The Sunday Oregonian., July 21, 1912, SECTION SIX, Page 2, Image 62

m Q VEAWAY THIS BILL! QN ; DqLLAe5?
He Contends .Nsvvflial He Didhi asA
Is PrcasinA Pradteiousr Soil Against
I 0QXS
bt -vrrLLiAir athertox du put.
OCT In tlie heart of California there
are certain oil lands that have
been yielding 110.000.000 a year
and which are worth a cold billion dol
lars of anybody's money.- All the world
has been believing for a decade that
those lands belonged to the Southern
Pacific Company and to Individuals to
whom that railroad had sold them.
That company and 'those individuals
have been taking unto themselves the
huge profits that have come from
those reservoirs of liquid fuel that Na
ture has stored beneath the desert in
the ages past.
It now appears that all the world
was wrong and that this treasure still
belongs to the ninety million. The
final test of ownership Is to be settled
In a suit for recovery of these lands
which the Government is just now
bringing. Incidentally, here is the most
valuable contention that has ever been
brought into an American court.
That the United fa'ates still holds a
strong claim to the ownership of these
lands was developed in an almost acci
dental way. The man who made the
discovery was not a lawyer at all, but a
young geologist in the employ of the
Government. This man was A. C.
Veatch. a scienti t of the Geological
Survey and head of the Government's
work of land classification. Veatch was
still in his 20s. but had already made
himself a reputation as a whirlwind
lor accomplishing results in the Held.
"hen he went to California to clas
sify oil lands in a purely sclentiia
study of oil resources, the magnitude of
the value of lands which had passed
into the possession of the Southern Pa
cific in connection with the land grants
extended by the Government at the
time of Its building appalled him. He
read the grants out of curiosity and
found, to his surprise, that mineral
lands were excepted from their pro
visions. The only mineral lands that
might be patented to the railroad were
those containing coal and iron. Aside
from this, only agricultural lands
might be cllmed by the company.
A Seleotlut DUcoveT Lavr.
Now oil is scientifically and legally a
mineral. Oil lands were, therefore,
clearly excepted. It was found, how
aver, that title to these lands had been
Issued by the Government. Those
titles, however, noted the exception of
mineral lands. They were therefore not
titles If the lands in qu-stion were min
eral. When the Southern Pacific trans
ferred these land9 It likewise noted the
exceptions. Whoever received its deeds
did so with a knowledge of the flaw In
the title. So these titles were not titles
at all and the land still belongs to the
Government. Such aj th- discovery
of the scientist. Veatch, In the field of
tew.
In the face ef the declaration of the
Xrant that only agricultural land
sheuld be taken by the Southern Pa
cific Scientist Veatch began a further
study of the lands that were claimed
by that company. He found great
tracts of this land to be in a region of
absolute agricultural barrenness In the
western part of the San Joaquin Valley.
Here there was Insufficient rainfall for
the most meager crops. There was no
possibility of Irrigation. Much of the
tend was a heterogeneous mass of
broken foothills that could be farmed
under no conditions. Under it, how
ever, lay those vast reservoln of oil.
This opened up a new poslblllty
of proceeding against the -Southern
Pacific Company for recovery of these
tends. It was evident that that com
pany knew that these were not agri
cultural tends when they were taken.
If this knowledge could be proven, the
fact would be established that these
oil tends had been secured fraudulently
mad they could be recovered.
The test of these lands had been
claimed by the Southern Pacific In 190-4.
A charge of fraudulent acquisition
would be outlawed In six years. Veatch
reported his conclusions to the Geo
logical survey and the report was re
ferred to the Land Office and. finally,
to Secretary Balllnger. of the Interior
Department, Secretary Bellinger re
garded the claim of the Government
as having little basis and so (dis
couraged the filing of a suit for re
ieovery. Little notice was taken of the
we In Washington.
Out in Los Angeles, there is a young
special assistant to the Attorney-Gen-crui
vtiii also bolleves in acting quick
lv and deliberating afterward. His
name is Willis N. Mills. He studied
the case and in 1909 found that the
statute of limitation would have run
against these charges of fraud if the
suits were not brought immediately.
Young Mills assumed the responsibility
of filing suits against the Southern
Pacific for these lands and did so three
days before the expiration of the Bix
years' limit.
Aliened Fraud Lands.
Bakersfield Is the Pittsburg of Cal
ifornia. It is In the center of the
Southern half of that state and In the
lower end of the San Joaquin Valley
This great valley Is back of the Coast
Range and the winds from the Pacific
have the water largely squeezed out
of them in making the ascent of the
Pacific side of that range. The West
ern side of the San Joaquin Valley Is
arid. Bakersfield Itself comes In for Its
share of heat and dust, but It Is better
situated than are the lands lurtner
west. .
It is theae lands that lie along the
eastern foothills of the Coast Range
that have been found so prodigal In
their oil yields. In the strip that lies
along these foothills have been devel
oped three great oil fields. These are.
hnu-inninor at the north, the McKlttrlck,
the Midway, and the Sunset. Across the
vallev lies the Kern River district, an
older field. These areas are the heart
of the oil producing sections of Call
fornia.
Here a company Is paying royal
ties to the Southern Pacific on a par-
tiallv develoDed quarter section ol lana.
Its returns are. nevertheless, such that
It pays dividends on a capltalzatlon of
S50O.000. Here a section of land. 640
acres, was sold to a British syndicate
for 11.500.000. and proved a gooa in
vestment. J. J. Mack and J. M. Melth
bought 00 acres in the Kern River
district from the Southern Pacific at
j 2.50 an acre. Already tney nave pront
ed to the extent of S3.000.000 and
their wells are still producing 2.000,
ooo barrels of oil a year.
It is in the McKlttrlck district that
the Government's primary cases for
recovery of land for alleged iraua
are located. There is but 6000 acres of
this land. It Is worth 2000 an acre
making an aggregate of J12.000.000
These lands were patented to the rail
rnnii in 1904. Tse Government, in its
suit, has shown that the geologist of
the railway company lnvestigatea inese
lands and reported them as oil lands
before it asked for patents. Attorney
Mills got possession of a large amount
of Southern Pacific correspondence that
had passed through the San Francisco
fire and which the company believed
had been destroyed and which proves
conclusively that the company knew
that these were oil lands and located
them on that account. There could
r.v hocn no other reason for lo
cating alleged agricultural lands in
these dry and DroKen tootnuis.
Pyramiding Vast Millions.
The Southern Pacific grant (rives
that company every alternate section
for 20 miles on either side of the
railroad. When there are lands al
ready appropriated In that strip or
which are reserved as National For
ests or for some similar purpose, the
railroad may select other lands outside
the 20-mile limit. Dut wiinin me ov
n. limit This means that the com
pany has the pick of tends in a belt
60 miles wide. This belt Includes o.l
lands In one-half the McKlttrlck, the
Midway and the Sunset fields, the S0
mile limit bisecting them. It gave the
railroad every alternate section in the
Kern -River district.
In the first three of these fields the
railroads secured as agricultural lands
600,000 acres of land. Actual land
deals In this region show this land to
be worth $2000 an acre. It Ur sellins
for that price. This deal, therefore,
deprived the Government of land that
today has a market value of $1,000,000,
000. But the patents to this land spe
cifically except mineral lands, and the
present contention ts that the title of
these lands still rests with the United
States. ,
In the Kern River field the railroad
has questionable title to 25,000 acres
worth $1500 an acre, or $37,600,000.
When oil was discovered In this dis
trict even the railroad company failed
to realise the value of the discovery. It
was then selling its lands at $2.50 an
acre, and settlers secured absolutely
manff fa Recover i ' 'CW
f isk 4 ME i
all of this valuable Kern River land at
that price, with the exception of a
single half section which the company
reserved. In theee transfers the ex
ception of mineral lands holds and, ac
cording to the present contention, these
fields studded with Innumerable pro
ducing wells, re. still the property of
the United States.
So the sum total of values In prop
erty that the Government owned, but
knew not of, and which was discovered
by a young scientist who worked for
$3500, and the fight for which is being
made by a young atorney who draws
' y1
$4000 a year. Is $1,047,500,000, or about
$11.65 to eacli and every man, woman
and child In the United States.
The suit for the 6000 acres in the Elk
Hill region is already in progress.
Hearings before a commissioner began
May 15 last in Los Angeles. These
were Geologist Veatch and Charles W.
Eberleln. the latter a former employe
of the Southern Pacific'. He served as
land agent for that road from 1903 to
1908. It was during those days that the
old-time interests that had been hand
ed down from the time of Huntington
were fighting to the death with Uie
Harriman Interests that had Just
assumed control of the road.
Eberlein was the personal represen
tative of Harriman and had been sent
out from New York to put to rout the
men of the old regime. He refused to
make any statement until he was duly
summoned and sworn. Then he told
the whole Inside story of the land
operations of the men on the inside of
the Southern Pacific, alleging that this
Inner ring had systematically looted
the companj for many years. Accord
ing to his evidence, one of the most
successful methods of doing this loot
ing was through the Kern Trading &
Oil Company. One of the operations of
this company, which was composed al
most exclusively of men on the inside
of the Southern Pacific Company, will
show the manner of operation.
The Southern Pacific had been leas
ing its lands to private individuals, re
ceiving one-fifth of all oil produced.
The officials of the Southern Pacific
who composed the Kern Trading & OH
Company, according to Eberlein's tes
timory, leased all the company's oil
lands to that company for one-tenth of
the oil produced. Then the oil com
pany leased to the operator for one
fifth and thus received the difference,
which was an amount equal to that re
ceived by the owners, the Southern
Pacific- The old crowd had so perfect
ed this nlan that they were, quite nat
urally, anxious to keep Its operations
secret from the Harriman interests. As
land agent for the road Eberleln event
ually came into possession of the facts
and trouble resulted.
The two factions were at daggers'
points at the time of the San Francisco
fire. At this time many of the records
of the Southern Pacific and its orn
cers were destroyed. Eberlein person
ally rescued a great batch of papers
which were much charred and burned.
Some of them were cinders but upon
these cinders could be traced the rec
ord of what had previously been writ
tan. These cinders were photographed.
One particularly Important piece of
correspondence between inese umuiais
which showed their knowledge of the
existence of oil in the Elk Hill land
was burned from the bottom up to the
very edge of the signature and there
the flames stopped their work. Alto
gether, the possession of this corres
nimHonfA has made out for the Govern-
I ::ient a case that they claim cannot be
refuted. The next few months will wit
ness the fighting out of this case.
Record of Other Cases.
If this case, which holds that this
particular $12,000,000 piece of land was
secured through fraud Is lost, the Gov
ernment will proceed for its possession
as well as these other lands aggregat
ing over $1,000,000,000 in value upon
the second count. It will hold that,
being mineral lands and therefore ex
empt from the provisions of the grant,
all these lands are still the property
n .Ka n n.rAnmAn , Pfltant f1, mill.
j oral land have never passed from the
Government to the Southern Pacific.
Itself the owner outright of about one-
third of the producing oil wells of Call
i fornia. It will have as fine a collection
of forests or aerricKs as were ever set
up in the midst of any desert at any
point in the world. It will be the soe
proprietor of oil gushers by the simple
process of putting down a well. It will
find that It owns many millions of
barrels of oil that rest calmly behind
dams that have been thrown across the
mouths of canyons, thus forming reser
voirs for storage as water Is stored for
Irrigation.
Not only this, but a precedent will
have been established that may be ap
plied in many other localities where the
Government has granted lands to rail
roads and retained the mineral rights, j
Wyoming is already developing oil
fields, some of which are located on
lands that aro claimed by railroads.
There are cases Innumerable where
railroads have laid claim to lands that
It has claimed as agricultural, when, as
a matter of fact, their chief value is
because of the metals that lie beneath
them or the timber that grows from
them. The case is the most Important
from the standpoint of the public do
main of any that has ever been brought
Other Oil Land Grabbers.
In no district was the Southern Pa
cific able to appropriate unto itself
more than half the land. Its grants
called for alternate sections. Those
other sections were the prey of the in
dividual land grabbers. Their methods
have been many and interesting.
The development of oil lands on the
public domain of the West has been
going on for little more than a decade.
Ten years Is so short a time that Con
gress has found It inadequate for the
framing of any law with reference to
the acquisition of lands as oil lands. It
has therefore become almost a neces
sity that the oil prospector should dis
semble. The first resort was to tha
location of oil land as a homestead or
a desert claim. This process was, how
ever, tedious and but limited areas
could In this way be secured.
When the wealth In oil In this re
gion of little fuel became apparent,
resort was taken to other method!--The
placer claim was the Instrument
that lent Itself most readily to the
matter in hand. The placer claim en
titles its locator to a rectangular 20
acre tract of land. He may locate but
one tract at a time, but he may keep
on locating ad Infinitum. The great
est difficulty 1 the provision that he
must do $100 worth of development
work on each claim each year. The
law is Intended to develop minerals
and performs its purpose very credit
ably when rightly applied.
But these oil men found a method
of getting more land than It was in
tended that they should have. They
found this acquisition of 20 acres at a
time was very tedious. So the Joint
claim was invented. Under the Joint
claim idea eight persons could pool
their interests, take 20 acres each and
concentrate the assessment work for
all the claims at one point. The in
dividual oil operator, taking advan
tage of this arrangement and using the
names of seven dummies along with
his own, was able to gobble eight times
as much oil lands, and there was no
limit to the number of times he could
work the scheme.
Much of this assessment work was
most fantastic. There was no inten
tion In this assessment work to per
form any service other than hold the
claim. Many of these holdings were,
for example, claimed for the gypsum
they showed. The assessment work
was done in this gypsum bearing rock.
There is many a hillside in this oil
territqry that shows terracing of the
most fantastic sort that has been done
in the guise of gypsum development.
Upon these hillsides in the deserts
may be seen long flights of winding
stairs that have been cut out by work
men whose sole business is to expend
given amounts of labor to no avail
that the claims might be held.
But Uncle Sam was profligate In
those days of the wealth of the public
domain. Only of late has he begun to
have a care. This developing spirit Is
shown In the Coallnga field, but a few
miles further toward San Francisco.
The Southern Pacific has a claim upnn
these lands also because of the build
ing of branch railroads In that direc
tion. When 20 miles of this road were
completed the lands were to be al
lotted. Track was laid for a distance
which has recently been shown to have
been a little less than 20 miles. The
lands here, however, were allotted and
are claimed by the railroad. The Gov
ernment has developed two ways of pro
ceeding for the recovery of these lands
on the basis that 20 miles of track
was not built and that the lands were
mineral and therefore exempt from the
grant. In the meantime all this tract
has been withdrawn from settlement.
Altogether It is a merry mixup for
possession of this liquid fuel that Is so
important to the development of the
Pacific Coast. The Government seems
to have the best end of the argument.
(Copyright, 1912, by W. A. Du Puy.)