clause in the contract saying that if the operator was compelled to shut down he should contribute $100,000 to the community to support it." The views of Mr. Ames are fully concurred in by Mr. Carter (p. 748) when he states that the point made is of no practical application. But this clause, wether it be good or bad, weak or strong, is an afterthought of Mr. Barnes and his associates, injected into this case as an afterthought and solely for the purpose of attempting to save something from the wreck of their senseless and baseless charges that preceded the enactment of Oregon memorial and Senate Resolution 332. CONCLUSION I hope I will not be considered presumptuous in suggesting a course for the committee to follow. If this had been a case in a court, the matter would have been dismissed immediately upon the conclusion of the presentation of the testimony of Mr. Barnes and his associates. There is not a scintilla of evidence to support the charge that the common-carrier clause will be abandoned; nor to support the charge that Herrick did not have ample assets to finance the project; nor to support the charge that there was fraud and collusion between Herrick and certain officials of the Forest Service; nor to support the charge that Herrick received some undue advantage in connection with clause 3 as it was redrafted. I realize, of course, that this is an investigation, and even though Mr. Barnes and his associates made no case, it was right and proper for the committee to proceed with the hearing. It was the desire of the Forest Service that the matter be fully investigated. In fact, Colonel Greeley, in his letter of February 5, 1927, to Senator Stanfield (p. 22) stated: "The Forest Service is charged in effect with fraudulent practice and nothing less than a full investigation of these charges will be satisfactory to me." Instead of the Forest Service attempting in any way to dismiss the case upon the presentation of the testimony of Mr. Barnes and his associates, the Forest Service voluntarily offered to the committee Logging Engineer Huffman. Forest Supervisor Dutton, Assistant District Forester Ames, District Forester Granger, and Assistant Forester Carter, in addition to Colonel Greeley. These men were asked a few questions by me and then submitted to the committee for any and all questions that the committee or that Attorney De Neffe might wish to propound to them. The files of the Forest Service were turned over to Mr. De Neffe and he raked them fore and aft in the hope that he might obtain some information with which to substantiate the charges made by Mr. Barnes, but of no avail. That the Forest Service is clean is obvious. I submit, therefore that the Forest Service is entitled to receive specific findings on: 1. The charge of fraud and collusion. 2. The common-carrier clause. 3. The financial ability of Herrick to consummate the project. 4. Whether Herrick received an undue advantage by reason of modified clause 3 of the contract. That the United States Senate could and should investigate a matter of this sort for the purpose of determining whether or not there was fraud, or whether the administration of the Forest Service has been so lax as to fail to protect the rights of the United States, there can be no doubt. If, however, it is the conclusion of the committee that there was no fraud or collusion in this matter (and it is submitted that the committee can arrive at no other conclusion), then necessarily the inquiry resolves itself into a matter pertaining to a function which has been intrusted to the executive department for execution. From the standpoint of the Forest Service, the Herrick contract has not been an easy one to handle. The Forest Service has been confronted, as was so well expressed by Colonel Greeley, with protecting the interests of the Government, protecting the interests of the local community, and protecting the equity of the contractor, in the face of the delinquencies of Mr. Herrick in his performance of the stipulations required by the Forest Service in connection with this construction work. It is possible men might disagree upon the wisdom of the course the Forest Service has pursued in this matter. I can not believe, however, that it will be the disposition of the committee, now looking at this case in retrospect, to say that the Forest Service has not fulfilled to the best of its judgment the obligations that were imposed upon it. If the committee feels there should be some expression on this point, I submit that the expression should be one of commendation to the Forest Service and to Colonel Greeley in connection with the wisdom of the course he has pursued, notwithstanding the fact that he could have taken advantage, perchance, of some one of Herrick's defaults and as a result thereof canceled the contract, to the great damage of Herrick, to the great injury of the local community, and to the possible injury to the United States. Mr. Barnes sought this investigation. He premised it on propositions that were false. He has absolutely failed to substantiate any charge he has made. Without the slightest regard for the name of Herrick, for the name of the Forest Service, or the men working therein, he has charged fraud and collusion and he has made a complete fizzle in his attempt to justify his untenable position. He should be repudiated and rebuked by the committee for his senseless and unsupported charges. I submit that the committee in its findings give to the Forest Service in this matter a clean bill so that it may go to the people of Oregon untainted by this vicious and unwarranted attack of Mr. Barnes. REPORT OF FINDINGS SUBMITTED TO THE SENATE The following is the report submitted to the Senate on March 3, 1927, by the Committee on Public Lands and Surveys, pursuant to Senate Resolution No. 332, as to its findings in respect to the contract between Fred Herrick and the United States Forest Service for the purchase and cutting of timber in the Malheur National Forest, Oregon : [Senate Report No. 1695, Sixty-ninth Congress, second session] The Committee on Public Lands and Surveys, to whom was referred the resolution (S. Res. 332), submits the following report on the investigation conducted by it under and by virtue of Senate Resolution 332, hereinafter set forth. On January 31, 1927, the Senate adopted the following resolution: Whereas on June 15, 1923, a contract was entered into by and between the United States Forest Service and one Fred Herrick, of Saint Maries, Idaho, for the purchase by said Herrick of approximately eight hundred and ninety million feet of timber situate in the United States forest reserve in Grant County. Oregon, known as the Bear Valley Unit of the Malheur National Forest; and 'Whereas by the terms of said contract the said purchaser agreed within a period of two years from the date of said contract to construct and complete, ready for operation, approximately eighty miles of common-carrier railroad to a designated point within said Grant County, Oregon; and "Whereas by the terms of said contract said Herrick agreed to commence logging operations by April 1, 1925; and 'Whereas it is charged by reliable citizens of Grant and Harney Counties, Oregon, that said Herrick has failed and refused to carry out the terms of said contract, as is therein specified; and "Whereas on two different occasions said Forest Service has, since the signing of said contract, granted to said Herrick and to the corporations by means of which he is attempting to develop said project an extension of one year to complete the performance of said contract, making a total of two years' extension which has thus been granted; and “Whereas said Herrick and said corporations are now requesting another extension on said contract from said Forest Service; and "Whereas said citizens further charge that one James W. Girard, while in the employ of the United States Forest Service, in a responsible position, in its office in Missoula, Montana, was instrumental in getting said Herrick to bid on said timber and to enter into said contract; that soon after bids were opened and before said contract was signed, said Girard resigned his position with the Forest Service and entered said Herrick's employ in the development of said project, at an increase in salary of $5,000 per year over what he had been receiving from the Government; that soon after said contract was signed one Frank Klobucher, also an employee of the Forest Service in said Missoula office, likewise resigned his position and accepted a position with said Herrick in connection with said project, at a substantial increase in salary; that soon there-after said Herrick, Girard, and Klobucher acted as incorporators of the Fred H. Herrick Lumber Company and of the Malheur Railroad Company, which are the operating corporations organized by said Herrick to develop said project, and said Girard and Klobucher became and now are officers, directors, and stockholders of and in sald corporation; and "Whereas reliable citizens of said counties also state that there are circumstances surrounding said transactions which strongly indicate that there was fraud and collusion between said Herrick and certain officials of the United States Forest Service in the making by said Herrick of said bid and in the execution of said contract, and that said Herrick has told different persons in said counties that he would not have entered into said contract if he had not been assured in advance by officials of the United States Forest Service that he would be granted all the extensions of time he desired to complete said contract ; and Whereas on December 4, 1926, the county court of said Grant County adopted resolutions in which, among other things, it is charged in effect that it is apparent that the unusual privileges extended to said Herrick and said corporations, and the leniency shown to them in regard to the violations of the terms of said contract, have been due to the connection between said Herrick and said former employees of the United States Forest Service, and said resolution requested that the Oregon delegation in Congress demand a complete investigation of the original advertising of said timber for sale by the Forest Service, and of the execution of said contract, and of all such extensions granted, and of the activities of present and former employees of the United States Forest Service in connection with said matters; and "Whereas said citizens further charge that neither said Herrick nor said corporations ever had, and have not now, sufficient financial resources to perform said contract according to its provisions and charge that said contract was secured, as aforesaid, as a pure speculation on the part of said Herrick and said. Girard; and Whereas on January 20, 1927, the Legislative Assembly of the State of Oregon, without a dissenting vote, adopted a memorial in which, among other things, it memorialized the Senate of the United States to appoint a special committee to investigate the facts surrounding the execution of said contract and the granting of said extensions of time; that such committee be authorized to recommend to the Department of Justice the institution of proper legal proceedings to fully protect the interests of the citizens of said Grant County, the State of Oregon, and of the United States: Now, therefore, be it "Resolved, That the Committee on Public Lands and Surveys, or any duly authorized subcommittee thereof, is authorized to investigate and inquire into all matters and things surrounding and connected with the advertising and receiving of bids for the sale of said timber, the execution of said contract, and the granting of said extensions of time to perform said contract. For the purpose of this resolution such committee or subcommittee is authorized to hold hearings, to require by subpœna or otherwise the attendance of such witnesses, and the production of such books, papers, documents, and records, and to administer such oaths and to take such testimony and to make such expenditures therefor, as it may deem advisable. The cost of stenographic service to report such hearings shall not be in excess of 25 cents per hundred words. The expenses of such committee or subcommittee, which shall not exceed the sum of $3,000, shall be paid from the contingent fund of the Senate, and the expenditure of said sum is hereby authorized for the above purposes. The said committee or subcommittee shall make a final report on said matters to the Senate as to its findings on or before the 28th day of February, 1927, together with recommendations for such legislation or action as it may deem necessary and proper." The committee, after 11 days of hearings, in which more than seventeen hundred pages of stenographic evidence were submitted, and after giving careful consideration to all of the evidence, desires to make the following report and recommendations: On June 15, 1923. the United States Forest Service entered into a contract with Fred Herrick, of St. Maries, Idaho, for the sale of approximately 890,000,000 feet of timber in what is known as the Bear Valley unit of the Malheur National Forest, in Grant County. Oreg. Under the terms of the original contract, and contract as modified, Mr. Herrick was to have completed a railroad from Crane to Seneca, Oreg., to be operated as a common carrier. He was to have constructed a sawmill at Burns, Oreg., and to have begun the general operation of lumbering within two years from the date of the execution of contract. It appears from the testimony that Mr. Herrick has failed to comply with the terms of the contract. The Forest Service has granted extensions from time to time, and it appears from the testimony that a further extension must be granted to Mr. Herrick if his contract is to be continued. These delays and extensions have resulted in unrest and dissatisfaction on the part of a great many of the people living in the section of the country where this operation is to be carried on. It was suggested that Mr. Herrick obtained the contract from the Forest Service through fraud and collusion on the part of former forest employees, viz, Messrs. Girard and Klobucher. Mr. Girard and Mr. Klobucher were employees of the United States Government in the Forest Service at the time the Forest Service entered into the contract with Mr. Herrick for the cutting of said timber, and they have since joined him in this enterprise, receiving salaries and owning an interest in the railroad company and the sawmill company that is to handle the timber. The evidence shows that this arrangement was made between Mr. Herrick and these members of the Forest Service subsequent to the filing and opening of the bids for the timber contract. There is no evidence in the testimony to substantiate a charge of conspiracy, fraud, or collusion on the part of anyone connected with the so-called Herrick contract, or with the Forest Service or Mr. Girard or Mr. Klobucher, and it is the opinion of the committee that these gentlemen should be wholly exonerated from any charge of conspiracy, fraud, or collusion. There is an abundance of evidence showing Mr. Herrick's noncompliance with the terms of the original contract and with the modified terms of contract. It was charged that Mr. Herrick was not financially able to carry out the terms of the contract. It appears to the committee that Mr. Herrick was financially able to comply with the terms of the contract, but possessed with a determination to arrange his finances to suit his own convenience. The evidence given in the testimony leads the committee to believe that Mr. Herrick could have financed and can finance the undertaking in accordance with the terms of the contract. The evidence further shows that the Forestry Department has attempted to secure a compliance from Mr. Herrick of the terms of the contract, but has been compelled to grant certain extensions or cancel the contract. The fact that extensions have been granted is sufficient evidence that in their opinion it was more practical and for the best interests of the Government and the people to grant the extensions that have heretofore been made. Certain modifications were made in the contract entered into aside from that of granting extensions. The committee does not feel that it should be concerned as to the modifications that have been made by the administrative branch of the Government, but believes that if the Forestry Department sees fit to further extend the time for completion of the project and the beginning of operation thereof, the committee may, with propriety, make certain recommendations, to wit: 1. That Mr. Herrick make financial arrangements satisfactory to the forest department. 2. That Mr. Herrick, or his assigns, be engaged in cutting the timber in a substantial way on or before October 1, 1927. 3. That the sawmill plant be completed and in full operation at Burns, Oreg., on or before January 1, 1928. 4. That the railroad from Burns to Seneca be in operation as a common carrier for freight and passengers on or before October 1, 1927. It is admitted and asserted by the Herrick interests and the Forest Service that it is and has always been their full intention to cause the railroad from Burns to Seneca to be operated as a common carrier, and, insomuch as there seems to be a question as to the interpretation of the wording of the contract, the committee recommends that if further extensions or modifications of the contract are to be made, one of these shall clearly set forth the condition that the railroad from Burns to Seneca is to be operated as a common carrier. Respectfully submitted by the committee. ROBT. N. STANFIELD, Chairman. T. J. WALSH, RICE W. MEANS. JOHN B. KENDRICK. (Whereupon, at 2.15 o'clock p. m., the committee adjourned to meet subject to the call of the chairman.) INDEX FRIDAY, JANUARY 28, 1927 Memorial of the Oregon State Legislature (Senate Joint Memorial 5) Resolutions of the county court of Grant County, Oreg., and the Grant Resolution authorizing the investigation (S. Res. 332) Page 1 2, 28-30 Resolution authorizing the Committee on Public Lands and Surveys Chairman of the committee instructed to favorably report the resolution Resolution amended so as to make February 28, instead of February 20, Resolution reported as amended. Certain telegrams to members of the committee with reference to the 12 FRIDAY, FEBRUARY 11, 1927 Resolution authorizing the investigation (S. Res. 332), as agreed to by Procedure to be followed in the examination of witnesses_ Letters to Hon. Robert N. Stanfield from Col. W. B. Greeley, Chief For- Letter and telegram received by Hon. Charles L. McNary from Mr. R. J. E. W. Barnes, Portland, Oreg., testimony of 22 22 23-26 26-95 Direct examination by Mr. Frederick M. De Neffe, attorney repre- 26-95 Credentials of Mr. É. W. Barnes in representing Grant County, 26, 27 Resolutions of the Grant County Stock Association and the 28-30 Telegrams to Hon. Charles L. McNary from certain residents in Petition, dated February 2, 1922, addressed to the Secretary of Sale prospectus (Exhibit No. 8) Introduction_ Area, location, accessibility. Description of timber. Additional Government timber. Management plan.......... 31 32 40-55 40 41 41 41 42 |