long-distance telephone call from Duluth from one of the vendors up there who had submitted his papers and wanted to know when he would get the money. I also had a long distance telephone call from Arcadia, Fla., on the same subject. The vendor wanted to know when he would get his money. We could assure him that he could get his money very soon because we have that expendable money. If that expendable money is not made available next year, it will be manifestly unfair to prospective vendors, because we will have to be putting them off. We will be taking their options, and asking them to wait a year for their money. They will want to resettle themselves, and, perhaps, obtain land elsewhere. They will want to make their plans for the future, and they should not be required to wait for a year. Therefore, to limit it to the contractural $1,000,000 is not only slowing up the program, but it is unfair to the prospective vendors.

Mr. COLLIER. It is just bad business. Through these delays in the resettlement purchases, which took place under similar conditions, there was built up considerable ill will among them. They said, "What is the use? We contract and tie ourselves up; we hog-tie ourselves and then have to wait 18 months for our money." In order to get anything under those conditions, we have to pay more than we would if the transactions were handled on a normal business basis.

Mr. STEWART. To have it on a business-like basis, the expendable $1,000,000 should be added to the contractural $1,000,000. If you had land that you wanted to sell to the Government, and you had plans for moving out of your present area, and locating somewhere else, you would not want to wait a year for your money. That is the position these prospective vendors are in.

Mr. JOHNSON. You are recommending that the $1,000,000 estimated by the Budget be increased to $2,000,000.

Mr. STEWART. We would like to have the $2,000,000 authorized by the Act made available. We want the expendable $1,000,000 continued, and the contractural $1,000,000.

Mr. COLLIER. It comes to the same thing in the end. The only question is whether Uncle Sam can trade in a decent way under these conditions, and make favorable terms, or whether he must keep these people waiting for their money.

Mr. FITZPATRICK. You do not resort to condemnation proceedings. Mr. COLLIER. No, sir.

INCREASE OF WASHINGTON AND FIELD PERSONNEL

Mr. JOHNSON. On page 88, I notice that you have an increase of two employees in the departmental service, in the District. Then you have another increase of 14 employees in the field service over the number for the current year. That is going pretty strong, is it not? Mr. DODD. Let us take first that increase of 14 employees. That 14 dwindled to 6 after the Budget got through with the estimate. The actual number we are requesting for 1938 is 25. There will be three assistant attorneys. We have reduced that number. We are asking for two additional land field agents, and one additional clerk in the field. In the Washington office we are asking for one stenographer at $1,620 and one junior stenographer at $1,440. As Mr.

Stewart has indicated, title papers are coming in all the time, and we do not have in the Washington office a sufficient amount of stenographic help to push the papers along.

Mr. STEWART. In addition to the Land Division personnel referred to, we provide out of this fund money to pay attorneys for examing abstracts of title. We have had to set up three assistant attorneys in the Solicitor's office, together with two stenographers. They are being paid out of this appropriation for land purchases.

Mr. DODD. In effect, those positions have been established since this tabulation on page 88 was prepared; so that for 1938 that increase of three assistant attorneys, professional service, grade 2, is no longer an increase.

Mr. FITZPATRICK. You have here four assistant attorneys, and yesterday you told me you had only three in the entire Department. Mr. DODD. Except two in the Solicitor's office. Mr. FITZPATRICK. Except two

Mr. DODD (interposing). Two connected with the Solicitor's office and paid from organization funds.

Mr. FITZPATRICK. You said yesterday that you had only three on the entire pay roll. That is what you told us yesterday.

Mr. COLLIER. I called your attention to those land attorneys at that time.

Mr. FITZPATRICK. Is there any way by which we can find out how many there are in the Department connected with the Bureau of Indian Affairs.

Mr. COLLIER. Yes, sir.

Mr. FITZPATRICK. How many are there?

Mr. COLLIER. I cannot tell you offhand, but we can supply that. The Budget Bureau does not allow the Solicitor to ask for these items, but they compel us to ask for them.

Mr. FITZPATRICK. I think the General Land Office had 38 assistant attorneys, but the statement was made that the General Solicitor's office included all the attorneys in the Interior Department.

Mr. DODD. I believe we placed in the record a full statement yesterday morning, but if we did not, I will see to it that a statement is made now.

Mr. FITZPATRICK. I asked yesterday what was the number of lawyers in the entire Indian Affairs Service.

Mr. COLLIER. I think we gave it to you.

Mr. FITZPATRICK You said there were three.

Mr. DODD. We said there were three attorneys who were on the Solicitor's pay roll, and who are stationed in our office. Then we described the two attorneys who are employed under the Indian Reorganization Act, for reorganization work, to be paid by us, but attached to the Solicitor's office. Then there are these land attorneys. Mr. FITZPATRICK. Nothing was said about them. Mr. COLLIER. I reminded Mr. Dodd of them.

Mr. FITZPATRICK. We were discussing it.

Mr. DODD. The Commissioner reminded me of it.

REDEMPTION OF RESTRICTED PROPERTY SUBJECTED

ΤΟ

TAXATION

Mr. JOHNSON. The next item, on page 90, is for the redemption of restricted property subjected to taxation.

Mr. DODD. The following justification is submitted for the record: Regular appropriation, 1937_

Base for 1938.

Increases requested for 1938: Redemption of Indian property.

Total estimate, 1938____.

$25,000

25, 000

This item is submitted to comply with the authorization contained in the act of June 20, 1936, reading as follows:

"That there is hereby authorized to be appropriated, out of any money in the Treasury of the United States not otherwise appropriated, the sum of $25,000, to be expended under such rules and regulations as the Secretary of the Interior may prescribe, for payment of taxes, including penalties and interest, assessed against individually owned Indian land the title to which is held subject to restrictions against alienation or encumbrance except with the consent or approval of the Secretary of the Interior, heretofore purchased out of trust or restricted funds of an Indian, where the Secretary finds that such land was purchased with the understanding and belief on the part of said Indian that after purchase it would be nontaxable, and for redemption or reacquisition of any such land heretofore or hereafter sold for nonpayment of taxes.

"SEC. 2. All lands the title to which is now held by an Indian subject to restrictions against alienation or encumbrance except with the consent or approval of the Secretary of the Interior, heretofore purchased out of trust or restricted funds of said Indian, are hereby declared to be instrumentalities of the Federal Government and shall be nontaxable until otherwise directed by Congress.'

This act was designed to provide a partial measure of relief and reimbursement to Indians who, by failure to pay taxes, have heretofore lost or are in danger of losing lands purchased for them under the supervision, advice, and guidance of the Federal Government. These losses are not the fault of the Indians, since the lands and improvements were purchased with the understanding and belief on their part, induced by representatives of the Government, that the lands would be nontaxable after purchase.

A case in point is that of Mary Sky Necklace, an Indian woman of the former Yankton jurisdiction in South Dakota. In 1920 she had $1,300 in trust funds held to her credit by the Government, and with the approval of the Department invested this money in a small home, consisting of a house and two lots in Bon Homme County, S. Dak. A deed was taken in her name, and as a means of protection of the property the deed was made subject to restrictions against alienation or encumbrance except with the consent of the Secretary of the Interior. On the back of the deed was placed a statement under the signature of the then superintendent of the Yankton Agency, as follows: "The consideration for the within deed is paid with the funds held in trust by the United States for the benefit of the grantee."

At that time it was believed and contended by the Interior Department that lands purchased in this manner were nontaxable so long as they remained in the possession of the Indian purchasers, and the Indians were given to understand that this was the law. This contention was based on decisions of certain Federal courts, as for instance, United States v. Nez Perce County (267 Fed. 495) and United States v. Yakima County (274 Fed. 115). Other later decisions, however, have been adverse to this contention.

Some property so acquired has been sold for nonpayment of taxes but could be redeemed out of the $25,000 here requested. Other land has been sold and the period of redemption has expired. Such land could be reacquired for the Indian only if the owner would be willing to sell. No relief is provided for Indians whose lands have been lost and cannot be redeemed or reacquired, but it is hoped that they will be provided with home sites through funds provided pursuant to the act of June 18, 1934 (48 Stat., p. 984).

This legislation is intended to stop further taxation of restricted lands now held by Indians which have been purchased for them with their individually owned trust or restricted funds and to redeem or reacquire any such lands heretofore sold for nonpayment of taxes.

PURPOSES OF ACT

Mr. JOHNSON. This appears to be a new item.

Mr. DODD. That item appears in this bill to carry out the terms of the act of June 20, 1936. It is primarily for the purpose of redeeming

lands which may have been sold for taxes, or for paying taxes on lands purchased with restricted funds and erroneously placed on the tax

rolls.

Mr. RICH. Why was anyone who purchased this land given assurance that it would not be taxed? Who gave the purchasers that assurance or information?

Mr. STEWART. Years ago it was the policy of the Department to advise Indians who had money to their individual credit, or who had trust funds, so to speak, that they could use those trust funds by going out and buying white-owned land, and that the restrictions on those trust funds would flow to the land. In other words, that the taxable status of the land would immediately be removed, where the purchase was made with individual trust funds. In many instances, individual Indians, or hundreds of them, were authorized by the Interior Department to use their individual trust funds by going out and buying land in the vicinity of the reservation.

Mr. RICH. Where did they go? Did they go outside of the reservation?

Mr. STEWART. It was largely within existing reservations, on alienated land, but there were some on the outside. In using their individual restricted trust funds to buy the land, they thought the land would no longer be taxable. That went on for some period of time until a case was taken to court, which is referred to as the Mummert case, wherein the court held that the restricted funds, in effect, did not apply to the land that was acquired, and that, therefore, the land continued taxable. That was due to a misconstruction of the law or misinformation on the part of the Department, and this item is brought about on the theory that the Government is under a moral obligation, at least, to these Indians to go in and save these lands for them from tax sales.

Mr. RICH. So far as the lands were purchased inside an Indian reservation, they are not taxable in the State, are they?

Mr. STEWART. Yes, sir. I might explain that to you by this map I have here, which shows the situation on the Cheyenne River Reservation. That is shown by the color scheme. These [indicating] were individual Indian allotments. Then, after the allotments were made to the Indians, the surplus land was thrown open to homestead entry. A good many Indians sold their allotments, and a good many Indians with restricted trust funds purchased some white-owned land or some of the homestead lands. They were told to go ahead and use the trust funds for the purchase of homestead lands, and that they would not be taxable. This was years ago, and now the court has held that that was not so, and that the use of those funds, or even trust restricted funds, in the purchase of the land, would not apply to the land, and that, therefore, the land would continue taxable.

Mr. RICH. When did you have this trial in which the court held that?

Mr. STEWART. I think it was in the late twenties-around 1928 or 1929.

Mr. RICH. And this has been hanging fire since 1928 or 1929?

Mr. STEWART. Yes, sir.

Mr. RICH. Have you made this recommendation before.

Mr. STEWART. I do not think so.

Mr. COLLIER. It has been asked for before.

Mr. DODD. Legislation has been pending in Congress for a number

of years.

Mr. COLLIER. Yes; at least since 1932. The authorizing legislation was passed last year.

Mr. FITZPATRICK. Is any part of the land on that reservation shown on the map nontaxable?

Mr. STEWART. Yes, sir. The land indicated in heavy green there is nontaxable. This land indicated by blue and green is supposed to be trust land. It is tribal or trust land.

Mr. JOHNSON. It is nontaxable?

Mr. COLLIER. The land that never passed out of Indian ownership is not taxed, but that which passed out of Indian ownership is taxed. Mr. STEWART. This land indicated in red is taxed. This land [indicating] is in heirship status.

Mr. RICH. Suppose an Indian owns land that is now exempt from taxes, but decides that he wants to sell his land and does sell it. Would he have to have authority from the Department to sell it? Mr. COLLIER. Yes, sir; if it is trust land.

Mr. STEWART. On this particular reservation they cannot sell their land.

Mr. RICH. On any other reservation, if he sells the land with your approval, squanders the money, and then comes back to the Department saying, "I am without my land; I have sold it and spent my money, and do not have anything", what would the Department do? Would you go and buy him land somewhere else?

Mr. COLLIER. It would depend on the circumstances of the case. It might be a case where he should be provided with land so as to make a living, or it might be a case where, obviously, he would not use the land so as to make a living. In that case the land would not be bought.

Mr. RICH. Roughly, how many cases have there been where Indians who owned property have gone out and sold it, squandered the money, and then come back to the Government to be taken care of?

Mr. COLLIER. I would say that question could be answered yes or no according to whether one believed that the money was squandered. If you take the case of a non-English speaking Indian, who has never paid taxes, and you force a patent in fee on him, the land then becomes taxable. Now, he did not ask for a patent in fee, and the taxes pile up. Finally, the tax lien is executed, and he loses his land. That is something that happened all over the country from 1915 to 1925. There are other cases where the Indian solicited a patent in fee, and where, perhaps, the Department unwisely gave him a patent in fee. Then he sold the land and blew the money. He may have learned his lesson from that experience. As they are ward Indians, eventually it might be good business to put them on land, or provide them with a farm. Mr. RICH. Suppose he does it for a second or third time.

Mr. COLLIER. He could not do it again, because land bought under the Land Acquisition Program is inalienable.

Mr. JOHNSON. Such lands are not taxable?

Mr. COLLIER. No, sir; not when the title reverts to the Government. The occasion for this particular item is that the law was obscure, and the Department, perhaps unwisely, thought that the land could be bought with individual trust fund money in the name