Evening star., 1927-10-20
Claims Oil Stock Holders
Lose by VOiding Of Lease

~ ine EuilOr NJ IHs StA'
have just read in The Sunday Star
The article OF the ever.interesting
William Hard. Mr.. Hard. like almost
every on else who discusses tho Ia
nous OIL cases, falls into some errors.
He describes Mr.. Dohenv as having
repaid tn the Government many mil
lions of dollars for oil taken from the
Elk Hills reserve. and again speaks
of the millions Mr.. Doheny will lose
from having constructed for the Gov
ernment the great oil storage tanks at
Pearl Harbor.
The fact is that nf he frs.-men-
toned millions Mr.. Doheny CONTROL
ing Pan-American Western) loses a
relatively small portion. That com
pany. Of which Mr.. Doheny owns
about 25 per cent of the stock, loses
less than $2.000,0 900 The Pan-Ameri-
can Petroleum K Transport Co.. of
which Mr.. Doheny and his family at
one time had as much as u per cent
OF the stock, paid the Governmen Mt
81 100000 for the oil taken from Elk
Hills reserve and for interest on it's
value. As Mr.. Doheny sold his inter
e"t in this latter company several
years ago. he is not paving one cent
chiefly by about 5000 men. women
and children scattered all over the
United States. a great MANY of them
are widows and orphans; a great ma
jority of the men are small business
men, clerks. bankers or wage earners
These people had nothing whatever to
do with the contract made with the
Government and most of them never
heard Of it until the scandal was
started for political purposes at a
much later date.
The Supreme Court Cancelled the
leases and voided the contract on the
ground that the Government had no
legal authority to make such contract
OF course, 1t was question of the
correct interpT citation of laws.
The Supreme Court held that, az the
contract was Illegal. the PanAmerican
companies divided into two parts since
the original contracts were made, of
which Mr.. Doheny retained the one
known as Westerly should pay for
the oil which had been turned over to
them in payment for their ha wing
erected the storage tanks at Pearl
Harbor. Then the Supreme Court
stated that il had no authority 10 order
the Government to reimburse the Pan
American people for the great work
they had erected at Pearl Harbor.
and suggested that they go to Con
gress for relief. Surely the Supreme
Court In this language recognized the
right which the Pan-American people
had to this relief.
BE it remembered that the work at
Pearl Harbor was done under two
contracts. The first storage units
were completed long before the Elk
Hills reserve lease was even thought
Of. The second construction was con
nected with the lease. The cost of
this entire construction was, roughly.
$12 100000. There was no profit in it
for the Pan-American Co. They en-
plOyed the j. G. White Construction
Co. to do the work and paid that com
pany cash. The Navy Department
had it's checkers on the job all of the
time 10 see that 1t was no-profit job
] believe this is the only time the
Government has ever had a big con-
tract done on that basis.
Several years ago. when Mr. Doheny
owned a. fraction over so per cent Of
the Pan-American "A" stock voting
stock. he sold that stock to a syndi
cate made up OF four members The
other half OF the "A" stock and all of
the "B" stock was in the hands of the
publc-men, women and children
There are nearly 100000 Of shares
In their hands, and If the Congress
does not pay for the Pearl Harbor
storage. with the oil placed there by
the company. then they. and not Mr.
Doheny, will lose about $4,000, 600
The Navy is using the storage facili-
ties, and has to use them. They con.
stitute our first line of defense in case
of any aggression from the western
side Of the Pacific. No enemy fleet
dare attack our Pacific Coast so long
as an American feet lies i'm Pearl
Harbor with that fuel supply at hand.
A few weeks ago the Pan-American
Petroleum & Transport Co. paid the
Government $11.000,000 for the oil
taken from Elk Hills. Mr.. Dohenys
Western company paid something over
a million. About one-fourth of this
last amount came from Mr.. Doheny
and his family. but none of the Sill
900, 900 was his loss. AS result of
that enormous cash payment, Pan
Americans $4,000 stockholders, scat
tered throughout the country, have
had their annual dividend cut from Sc
to 81. / am sure Mr.. Hard will not
think this Is just punishment for
their participation in illegal contracts.
Some of these sufferers have heen
DoIH SiiIc thc toiitidGtS were Hiduc.
l know widow with three children
whose husband left her 200 shares of
this stock. 1t brought them $1,000
per year. now reduced TO $500 1t is
unthinkahle that this great Govern
ment could complacently make use of
the Pearl HarbOr storage at the ex-
pense OF $1,000 perfectly innocent
stockholders. Mr.. Doheny was the
sole individual connected with the
company who was willing to make the
contracts. HIS own brOther-in law.
Champion Anderson. president of the
California property at that time.
strenuously protested. The rest Of
the stockholders knew nothing about
it. WALLACE d. BASSFORD.