215). In February, 1878, the project of George W. Wright for a branch railroad from Wadena to Fergus Falls and Pelican Rapids in Minnesota was adopted, and in May, 1878, surveys were made of the later constructed line from near Bismark to Deadwood in the Black Hills (Smalley, p. 216); an interest was purchased in the Portland, Oreg. Terminal Co. (Smalley, p. 274), and many other feeder lines were built. Page 47 of the annual report of the Northern Pacific Railroad, dated September 18, 1884, shows the branch roads as follows: Undoubtedly some of the feeder lines were constructed after the date fixed for the completion of the main line, and it is probably true that a number of the associated projects were financed from funds other than those which Congress permitted to be raised for the construction of the main line and branch lines, but it remains true that any diversion of the funds from the sale of the bonds authorized by Congress for the construction of the main line and branch was a breach of contract, and also was a direct cause of loss to the Northern Pacific of considerable quantities of land in the primary limits of the grant to the homesteaders and others who were settling up the western country. You will observe that this letter does not discuss the sales of lands to persons and associations closely connected with the Northern Pacific. It is quite possible that the Northern Pacific could have profited to a greater extent had some of these sales been made to persons who were not connected with the company. SUMMARY. There are now within the boundaries of the national forests in Montana, Idaho, and Washington, approximately 2,500,000 acres of odd-numbered sections of land within the indemnity limits of the Northern Pacific grant. These lands have been considered by Congress the property of the United States for a great many years. The Government has expended considerable sums of money in their protection and administration. These odd-numbered sections in the national forests checkerboard the adjacent lands therein. Should the Government be forced to give up these lands at this date it would mean not only that their values would be lost to the national forests, but that the value of the remaining even-numbered sections would be lessened by the presence of alienated odd-numbered sections among them. These national forest lands hang in the balance and they should be saved to the United States if it is possible to do so. In my judgment, the decision of the Supreme Court in 256 U. S. 51 does not est op the United States from a further consideration of the case. The Supreme Court decision was upon the case made, and it can not be construed to have considered the many phases of the grants that were not before the courts. The fact that the Supreme Court remanded the case to the district court for additional facts and findings shows that it did not consider the case a closed one even under the decision rendered. It is my opinion, therefore, following the Supreme Court decision and observing that decision with the respect that should always be given to opinions of that body, that the United States is not estopped by that decision from making an exhaustive inquiry into the many phases of the grant. Recapitulating the suggestions contained in this letter, I suggest that a tentative adjustment be modified 1. To show that mineral losses in the primary limits may not be satisfied in the second indemnity limits of the grant, except in Wisconsin, Minnesota, and Oregon. 2. To show that lands in the second indemnity belt may be selected only for losses sustained in the primary limits between July 2, 1864, and the date of the definite location of the road. 3. To show that if on the date of the forest withdrawals covering the lands in the second indemnity belt there were in the second indemnity belt sufficient lands, other than the withdrawn lands, to satisfy such losses that could lawfully be satisfied in the second indemnity belt, the forest withdrawals therein were valid, applying to the second indemnity belt the rule you have applied to the first indemnity belt. 4. To deduct from the Northern Pacific grant the area of conflict 5. To deduct the acreage of the error at the Portland terminal.. 8. To correct the error in the location of the primary first and 9. To deduct the acreage of the error at the Kalama terminal____ 10. To deduct for the Tacoma overlap- 11. To deduct the excess acreage of the grant through Washington 12. To show wherein the Northern Pacific defeated its grant 13. To show the great additional values received by the Northern 16. To reconsider whether Crow Indian Reservation losses could 17. To show the values that have been lost to the United States under the act of Mar. 2, 1896, for lands erroneously patented to the Northern Pacific. Area involved. 370, 378. 05 11, 424. 48 41, 415. 38 144, 000. 00 27,000.00638,450.99 1, 500, 000, 00 75, 000, 00 590, 000.00 2,250,000. 00 1, 300, 000. 00 18. To deduct from the Northern Pacific grant an area equal to the acreage sold under the 1875 foreclosure proceedings at private sale in violation of the public sale provision of the joint resolution of May 31, 1870 19. To show whether or not the Northern Pacific complied with the sales provision of the joint resolution of May 31, 1870, requiring the company to dispose of certain of its lands at not more than $2.50 per acre. 20. To show the extent to which the Northern Pacific expended the 21. To show the length of road not constructed within the time therein instead of including these areas as being properly in the grant and using them as a set-off against the de- Area involved. 838, 852.00 I understand, of course, that some of the matters I have touched upon will not appeal to you as being properly within the adjustment of the grant as you have undertaken it, yet they are a part of the grant to the same extent as the acres thereof. The $2.50 sales provision is as vital a section of the grant as any other portion. The same is true of the provision of law which required the company to complete its line by July 4, 1879. The Government is entitled to know what the company has done under the sales section of the law. If the company has sold any of its lands that were subject to the $2.50 provision for more than this price, it is not entitled at the same time to assert a deficiency claim against the United States, until at least some determination has been made of the excess receipts. I am satisfied that you will agree with me that whatever the deficiency, if any, may be, it can not be other than a deficiency in form. and not in substance in view of the many concessions that have been made by the United States to the Northern Pacific and the resulting benefits thereof. If you agree with me in this conclusion, perhaps you will join with me in recommending to our respective secretaries that the Northern Pacific land grant can not be finally adjusted in fairness to the United States on the information now at hand. It is my firm conviction that Congress is entitled to the full information concerning the grant in view of the large public interests involved. The action taken by Congress in connection with the Oregon & California case must be regarded, it seems to me, as a pronouncement that it would wish to handle similar cases in a similar manner, and I feel that it is the duty of the administrative officers to bring the case to the attention of Congress for such action as it may deem right and proper in the light of all the circumstances. If your views concur with mine in this connection, I would respectfully suggest that the adjustment be not approved in any form until after Congress has had an opportunity to decide whether it will pass further legislation in the matter. 88015-24- -3 The equities in this case are overwhelmingly in favor of the United States. It seems certain that Congress will remedy the situation if the matter is presented to it. I shall be very glad to have you keep me advised in the matter. A copy of this letter and a copy of the brief filed in your office are being served on Britton & Gray, local attorneys for the Northern Pacific Railway Co. Very truly yours, (The following is a copy of the brief filed July 12, 1923, with the Commissioner of the General Land Office :) MEMORANDUM. The act of July 2, 1864 (13 Stat. 365), which authorized the construction of the Northern Pacific Railroad from Lake Superior to Puget Sound and to Portland, Oreg., and which contained the various conditions and covenants under which the railroad should be built, provided: SEC. 10. And be it further enacted, That all people of the United States shall have the right to subscribe to the stock of the Northern Pacific Railroad Company until the whole capital named in this act of incorporation is taken up, by complying with the terms of subscription; and no mortgage or construction bonds shall ever be issued by said company on said road, or mortgage, or lien made in any way, except by the consent of the Congress of the United States. It was not until the joint resolution of March 1, 1869 (15 Stat. 346), that the Northern Pacific was permitted by Congress to issue bonds and to secure them by mortgage upon "its railroad and its telegraph line" for the purpose of raising funds to construct the railroad from Lake Superior to Puget Sound and to Portland, Oreg. The act of July 2, 1864, did not authorize the Northern Pacific to build a railroad between Portland and Puget Sound. By joint resolution of April 10, 1869 (16 Stat. 57), Congress authorized the Northern Pacific to extend its branch line from Portland to Puget Sound to connect with the main line road. This resolution did not carry a land grant between Portland and Puget Sound along the branch line authorized between these points. But the Northern Pacific sought further concessions in addition. to those covered by the resolution of March 1, 1869, and the resolution of April 10, 1869, and so Congress by joint resolution approved May 31, 1870 (16 Stat. 378), which was passed at the request of the Northern Pacific, further extended the rights and privileges of the railroad company. The joint resolution of May 31, 1870, is as follows: Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the Northern Pacific Railroad Company be, and hereby is, authorized to issue its bonds to aid in the construction and equipment of its road, and to secure the same by mortgage on its property and rights of property of all kinds and descriptions, real, personal, and mixed, including its franchise as a corporation; and, as proof and notice of its legal execution and effectual delivery, said mortgage shall be filed and recorded in the office of the Secretary of the Interior; and also to locate and construct, under the provsions and with the privileges, grants, and duties promožni firm is act of incorporation, its main road to some point on Paget Sound, a the valley of the Columbia River, with the right to locate and enstier is branch from some convenient point on its main trunk line across the Cascade Mountains to Puget Sound; and in the event of there not being in any State or Territory in which said main line or branch may be keztet, at the time of the final location thereet, the amount of lands per mile grazned by Commess to subi company, within the limits prescribed by its charter, then sibi company stall be entitled under the directions of the Secretary of the Interior, in receive so many sections of land belonging to the United States, and designated by odd numbers in such State or Territory, within ten miles on each side of said road, beyond the limits prescribed in suid charter as will make up such deficiency, on said main live or branch. except minent and other lands as excepted in the charter of said company of eighteen handdred and sixty-four. to the amount of the lands that have been granted. wid. reserved. occupied by homestead settlers preempted, or otherwise disposed of subsequent to the passage of the set of July two eighteen hundred and sixty-four. And that twenty-five miles of said main lise between its western terminus and the city of Portland, in the State of Oregon, shall he completed by the first day of January, anno Domini, eighteen hundred and seventy-two, and forty miles of the remaining portion thereor each year thereafter, until the whole shall be completed between said points : Provided. That all lands hereby granted to said company which shall not be said or disposed of or remain subject to the mortgage by this act authorized. at the expiration of five years after the completion of the entire road, shall be subject to settlement and preemption like other lands, at a price to be paid to said company not exceeding two dollars and fifty cents per acre: and if the mortgage hereby authorized shall at any time be enforced by foreclosure or other legal proceeding, or the mortgaged lands hereby granted, or any of them, be sold by the trustees to whom such mortgage may be executed, either at its maturtiy or for any failure er default of said company under the terms thereof, such lands shall be sold at public sale, at places within the States and Territories in which they shall be situate, after not less than sixty days' previous notice, in single sections or subdivisions thereof, to the highest and best bidder: Provided further. That in the construction of the said railroad, American iron or steel only shall be used, the same to be manufactured from American ores exclusively. SEC. 2. And be it further resolved, That Congress may at any time alter or amend this joint resolution, having due regard to the rights of said company, and any other parties. It will be observed that the joint resolution gave to the railroad company very broad powers it had not previously possessed with reference to the mortgaging of its property; it provided a second indemnity belt for the land grant and it made a new grant of land for the stretch of road to be constructed between a point at or near Portland to Puget Sound. The concessions obtained by the Northern Pacific under the joint resolution of May 31, 1870, were worth millions of dollars to the railroad company, all of which could have been withheld by the United States. Indeed it is quite probable the Northern Pacific Railroad would not have been constructed in the absence of the joint resolution of May 31, 1870. But the joint resolution was not an outright gift by the United States. It contained conditions, limitations, and covenants that Congress felt were necessary for the proper protection of the interests of the United States, particularly with reference to lands granted to the railroad company. The United States in extending to the railroad company the magnanimous features of the joint resolution did so provided that all lands hereby granted to said company which shall not be sold or disposed of or remain subject to the mortgage by this act authorized, at the expiration of five years after the completion of the entire road, shall be subject to settlement and preemption like other lands, at a price to be paid to said company not exceeding two dollars and fifty cents per acre; and if the |