the understanding of this department that the financial part of the matter does not form an insuperable barrier to a continuance of the work, as sufficient advances can be obtained from the reclamation fund in the Treasury for that purpose.

To say the least, it is exceedingly doubtful whether the clause in the contract authorizing the discontinuance of the work warrants such action when an average height of 150 feet is reached. It is extremely probable that the courts would construe the clause to mean that the entire dam must be constructed to that height before the clause can be invoked.

In view of this fact, and as no vital or substantially important reason for discontinuing the work has been advanced, I have to direct that the suspension of work be revoked and the contractor allowed to proceed with the construction.

Very respectfully,

FRANK PIERCE, Acting Secretary.

Mr. VERTREES. I ask you if this was not the Secretary's action in that matter when he found that the grounds that you were suspending the work on in your statement to the contractor was that it would be dangerous to proceed with the work at that season of the year, and that the real ground was that the trouble you were in with respect to funds, and your disinclination to draw upon the funds for 1910, that he then ordered that work to proceed and set your order of suspension aside?

Mr. NEWELL. He set the order of suspension aside, but I do not think he had the information

Mr. VERTREES. Did you ever at any time indicate to that contractor that the real substantial reason, or a real substantial reason, for your order on him was the financial difficulty?

Mr. NEWELL. I explained to him that that was one of the reasons; yes, sir.

Mr. VERTREES. Did you explain that to Mr. O'Rourke ?
Mr. NEWELL. I think so. He understood it.

Mr. VERTREES. When did you explain it to him?

Mr. NEWELL. I think he understood it at the time he came to my office and asked about it.

Mr. VERTREES. You say you think he understood it. Who made him understand it; did you?

Mr. NEWELL. My statement to him was clear.

Mr. VERTREES. Did you say to him that that was the reason? Mr. NEWELL. I stated the only reason that we could order it was under article 60 of the contract, but that also we would be very glad if we did not have to spend the money that year.

Mr. VERTREES. That you would be very glad of that?

Mr. NEWELL. Yes, sir; we did subsequently spend the money. Mr. VERTREES. So that is the form in which you stated it to him, the way you have just given it to the committee?

Mr. NEWELL. Substantially.

Mr. VERTREES. The letter of May 27, 1909, to which I called your attention, written by Mr. Davis, is now presented to you for the purpose of having it made, Mr. Chairman, a part of the record, and I ask the witness to make it a part of the record.

The CHAIRMAN. Is that one of the letters he has identified?
Mr. VERTREES. Yes, sir.

The CHAIRMAN. That is admitted.

(The letter referred to appears in a previous part of to-day's record.) Mr. VERTREES. Do you know what happened in the Secretary's office with respect to the Roosevelt dam after this conference that you speak of?

Mr. NEWELL. The next I knew about it is that I took that order of Mr. Pierce and went down to him and asked him why he ever signed such a drastic order as that; that it was a very dangerous thing for a man in his position to order an engineer in the field to put his work in that condition. It was like the Secretary of the Navy ordering the captain of a vessel to put his boat in dangerous waters, and if the order was issued it should be modified so as to allow the judgment of the engineer to prevail.

Mr. VERTREES. Is it not a fact that the Secretary submitted it to Assistant Attorney-General Lawler for a legal opinion as to the rights of the Government, and did advise that the Government could not proceed as you had done, without subjecting itself to a penalty of $250 a day?

Mr. NEWELL. I do not think he did before that order was issued. He did not have time.

Mr. VERTREES. Did he afterwards?

Mr. NEWELL. I think he did afterwards.

Mr. VERTREES. Did he ask an opinion on that point?

Mr. NEWELL. He then rescinded that because he said he had not given sufficient weight to article 60 of the contract.

Mr. VERTREES. Did he not direct the work to proceed, and did they not proceed with the work?

Mr. NEWELL. They gave me two subsequent orders, rescinding that instruction of June 24. On July 20 we had two alternative orders recognizing the validity of article 60 of the contract.

Mr. VERTREES. I do not care to go into the details of that legal question, but as a result did they not enter into a sort of compromise by which the work could proceed?

Mr. NEWELL. Yes, sir; Mr. Hill arranged

Mr. VERTREES. Pursuant to the direction of the Secretary's office? Mr. NEWELL. Mr. Hill made an arrangement with the contractor by which the masonry could be confined to the thicker part of the dam.

Mr. VERTREES. What steps did Mr. Ballinger take looking to the reorganization of your office?

Mr. NEWELL. The only steps that I recall now is a memorandum, I think, early in December, 1909.

Mr. VERTREES. In point of fact, did not Mr. Ballinger contend with you that your office was sadly in need of organization, and submit to you a plan of reorganization with diagrams?

Mr. NEWELL. He submitted to me a diagram; yes, sir.

Mr. VERTREES. And a lengthy written opinion, or, rather, statement, of the proposed reorganization of the Reclamation Service, stating what he wanted done, why he wanted it done, and did he not submit it to you for your comments and consideration? Mr. NEWELL. He submitted it to me for my comment. not say he wanted it done. It was a matter for discussion. Mr. VERTREES. I mean by discussion did he not write you a letter to this effect on December 4, 1909:

He did

DEPARTMENT OF THE INTERIOR,

SECRETARY'S OFFICE,

Washington, D. C., December 4, 1909.

MY DEAR MR. NEWELL: I hand you herewith a memorandum and diagram covering proposed changes in the method of handling the affairs of the Reclamation Service. have given considerable study to this subject and am convinced that the scheme here outlined will be productive of a more satisfactory and efficient administration of the service. Of course, you will see that the details have not been fully worked out, but these can be developed in the most advantageous manner through conference. You will please consult with Mr. Arthur Davis, and I will be ready to confer with both of you in the next two or three days regarding the installation of this plan and will advise you when I am able to take it up. I am anxious to make as rapid progress with it as possible and to secure thereby such working relations with all branches of the service as will promote mutual confidence and a high degree of efficiency.

Very truly, yours,

Mr. F. H. NEWELL,

R. A. BALLINGER, Secretary.

Washington, D. C.

Director, U. S. Reclamation Service,

Did you not receive that letter?

Mr. NEWELL. I did.

Mr. VERTREES. I will ask you to give it in evidence as part of your deposition and I ask that it be printed.

The CHAIRMAN. That will be done.

Mr. VERTREES. I also offer, Mr. Chairman, under date of December 4, a plan of the proposed organization as drafted by the Secretary and submitted to Mr. Newell.

The CHAIRMAN. Inclosed with that letter or accompanying the letter?

Mr. VERTREES. Yes, sir; accompanying the letter.

The CHAIRMAN. Is there objection to that?

Mr. PEPPER. Not at all.

The CHAIRMAN. That will be admitted.

Mr. VERTREES. Now, along with that did he not submit to you a diagram also illustrative of the proposed organization?

Mr. NEWELL. Yes, sir.

Mr. VERTREES. I will ask you if that is not the diagram he submitted or its being submitted for the purpose of obtaining your views and opinions?

Mr. NEWELL. Yes, sir; that appears to be it.

Mr. VERTREES. Did he not submit also a diagram showing the organization as it then stood?

Mr. NEWELL. I think not. I do not recall that.

Mr. VERTREES. I show you what purports to be a diagram of that organization as it then stood, and ask you whether it accurately represents it?

Mr. NEWELL. To a certain degree; yes, sir. I would not make a diagram like that, but I think it conveys the general ideas fairly well. Mr. VERTREES. I desire to offer that diagram in evidence, Mr. Chair

man.

The CHAIRMAN. Is there objection. The chair hears none, and it is so ordered.

Mr. PEPPER. I desire to suggest that they be indicated to the stenographer so that they will be understood.

Mr. VERTREES. There is a legend or memorandum on them.
Mr. PEPPER. To show which is which?

Mr. VERTREES. Yes, sir.

(The plans and diagrams are as follows:)

DEPARTMENT OF THE INTERIOR,
Washington, December 4, 1909.

THE PRESENT ORGANIZATION OF THE RECLAMATION SERVICE.

While under the terms of the reclamation act the Secretary of the Interior is immediately and personally responsible for all operations under the act, the present organization vests, in a large measure, the administration and construction in the director. He is now authorized to execute all contracts not exceeding one thousand dollars and all contracts for the execution of building and engineering work under plans outlined in statements and estimates previously approved by the Secretary, without referring such contracts to the Secretary for consideration or approval.

2. He is authorized to examine and approve all accounts of fiscal officers and creditors submitted for direct settlement in the Treasury.

3. He is authorized to correspond directly with the accounting officers of the Treasury and with the heads of bureaus of the Interior and other departments respecting the execution of work outlined and approve statements and estimates and all other matters which do not involve questions of general policy.

4. He is authorized to perform any and all acts necessary to carry into effect operations authorized by statements and estimates previously approved by the Secretary.

He is, under existing practice, required to submit to the Secretary for approval proposed reclamation projects for construction and allotment of funds therefor.

2. To submit to the Secretary quarterly statements and estimates showing work done and work contemplated for ensuing quarter and estimated amount required therefor.

3. To submit to the Secretary all matters of general policy and all legal matters requiring the consideration of the Assistant Attorney-General.

Under this method, as will be perceived, a very large discretion is given to the Director of the Reclamation Bureau, with the result that heretofore that officer has been the real power and alone possessed of full and accurate knowledge as to the status of pending and contemplated work and the conditions and circumstances surrounding the same. As at present organized, no reclamation matter of any kind reaches the Secretary of the Interior except through the director. A rough outline of the present organization is shown on the accompanying diagram.

DEPARTMENT OF THE INTERIOR,
Washington, December 4, 1909.

PROPOSED ORGANIZATION OF THE RECLAMATION SERVICE.

As the Secretary of the Interior is made by law directly responsible for the administraction of the reclamation act, it is proposed to change the method of administration by dividing the service into three branches:

1. Law. In charge of a chief law officer, attached directly to the Secretary's office. 2. Construction.-In charge of a consulting engineer, attached directly to the Secretary's office; and

3. The Reclamation Bureau.-In charge of the director and dealing under the supervision of the Secretary with matters of examinations and surveys, settlement of lands, information, and experimental farming on projects, and accounting and finance. The attached diagram shows roughly the proposed plan of reorganization and the principal officers thereunder.

Under the proposed plan the organization would be:

1. Law.-Chief law officer in the Secretary's office and assistants, and local or reclamation district attorneys, who would be either officers in the continuous employ of the Reclamation Service with headquarters at a central point within each district, or reputable local firms selected at a central point in said district and paid a per diem for the time actually employed in rendering legal services to the field force of the reclamation district. These attorneys would be responsible to the chief law officer.