Million-dollar elm

June 17, 2019

When thinking about multimillion-dollar merger and acquisition activities taking place in modern times, many probably picture oil company executives sitting around a large desk in a stately board room in an expensive high-rise building that overlooks the skyline of a metropolitan city.

However, in the early days of oil discovery in Oklahoma, board rooms didn’t exist. Multimillion-dollar lease auctions would take place under the shade of a giant elm tree next to the Osage Council House. The elm tree, located in Pawhuska, Okla., was given the title “Million-dollar elm” by the reporters covering the events attended by some of the soon-to-be wealthiest oil company founders, bidding on leases from the oil-rich land in Osage County.

Eighteen tracts brought bonuses of $1 million on Nov. 11, 1912, giving the giant shady elm tree the title of the million-dollar elm.

The largest county in Oklahoma, Osage encompasses more than 2,250 sq miles of oil-rich land. Many early oil discoveries in the Osage region brought thousands of people flocking to get their share. High-quality, easily refined oil was produced in the region. Burbank oil field, discovered in May 1920, started producing about 150 b/d. At its peak, however, the field produced more than 70,000 b/d from 1,800 wells. A large portion of Phillips Petroleum’s early wealth came from Burbank field.

The first drilling deal came from Indian Territory Illuminating Oil Co. Beginning in 1896, it had drilling rights in the Osage Nation for 10 years. The federally controlled Osage Indian Reservation auctions bidding opened to other companies in 1916 for leasing 160-acre tracts just in time for the greatest period of the Osage oil boom. World War I and the growth of the automobile accelerated the need for oil. Oil production boomed from 6,000 b/d in 1900 to more than 11 million b/d in 1914.

The Osage tribe was paid more than $202 million in oil and natural gas royalties, bonuses, interest, and land rentals during the height of the Osage oil boom during 1919-28.

During the lease auctions under the million-dollar elm, the highest paid price at the time for a 160-acre tract bid was $1.995 million from Josh Cosden.

Million-dollar auctioneer

The money paid to the Osage tribal nation was due largely in part to the auctioneering talent of Col. Elmer Ellsworth Walters. Though serving the Osage tribe and netting them millions of dollars, Walters received about $10/day for his auctioneering. “The Osage were able to retain collective ownership of subsurface mineral rights, rather than having to accept allotments to individual owners,” explains Corey Bone of the Oklahoma Historical Society. “Instead, tribal members received ‘headrights’ that assured them an equal share of mineral rights sales equivalent to income from 658 acres.”

Walters earned the Osage tribe about $157 million in leases by 1928. An average Osage family of five, in 1926, would collect $65,000/year in lease money allotments. Auction onlookers would crowd together to watch the skilled auctioneer “extract millions from the silk pockets of such newly minted oil barons as Frank Phillips, E.W. Marland, and William G. Skelly.” The Osage people awarded him a medal for their appreciation along with gifts of a diamond-studded badge and a diamond ring.

With the onset of extreme wealth for the Osage tribe, a dark side emerged with many unexplained murders. Many believed that men, women, and children were being killed for their “headrights” to their land. An estimated 24 Osage Indians died of questionable causes in the early 1920s. Unfortunately, the news media covering the Osage oil boom was more focused on the mishandling of the Osage people’s newfound wealth with their extravagant and frivolous purchases.