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Falls to obtain information regarding the appraisal or not, I do not know. We have been waiting since last May to get that information

. or to have it available to us so that we could spot check and do our own cruising and appraisal of the property to see whether or not we are then in the position to make a bid on the property.

Is a copy of this notice in the record ?
Mr. GAMBLE. A copy has already been placed in the record.

Senator NEUBERGER. That is a notice of sale put out by the Management Specialists.

That is in the record.

Mr. Mathis. Mr. Chairman, I have not studied this bill in specific detail, perhaps as one might, but in going over the bill and reading it, I find several things in there that I think would make it extremely difficult or preclude, perhaps, the possibility of private purchasers making bids on this land.

Mr. COBURN. You are now referring to S. 3051?
Mr. MATHIS. Yes, S. 3051.
If you like, I should like to point out those things.
Senator NEUBERGER. We would be pleased to receive your views.

Mr. Mathis. The people whom we represent would be interested in bidding on these lands and agree to operate them or manage the lands on a sustained yield basis. But I say very frankly that I do not believe that we would undertake such an obligation subject to rules and regulations to be laid down by the Secretary of the Interior, the Secretary of Agriculture, or any Government agency.

They would submit a plan under which they would operate these lands and live up to that plan. But to have those rules and regulations changed from time to time, as we know our Government does, would, I think, preclude the possibility of their bidding.

Senator NEUBERGER. There would have to be some enforcement, however, of the covenant. You realize that.

Mr. MATHIS. I realize that. I think some enforcement of the covenant would be called for.

Senator NEUBERGER. And it would have to be done by some governmental agency experienced in timber management. I am sure you realize that.

Mr. MATHIS. I realize that, sir; yes, sir. But the personnel and the opinion of the people who would enforce that would change from time to time.

There are very successful sustained yield managements of large timber properties throughout the entire United States by many successful corporations.

The rules and regulations by which they operate on sustained yield tree plantations, I am sure, are dictated by the best business principles. They would be willing to undertake to operate this property based on such principles, but not on Government regulations.

Senator NEUBERGER. Just 1 minute, Mr. Mathis. I just noticed, and I had not noticed earlier, and I hope you will forgive me, that Congressman Ullman is in the hearing room. I would be very pleased if he would come up and join us at the committee table and participate as he sees fit.

Congressman Ullman, Mr. Mathis—I do not know whether you have met. Congressman Ullman is the author and sponsor of H. R. 9737 which is a somewhat similar bill in the House of Representatives to the one that I am sponsoring for Senator Morse and myself in the Senate.

Please forgive me for interrupting.

Mr. MATHIS. I think what I have to say with reference to S. 3051 would apply almost verbatim to H. R. 10375.

The forfeiture provision in this bill which is subject to the decision of the Secretary of Agriculture would constitute grounds for a forfeiture of the lands. I think this is particularly undesirable. It is a rather peculiar situation, too, where you would pay the Indians for the land, and then at the forfeiture the lands would go to the Government.

I cannot quite conceive of the equity and justice in that.

Relating back again to the terms of the bill which require a proposed purchaser to operate under rules and regulations laid down by the Government, I think this forfeiture provision would preclude private interests from bidding on the land.

I might say also that these two restrictions in this bill would seriously and adversely affect the necessary financing in order to pay cash in a transaction of this size. I think it would make it almost

a impossible to obtain financial assistance in buying these lands.

That is not just my opinion; it is common sense too, that if you put those restrictions in there, the banks and financial interests would not go along with the financing.

I do not think the 75-year provision for sustained-yield basis is bad. I think that is all right. I do not think that you would find that private industry would object to the 75 years, provided they were permitted to operatē the lands on the same managed sustained-yield basis that they are presently generally operated on throughout the country.

As I stated, I have not studied this bill carefully and perhaps could give you more on it, but I think that constitutes the substance of my position in speaking on behalf of the parties I represent that are interested.

Under this bill, I do not think they would enter a bid. I am speaking of S. 3051 and H. R. 10375.

Senator NEUBERGER. May I ask you a few questions?
Mr. MATHIS. Yes, sir.

Senator NEUBERGER. Do you feel free to disclose the name of the principal or principals for whom you are speaking?

Mr. MATHIS. No, Mr. Chairman; I do not. For obvious business reasons, I do not wish to disclose their names at this time. It might adversely affect them.

Senator NEUBERGER. Are you speaking for one corporate entity or for a number, may I ask that?

Mr. Mathis. At the moment I am speaking for one corporate entity, but I am confident that the officer with whom I discussed this subject plans to have perhaps a new corporation organized which would bring in other capital and other individuals or other companies. Senator NEUBERGER. Are they now in the forest products industry? Mr. Mathis. Yes, sir; they are, in a very substantial way. Senator NEUBERGER. Do they operate in the Pacific Northwest ?

Mr. MATHIS. Sir, I am afraid to give you any more information. It might disclose the identity of my people

Senator NEUBERGER. I noticed in the letter which you wrote on February 7 to Secretary Chilson, you said:

We would appreciate it very much if you will communicate with Senator Neuberger, informing him of our discussions with you during the middle of 1957, so that the record will be complete. If you elect to write to Senator Neuberger, will you please send a copy to the undersigned.

That is the end of that quotation from your letter of February 7. Did you have a discussion with Mr. Chilson on this matter in 1957?

Mr. Mathis. Yes, I did. The appointment was made for me. I went directly to his office. I am confident that we discussed it for between an hour and 2 hours.

Senator NEUBERGER. Between an hour and 2 hours?
Mr. Mathis. Considerably; in detail.

Before I left Mr. Chilson's office, I would stand corrected on this, but I am quite confident. I left my card with him. I know I gave him my name and address. I told him my office was in Washington; that if at any time he wished to communicate with me regarding this matter, I would be available.

I have heard nothing from him.
Senator NEUBERGER. You have heard nothing from him?

Mr. Mathis. I have not received a copy of any letter that he might have written to the committee.

I had one party attempt to reach him since I wrote the letter, but he was unable to get him.

I have not tried myself.

Senator NEUBERGER. May I ask you this question? Did you disclose to Secretary Chilson the name and identity of your principal?

Mr. MATHIS. No, sir; I did not. I told him it was for obvious reasons. He did not ask me in the first place, and I felt prompted to tell him that for obvious reasons I could not disclose the name, and asked him if he felt that he should have the name of the individuals. He said, “No”; that my statement and representations to him were sufficient, at least for the time being. The name would be disclosed if and when the parties entered a bid on the property.

Senator NEUBERGER. On February 3, 1958, Secretary Chilson appeared before this subcommittee. I asked him how it happened that the Department of Interior had somewhat changed their views regarding the purchase of this reservation from that of January 1957.

I asked these questions. I would just like to read several of them

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to you.

Senator NEUBERGER. In other words, you changed your mind from this statement that I read of January 1957 because you had had some indications that private industry might buy this forest at the price set in the appraisal?

Now, let me ask : Did those indications come from the lumber industry as a whole, various segments of the lumber industry? Where were those indications received from?

Mr. CHILSON. They were quite nebulous, Mr. Chairman, and I cannot name any particular names, of persons or industries, who came out flatfooted and said that they would be interested.

I had some telephone conversations with a member of a law firm in New York City, I have forgotten the man's name, who told me over the telephone that he had a group who were interested in buying under those conditions.

Senator NEUBERGER. By those conditions, you mean?

Mr. CHILSON. Sustained yield management and to pay the appraised price. He set up two appointments with me, neither one of which he kept. He phoned each time saying he was unable to come, and then he called me later and said his group was not interested.

In talking with some foresters and some lumber representatives, also in discussing the previous experiences with timber sales in general, where we had some surprising bids on timber, much higher than anybody had estimated they would be, putting all those together we thought that it justified at least the offering of the timber to the industry under these terms.

I tried to admit frankly, Mr. Chairman, that there is quite a question whether industry will buy any substantial portion, or any of this timber under these conditions. We do not know.

The thing that does strike me, however, is this: Somewhere along the way the industry has done exactly this: they have acquired timberlands. I assume they had to pay what was then the market price. They have managed them under sustained yield management principles.

I might say this, too—and this is purely a private opinion-looking back over what has happened to the value of timber over the past many years, there has been a great increase in the value. With the increasing population and with the amount of timber remaining pretty well static, you might say-I cannot conceive but that at some time in the future and maybe not too far distant future—the value of these timberlands is going to be much more than it is today.

That is one reason that I had no particular difficulty, Mr. Chairman, in the financial end of this thing.

If the Federal Government is the one that acquires these lands and pays the price, I am satisfied that in the long run the Federal Government is going to have a good deal.

That is the end of Secretary Chilson's comments at that particular point. After that I resumed questioning. The thing that I wanted to ask you, in fairness to him, is this: Were you the gentleman referred to where he said:

He set up two appointments with me, neither one of which he kept. He phoned each time saying he was unable to come, and then he called me later and said his group was not interested.

Were you the one to whom he has reference there?

Mr. MATHIS. Those remarks could not have reference to me, Senator. I had only one appointment. I kept that appointment. My office is here in Washington.

Senator NEUBERGER. Did you talk with the Secretary for some 2 hours about this?

Mr. MATHIS. Over an hour, at least; over an hour, I am confident.

Senator NEUBERGER. Did you have any idea as to why he did not make reference to his conversation with you in answer to my question!

Mr. Mathis. Well, Senator, I have searched my mind and memory since the substance of Mr. Chilson's testimony first came to my attention. I have no idea that I can put my finger on, so to speak, is to why he did not recall my meeting with him. He might have confused me with being from New York instead of being from Washington.

On the other hand, I did not break any appointments with him. Senator NEUBERGER. Mr. Coburn, do you have any questions?

Mr. COBURN. I would like to pursue the matter of that meeting with Mr. Chilson.

Mr. Mathis, who was present at this meeting with Mr. Chilson?

Mr. MATHIS. There was present with me, and he made the appointment for me, a gentleman by the name of Albert A. Grorud. He is here in the room, I believe.

Mr. COBURN. Who was present representing the Department with Mr. Chilson at that time?

Mr. MATHIS. There was no one but Mr. Chilson representing the Department.

Mr. COBURN. You say in your letter:

Perhaps Mr. Chilson may have overlooked or not remembered our meeting and the information we gave him regarding a potential purchaser.

What information did you give Mr. Chilson regarding this potential customer?

Mr. Mathis. The principal information that I gave Mr. Chilson during our meeting was that we represented a client who had a definite interest in purchasing the land; that there were many complications in figuring out a bid for such a purchase; that we would want to get a copy of an appraisal or a cruise of the timber by reputable people; and that we would want, then, to spotcheck and cruise ourselves to see that the appraisal was correct.

I told him that my people were operating timber lands now on a sustained-yield basis, and they would be willing to bid on these and operate these lands on that basis if they were the successful bidder.

We discussed at length the manner in which a covenant could be contained in the conveyance instruments that would bind the bidder to operate these lands on a sustained-yield basis.

Mr. Chilson being a lawyer, I told him that in my opinion, although I had not studied the property law involved, I was convinced that such a restrictive covenant could be placed in the conveyance which would be binding on the parties. I stand corrected if the lawyers have a different opinion, but I was under the impression that could be done.

I suggested also, I believe at that time, that it could be done perhaps by separate instrument in the nature of a contract with a forfeiture clause or something of that kind.

The discussion, you might say, was a two-way discussion. We discussed various other angles of the lands.

I told him that my people would not, I believe, be interested in bidding on the lands, if they were going to be offered in small parcels like 180, which was the figure you had in mind at that time.

You might find yourself with parcels scattered over there like shots on a target, if you attempted to buy so many small parcels and to operate them.

I suggested that if the land was sold, it should be sold in larger parcels, so that maybe 4 or 5 purchasers could come in and buy parts of it.

My people might not want to buy all of it. They might want to bid on a half of it for example.

Other than that, I cannot recall much detail except that it was a general discussion of the entire situation.

Mr. COBURN. Did Mr. Chilson inquire into the financial resources of the group which you represent?

Mr. MATHIS. He asked me if they were able to do this, and I told him I was confident that they were of sufficient financial responsibility, that they could carry out any undertaking that they would make a commitment on. I am confident of that.

Mr. COBURN. Inasmuch as you were an agent for an undisclosed principal, he did not ask you for any credit references ?

, Mr. MÁThis. None whatsoever. He said he was willing to accept my representation that they were financially responsible.

Senator NEUBERGER. Was any potential specific sum referred to as the possible value of the timber in question?

Mr. Mathis. No, Mr. Chairman, it was not. I did not have a copy of any appraisal. My people had never looked at the lands. Accordingly, the question of price did not come up.

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