Mr. FINNEY. Do you want me to tell what occurred when Kelley came to my office, and so forth?

Senator WALSH of Montana. Yes.

Mr. FINNEY. Kelley states that after he came to Washington he had a conference with me and learned that his written letter had not been delivered to the Secretary; that he had four or five copies of this report, from which you have been reading, with him; that he wanted to distribute copies of his report among the attorneys in the solicitor's office, and I advised him not to do so. That is correct, because they had nothing before them whatsoever at that time.

We had some discussion about the Freeman case. I told him it had been referred to by the Secretary in his annual report. He adverts to that in his statement. He says that I said that I was not in favor of reopening the case, but would further consider it and confer with him later. I can not recall definitely what I said about that. I may have said it would take a very strong showing to justify reopening the case or something like that.

He said he had a second conference with me, which I think probably is correct, and that later on he was informed by the commissioner that I determined, quoting from his statement now

that no action should be taken upon my report; that it was not to be submitted to the Secretary for his consideration, and if I saw the Secretary I was not to mention the matter to him in any way; that Finney had determined he did not wish the Secretary to see or know about this report and later when I saw the Secretary this matter was not mentioned by either of us.

I did discuss the report with Kelley, as I say, and I finally did reach the conclusion that the supplemental report did not justify reopening of the case at that time and on that report, but I talked with Doctor Work about it. I did not conceal it from Doctor Work. I told Secretary Work that Kelley was in town and had brought with him a report which disagreed with what was stated at that general hearing. Briefly, I did not read the report to him, but told him briefly the contention was that the area there was not a solid mass of mineral but was interspersed with beds and so forth. I told him in my judgment that did not justify the reopening of the case, and he agreed with that, and I think I probably did tell Spry we had determined not to reopen the case.

Senator WALSH of Montana. Did you tell him that the report stated that as a matter of fact the upper 700 feet of the upper Green River formation comprising an extension of the Carroll section, is made up almost entirely of limy sandstone?

Mr. FINNEY. No, sir, I don't think I told him those exact words. Senator WALSH of Montana. Did you tell him that in effect? Mr. FINNEY. I told him in substance, yes; that that was the contention. I didn't agree with that. That is not in accordance with the testimony in the case.

Senator WALSH of Montana. I understand.

Mr. FINNEY. That is based on a stratigraph taken 15 miles south of the homestead. The testimony at the hearing is not only of the claimants' witnesses, but of another engineer of the department, Kintz. Kintz said he found shale on the surface of the claim and it ran from a trace up to, one fragment was 47 gallons to the ton. If the fundamental and controlling question had been whether this was a solid mass of mineral from the top of the ground down, Mr.

Kelley's report would have been very pertinent, and I think Mr. Kelley had an erroneous idea of what actuated the department in its decision. It was probably justified because I am satisfied these lawyers went back to Denver after that general hearing, and after the Freeman-Summers case had been decided, and bragged they had won a wonderful victory, that they had convinced the department this was a solid mass of mineral. That probably aroused Kelley and actuated him in making the further investigation, but that was not the attitude of the department. I had this report, No. 729, before me and these stratigraphs by Winchester show beds of shale and show intervening areas. Here was my theory: On the surface, according to the testimony, and that includes the testimony of one of the Government engineers, there had been discoveries of shale, exposures or workings. Now, probably that bed of shale in and of itself would not have paid to work. In fact, none of them would pay to work at the present time, but, the miner who takes the piece of land is entitled to consider not only the top but what is below and the presence of these richer beds in the land may properly be coupled with what is on the top and will justify a man going down through this formation with the prospect of developing a mine.

That is the theory of the decision, Senator, right or wrong.

Senator WALSH of Montana. I can understand that perfectly well and I can understand likewise the theory that there being a little strata on the surface, but the richer strata being exposed in cuts and canyons elsewhere, I can very well understand that contention, the discovery being made of the little strata on the top, although there are intervening barren strata, that the contention may very justifiably be made, that having discovered a little strata at the top, he may take into consideration what he learns from the exposures_even miles away, of the existence of the rich strata below. That I can understand perfectly well. I take it you had that in mind in writing your opinion.

Mr. FINNEY. Yes, sir.

Senator WALSH of Montana. But, now having in mind the very unsatisfactory testimony, as recited in the Duncan opinion, concerning the actual discovery that was made, which I think quite conclusively establishes that all the discovery consisted of was to see exposure on the surface, it would seem to me that this statement made here, which I have quoted, is of very particular significance.

Mr. FINNEY. Let me call your attention to this fact, this report does not recite and I don't think Kelley was there at all; that either of his men were on this land at all. They were off 12 or 15 miles to the south making a stratigraph and exposures of one of the banks or one of these cliffs. Everything else is deduction. Parts of the Freeman homestead are at an elevation of around 7,500 or 7,600 feet. Other parts run up to eight thousand and something. I think there is a difference of 800 feet, or something like that. It might be that in the extreme high upper parts there might be an overburden of barren material that was not existent further down. I am not certain about that, but this report does not say that these men were back on the surface at all. As far as I can tell by the report, the stratigraph, they were off all this distance to the south and making a stratigraph of an exposure.

Of course, if men had gone all over the claim and come in and said, "We have examined every part of the locations, and that testimony you had before you in 1927 was false. There wasn't any shale exposed on the claim at all, or no workings there," that would have been a very pertinent thing; but I didn't regard this as very convincing. Bear in mind, it came after there had been two hearings, one of which was attended by this man Kelley's representative under an authorization by the department for him to intervene, in the hearing for the purpose of bringing out the facts. Now, it is true that he did not have this shale-testing retort at the time, but Kintz had been using the Bureau of Mines plant, which is right in this neighborhood, for testing his samples, and there are other very informal methods of making tests. I don't know why they did not make them if they wanted to and put them in at the original hearing.

Senator WALSH of Montana. What study did you make of this report when it came before you?

Mr. FINNEY. Oh, I had it on my desk for several days and read it over two or three times, and I talked to the Secretary about it. Senator WALSH of Montana. Who else read it?

Mr. FINNEY. As far as I know, no one else. No action was taken one way or the other. I just simply did not act on it, the motion for a rehearing being still pending.

Senator WALSH of Montana. Mr. Kelley says, with respect to the matter, as follows:

Mr. Finney now summoned me to Washington, but without consulting Doctor Work.

I brought with me six or seven copies of a detailed 34-page report, which I prepared with the two engineers who had tested the samples of the section they had cut. This report furnished in detail the results of the tests which exploded the theory on which the Freeman-Summers decision was founded. Arriving in Washington, in February, I went to Mr. Finney's office and discovered that my letter to Secretary Work had never been delivered to him. It was still in Mr. Finney's office. I outlined to Mr. Finney the contents of the report which I had brought with me.

But I instantly found Mr. Finney unreceptive and even hostile. He told me that the Secretary's annual report had alluded with approval to the information obtained at the fateful hearing of December 1, 1926, when the oil companies set up their theory which my report demolished.

Have you got that report there?

Mr. FINNEY. Yes. I did not refer to it as a "fateful" hearing, however. That is newspaper language, I guess.

Senator WALSH of Montana. That is Mr. Kelley's language, I take it, Mr. Finney.

I read from the report as follows [reading]:

Immediately prior to the enactment of the leasing act, numerous locations were made upon the shale areas under the placer mining laws, and many of these locations have been followed by applications for patent. It became the duty of the department to consider these claims and to determine whether the locators had complied with the requirements of the general mining laws. A public hearing, attended by many people interested, was held in the department on December 1, 1926, and the subject was thoroughly discussed, Following this hearing, after extended consideration by the department, decision was rendered in the case of Freemen et al. v. Summers, involving primarily, the question of what constitutes sufficiency of discovery upon certain shale placer mining claims. The department applied the long-established rule that when the locator had discovered mineral within the limits of his claim in a situa

tion and formation that the vein or deposit could be followed to depth, with reasonable assurance that paying minerals will be found, such discovery may form the basis of a patent, where compliance with the law has been had in other respects.

Field investigation is being made of all shale claims, to the end that valid rights may be protected and permitted to be perfected, but that invalid claims, where compliance with the laws has not been had, may be eliminated and canceled. Many difficult questions of law and of fact necessarily arise in these cases, and while general rules of law may be applied, the facts of each case, as disclosed by investigation and evidence, must govern the department in the disposition of the cases.

I suppose you wrote that part of the report, Mr. Finney?

Mr. FINNEY. I think Burlew wrote the annual report that year but undoubtedly I reviewed that. I don't think he would put that in without consulting me.

Senator WALSH of Montana. Well, one would get the impression from this that the decision in the Freeman-Summers case was more or less influenced by the conference on December 1, I would think, Mr. Finney.

Mr. FINNEY. Well, I don't know.

Senator WALSH of Montana. It says

A public hearing, attended by many people interested, was held in the department on December 1, 1926, and the subject was thoroughly discussed. Following this hearing, after extended consideration by the department, decision was rendered in the case of Freeman et al. v. Summers, involving, primarily, the question of what constitutes sufficiency of discovery upon certain shale placer-mining claims.

Mr. FINNEY. Of course, the hearing was called for the purpose of discussing discovery, that is true.

Senator WALSH of Montana. Let me continue from Mr. Kelley's article. [Reading:]

Mr. Finney remarked to me that the facts contained in the report "would prove very embarrassing."

What is the fact about that?

Mr. FINNEY. I don't recall that I said that.

Senator WALSH of Montana (reading):

He asked me also if I knew what the consequences would be if the facts in the report proved to be incorrect. I replied that I was not under any misapprehension and that I was prepared to stand on every line of the report.

What does that mean?

Mr. FINNEY. I think I did say something to him about the fact that he was being criticized by the attorneys and others out there for being unfair, and that if he made a statement to the Secretary which he could not support, it might be troublesome to him.

I want to say right here, if I may, that I had been instrumental, to a degree at least, in keeping Kelley in his job. There had been a lot of criticism of him and I had spoken to the Secretary and suggested that no changes be made.

Senator WALSH of Montana. Criticism from where?

Mr. FINNEY. From lawyers and shale claimants out in Colorado. Senator WALSH of Montana. Out in Colorado?

Mr. FINNEY. Yes.

Senator WALSH of Montana. He continues

Thereupon I laid several copies of the report on his desk. I said that I wished to have the opportunity of taking the facts in the report up with

all the attorneys in the office of the solicitor of the department. At that Finney told me he did not wish me to discuss the report with any of the attorneys. He spoke with some show of feeling.

Mr. FINNEY. I wasn't holding any soviet. As long as I am in a position of control, I am not going to submit to the subordinate the final decision of the case. I don't believe that is proper. If these men had had the case before them, any one of them, and were charged with the duty of preparing the decision, I certainly would have given them a copy of that report. That was not the fact, Senator. No one among the attorneys had the case before them at that time.

Senator WALSH of Montana. When the application for the exercise of supervisory authority was filed, what was done with that application?

Mr. FINNEY. That was referred out to Mr. Phillips, the same attorney who had written the two previous decisions.

Senator WALSH of Montana. Well, when this application by Summers came before you for a rehearing, to whom was that referred?

Mr. FINNEY. That, I think at the time-I am speaking now just from recollection-I think that was just resting in the file with other cases. We usually have 700 or 800 cases on hand down there waiting to be assigned out. A long time afterwards it was assigned.

out to this same Mr. Duncan.

Senator WALSH of Montana. On application, the Kelley report would be exceedingly pertinent, would it not?

Mr. FINNEY. Well, that would depend, of course, on the questions that were raised by the Summers attorney in his motion, and also whether the parties considering it gave any particular weight to that report; yes, sir.

Senator WALSH of Montana. Well, anyway, did the Kelley report go to the solicitor of the department?

Mr. FINNEY. No, sir.

Senator WALSH of Montana. Nor to any of the board of review? Mr. FINNEY. No, sir.

Senator WALSH of Montana. It came before you, and, except for the talk that you had with Doctor Work about it, no one else in the department knew anything about it?

Mr. FINNEY. Well, I told Spry we had decided not to take any action on it.

Senator WALSH of Montana. That was your determination on the

matter.

Mr. FINNEY. Yes; that was while Kelley was still in Washington. Then, the report was referred by me to the General Land Office to be filed in the usual place. In other words, the action was nonaction.

Senator WALSH of Montana. Well, what was eventually done with the application for a rehearing?

Mr. FINNEY. That was held, not acted on, because of the pendency of the Krusknic case, which involved the annual assessment work, and after the decision by the Supreme Court in that case, it was assigned to Mr. Duncan and he prepared a paper which was approved by Assistant Secretary Edwards. I think you will find