Evening star., 1924-01-25


tigation of the naval oil lease
was begun by the public lands
committee.
attend to the management of his
ranch.
His troubles had been increased
In 1913 by the death OF his daughter
and his son. who. up to then, had
taken his place in the management
OF his ranch.
I'm our frequent talks 1T was clear
that the acquisition of a neighboring
flows through his home ranch was
hope Of his amounting to an obses-
sion. His failure to raise the neces-
sary. funds by realizing on his ex-
tensive and once valuable Mexican
mine holdings had made him feel he
was victim OF an untoward fate.
Time Was Ripe.
"In one of these talks j indicated to
him that would be willing to make
him the loan and this seemed 10 re-
lieve his mind greatly. In the autumn
Rad become possible by reason Of the
willingness Of the then-owners OF the
Harris ranch to sell. and that the time
had arrived when he was ready to take
advantage OF my offer to make the loan.
The lease on naval reserve No. l
was the direct outgrowth of the con-
tract which the Pan-American Pc
troleum and Transport Company
made with the Navy, as a result Of
competitive bids, in which that COM
pany was the lowest bidder, for the
construction of certain storage facili-
ties and the furnishing of fuel oil at
Pearl Harbor. T. H., and in the abb
sence Of that contract, the lease
would never have been executed.
The Navy Department, through its
representative. took UP with US the
question Of constructing the improve
ments and facilities at Pearl Harbor
and of paying for them with the royalty
oil which the Navy was then obtaining
from the various leases in naval re-
serves Nos. l and 2. and of filling the
tankage constructed with large guam
tity of fuel oil.
Il was entirely in sympathy with the
which have perhaps been better ex-
planned to your committee by the
Nays representative. Admiral Robi-
son, that I could hope to do. l prom
pany would at least submit bid to
perform the work under those condi-
tions; that is, furnish the money to
pay for the work of construction at
the harbor and of filling the tanks
with oil. and received in return royalty
oil at the posted field price to the value
of the money so expended. The Incl
dents up to the date of the contract
and the fact that the contract was let
on competitive bidding eliminate any
possibility of favor to the company by
either the Navy Department or the In
terror Department.
The negotiations for this contract
between the Navy Department and
local Washington attorney. who was
assisted in determining the neces-
sary calculations by our California
general manager, who is president of
Of their exchange of ideas, our Cali
fornia general manager decided that
the terms of the proposed contract
were not such as to be of any ad-
vantage to the company and that the
company could not afford to take the
risks attached to the performance of
the contract for the conjecturaI
profit that might result therefrom,
and he SO stated in a letter which
he wrote to our Washington attorney.
Neither our Washington attorney
nor our California general manager
nor any other officer or attorney of
the company had any knowledge of
the loan which made to Mr.. Fall,
that being an entirely private mat
pany's funds.
When the bids were opened it was
round that the bid of the Pan-Amerf-
can petroleum and Transport Com
pany was the lowest The Washing
ceived the idea of making. in accord
ance with the provisions of the call
for bids, in addition to an unquali-
ned bid. an alternative bid showing
a consid saving to the govern
ment In ;ual cost of the con-
structi, the contract. and a
recomp' the Pan-American
Petroieu., Transport Company
for such W. er of profit by giving it
an opportunity later on to extend it's
hrrot T.
through the acquisition of additional
OIL territory whenever the Navy
might be disposed to make additional
contracts for the development of it's
reserve.
'"The alternative bid was considered
the most favorable by the represent
tatives of the government, as is
shown by a letter addressed to the
Washington attorney Of the COM
and signed in the absence of Mr.. Fall
from Washington by the acting sec
rotary of the Interior and the Sec
rotary Of the Navy"
Mr.. Doheny read the letter into the
record.
ut follows:
"In your proposals (A) and (B) Of
April II, 1922, under each of which
your bid was the lowest received by
the government, your company sub
mitted two bids for the erection and
construction Of storage facilities at
Pearl Harbor. r. H, and the filing Of
these with fuel oil. In proposal OBJ
you offer to accept an amount Of
royalty crude oil for fulfilling the
contract, which expressed in money
was $235.184.40 less than the amount
in proposal (A), and your company
|offered to give the government in
addition any saving in the cost of
construction under the amount esti-
mated, provided that the government
would give the company preferential
right to lease certain lands in Naval
Reserve No. in Californka.
ut Is evident from our converse
tion OF April 1s that your interpre-
tation Of preferential right was to
the effect that the Pan-American
Petroleum and Transport Company
desired the right to lease certain
specified lands in naval petroleum
reserve No. I, as well as prefer
entail right to lease other land in
naval petroleum reserve NO. l, 70 tne
extent described In Article II OF con-
tract. It IL my understanding from
your conversation that unless the
Pan.Amertcan Petroleum and Trans
port Company could. get q lease 20
certain lands. your company Wo4Ia
not dasire to enter sintosa contraot
under the terms outlined in proposal
(B) and preferred the governmeht
Y ould accept -propesa1t.tA3. -'.:-s,
''Ths Department of the lnlerioI
Il o. A =