The Washington times., 1924-06-05
SENATE IS GIVEN
OIL SCANDAL
REPORT
Deals Are Scored in Findings
by Committee Submitted
by Senator Walsh
CONTINUED from First PageD

LntrQs BECAUSE the leases were COu'
sumated without competitive bid.
ding, as prescribed by law.
This order (executive), running
counter as it did to the well-under.
stood policy of Congress, merits
more than a passing notice." he
said. IT'S illegality ought to have
been recognized by everyone con-
nected in it's PRONUNCIATION. The
idea that the President may, by his
flat. transfer powers reposed in or
duties imposed upon one Cabinet
officer to another is intolerable and
indefensible.
Took Clerks Judgment.
Not only was the order illegal;
but Walsh held that the law pro-
hibited leasing without competitive
bids.
O"Your committee is Of the opinion
that the law provides that the
leases could not be legally executed
upon competitive bidding" Like.
wise, Walsh said statutes did not
allow DENLY or Fail to make con-
tracts for storage tanks in ex-
change for Oil. "Some of the
strongest companies in the country
declined to bid on the contract for
the construction Of the storage at
Pearl Harbor upon the ground that
the statute did not authorize pay
ment Of work Nof that character in
oil.
Notwithstanding their reluctance
upon the advice Of counsel and of
an intimation to Secretary Fall that
1t would not be wise on his part
to do so, no opinion concerning the
validity Of such a contract was
sought from the Department Of JUS
tice, nor from the Solicitor OF the
Interior Department nor any OF the
law officers of the Government"
except an opinion prepared by a
clerk in the office Of the Judge Ad-
vocate Of the Navy who commands
salary Of $3.50 year." Walsh
said.
Rejects Drainage Theory.
Arguments of Fall and DENLY
that, because Of drainage conditions,
the leases were good bargains on
the part Of the Government, Walsh
repudiated, chiefly in connection
with the Sinclair contract. This
view Is advanced with fullness of
argument, that the leasing of the
reason of the fact that it was being
drained by the wells in the nd.
jacent Salt Creek field" said Walsh.
''This contention. advanced in state.
ments made public at or near the
rife, being stoutly controverted by
public men in Wyoming and others
more or less qualified to speak,
the committee appointed two geolo.
gists to make a survey of the
ground. The conclusions of Fred G.
Clapp, one of the experts, are be
lieved by the committee to be q
safe guide
Walsh then pointed out that even
with quarter of the oil drained
away there would be $4,000 .0OC
barrels left in the ground. "If the
Government royalty is 20 per cent
1t will be entitled to about 5000, 600
barrels, but it is in evidence thai
1t takes about two barrels of OF
to pay for the construction of one
barrel of tankage OR, rather, that
the tankage costs at the rate OF
two barrels of oil for each barrel OF
| capacity in the tanks. SO that thG
Government would have fuel oil in
the tanks only to the amount O!
one'third Of 100000, or 1866, 66t
barrels" Welsh explained. "Tht
Government actually, therefore, re
alizes for use as fuel but 6 pel
cent OF the total content of the
reserves under the plan being fol
lowed.
Your committee cannot beIiev,
| that a lease under which the Gov
eminent receives six per cent of tn,
| oil in the ground and the Jesse,
gets "a per cent can possibly be IL
the interest of or just to the Gov
ernment," Walsh added.
III the Secretary of the interior
consulted with anyone competen
from experience in affairs Of such
magnitude to advice him concern
Ing the terms of the lease, viewed
as business proposition, the fac
was not divulged.
mot only was the Teapot Dome
lease awarded to Sinclair without
competition but he paid a fabulou.
price to procure the elimination o.
potential rival. One seeking only
fair contract from the Govern
ment does not buy off his competi
tors; neither does he, when III
secures 1t, ordinarily, submit Il
Diackmail In connection with 1t; no,
does he, while negotiations ar.
pending, accommodate the awardins
OFFICER with loans" Walsh declared
Under the heading Incidental In
quiries," Wash said "the rumor cur
rent, particularly after evidenc,
mat the transactions were tainted
that public officers had been con
nected in dealings in the stocks o
the companies to which the leases
mad been awarded" "Diligent in
curry into the foundation of the ru
NOR revealed no facts of sufficien
Importance to report" Wash added
IN IKE manner the rumor per
sisted that the appointment Of Fal
was brought about or was made
pursuant to conspiracy which wal
entered into between certain promi
nent oil operators and others at o.
prior to the Republican Nationa
convention Of 1920 which, in It's gen
eral scope, contemplated the exploit
tation OF the public land. The evi
uence failed to establish the exis
tense OF any such conspiracy,
Walsh said.
Remedies Suggested.
AS a warning to officers who han
die the reserves in the future
Walsh declared: that no lease shoulC
be made without competitive bid
ding; that no lease to protect re
serves from drainage should b,
made unless an emergency be de
clared by the President; that al
leases should he approved by tn,
Comptroller General; and, that au
thority under the law to exchang,
should be restricted to exchange o.
crude oil or gas for ruel oil or othel
products or derivitives Of oil or gas
not oil storage TANKS.