Part 2: Allotment, oil and headrights
(Editor’s Note: What follows is a portion of the book, “Oil in the Osage,” originally published in 1996 by the Pawhuska Journal-Capital. Much of the book’s content was produced by writer Libby Meyer. As a tribute to that book and the rich story it told, the newspaper is serializing the content over a period of seven weeks. The first installment appeared in last week’s newspaper.)
When Oklahoma became a state in 1907, the Enabling Act, which had been passed the year before, stated that the Osage Indian Reservation was to be a separate county until the land was allotted or changed by the state legislature.
In 1906, legislation had provided for equal distribution of Osage wealth. As of January 1, 1906 and making provisions for children born prior to July 1, 1907, a roll of tribal members was established. The total number of original Osage allottees was 2,229. The rolls then were closed and the number remains unchanged to this day.
Each allottee was granted 160 acres of land, but what would eventually become of greater importance was the prohibition of the sale of oil, gas, coal and other minerals by an individual member of the Osage tribe. The stipulation was to last 25 years, but was later extended by an act of Congress.
The Osage were the first to retain oil and gas rights of reservation land. The entire tribe held mineral rights and were leased by the Nation’s council. Royalties were to be paid to the tribe as a whole, then distributed to individuals based on tribal role.
The payment set up was called headrights. By 1906, Osage “citizenship” had become attractive, due to oil, to Indians of other tribes, and to some whites as well. Under certain conditions, headrights may be sold. Non-Indians or Indians of other tribes may inherit shares or fractions of shares. It is the shares owned by non-Indians, which may be sold.
Oil Discovered in the Osage
The official date ascribed to the discovery of oil is October 23, 1897. The discoverers were Henry and Edwin B. Foster, not oilmen but bankers, who came from Westerly, Rhode Island, and who were engaged in building a railroad from Kansas City, Kansas to Coffeyville, Kansas.
John N. Florer, a trader among the Osage, was the man responsible for involving the Fosters in the Osage oil. On one of his trips, an Indian friend related a story of seeing a rainbow, which seemed to float across a stream when the sun shined on it.
When Florer saw the rainbow, he knew it was oil. The Indian placed his blanket in the water and Florer squeezed the oil into a bottle to show evidence of the find. The area spotted was on Sand Creek near Okesa, in the eastern part of Osage County.
It took Florer four years to convince the Osage to lease their reservation land for oil and gas production. He met with Henry and Edwin B. Foster for the financial backing needed for the project.
Henry Foster had been interested in oil on the Osage Reservation since 1891 when federal restrictions were eased on leasing Indian lands. The Fosters were anxious to work with Florer, who wanted to secure the whole Osage Reservation.
In 1896, they took a blanket lease on the entire reservation, which was signed on behalf of the Osage by James Bigheart, the elected principal chief, and approved by Hoke Smith, then Secretary of Interior under President Cleveland.
With this action, a monopoly was acquired which eventually became the Indian Territory Illuminating Oil Company (also known as I.T.I.O.).
Foster’s first producing well in the Osage Nation was in NW SW Sec. 34-27N-12E, for initial production of 20 barrels daily from the Bartlesville sand.
It was not the first Oklahoma producer. This was the No. 1 Nellie Johnson, at what is now Bartlesville. It preceded Foster’s successful well by seven months, and was about two and a half miles southeast of the Foster well.
Under the first lease Foster had been granted exclusive rights to explore for oil and gas in the entire Osage Nation for a period of 10 years. He was to pay a royalty of a flat $50 a year for each gas well and ten percent for oil produced.
Next week: Foster’s Monopoly Broken, Independent Oilmen in the Osage, and The Million Dollar Elm.