Democratic watchman. (Bellefonte, Pa.) 1855-1940, February 08, 1924, Image 6
~ 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. 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