rather than in acres of real estate. 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 title to the land?
The principal 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 convenants of the lessees shall specifically safeguard oil fields against the penalties from careless drillings and of production in excess of transportation facilities or of market requirements.
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.
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 lawmakers, how far the state legislature might impose appropriate restrictions to secure an equitable enjoyment of the common reservoir, and to prevent waste and and excessive drainage by the various owners having access to this reservoir.
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 title to a certain tract, much in the same way as he would acquire title under a mining law. Of course, if the system of leasing is adopted, then he
