SCHEDULE D.-Oil and gas applications for submerged area in Gulf of Mexico off the States of Louisiana and Texas which were filed on or after June 23, 1947-Continued

SCHEDULE D.-Oil and gas applications for submerged area in Gulf of Mexico off the States of Louisiana and Texas which were filed on or after June 23, 1947-Continued

NOTE.-Approximate average acreage is estimated at 2,500 acres per application.

Mr. DANIEL. In answer to this argument that this land ought to be taken over by the Federal Government to divide up among all the people so the people of Missouri and some of these other States will get some of the profits from these leases and royalties, I want to read into the record this observation:

That there are now eleven-thousand-three-hundred-and-sixty-odd. Federal oil leases in effect, issued by the Department of the Interior on 8,512,687 acres of public lands; $62,000,000 worth of oil was produced last year and, as has been pointed out already, over one-third of it at 5 percent royalty.

I want to point out, of all that public lands leased by the Department of the Interior, the State of Missouri, and the other States. are not getting a dime outside of the 17 reclamation States, and 521⁄2 percent of that money goes into the reclamation fund, not directly to those States, but to be appropriated by Congress.

The proposed Federal bill proposed would let the money go the same way, not to all the States of the Union. The Federal bill is willing to give 90 percent of all this income and keep 10 percent for administrative expenses. It would not go to all the people of the United States even under the Federal Government's proposal.

Mr. WOODWARD. General, you said $62,000,000 worth of oil. Is that barrels or dollars?

Mr. DANIEL. I want to change that to barrels-62,000,000 barrels of oil.

Mr. WOODWARD. Of which 22 million was at a 5 percent royalty? Mr. DANIEL. Yes. Over a third at 5-percent royalty.

Mr. WOODWARD. The value of that 62,000,000 barrels of oil, the Government only got a royalty out of it. It didn't get the sales price of all the oil.

Mr. DANIEL. The Government just received the royalty. Over onethird of it at just 5 percent.

Senator MOORE. That is practically nothing. These reclamation States-you divide that up among the 17 reclamation States, and it does not amount to anything among them.

Mr. WOODWARD. General, there has been a lot of newspaper articles appearing around over the country that this was a give-away bill, and the Government of the United States was losing these oil reserves, giving them away to the States. If the Federal Government retained the right to explore these areas and develop them as they have the public lands, if they did not get any more oil out of the marginal sea than they have out of the public lands then the people of the United States would not have much protection in time of war; would they?

Mr. DANIEL. No, sir; they certainly would not.

It has been pointed out, but in my summary I want to point out again that the States are getting much more money out of oil companies for these leases than the Federal Government is getting.

I am proud to say that I am on the lease board there in Texas, and we let them at public auction. Anybody can bid on them. Even a Kansas City oil co-op, if it wants to come down and lay the money on the line and make the highest bid.

It will not get it at 2 bits an acre, though. We have a minimum of $2 an acre in Texas, four times the flat price of the Federal Government.

Mr. WOODWARD. That is just a rental to the Federal Government for the first year. There is no bonus at all.

Mr. DANIEL. I call it a 2-bit bonus. You might call it a rental. It does not amount to much either way you take it.

In Texas, I am proud to say that we average higher than any other State for our leases on submerged lands, although the other States have an awfully good average. They have an average so far above the Federal Government on their leases on uplands, that it is pitiful.

The Department of the Interior lease practice and whta it gets out of its leases to the oil companies stinks, to tell you the truth about it, and Mr. Ickes was willing to admit that himself the other day. Yet, he couldn't think of any specific instance-he said he figured he had recommended changes in the law, but he wanted to blame it on Congress without recalling any specific instances where he recommended that you change the law on the subject.

Mr. WOODWARD. General, with all the laxity of those laws referred to by former Secretary Ickes, and this low royalty rate-out of the 62 million barrels produced, there would be only about 8 million barrels of royalty oil under the Federal royalty rate accrue to the Government

Mr. DANIEL. You are figuring a third of the amount at 5 percent? Mr. WOODWARD. It would be less than 8 million barrels. I beg your pardon.

Mr. DANIEL. Yes.

Mr WOODWARD. It would amount to about a day and a half's production for the rest of the United States. Is that about right?

Mr. DANIEL. I will take your word for that. I don't know what the production runs.

Mr. WOODWARD. In other words, the oil industry is producing more oil every 2 days than the Federal Government got last year out of its royalty production from public lands.

Mr. DANIEL. I see.

Mr. WOODWARD. The welfare of the people generally and the people who are talking about giving away the benefits of the United States, if they are looking to the protection of this country in time of war, how would the best interest of all the people of the United States be served?

Mr. DANIEL. There is no doubt about it. The best interest of all the people of the United States would be served best by keeping the control of oil lands and the production of oil close to the people in the States where it has been possible to win two World Wars with it, and not risk it in the National Government.

You look at the countries of this world who have nationalized the mineral resources, and you will find what has happened. Look at Mexico and these South American countries. Their oil production dropped off just as soon as they confiscated the oil lands and took over the minerals.

Look at England today, where they took over the coal mines. The reports that I have read on it show the cost to be twice as much to produce the coal, and they are producing just half as much coal under Government ownership and management. You talk about the Department of the Interior policy that I applied a pretty bad term on a minute ago. I mean it. You have the records already introduced here where, under this system, over half of all these 8,512,000 acres of land

and over half of all the producing acreage is held by 20 companies, and they are big companies.

You have already introduced it in the record here. In Texas, the majority of our leases are held by independents. It has already been shown to you here that the only chance the independents are going to have under this thing is to lease under State operations.

They cannot compete with the big oil interests and cartels and monopolies that can be set up under the Department of the Interior practice, especially under the new Federal bill.

Under the new Federal bill they would allow them to lease over 60,000 acres in one tract. Can you think about an independent being able to go out there and bid against the majors and the big boys on 60,000-acre leases at a time. You know what we do in Texas? The largest lease we will make out there on the Gulf is slightly over 1,400 acres. One well can't hold over 1,400 acres out there. In closer to the shore, 640 acres is the largest lease we will let.

That permits your independents to have a chance to get out there. and compete. That is why we have over half of our leases held by independents.

I want to tell you about what we are getting there. In Texas, we have averaged just a few cents under $20 an acre on all our submergedlands leases. That is the first year. One dollar acre rental after that, on a 5-year lease.

Think about it. Twenty dollars an acre is the average we have received compared with 25 cents an acre received by the Department of the Interior. That is all they will receive if this mineral leasing act applies that Senator Wheeler and Secretary Ickes say ought to apply to these lands.

I have shown you that our rentals are $1 in Texas. What do they get on rentals in the Department of the Interior? Nothing for the second and third years. Twenty-five cents an acre for the fourth year, 50 cents an acre for the fifth year. And on royalties we have already shown that our minimum is 122 percent. We can charge as high as we want. In the Gulf, we have not let any leases yet for over 122 percent, because it is all wildcat stuff, but on the rivers and bays, we have some going up as high as 52 percent royalty.

Senator Donnell isn't here, but I want to answer a question or two that I know he would ask.

I am putting it in the record here to clarify Texas' position as to the funds that we have contributed to the National Association of Attorneys General.

This $500 a month that we have contributed to the National Association of Attorneys General was done so out of State funds appropriated to the attorney general's department for any kind of legal work that we needed to accomplish and expenses in connection with it, for the good of our State.

It is in line with previous acts of that department to hire special counsel, to contribute to the National Association of Attorneys General. We have been doing it for years, and it is all State funds.

For the record, I want to say that the State officials realized back here as a result of House Joint Resolution 225, 2 years ago. What they tried to do, people like Secretary Ickes and Senator Wheeler, is to lay down a smoke screen and say the States are being pushed by oil interests.