Saturday, June 16, 2012

Part 5: Barnsdall

 On March 16, 1896, James Bigheart, Principal Chief of the Osage tribe on behalf of the tribe, under and pursuant to the action of the council, signed a lease agreement with Henry Foster for the purpose of prospecting and drilling wells, for mining and producing petroleum and natural gas on the entire reservation for a period of ten years.  The lease provided a royalty to be paid the Osages of one-tenth of all petroleum procured and fifty dollars per annum for each gas well discovered and utilized. Henry Foster unexpectedly died after a short illness in New York City before the lease was approved by the Secretary of the Interior. The Osage council then granted Edwin B. Foster permission to substitute his name as representative of Henry Foster and his heirs. The lease was approved by the Hon. John M. Reynolds, Acting Secretary, under date of April 8, 1896, making Edwin B. Foster, the lessee of the great blanket lease on the entire Osage reservation covering 1,470, 559 acres, an area twice as large as his native state of Rhode Island. The Phoenix Oil Company was immediately formed and incorporated under the laws of West Virginia to which Edwin B. Foster assigned all his interest in the lease in consideration of 30,000 shares, with par value of $1 per share, of the capital stock of the company. During the later part of 1896, two wells were drilled near the Kansas line. One produced but not enough to make a profit. The other was a complete failure. Operations were discontinued through the winter and in early 1897 oil was struck near Bartlesville, Oklahoma, which revived the hopes of the Phoenix Oil Company. By the fall of that year, the Phoenix Oil Company brought in its first producing well in the Osage reservation on Butler Creek. To raise funds in order to continue operations, the Phoenix Oil Company assigned a large block of leases to Samuel C. Sheffield, which he in turn assigned to the Osage Oil Company. After drilling seven dry holes and four producing wells, the drilling came to a standstill. Though the company could produce oil it had no way to get it to market without a railroad or pipeline to transport the oil from the Osage fields to the refinery in Neodesha, Kansas. In 1899, the Atchinson, Topeka and Santa Fe Railroad built into Bartlesville, Oklahoma and started service which provided a means for the produced oil to get to market.

Theodore N. Barnsdall
 So far the operation of the blanket lease on the Osage reservation had been a losing venture. John N. Florer, not wanting the company to fail spent a large amount of time traveling between New York and his home gathering support and making argument to try a new venture. In December of 1901, his hard work paid off and the Indian Territory Illuminating Oil Company was formed in New Jersey from the remnants of the Phoenix Oil Company. With a capital stock of 3,000,000 shares of a par value of $1 per share, to which the Phoenix and Osage Oil Companies assigned all their rights, title and interest. Soon after the company was organized, Edwin B. Foster died, and William Hoxey was made trustee of the Foster estate. It was during this time that Theodore N. Barnsdall of the Barnsdall Oil Company in Titusville, Pennsylvania, bought 51% of the stock in the Indian Territory Illuminating Oil Company.  The new company started out in adverse and unfortunate circumstances. In the process of reorganization some outside parties, other than the original stockholders, made an attempt to get control of the company and there was dissention and trouble within its ranks. For over a year it drifted in disorder until litigation brought receivership. The receivership came about from a suit brought by the Mechanic Savings Bank of Westerly, Rhode Island, against the Indian Territory Illuminating Oil Company and its stock holders for a debt owed the bank. The case was heard at Newkirk, Oklahoma Territory, before Judge Buford in 1903, and the company was thrown into receivership. Mortimer F. Stilwell, a nephew of John N. Florer, was made receiver. A sub-lease to satisfy the debt with the Mechanic Savings Bank was made to J. M. Guffy and J. H. Galey of the Standard Oil Company, on a block of 113,730 acres in the southeastern part of the reservation in the vicinity of Tulsa and a block of 41,000 acres west of Bartlesville.  During this time the Barnsdall Oil Company opens an office in Bartlesville, Oklahoma.

Charles Edward Ingersoll, an industrialist in Philadelphia, Pennsylvania needed to find a way to transport his coal ventures in western Arkansas and in northeastern Indian Territory to the west. Ingersoll and his business associates formed the Cherokee Construction Company, financed by notes and mortgages to begin the project it later issued stocks and bonds when the rail line became operable. The Cherokee Constuction Company soon began construction of a railway from Fort Smith, Arkansas to Wichita, Kansas, calling it the Midland Valley Railroad. Named after the coal mining town Midland, Arkansas, in which the railroad would serve. During the beginning of the construction, representatives of the railroad come to James Bigheart’s ranch seeking right of way through the Osage reservation. Bigheart approves construction of the railroad through the Osage reservation.

In the early part of 1904, a bill providing for the allotment of the Osage Reservation and the pro rata distribution of the funds held in trust by the United States was introduced in the House of Representatives by Delegate Bird McGuire.  This bill provided that each Osage receive 160 acres of land, inalienable for twenty-five years. The surplus land was divided  among  the  members  of  the tribe, and after satisfying the Secretary of Interior  that they were capable of  managing  their own affairs, they  were permitted  to sell the same. The trust funds were apportioned among the Osages and drew interest while retained in the United States Treasury. This money was not paid out until full disposition had been made of their surplus lands. The school fund of $1,500,000 was preserved as a separate fund in the Treasury. The Osage rolls were  kept open for three months after  the passage of the Act for Osages not  then included,  and  an opportunity  given  to  present  proof  wherever fraud was charged  in connection with the enrollment. A commission  of  four  had  charge of  the  allotment  work: one commissioner  named  by  the  president served as the chairman; one was named by the tribe, one by the Osage Council, and one by  the Interior  Department. Bigheart,  aware that  white men  waited impatiently to seize any Osage  property interests by fair means or foul, the moment they were left without  Federal  government protection, was still bitterly opposed  to the Allotment  bill, and shrewdly and persistently fought its  passage. As the Indian Territory Illuminating Oil Company's Osage lease would expire by limitation March 16, 1906, the Company in the latter pa r t of 1904 applied to the Secretary of the Interior for an extension of the lease.  This was referred to Congress and the Indian Appropriation bill was passed and approved March 3,1905 renewing the lease for a period of  ten years to the extent of 680,000 acres  and with an  increase of royalty from one-tenth t o one-eighth fixed by order of the  President of  the United States.

  During  January, 1905, H.H. Brenner, a banker, real estate owner and a partaker in the oil and gas business from Pawhuska, Oklahoma travels to Washington and negotiates for two months with congress for the setting aside of town sites in the Osage reservation. As a result of his efforts, in March 1905, 640 acres were set aside for the town site of Pawhuska; 160 acres for Bigheart; and similar amounts set aside for Hominy, Fairfax and Foraker. It was noted that the setting aside of these town sites was a necessary preliminary to real development of towns that are now among the most important in the Osage reservation. Two years prior, James M. Guffy and J.H. Galey of the Standard Oil Company construct a 2” natural gas pipeline from the most southeastern part of the Osage reservation to a brick factory north of Tulsa, Oklahoma. Another line was laid from their other developing Glenn Pool. The success of these ventures paved the way for Guffy and Galey to receive a franchise to distribute natural gas in Tulsa. Later in 1905, Guffy and Galey sell their gas company to Glenn T. Braden and Theodore N. Barnsdall along with more than 150, 000 acres of leases in the Osage reservation which includes the Bigheart Trading post, James Bighearts ranch and Roaslie Chouteau's indian settlement. Surveying for the townsite of Bigheart  began at the Bigheart trading post but it was found out that the land the trading post sat on was susceptible to flood. The surveyers had to stay within the limitations of having the railway near so they settled for an area two miles north of the Bigheart trading post along the west side of Bird Creek near the Chouteau indian settlement. The new Bigheart townsite would set on a 160 acre tract which was on the land used by the Red Eagle family. By September of 1905, the Midland Valley’s railroad station at Bigheart opens on the 160 acre town site set aside by congress earlier in the year.

In January of 1906, a post office was established at the Bigheart town site. It was located at the Midland Valley Station like most of the developing communities. The station would have an agent or telegrapher with a ticket counter, baggage office and express office. In most towns the train station was a place that served as a center for news, transportation and commerce. In February 1906, when the allotment bill came up before Congress again and Bigheart learned that Chief 0-lo-ho-wal-la's delegates planned  to  pass the bill as introduced  in 1904, he took Fred Lookout (later Principal Chief of the   Osages) with him to Washington and succeeded in having the rider clause introduced  that  saved  all  minerals  below the surface lands  ("top  fifteen inches of  the soil")  for the tribe. In February Chief 0-lo-ho-wal-la and Assistant Chief Bacon Rind, James Bigheart, Ne-Kah-Wah-She-Tan-Kah,Black Dog, W.  T. Mosier, Frank Corndropper, C.  N.  Prudom, W. T. Leahy,  Peter Bigheart, J. F. Palmer, and  Two-ah-hee selected by  the  chief, promoted  the final of  the  bill  that  was passed  as Act  of  Congress, on June 28,  1906.  This is known in history as the "Osage allotment Act."  It provided for a division of the lands and moneys held in common by the tribe. It provided for a final roll to be closed July, 1907, with membership that   totaled 2,229.  Each enrolled member received about 655 acres of the surface land and $3,819 in cash out of the tribal funds in the Treasury. In March, James Bigheart suffered a stroke of paralysis while in Washington from which he never fully recovered.  The town of Bigheart was one of five town sites exempted from Osage allotment. The town site was surveyed and platted. Lots were then auctioned in May of 1906. Businesses and residences began being constructed along the railroad right of way. The Bigheart Star was the first newspaper to be published in the town.

John N. Florer, one of the founding members of the Indian Territory Illuminating Company, died on January 10, 1907.  He lived long enough to see his dream come to pass, and was sure that the Osage reservation was under laid with oil, but even this optimistic Indian trader, had he lived long enough, would have been amazed at the immensity of the oil and gas resources which grew from doubtful and uncertain beginnings. On November, 16 1907, the Osage reservation becomes part of the new state of Oklahoma.

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