Evening star., 1926-12-03
ROBSON ADMITS WILBUR TOLD
HIM TO WITHHOLD FACTS

( plained to oil companies cOulu not
construct the tanks and the construc-
| ton companies wanted cast in return
for their work He suggested at that
time that congressional authority be
obtained whereby Navy oil from the
California reserves could be sold for
| money. and that the funds thus re-
ceved could be used for building the
| storage facilities.
Contract Sent to Fall.
On April II, 1922, Balm. said the
Pan American bids were referred to
Fall at Three Riverts, n. Mex.
A. w. Ambrose, oil expert of the
department, took with him draft
| of the contract and in fact "all the
| information there was on it in
| Washington at the time"
| After Ambrose got there Balm said
| that he mad received word to go
ahead"
Balm testified that he had learned
| from Doneny. about April IL, that
the Pan-American Co. would sub
nit an alternate proposal on the
construction work at Pearl Harbor.
When the BIDS were opened, April
Is. it was found the Doheny Co.
had submitted two offers. "a" bid
provided tor the specific work asked
for in the invitation. "B" bid was
different, ne said. It contained {
clause granting preferential right to
the Pan american Co. in the Elk
Hills reserves should they be
opened hereafter to leasing.
Balm said the "B'' bid was accepted
and approved by himself. Mr.. F>inney,
Secretary Fall and Admiral j. K. Rob
'Gon. Fall was at Three Rivers when
the bids were opened and did not 'o-
turn to Wash ngton until after the
contract had been awarded. The wit
/ ness pointed out. however, that Secre-
tary Fall had agreed to the "R" pro-
posal when notified by WIRE
Asks Value of Rights.
Roberts went briefly into the ques-
ton of preferential rights as contained
in the clause. The witness said that
he had once remarked to j. J. Cotter,
representative of the Doheny COM
pany, tina: "a preferential rights
clause" was very valuable. "As a
matter of fact" said Mr.. Roberts,
"you knew that it was estimated that
the Elk Hills reserve contained from
$50 to $50 million barrels of oil, did
you not?" Balm said that that was
his impression. Mr.. Roberts abruptly
shifted oss-examination to the scene
of Bair's, trip to California during
January Of 1922, when he went to con-
fer with various oil company officials
regarding the Pearl arbor project.
At this time the E' Hills lease and
the Oil conversion plan were still hang
ing fire in the department.
AS he had testified previously, Balm
said he had founG the oil companies
'tied in a knot" as to the legality of
the executive order under which the
reserves We're transferred from the
Navy Department to the Interior De
partment. 1t was brought out by
counsel that under this order the de-
partment had approved preliminary
plans for it's agents with respect to
| the exchange of crude oil for fuel oil.
| Obtaining a statement from Balm to
the effect that the Standard, General
Petroleum and Union companies were
loath to go into the project because
| their attorneys doubted it's legality
| Attorney Roberts produced the letter
| written by Balm on May II, 1922, and
addressed to Secretary Fall. who was
then at Three Rivers. N. Mex.
Doubts About Contract.
l AL IAAAO ACtLSA bclAl lOiu II Oil NAlOI kAC
Standard and General Petroleum com
panies, particularly, were adopting a
very technical attitude toward the
| plan with regard to the transfer of
Oil. He said that Mr.. Story of the
Standard Co had gone so far as to
doubt the right of the Standard Co.
to transfer oil to the Pan-American
Co. under the plan.
| Balm suggested to Fall that the de-
partment JOIN with some small oil
company in a friendly suit in a Fed.
eral court so as to bring out definite
ruling on the proposition involved.
He suggested also that it would be
better for the Attorney General to put
into writing the opinion which he
understood the Attorney General had
expressed informally as to the legality
of the department action.
When former Attorney General
Daugherty was witness at the trial
last Tuesday he was asked specifically
if he had ever rendered an opinion on
this proposition. Daugherty had re-
piled that he did not recollect whether
he had given an official opinion os
not. but that the records would
show.
Mild Sensation Caused.
The introduction of this letter to
Secretary Fall, a reply to which was
not put into evidence, produced mild
| sensation in court.
| Under further questioning, Balm
said that the companies which had
protested the plan stated that they
could not afford to risk participation
| in it unless it's legality was we'll estab-
| lished.
| Balm was asked if he had not for
warded a letter to Senator SmoOt of
/ the public lands committee saying
that Dohe1y's plan had first come to
his attention in August. There was
considerable controversy as to the
exact date. Balm explaining that the
notation that he had made on the let
.er had been written some time later.
| He thought he was in error as to
| the date That it was month later.
At one point during his cross-exami.
nation Balm became confused over the
| rapid exchange of names. He re.
ferred to the oil defendant as "Secre-
tary Doheny," which caused consid.
cradle merriment among the spec
tators and even to the IL jurors who
had been sitting somewhat wearied
throughout the proceedings. Balm
hastily corrected himself.
Balm then was excused as a wit
ness. for the time being at any rate
| dIlu LIlc uclciSc Cdicu I1OIIy
of New York. purchasing agent for
the Pan-American Co. He was ques
toned briefly by Attorney Hogan as
to correspondence with Doheny as to
the purchase Of supplies and material
for the construction of oil tanks at
Pearl Harbor. These inquiries were
made prior to November /, 1922.
Pearl Harbor Project.
Referring to the Pearl Harbor pro
ject. Admiral Gregory testified that it
was exceedingly desirable and neces
sary to have the work under both
contracts done by the same company
Mr.. Hogan asked the witness if any
one from the Department of the In
terror performed any functions in