were made as early as 1887 by an old sage brusher named Cy Iba and several other fellows. I always regarded lots of them as peopleSenator WALSH (interposing). That name is spelled C-y I-b-a. Mr. FINNEY. Yes, sir. Those are the earliest ones I recall. Then in 1890 a man named Shannon, who had been in the Pennsylvania oil fields and was enough of an oil man, I think, to see the possibilities, and he and his associates made a number of locations. As I recall most of them were in the northern part of the field. Then there were a number of others, the Stock family, who lived out in Wyoming, who were interested in some locations.

Senator KENDRICK. Were there not some leases by a man named Johnson also?

Mr. FINNEY. Yes; there was a man named Johnson who participated in some of these locations. I can not recall all, but there were quite a large number of locations made from 1887 up to 1910.

Now, these Fitzhugh-Henshaw locations were made-the date can be obtained from the record, but I think in the early part of 1910that was after the withdrawal, the congressional withdrawal of July 3, 1910, to which I have referred.

Senator KENDRICK. In connection with those early day locations referred to, you understand that for perhaps 6 or 8 or 10 years previous to that the presence of the oil was a matter of common knowledge in that country.

Mr. FINNEY. I have heard and seen in various matter in the departmental records that oil was known in the very early days and that some of the old Mormons and other pioneers greased the wagon wheels with oil that seeped out around Salt Creek. That was in the form of seeps or springs.

The CHAIRMAN. Is there any reason why these Bouton and Bell reports should not be made a part of the record?

Senator WALSH. They ought to be.

The CHAIRMAN. Let us ask that they be made part of the record then.

Mr. FINNEY. Do you want the others?

Senator WALSH. I will read this letter of transmittal of the report first referred to by Mr. Finney. (Reading:)

Hon. CLAY TALLMAN,

Commissioner General Land Office,

DENVER, COLO., September 25, 1920.

Washington, D. C.

DEAR SIR: Having been for some time engaged in making investigations with reference to the Salt Creek oil field, Wyoming, both for the Department of the Interior and Department of Justice, there may be some matters relating thereto which I have learned that would assist you at this time in acting on the pending applications for leases. As a personal friend and as a friend of the court I desire to submit this memorandum for such consideration as it may deserve. It may be that some of the propositions advanced have not heretofore been called to your attention. There are so many phases to the oil-leasing question. The public interest is at all times paramount. The first part of this memorandum tends to show that because of fraud the Midwest interests are not lawfully qualified to receive any lease in the Salt Creek oil field, Wyoming, while the second part shows how the Midwest interests are attempting to evade the maximum limitation of 3,200 acres allowed by the leasing act of February 25, 1920.

If the present applicants are not lawfully entitled to leases, section 17 of that act expressly provides for the sale of such leases, "to the highest responsible bidder by competitive bidding," by such a procedure the Government would receive millions of dollars were the Salt Creek oil field so sold.

If the leases are given away but a few who have already made millions by defiance of the Executive orders of withdrawal will be benefited. The natural resources belong to the people of the United States rather than to a few who are exploiting and making capital of the hardships of some early pioneers who in no wise will be benefited by any lease. May not these leases be sold and all law-abiding citizens have an equal opportunity as well as receiving the benefit of the proceeds of such sales added to the reclamation funds?

Very respectfully,

A. B. BOUTON,

Special Assistant United States Attorney.

Senator WALSH. Then the report follows:

SOME FACTS AND CIRCUMSTANCES RESPECTING THE INTEREST OF THE MIDWEST REFINING CO. AND ALLIED INTERESTS

The ATTORNEY GENERAL, Washington, D. C.

DENVER, COLO., March 1, 1920.

SIR: May 2, 1917, as a special agent of the General Land Office, I prepared and submitted to the Interior Department a memorandum on the FitzhughHenshaw locations. The principal theme therein discussed was the facts and circumstances showing that that group of locators was not in possession as occupants or claimants and was not in prosecution of work leading to discovery at the time the withdrawal order of September 27, 1909, was issued.

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In that memorandum there was a short discussion on the bona fides of the Fitzhugh-Henshaw locators, on pages 78 to 81, which began with the statement, "The bona fides of this group of locators has never been definitely ascertained," and concluded, 'It has been considered useless to make an inquiry into the bona fides of these locators." That was probably true at that time, as that memorandum established the fact that said group of locators was not within the protection of the act of June 25, 1910, which saved the rights of a certain class of claimants to withdrawn oil lands. Subsequent investigations made by this office has resulted in the securing of additional data which corroborates the conclusion reached in said memorandum that this group of locators and others claiming through and under them were not within the protection of the proviso in the Pickett Act.

The leasing act approved February 25, 1920, provided in sections 18 and 18a for a certain measure of relief to occupants or claimants of lands withdrawn September 27, 1909, who were in possession prior to July 3, 1910. The Fitzhugh-Henshaw group of locators had taken possession prior to July 3, 1910, hence their successors in interest can avail themselves of the relief afforded by the provisions of said act. Section 18 is limited by the express proviso that

"No claimant for a lease who has been guilty of any fraud or who had knowledge or reasonable grounds to know of any fraud, or who has not acted honestly and in good faith, shall be entitled to any of the benefits of this section." While section 18a provides a method of relief where the validity of any gas or petroleum placer claim is drawn in question.

It is therefore important to know of the bona fides of applicants for leases under scetion 18. It is not believed that Congress intended to extend a greater measure of relief under section 18a than that provided in section 18. If under section 18a a less amount were collected for past production or a smaller royalty provided for future production, then it were better not to question the validity of a doubtful claim. Nor would the President grant a lease to one denied a lease under section 18 because of fraud.

This office has made an investigation relative to the bona fides of the Fitzhugh-Henshaw group of locators. The matter herein set forth has not been furnished to the Department of the Interior, and so far as we are informed the General Land Office does not know of the existence of the evidence and matters herein discussed. It is respectfully recommended that the Department of the Interior be furnished a copy of the following:

MEMORANDUM ON THE BONA FIDES OF THE FITZHUGH-HENSHAW GROUP OF LOCATORS

The Fitzhugh-Henshaw group of locators made a large number of locations in the Salt Creek oil field in Wyoming. These locations, 120 in number, were made on lands that had been withdrawn by Executive order on September 27, 1909. One or two of these locations were made in November and December, 1909. Nearly all of the locations were made in February and March, 1910, and recorded May 4, 1910.

The persons who made these locations are the following, all of whom were at that date residents of San Francisco and Oakland, Calif.:

William G. Henshaw, a busines man and financier-there is evidence to show that he furnished all the money, attended to all the business, was the real party in interest, took all the proceeds out of the transactions, allowing a mere nominal sum to those whose names he had had (sic) used as locators for him; Hetty T. Henshaw, wife of William G. Henshaw; William M. Fitzhugh, a promoterlocator, who entered into contracts with William G. Henshaw to make these locations and give William G. Henshaw three-fourths of all that was made out of the transaction agreeing in advance to deed the lands to a corporation as and when requested to do so by William G. Henshaw; Mary E. Fitzhugh, wife of William M. Fitzhugh.

The four names given above were used on each one of the 120 locations with four of the following persons, no particular method of selecting or rotation being used: F. W. Henshaw, a California judge, brother of William G. Henshaw; Helen W. Henshaw, wife of F. W. Henshaw; Lillie T. Hall, a sister of Hetty T. Henshaw; E. M. Hall, husband of Lillie T. Hall; Alla S. Chickering, daughter of William G. Henshaw; Harry Chickering, at that time husband of Alla S Chickering; Ethel K. Nichols, a niece of Hetty T. Henshaw; Henry D. Nichols, husband of Ethel K. Nichols; H. J. Knowles, no relation, freely admits his name was used merely as an accomodation to William G. Henshaw.

The following four names were used, two of them once and two of them twice, or in other words on two locations only. They were used in the late fall of 1909. All the others were used in 1910 but not these four. It was stated that locations had been made in 1909 using these names, but as they were in the office of William G. Henshaw those locations were torn up and relatives substituted. No other than the two locations mentioned, however, were recorded: Charles T. Rudolph, Emil Nusbaumer, William H. Metcalf, P. C. Black. All were attorneys or employees of William G. Henshaw in his office in San Francisco, Calif.

Fraud may be defined to be the wilful acquisition or attempt to acquire the property, or to defeat the rights of another by means which are deceptive and unjust. The ordinary means of fraud are either false representations or concealment of the facts. The particular fraud which will be set forth in this memorandum to show the lack of good faith in behalf of this group of locators is illustrated and defined in the opinions given by several able judges. It is believed that the facts set forth herein bring the locations made in the names of these groups of locators within the principle denounced as fraudulent in the following cases:

*

"The prohibition contained in section 2331 against the location of more than twenty acres for each individual claimant' (sic) is direct and positive, and limits the amount of ground that any one claimant may appropriate, either individually or in association claim, at the time of the location. The question here is, not whether an individual can purchase mining claims after they have been located and hold them in his own name, but whether an individual can, by the use of the names of his friends, relatives, or employees as dummies, locate for his own benefit a greater area of mining ground than that allowed by law. * * * The few restrictions imposed are only intended to prevent the primary location and accumulation of large tracts of land by a few persons, and to encourage the exploration of the mineral resources of the public land by actual bona fide locators. The scheme of using the names of dummy locators in making the location of a mining claim for the purpose of securing a concealed interest in such claim appears to be contrary to the purpose of the statute; but when this scheme is used to secure an interest in a claim for a single individual, not only concealed but in excess of the limit of 20 acres, it is plainly in violation of the letter of the law, and when, as in this case, all the locators had knowledge of the concealed interest and were parties to the transaction, it rendered the location void." (Cook v. Klonos et al., 164 Fed. 529, 537, 538, 539.)

"It follows, therefore, with exact logic, that five persons may by means of proper association make valid location of 100 acres in one claim, so that it did not include more than 20 acres to each individual. This does not mean that while the five may, by associating themselves together, locate 100 acres in one claim, one or two of the five can acquire by such location substantially all of the claim leaving the others with proportionately a very small or nominal interest therein, but each must acquire an interest not to exceed 20 acres.

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"Any scheme or device entered into whereby one individual is to acquire more than that amount or proportion in area constitutes a fraud upon the law, and consequently a fraud upon the Government, from which the title is to be acquired, and any location made in pursuance of such a scheme or device is without legal support and void. The proposition seems to be well established. Now, in the case under review, the very articles of agreement put the claimant beyond the pale of the law, while the testimony establishes the illegality of the scheme beyond peradventure. The location, although made in the name of the association, two of the parties thereto were to have but a nominal interest in the claim, one less than one-fifth, and one more than onehalf, giving the latter, of course more than 50 acres proportionately in the claim. So that, regardless of the discovery, regardless of the marking on the ground, or even the assessment work, the claim was void, and could not avail the locators in any stage." (Nome & Sinook v. Snyder, 187 Fed. 385, 388-389.) "It is manifest that Burge could acquire no rights in mineral lands as against the Government by such subterfuge, and since the Brookshire Co. was in possession and claiming under him, and as his representative or agent, it necessarily follows that its interests were no greater than his. It is true there is no limitation as to the number of mining claims an individual or association of individuals may locate, but it is provided that no claim shall exceed 20 acres for each individual (sec. 2331 R. S. (Comp. St. 1916, par. 4630)), or 160 acres for any association (sec. 2330 R. S. (Comp. St. 1916, par. 4629)). This is a direct and positive limitation of the amount of mining ground any one claimant may appropriate individually or as a member of an association in any one claim, and he can not evade the law by the use of the names of his friends, relatives, or employees. Any device whereby one person is to acquire more than 20 acres, or an association more than 160 acres in area, by one discovery, constitutes a fraud upon the Government and is without legal support and void." (United States v. Brookshire Oil Co. et al., 242 Fed. 718-721.)

It is not the intention to enter into any discussion of the evidence hereinafter set out. That evidence is all available and is clear and distinct. The contracts are on record. Their construction and interpretation has been made by the parties thereto and their successors in interest who will make the present application for leases. They have been so applied and enforced that no other than an illegal and unlawful agreement can be said to have existed. William M. Fitzhugh tried to interpret the contracts in the only possible legal way. That was to claim a one-fourth interest by reason of the fact that he and his wife were locators and together entitled to one-fourth of each claim.