The Washington times., 1924-02-14
LETTER BY Balm
WARNED FALL
ON LAW
Suggested Daugherty Rule As
to Legality Of Teapot
Dome Exchange"

The legality Of the contract
which ex-Secretary Of the Interior
FAN made with n. Z. Dohony in
the lease Of Elk FILLS naval oil
reserve was widely questioned in
oil circles at the time Of its con.
summation, and Fall hesitated to
request an official opinion on it
from Attorney General Daugherty,
it was revealed today by a letter
introduced in the record Of the
Senate's investigation Of the leases.
This letter, written to FAN by H.
Foster Balm, Director OF Bureau Of
Mines, said:
"SAN FRANCISCO, CAL,
May IL, 1929.
"'Hon. Albert B. Fall.
Three Rivers, New Mexico:
Dear Mr.. Secretary:
II have been here for the last new
days arranging for a transfer of
the accumulated royalty oil and
for future royalty oils to the Pan
American Company.
Il have been surprised to find
the Standard and General Petro.
leum in particular are adopting a
very technical attitude toward this
transfer, going so far as TO raise a
question as to whether either com.
pany would be safe in making such
transfer. or In later handling any
OF the oil in question should the
Pan American desire to have them
do 50.
None Of US want Mr.. DOheny
to get into trouble and I take
we will do anything we can to make
1t easy for him.
II have been told there was a
definite proposal to one of the
smaller oil companies go into court
and fight this contract with a view
Of getting decision as to the
right OF the department to make
such a bargain.
This proposal was not carried
through. Mr.. Storey tells me that
he objected to It as he felt that
1t would embarrass the department
and would give support to the trou.
ole makers in Congress.
He processes to be anxious and
willing to do anything he can to
help the department to carry out
its plans, but to be in the awk-
ward position Of having an opinion
from his attorney which might be
quoted against him in case the mat.
ter ever came up.
Suggests Daugherty's Opinion.
Out of all this has come the
suggestion repeatedly that the opin-
ion OF the Attorney General be
obtained as to the legality of the
contract.
II realized the objections to ask.
ing such an opinion, but / have
thought 1t proper to let you know
the difficulties that are being raised
here so that you might reconsider
the matter and decide as to whether
you might not properly ask the
Attorney General to put in writing
what / have understood was his
informal and verbal expression of
opinion favorable to the action the
Department has taken.
AS you will recall Mr.. Sutro and
Mr.. Wyle have been doubtful as
to the right of the department to
make the exchange contract.
Take Positive Stand.
They now seem to have become
positive that no such right exists
and Mr.. Storey is even interpreting
the law so far an to question the
right of the Standard to deliver oil
to the Pan American on our order,
Il have arranged that Mr.. Camp
bell. as representing the depart.
ment, shall receive the oil and give
a receipt for 1t, and while l am not
q lawyer my impression is that
that should end the matter an far
as pipe line companies are con-
cerned.
OF course, this is not a matter
which primarily concerns the de.
parment since we have all been en-.
t!reIy clear In our minds as to the
right OF the Government to make
this exchange, and have in fact
gone ahead and contracted for the
eXcn0nge with the Pan American
ana the latter 10 an entirely re.
sponsible concern that I assume
enos It as tar as we are concerned.
Easy" for DOheny.
There is, however, another nhaaa
Of it. '01 p"S"e
Il am not certain that Mr.. Do.
heny cares, but Mr.. Cotter will
see him tomorrow and IL 1t does
not seem to them important
am giving Mr.. Cotter this letter
to show you SO that you NAV
know what I have found out here
The wells OH the north line of
~ are coming in In good shape, and
Anderson has done excellent work
IN pushing them ahead.
Il am sorry to bother you with
this business while you are at
home.
Cordially yours,
'TSigneO H. FOSTER Balm,