~ Bellefonte, Pa., February 8, 1924.
OUR COUNTRY’S GREATEST
ADMINISTRATIVE SCANDAL.
The Teapot Dome Oil Field Leases
Have Thrown Washington into
a Furore of Charges That
Impugn Cabinet Officials.
Out in Wyoming, in a county called
Natrona, in a spot just about forty
miles north and a little to the east of
Casper, is a rise of ground. On its
crest stands a giant boulder. Ap-
proached from the proper side, the
boulder bears a most striking resem-
blance to a teapot. That is Teapot
Dome. :
If, in the subsurface levels beneath
that peaceful-looking old boulder,
there ran nothing but water with
which tea might be brewed, Teapot
Dome would have no place in history.
The best it could expect would be a cer-
tain land-mark status among the men
who roam the ranges of “the great
open spaces.”
But, its substrata are rich with oil.
And Teapot Dome, therefore, has be-
come a household word wherever
Americans are interested enough in
their government to concern them-
selves with a political scandal.
It began when Albert Bacon Fall.
as Secretary of the Interior in the
Cabinet of President Harding, nego-
tiated and signed a lease transferring
the Teapot Dome naval oil reserve
from the government to the private ex-
ploitation of Harry F. Sinclair, a mul-
ti-millionaire oil magnate and turf-
man.
The Senate protested as soon as it
heard about the contract.
SENATORS DEMANDED INQUIRY.
Senator John B. Kendrick, Demo-
erat, of Wyoming, and the ever-alert
and chronically suspicious Robert M.
La Follette, of Wisconsin, demanded
an inquiry. They obtained it. The
investigation has been in progress for
inany months. It attracted little pub-
lic notice, until there crept into the
hearings a suggestion that Mr. Fail
may have received money from Sin-
clair.
Now it is the most important mat-
ter in Washington. :
Little else is considered vital. Noth-
ing else is discussed in cloak rooms of
the Capitol; in the drawing rooms of
social Washington. Newspapermen
are writing about it almost exclusive-
ly. Great throngs gather daily in the
Senate committee room to hear sen-
:sational testimony; to watch one of
the great mining lawyers of the West,
Senator Thomas J. Walsh, of Monta-
ma, pick at the testimony of reluctant
‘witnesses, trap them with cunning
tquestions and pull from them the
:statements he has sought to hear for
many months when he seemed all but
‘balked in his efforts to establish an
«official impropriety in the lease.
Washington and Los Angeles and
Palm Beach; dreadnaughts out at sea
~—the “first line of defense”—and ge-
-ologists prying into the secrets of
Mother Earth thousands of feet be-
low the surface; a horse ranch at
Three Rivers, New Mexico—not many
‘miles north of El Paso; a $100,000
‘house on Long Island—the winnings
of the 1923 champion of the American
turf, Zev—*six or eight cows” confus-
«d in conversation with $68,000 in
‘canceled checks; a sudden trip to Eu-
rope by the millionaire Sinclair and
‘a hurried cross-continent journey by
‘the millionaire Doheny; one allegedly
to escape the inquiry, the other to re-
‘veal a $100,000 loan to a Cabinet offi-
«cer; unexplained transfers of thous-
ands of dollars in oil stock and Liber-
‘ty bonds and contradictory statements
‘by men of national reputation; a has-
‘ty and sensational resignation from
high office. of a son of Theodore
Roosevelt—Archie Roosevelt, brother
«of the Assistant Secretary of the Na-
wy and brother-in-law of the Republi-
can leader in the House—all these
and ore are parts of the picture
‘which the Senate committee has pre-
sented.
And gossip-loving and scandal-mon-
‘geririg old Washington is in its ele-
tment.
NOT AN INTRICATE STORY.
: It is not an intricate story, this
Teapot Dome affair, though it has ne-
«cessitated a wealth of explanation.
Warren G. Harding became Presi-
cdent of the United States and Alberti
.B. Fall Secretary of the Interior on
-March 4, 1921. They were fast friends.
Mr. Harding had unbounded admira-
-tion for Fall’s ability, Not only had
‘they served together in the Senate,
but they had been on the Committee
on Foreign Relations together in the
feverish days and nights of the
League of Nations struggle with
President Wilson. Fall had great an-
.alytical gifts when it came to picking
flaws in a treaty or bill. He had
gained special distinction as an au-
thority on Mexican affairs. He was a
‘bitter critic of the Wilsonian policy.
To say that Mr. Harding had the
‘most profound faith in Mr. Fall’s in-
tegrity is to say but half the truth.
Mr. Harding was not alone. So did
-everybody else.
Although the Senate inquiry has
«developed testimony so serious as to
«convince the calm and conservative
mind of President Coolidge that mat-
ters in disclosure require an expla-
nation and demand a Department of
Justice investigation for possibility of
criminal conduct, Washington does not
‘want to believe even yet that Albert
Fall despoiled a public trust and gave
away public property in exchange for
bribes from millionaire oil magnates.
XRGED RATIFICATION OF TREATY.
Five days after he entered the
White House, President Harding sent
‘to the Senate a special message urg-
‘ing ratification of the treaty with
Colombia, involving payment of $25,-
000,000. From the time President
Roosevelt obtained the Panama Canal
route and aroused the Columbians,
‘the Republican party was opposed to
ithe treaty on the ground that it in-
sultingly repudiated Roosevelt by pay-
ing damages to Colombia. :
“Qil,” said opposing Senators. Fall
-acknoweldged it was oil. American
companies needed support of the Co-
fombian government. The treaty was
wxatified by a narrow margin.
Now, along toward the end of the
Wilson administration, Judge John
Barton Payne, as Secretary of the In-
terior, had granted some drilling
rights to Doheny’s company, the Pan-
American Petroleum company, in one
of the naval reserves. A row follow-
ed between the Navy and Interior De-
partments.
i The naval oil reserves had been set
| aside by Congress in 1909 and had
been safeguarded zealously by the
conservation policies of Presidents
Roosevelt, Taft and Wilson. Secreta-
ry Daniels wrote many reports for
their preservation, and gave constant
battle to bills offered in Congress to
open the reserves to private develop-
ment. The oil interests had tried re-
peatedly to persuade Presidents Taft
and Wilson to lease them. They tried
in vain.
On May 31, 1921, President Hard-
ing signed an executive order trans-
ferring control of the naval reserves
from the Department of the Navy to
the Department of the Interior and
vesting absolute power in Secretary
Fall.
In a letter to Edward L. Doheny,
dated July 8, 1921, relating to the in-
terdepartmental trouble, there had
been over the Doheny lease in Cali-
fornia resulting in Doheny voluntari-
ly releasing eight of the twenty-two
wells to the Midway Oil company,
Fall stated:
“There will be no further possibili-
ty of any further conflict with navy
officials and this department, asl
have notified Secretary Denby that I
should conduct the matter of naval
leases under the direction of the Pres-
ident, without calling any of his forc-
es in consultation unless I conferred
with himself personally upon a mat-
ter of policy. He understands the sit-
uation and that I shall handle mat-
ters exactly as I see fit and will not
consult with any officials of any bu-
reau in his department, but only with
himself and such consultation will be
confined strictly and entirely to mat-
ters of general policy.”
CONFERENCE AT FALL'S RANCH.
It was at about the same time, or a
little earlier, that Fall, after a hear-
ing, set aside an adverse report of
Fred C. Dezendorf, legal authority in
the general land office, on the title of
the Standard Oil company of Califor-
nia to drill for oil on land adjacent to
Naval Resrve No. 1, in the Elks Hills
district, which begins about seven
miles south of Taft, California. At-
torney General Daugherty was said to
have concurred in the validity of the
Standard Oil title. That was import-
ant only in relation to subsequent de-
velopments and some further charges
which are likely to be made in the
Senate investigation.
Harry F. Sinclair and his Washing-
ton attorney, Colonel J. W. Zevely,
known as “Bill” Zevely to some of his
friends and as “Zev” to others, went
to Secretary Fall’s ranch at Three
Rivers in December, 1921. They spent
the New Year’s eve there.
possibility of Sinclair’s leasing it oc-
curred at that time. The suggestions
in the Senate hearings have been that
Fall initiated the conversation cover-
ing that official business. Stress is
placed on the fact that he elected to
do so at Three Rivers, 2500 miles
from the office of the Secretary of the
Interior.
Formal application by Sinclair for
the Teapot Dome lease was made to
Secretary Fall on February 3, 1922.
The lease was signed by Secretaries
Fall and Denby on April 7, 1922.
At that time Senator Kendrick was
urging a bill to obtain for the State
of Wyoming a share in the royalties
from the oil fields. Kendrick stated
publicly that as late as April 15 the
Interior Department denied that Tea-
pot Dome had been leased to the Mam-
moth Oil company, which Sinclair or-
ganized for the purpose.
“It is worthy of note that the text
of the lease of April 7 was not given
out until after Senator LaFollette’s
resolution was introduced on April 21
calling for an investigation of the
whole matter,” Senator Kendrick
says.
FALL DEFENDS SECRECY.
Fall defended the secrecy on the
ground that he was acting in a mili-
tary matter for the commander-in-
chief of the Army and Navy and did
not regard it as good public policy to
broadcast the fact that the Navy was
preparing to store. vast quantities of
fuel oil to be obtained as royalty oil
under the Teapot lease with Sinclair.
Now, it is not denied that Sinclair
went into the Teapot Dome field to
make money, just as Doheny took over
the Elk Hills reserve when oil men
said he had bitten off more than he
could chew. Doheny expected to put
$120,000,000 into the project and to
make a profit of $100,000,000 net.
Sinclair never has estimated his pos-
sible returns. The right of those men
to make a profit has not been chal-
lenged, but it has been the contention
of their critics that they were to gain
millions on millions without giving to
the government a fair share.
Two chief arguments were advanc-
ed by Fall in defense of his leasing
policy.
The first was that it was a policy
of conservation to take the Teapot
Dome oil out of the earth and have
the Navy’s royalty oil stored in tanks
for use at some future date, and sec-
ond, that instead of permitting the
pools to be depleted by drainage from
adjacent operations of private inter-
ests, the Navy was obtaining an ad-
vantageous shdre of royalty oil; that
the leases were the best which could
have been obtained; that he had gain-
ed better terms by dealing privately
with Sinclair than by open competi-
tive bidding. .
That the Naval Reserve No. 1 in
California was being drained by ad-
jacent operations is acknowledged
generally, but Fall’s foes now are un-
dertaking to show that when he over-
ruled the Dezendorf opinion holding
invalid the title of the Standard Oil
company of California in the Elk Hill
district, he paved the way for that
company to drain the Naval Reserve
and himself caused a condition
through which he sought later to jus-
tify his leasing of the entire reserve
to Doheny. ;
With respect to Teapot Dome a vi-
olent controversy has raged as to
whether the operations of the Mid-
west and pioneer e>mpanies in the ad-
jacent Salt Creek fields were draining
The first !
discussions of Teapot Dome and of the.
the Teapot Dome. Secretaries Fall
and Denby have relied on men they
regard as eminent geologists, who
contended that Teapot Dome was so’
menaced.
DRAINAGE FEARS SCOUTED.
Dr. W. C. Mendenhall, chief geolo-
gist of the United States Geological
Survey, testified on November 1, 1923,
as follows:
Senator Walsh—*“What have you to
say as to the necessity for or advisa-
bility of leasing the whole of the Tea-
pot Dome by reason of wells on the
adjacent Salt Creek structure?”
Dr. Mendenhall—“If it were de-
sired to maintain storage of oil for
the Navy underground, and if, with
that policy in mind the sole reason for
the leasing of the Teapot Dome was
the fear that oil within the dome
would be withdrawn in serious
amounts by wells drilled to the north
of it and outside the reserve, it would
be my opinion, that that fear was un-
justified and that any leasing in con-
sequence was unjustified.”
Senator Walsh has relied on the
statements of other geologists. Sena-
tor Kendrick has reposed great con-
fidence in the statements of former
Governors R. B. Brooks and Robert
D. Carey, both of them oil men and
both contending there was no sound-
ness to the argument that operations
in the Salt Creek sector were drain-
ing the Teapot.
“No one can justify the bartering
away of valuable natural resources,
the property of the State and the Na-
tion,” said Carey, as Governor of
Wyoming. He is a Republican.
G. B. Morgan, State geologist of
Wyoming, declared:
“My opinion is that Teapot Dome
and Salt Creek are separate structures
with practically no possibility of
draining Teapot through Salt Creek
fields.”
NAVAL OPINION DIVIDED.
Opinion was divided among naval
officers, whose duties brought them in
contact with the oil reserves. They
differed also as between the policy of
leasing the reserves on a royalty ba-
sis with the provision for the storage
of the navy oil. Rear Admiral Griffin
has opposed it bitterly before the Sen-
ate. His successor as Chief of Naval
engineering, Rear Admiral Robinson,
has been an ardent defender of the
Fall-Denby policy.
The great controversy over the
Teapot, it might be well to point out,
has been due in large measure to the
fact that it was the last and the rich-
est of the naval oil reserves created
in 1912.
Now, regarding the terms of the
lease which Sinclair obtained. Secre-
tary Fall, in a memorandum outlining
the lease to Secretary Denby, April
12, 1922, stated his opinion that
through the contract with Sinclair the
government would obtain a better
price for its crude oil, obtained
through royalties in the Salt Creek
| structure, than if the Teapot lease
had not been made because it threw
Teapot into competition with the oth-
er refiners.
Secretary Denby contends to this
day, as does Colonel Theodore Roose-
velt, Assistant Secretary of the Na-
vy, that the Fall-Sinclair lease was
the most advantageous which the gov-
ernment could have obtained under
any circumstances. They are con-
vinced no lease as favorable to the
government could be obtained were
the whole matter thrown open again.
FALL INVOKES HARDING'S SUPPORT.
And so run the conflicting conten-
tions through five printed volumes of
testimony heard by the Senate com-
mittee from October 22, 1923, to date.
It is necessary to recall, too, that
after the Senate adopted, on April 29,
the La Follette resolution for an in-
, quiry into the Teapot Dome lease,
! Secretary Fall prepared for President
{| Harding a long memorandum which
the President transmitted to the
| Senate with a letter of his own
indorsing the Fall leases and taking
personal responsibility for them.
Former Secretary Daniels had said
that it would be nothing less than
“criminal” for the reserved naval de-
posits to be opened up for private ex-
ploitation; that in the event of war
with the development of oil-burning
battleships, the fields might mean the
very existence of the United States.
When private interests threatened to
dig wells that would draw oil from
the California reserve, he said he
would dig two wells for one to offset
such operations and he added that, if
necessary, he would send marines to
safeguard the government’s rights.
That rankled with Fall, even up to
the time he wrote to President Hard-
ing, in response to the Senate demand
for the facts, outlining his reasons for
the lease. He alluded to the private
drilling operations that long had been
in progress on reserve No. 2 in Cali-
fornia. Various rights had been grant-
ed by his predecessors, because of
water intrusions and similar reasons,
to private companies. He pointed out
that a total of 724 wells had been
drilled on this one reserve prior to
the advent of the Harding Adminis-
tration.
He added that, “despite wild state-
ments to the contrary, as far as I
have been able to ascertain, no ma-
rines of the United States Navy had
been called out to prevent such dril-
ling for any reason whatsoever, nor
had any other force been used to pre-
serve at any cost the oils to the Navy
Department.”
HARDING TOOK RESPONSIBILITY.
It was upon receipt of this letter
from Fall that - the late President
Harding took upon his shoulders full
responsibility for what had been done.
In his message of transmittal of June
7, 1922, accompanied by the Fall let-
ter to him, Mr. Harding took pains to
point out that his message was not to
be construed as a defense, but, on the
contrary, to carry his full indorse-
ment.
“It is not to be construed as a de-
fense of either specific acts or the
general policies followed in dealing
with the problems incident to the
handling of the naval reserves, but it
is designed to afford that explanation
to which the Senate is entitled, and
which will prove helpful to the coun-
try generally in apprising the admin-
istration of these matters of great
public concern.
“I think it only fair to say in this
connection that the policy which has
been adopted by the Secretary of the
Navy and the Secretary of the Inter-
ior, in dealing with these matters, was
submitted to me prior to the adoption
thereof, and the policy decided upon
then and subsequently has at all times
had my entire approval.”
WALSH UNCOVERS SCANDAL.
Until Carl Magee, a New Mexico
newspaper man appeared before the
Senate committee with a story of
Fall’s sudden affluence and his exten-
sive purchases of property and cattle
in New Mexico, the inquiry had pro-
ceeded wholly along lines of a discus-
sion of the technical aspects of the
Teapot lease. Given a lead, Senator
Walsh kept prying, asking thousands
of questions. At last he struck soft
spots.
The developments of the last two
weeks followed in rapid succession.
They are so recent as hardly requir-
ing repetition. Yet, with whatever of
these facts the scandal might be mit-
igated, it is too late, perhaps, to con-
vince the considerable body of Ameri-
can public opinion that Albert Bacon
Fall’s job as Secretary of the Inter-
ior and as friend of multi-millionaire
oil men was not a regular Aladdin’s
lamp. Whenever he needed—Wash-
ington feels much of the country al-
ways believe—$25,000 or $30,000 or
$100,000, he took on a nonchalant air
and an oil geni appeared with crisp
currency in black satchels.
And Fall, awaiting in a sick room
his turn on Tuesday to face a prying
throng of Senators, says he is “sor-
ry” he deceived the committee. He
protests he did nothing corrupt.
Pitied by the charitable, who wish
to suspend judgment, called a traitor
by his political foes, the Kentucky lad
who became a school teacher, soldier,
State Supreme Court Justice, then
United States Senator and Cabinet
minister, is, at this time a sorry fig-
ure. Certainly, he is a far different
Fall than the reserved, often austere,
sometimes, perhaps, arrogant figure !
in the Senate and the |
pre-eminent
Cabinet.
Recognizable.
Salesman.—“Boy, can you tell me
where I can find your daddy?”
Son.—“Yes. He’s ‘down yonder
with them thar hogs, but you’ll know
him all right, cause he’s got a hat
on.
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will, as expressed by increasing deposits.
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STATE COLLEGE,PA. /
4
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61-46
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