OIL AND GAS LANDS

In the last Administration there were withdrawn from agricultural entry 2,820,000 acres of supposed oil land in California, about 1,500,000 acres in Louisiana (of which only 6,500 acres were known to be vacant, unappropriated land), 75,000 acres in Oregon, and 174,000 acres in Wyoming, making a total of nearly 4,000,000 acres.

In September, 1909, I directed that all public oil lands, whether then withdrawn or not, should be withheld from disposition pending congressional action, for the reason that the existing placer mining law, although made applicable to deposits of this character, is not suitable to such lands, and for the further reason that it seemed desirable to reserve certain fuel-oil deposits for the use of the American Navy. Accordingly the form of all existing withdrawals was changed, and new withdrawals, aggregating 2,750,000 acres, were made, in Arizona, California, Colorado, New Mexico, Utah and Wyoming. Field examinations during the year showed that of the original withdrawals, 2,170,000 acres were not valuable for oil, and they were restored for agricultural entry. Meantime other withdrawals of public oil lands in these States were made, so that on July 1, 1910, the outstanding withdrawals then amounted to 4,550,000 acres.

The needed oil and gas law is essentially a leasing law. In their natural occurrence oil and gas cannot be measured in terms of acres, like coal, and it follows that exclusive t.i.tle to these products can normally be secured only after they reach the surface. Oil should be disposed of as a commodity in terms of barrels of transportable product rather than in acres of real estate (applause). This is, of course, the reason for the practically universal adoption of the leasing system wherever oil land is in private ownership. The Government thus would not be entering on an experiment, but simply putting into effect a plan successfully operated in private contracts. Why should not the Government as a land-owner deal directly with the oil producer rather than through the intervention of a middleman to whom the Government gives t.i.tle to the land? (Applause) The princ.i.p.al underlying feature of such legislation should be the exercise of beneficial control rather than the collection of revenue.

As not only the largest owner of oil lands, but as a prospective large consumer of oil by reason of the increasing use of fuel-oil by the navy, the Federal Government is directly concerned both in encouraging rational development and at the same time insuring the longest possible life to the oil supply. The royalty rates fixed by the Government should neither exceed nor fall below the current rates. But much more important than revenue is the enforcement of regulations to conserve the public interest so that the inconvenience of the lessee shall specifically safeguard oil fields against the penalties from careless drilling and of production in excess of transportation facilities or of market requirement.

One of the difficulties presented, especially in the California fields, is that the Southern Pacific Railroad owns every other section of land in the oil fields, and in those fields the oil seems to be in a common reservoir, or series of reservoirs, communicating through the oil sands, so that the excessive draining of oil at one well, or on the railroad territory generally, would exhaust the oil in the Government land. Hence it is important that if the Government is to have its share of the oil, it should begin the opening and development of wells on its own property. (Laughter and applause)

In view of the joint ownership which the Government and the adjoining land-owners, like the Southern Pacific Railroad, have in the oil reservoirs below the surface, it is a most interesting and intricate question, difficult of solution, but one which ought to address itself at once to the State law-makers, how far the State legislature might impose appropriate restrictions to secure an equitable enjoyment of the common reservoir, and to prevent waste and excessive drainage by the various owners having access to this reservoir (applause). It has been suggested, and I believe the suggestion to be a sound one, that permits be issued to a prospector for oil, giving him the right to prospect for two years over a certain tract of Government land for the discovery of oil, the right to be evidenced by a license for which he pays a small sum. When the oil is discovered, then he acquires t.i.tle to a certain tract, much in the same way as he would acquire t.i.tle under a mining law. Of course, if the system of leasing is adopted, then he would be given the benefit of a lease upon terms like that above suggested. What has been said in respect to oil applies also to Government gas lands.

Under the proposed oil legislation, especially where the Government oil lands embrace an entire oil field, as in many cases, prospectors, operators, consumers, and the public can be benefitted by the adoption of the leasing system. The prospector can be protected in the very expensive work that necessarily antedates discovery. The operator can be protected against impairment of productiveness of the wells which he has leased by reason of the control of drilling and pumping of other wells too closely adjacent or by the prevention of imperfect methods as employed by careless, ignorant or irresponsible operators in the same field, which result in the admission of water to the oil sand; while, of course, the consumer will profit by whatever benefits the prospector or operator receives in reducing the first cost of the oil.

PHOSPHATE LAND

Phosphorus is one of the three essentials to plant growth, the other elements being nitrogen and potash. Of these three, phosphorus is by all odds the greatest element in nature. It is easily extracted in useful form from the phosphate rock, and the United States contains the greatest known deposits of this rock in the world. They are found in Wyoming, Utah and Florida, as well as in South Carolina, Georgia and Tennessee. The Government phosphate lands are confined to Wyoming, Utah and Florida. Prior to March 4, 1909, there were four million acres withdrawn from agricultural entry on the ground that the land covered phosphate rock. Since that time 2,322,000 acres of the land thus withdrawn was found not to contain phosphate in profitable quant.i.ties, while 1,678,000 acres was cla.s.sified properly as phosphate land. During this Administration there has been withdrawn and cla.s.sified 437,000 acres, so that today there is cla.s.sified as phosphate rock land 2,115,000 acres.

The rock is most important in the composition of fertilizers to improve the soil, and as the future is certain to create an enormous demand throughout this country for fertilization, the value to the public of such deposits as these can hardly be exaggerated. Certainly with respect to these deposits a careful policy of Conservation should be followed.

Half of the phosphate of the rock that is mined in private fields in the United States is now exported. As our farming methods grow better the demand for the phosphate will become greater, and it must be arranged so that the supply shall equal the needs of the country. It is uncertain whether the placer or lode law applies to the Government phosphate rock.

There is, therefore, a necessity for some definite and well-considered legislation on this subject, and in aid of such legislation all of the Government lands known to contain valuable phosphate rock are now withdrawn from entry.

A law that would provide a leasing system for the phosphate deposits, together with a provision for the separation of the surface and mineral rights as is already provided for in the case of coal, would seem to meet the need of promoting the development of these deposits and their utilization in the agricultural lands of the West. If it is thought desirable to discourage the exportation of phosphate rock and the saving of it for our own lands, this purpose could be accomplished by conditions in the lease granted by the Government to its lessee. Of course, under the Const.i.tution the Government could not tax and could not prohibit the exportation of phosphate, but as proprietor and owner of the lands in which the phosphate is deposited it could impose conditions upon the kind of sales, whether foreign or domestic, which the lessee might make of the phosphate mined. (Applause)

The tonnage represented by the phosphate lands in Government ownership is very great. But the lesson has been learned in the case of such lands as have pa.s.sed into private ownership in South Carolina, Florida and Tennessee, that the phosphate deposits there are in no sense inexhaustible. Moreover, it is also well understood that in the process of mining phosphate, as it has been pursued, much of the lower grade of phosphate rock which will eventually all be needed has been wasted beyond recovery. Such wasteful methods can easily be prevented, so far as the Government land is concerned, by conditions inserted in the leases.

WATER-POWER SITES

Prior to March 4, 1909, there had been, on the recommendation of the Reclamation Service, withdrawn from agricultural entry, because they were regarded as useful for power sites which ought not to be disposed of as agricultural lands, tracts amounting to about 4,000,000 acres. The withdrawals were hastily made and included a great deal of land that was not useful for power sites. They were intended to include the power sites on twenty-nine rivers in nine States. Since that time 3,475,442 acres have been restored for settlement of the original 4,000,000, because they do not contain power sites; and meantime there have been newly withdrawn 1,245,892 acres on vacant public land and 211,007 acres on entered public land, or a total of 1,456,899 acres. These withdrawals made from time to time cover all the power sites included in the first withdrawals, and many more, on 135 rivers and in 11 States. The disposition of these power sites involves one of the most difficult questions presented in carrying out practical Conservation.

The Forest Service, under a power found in the Statute, has leased a number of these power sites in forest reserves by revocable leases, but no such power exists with respect to power sites that are not located within forest reserves; and the revocable system of leasing is, of course, not a satisfactory one for the purpose of inviting the capital needed to put in proper plants for the transmission of power.

The Statute of 1891, with its amendments, permits the Secretary of the Interior to grant perpetual eas.e.m.e.nts or rights-of-way from water sources over public lands for the primary purpose of irrigation and such electrical current as may be incidentally developed, but no grant can be made under this Statute to concerns whose primary purpose is generating and handling electricity. The Statute of 1901 authorizes the Secretary of the Interior to issue revocable permits over the public lands to electrical power companies, but this Statute is woefully inadequate because it does not authorize the collection of a charge or fix a term of years. Capital is slow to invest in an enterprise founded upon a permit revocable at will.

The subject is one that calls for new legislation. It has been thought that there was danger of combination to obtain possession of all the power sites and to unite them under one control. Whatever the evidence of this, or lack of it, at present we have had enough experience to know that combination would be profitable, and the control of a great number of power sites would enable the holders or owners to raise the price of power at will within certain sections; and the temptation would promptly attract investors, and the danger of monopoly would not be a remote one.

However this may be, it is the plain duty of the Government to see to it that in the utilization and development of all this immense amount of water-power, conditions shall be imposed that will prevent monopoly, and will prevent extortionate charges which are the accompaniment of monopoly. The difficulty of adjusting the matter is accentuated by the relation of the power sites to the water, the fall and flow of which create the power.

In the States where these sites are, the riparian owner does not control or own the power in the water which flows past his land. That power is under the control and within the grant of the State, and generally the rule is that the first user is ent.i.tled to the enjoyment. Now, the possession of the bank or water-power site over which the water is to be conveyed in order to make the power useful, gives to its owner an advantage and a certain kind of control over the use of the water-power, and it is proposed that the Government in dealing with its own lands should use this advantage and lease lands for power sites to those who would develop the power, and impose conditions on the leasehold with reference to the reasonableness of the rates at which the power, when trans.m.u.ted, is to be furnished to the public, and forbidding the union of the particular power with a combination of others made for the purpose of monopoly by forbidding a.s.signment of the lease save by consent of the Government (applause). Serious difficulties are antic.i.p.ated by some in such an attempt on the part of the general Government, because of the sovereign control of the State over the water-power in its natural condition, and the mere proprietorship of the Government in the riparian lands.

It is contended that through its mere proprietary right in the site the central Government has no power to attempt to exercise police jurisdiction with reference to how the water-power in a river owned and controlled by the State shall be used, and that it is a violation of the State's rights. I question the validity of this objection. The Government may impose any conditions that it chooses in its lease of its own property, even though it may have the same purpose and in effect accomplish just what the State would accomplish by the exercise of its sovereignty. That is shown frequently in leases of houses containing a covenant against the use of the house for that which under the law of the State is an unlawful use; and nevertheless, no one has ever contended that that condition, though it be for the stricter enforcement of the State law, is without the power of the lessor as a proprietor of the land which he is leasing.

There are those (and the Director of the Geological Survey, Mr Smith, who has given a great deal of attention to this matter, is one of them) who insist that this matter of trans.m.u.ting water-power into electricity which can be conveyed all over the country and across State lines, is a matter that ought to be retained by the general Government, and that it should avail itself of the ownership of these power sites for the very purpose of coordinating in one general plan the power generated from these Government-owned sites. On the other hand, it is contended that it would relieve a complicated situation if the control of the water-power site and the control of the water were vested in the same sovereignty and ownership, viz: the State, and then were disposed of for development to private lessees under the restrictions needed to preserve the interests of the public from the extortions and abuses of monopoly.

Therefore, bills have been introduced in Congress providing that whenever the State authorities deem a water-power useful they may apply to the Government of the United States for a grant to the State of the adjacent land for a water-power site, and that this grant from the Federal Government to the State shall contain a condition that the State shall never part with the t.i.tle to the water-power site or the water-power, but shall lease it only for a term of years not exceeding fifty, with provisions in the lease by which the rental and the rates for which the power is furnished to the public shall be readjusted at periods less than the term of the lease, say every ten years.

The argument is urged against this disposition of power sites that legislators and State authorities are more subject to corporate influence and control than would be the central Government. In reply it is claimed that a readjustment of the terms of leasehold every ten years would secure to the public and the State just and equitable terms. Then it is said that the State authorities are better able to understand the local need and what is a fair adjustment in the particular locality than would be the authorities at Washington. It has been argued that after the Federal Government parts with t.i.tle to a power site it cannot control the action of the State in fulfilling the conditions of the deed, to which it is answered that in the grant from the Government there may be easily inserted a condition specifying the terms upon which the State may part with the temporary control of the water-power sites, and, indeed, the water-power, and providing for a forfeiture of the t.i.tle to the water-power sites in case the condition is not performed; and giving to the President, in case of such violation of conditions, the power to declare forfeiture and to direct proceedings to restore to the central Government the ownership of the power sites with all the improvements thereon, and that these conditions may be promptly enforced and the land and plants forfeited to the general Government by suit of the United States against the State, which is permissible under the Const.i.tution (applause). And that by such a provision, _in terrorem_, the edict of States and of the legislatures in respect to these lands might be enforced through the general Government.

I do not express an opinion upon the controversy thus made or a preference as to the two methods of treating water-power sites. I shall submit the matter to Congress with all the arguments, and urge that one or the other of the two plans be promptly adopted.

At the risk of wearying my audience I have attempted to state as succinctly as may be the questions of Conservation as they apply to the public domain of the Government, the conditions to which they apply, and the proposed solution of them.

In the outset I alluded to the fact that Conservation had been made to include a great deal more than what I have discussed here. Of course, as I have referred only to the public domain of the Federal Government, I have left untouched the wide field of Conservation with respect to which a heavy responsibility rests upon the States and individuals as well.

But I think it of the utmost importance that after the public attention has been roused to the necessity of a change in our general policy to prevent waste and a selfish appropriation to private and corporate purposes of what should be controlled for the public benefit, those who urge Conservation shall feel the necessity of making clear how Conservation can be practically carried out (applause), and shall propose specific methods and legal provisions and regulations to remedy actual adverse conditions (applause). I am bound to say that the time has come for a halt in general rhapsodies over Conservation, making the word mean every known good in the world (applause), for, after the public attention has been roused, such appeals are of doubtful utility and do not direct the public to the specific course that the people should take, or have their legislators take, in order to promote the cause of Conservation. The rousing of emotions on a subject like this, which has only dim outlines in the minds of the people affected, after a while ceases to be useful, and the whole movement will, if promoted on these lines, die for want of practical direction and of demonstration to the people that practical reforms are intended. (Applause)

I have referred to the course of the last Administration and of the present one in making withdrawals of Government lands from entry under homestead and other laws, and of Congress in removing all doubt as to the validity of these withdrawals as a great step in the direction of practical Conservation (applause). But this is only one of two necessary steps to effect what should be our purpose. It has produced a status quo and prevented waste and irrevocable disposition of the lands until the method for their proper disposition can be formulated, but it is of the utmost importance that such withdrawals should not be regarded as the final step in the course of Conservation, and that the idea should not be allowed to spread that Conservation is the tying up of the natural resources of the Government for indefinite withholding from use, and the remission to remote generations to decide what ought to be done with these means of promoting present general human comfort and progress (great applause). For, if so, it is certain to arouse the greatest opposition to Conservation as a cause, and if it were a correct expression of the purpose of conservationists it ought to arouse such opposition. (Applause)

Real Conservation involves wise, non-wasteful use in the present generation, with every possible means of preservation for succeeding generations; and though the problem to secure this end may be difficult, the burden is on the present generation promptly to solve it and not to run away from it as cowards, lest in the attempt to meet it we may make some mistakes (applause). As I have said elsewhere, the problem is how to save and how to utilize, how to conserve and still develop; for no sane person can contend that it is for the common good that Nature's blessings should be stored only for unborn generations. (Applause)

I beg of you, therefore, in your deliberations and in your informal discussions, when men come forward to suggest evils that the promotion of Conservation is to remedy, that you invite them to point out the specific evils and the specific remedies; that you invite them to come down to details in order that their discussions may flow into channels that shall be useful rather than into periods that shall be eloquent and entertaining without shedding real light on the subject (prolonged applause and cheers). The people should be shown exactly what is needed in order that they may make their representatives in Congress and the State legislatures do their intelligent bidding. (Great and prolonged applause)

President BAKER--The Congress is now adjourned to rea.s.semble at 2 oclock this afternoon.

_SECOND SESSION_

The Congress was called to order by President Baker at 3 oclock p.m.

President BAKER--It gives me a great deal of pleasure to announce that Governor W. R. Stubbs, of Kansas, has kindly consented to preside at this session. Ladies and Gentlemen, Governor Stubbs. (Applause)

Governor STUBBS--Mr President, Ladies and Gentlemen: I am very grateful for your liberal recognition. And I present to you a man who knows much about the laws pertaining to land in the United States, one better fitted to speak on this subject than any other, Senator Knute Nelson, of Minnesota. I take great pleasure in introducing him. (Applause)

Senator NELSON--Mr Chairman, Ladies and Gentlemen: I could not help thinking this forenoon as I looked at the magnificent audience how every delegate and visitor from abroad must conclude that in one respect Conservation in Minnesota has been a success--Conservation of our prosperous and growing humanity.

I am here to speak briefly of our public-land system, past and present, in the hope that we may derive some lessons from the mistakes of the past and have something to guide us in the future. I shall say little of Conservation in general. My aim will be to draw attention to what I deem of importance for the legislative branch of the Government to do in the future, and I shall do so only in general terms, seeking--on account of my position as Chairman of the Senate Committee on Public Lands--to avoid all matters that will lead to controversy.

As those know who have had experience in public affairs, particularly in legislation, all reforms are matters of compromise. Legislation is largely experimental and those who are most progressive and advanced in seeking reforms for the future often find themselves handicapped by those who would make no change; and the result is oftentimes a compromise in which the reformers get only half a loaf.

The natural resources of our country should be conserved by the individual, by the State, and by the Federal Government. For each there is an appropriate field. The farmer must conserve the resources of his farm; the State the resources of its lands, its forests and its waters; and the Federal Government the resources of its mines, its forests, and its lands with all their appurtenances. When the several forces act in harmony, beneficial results of a far-reaching and permanent value will be attained for the preservation and utilization of our resources.

Practical and beneficial Conservation of natural resources on the part of the Federal Government and the State should include and provide for due and efficient utilization of the same for the benefit of the ma.s.ses of the people. The mere conservation and retention of ownership, the mere securing of a larger price for the resource, may prove burdensome rather than a benefit to the public. The ultimate question is not so much how to hold and conserve as how to properly utilize our resources.

The mere holding, or the mere securing of a higher price seems to me to be entirely futile (applause). The aim should not be so much to secure a higher price for the Government as to secure lower price for the consumer and to prevent monopoly (applause). Hence, in the disposal of a resource, care should be taken to prevent combination and monopoly in restraint of trade in respect to the same; and the right, as in the case of railway rates, to regulate the price to the consumer should be retained; in other words, care should be taken and provision should be made that the consumer can obtain the product of the resource at a fair and reasonable rate. To merely conserve and hold at a high price r.e.t.a.r.ds development and enables those who have already secured a large share of a resource to monopolize the market and to secure an exorbitant price for the product of the resource. (Applause) The ultimate object of the conservation of a resource should be to utilize it for the best advantage of the consumer. True Conservation means beneficial use--means utilization.

The close of the Revolutionary War found our country with an empty treasury and a large public debt, but possessed of a large quant.i.ty of valuable public lands northwest of the Ohio river and elsewhere, ceded by Great Britain, supplemented by a cession from Virginia and some of the older States, from which were afterward carved great States, though the public domain was at that time regarded chiefly as an a.s.set from which the Government could obtain revenues for its wants and needs.

The first general land law of a public nature for the disposal of our public lands was pa.s.sed in 1796. This law, after prescribing a system of surveying the public lands, substantially the same as has been since adhered to, provided for the sale of the lands at public auction to the highest bidder, partly for cash and partly on credit.

By the Act of 1800 the minimum price was fixed at $2 an acre, and land not sold at public auction could be bought at private sale at that price.

The Act of 1820 abolished sales on credit and fixed the minimum price at $1.25 per acre, at which rate it has since remained. Lands offered at public sale became known as "offered land," and if not sold at public sale could be obtained at private sale or entry at the minimum price.