THE DOHENY OIL LEASES KNOCKED OUT
JUSTICE TRAVELS WITH LEADEN HEELS, but strikes with an iron hand, is the way Senator Walsh of Montana feels about it, now that the United States Supreme Court has finally and officially vindicated his investigation of the Harding Administration's oil deals, and declared the Doheny leases unlawful and void and the whole Fall-Doheny transaction "tainted with corruption." With those last three words the Supreme Court, in the opinion of the New York Evening Post and many another paper, "confirms the feeling of the man in the street." "This time the whole nation cheers," declares the Boston Herald, and from end to end of the country the newspapers express their gratification that at last justice has been done.
The recent acquittal of Mr. Doheny and ex-Secretary Fall is everywhere borne in mind, and the general feeling is exprest by the Springfield Republican when it says that even that Washington jury's verdict of "not guilty" in the criminal case for conspiracy is now "morally overturned" by the Supreme Court's decision in the civil case. The Baltimore Sun remembers that "fifteen United States Judges, including one District, six Court of Appeals, and eight Justices of the Supreme Court have now found Messrs. Doheny and Fall guilty of fraud upon the Government, while a jury did not believe the evidence justified conviction for conspiracy." The Boston paper finds here an indictment of our criminal processes, and the New York Evening World thinks "the man in the street will continue to shake his head cynically and wonder why men of great power and wealth can be involved in fraud and corruption and not pay the penalty." While the layman may have difficulty in understanding why a jury should find Fall and Doheny innocent while the Supreme Court so plainly declares their acts to be corrupt, the New York Herald Tribune thinks "he would make a parallel distinction as a matter of man-to-man justice without hesitation":
"He would discharge a suspected employee if morally satisfied of his guilt, whereas if the evidence of crime was complete he would institute criminal proceedings against him. The law merely seeks the same end by saying that the stigma of criminality shall not attach without overwhelming proof, whereas the setting aside of a contract—as in the present Doheny case—or a money judgment for breach of contract needs a lesser degree of proof.
"But a human factor also played its part in the criminal case arising from the same facts. That was the personality of Mr. Doheny, grown old in the oil business, with a long record of frontier integrity. Whatever the jury felt with regard to Mr. Fall, it clearly wished to believe the best of Mr. Doheny. The Teapot Dome cases remain. There can be little doubt of the Supreme Court's decision of the civil action. The criminal charges involve a new set of facts and a new background. The result of these additional charges against Mr. Fall will not be long delayed."
All the oil cases, we read in the news columns of the New York World, sprouted from that famous "little brown satchel," which Mr. Doheny has described as really black, that carried an "eloquent cargo of $100,000 in currency" from Mr. Doheny to Secretary of the Interior Albert B. Fall in November, 1921. The Elk Hills case was the first of these. It was started before the United States District Court in Los Angeles in October, 1924. According to The World:
"The first contract was entered into between Fall for the United States Government and the Doheny company on April 25, 1922, less than five months after the $100,000 was delivered. It gave the Pan-American Company a prior right to lease lands in the Government's naval oil reserves and provided for construction by the Doheny interests of storage tanks at Pearl Harbor, Hawaii, for storage of 1,500,000 barrels of naval reserve fuel oil. The Government agreed to pay the cost of the storage facilities and the stored fuel oil by exchanging royalty crude oil of equal value.
"On June 5, 1922, the Government gave the Pan-American Company the right to drill wells and take oil on a royalty basis from the Elk Hills naval oil reserve in Kern County, California. A supplemental contract, dated December 11,1922, provided for additional oil storage construction at Pearl Harbor for 2,700,000 more barrels of fuel oil and a supplemental lease of the same date conveyed further naval oil lands to the Doheny company for exploitation. Doheny subsequently declared that 'if we don't make $100,000,000 out of this we'll be in hard luck.'
"To put Fall in a position to negotiate these valuable leases and contracts with his benefactor it was necessary for President Harding to issue an Executive Order authorizing the Secretary of the Interior to lease the lands in the naval oil reserves for the Navy Department.
"At trial of the suit in Los Angeles it was contended by the Government that Fall induced the President to sign this order; that the $100,000 'loan' influenced Fall to negotiate secretly with the Doheny company; that the exchange of royalty crude oil involved in the contracts was illegal; and that the leases and contracts were entered into without competitive bidding, as required by law.
"The defense argued the 'loan' was a personal matter; that the secrecy of the negotiations was in compliance with a request from the Navy Department, which was in fear of a Japanese crisis; and that opportunity was given other oil companies to bid for the lease and contracts."
The trial court canceled the leases and contracts, but allowed Doheny compensation for expenses incurred. The Circuit Court of Appeals upheld the cancelation, but ruled that Doheny was not entitled to compensation for the construction work because of the illegality of the contracts. This decision was confirmed by the United States Supreme Court on February 28. The exact amount of money Doheny must return to the Government is variously estimated. A New York Times correspondent puts it at $10,541,947.59. Secretary of the Navy Curtis D. Wilbur estimates the total loss to the Doheny companies at $21,686,928. The only recourse left to Mr. Doheny and his associates in the matter of reimbursement is, as the Supreme Court points out, an appropriation by Congress. Washington correspondents, however, think it is practically impossible to get an appropriation from Congress as now constituted.
The Supreme Court's decision was unanimous, altho Mr. Justice Stone took no part in the case, as he was Attorney-General of the United States when it was instituted. Mr. Justice Butler, who delivered the opinion, emphasized the secrecy surrounding the oil deals and the fact that there is no law authorizing the exchange of reserve oil for such large scale improvements as that at Pearl Harbor. He asserted that there was no competitive bidding. He declared that Secretary of the Navy Denby was not entirely ignorant, but "took no active part in the negotiations." That Doheny gave $100,000 to Fall is said to be sustained by the evidence. It is declared that:
"The facts and circumstances disclosed by the record show clearly that interest and influence of Fall as well as his official action were corruptly secured by Doheny for the making of the contracts and leases; that, after the Executive Order of May 31, 1921, Fall dominated the administration of the naval reserves, and that the consummation of the transaction was brought about by means of collusion and corrupt conspiracy between him and Doheny. Their purpose was to get for petitioners oil and gas leases covering all the unleased lands in the reserve.
"The making of the contracts was a means to that end. The whole transaction was tainted with corruption."
Even if bribery can not be definitely proved, it is enough, we are told, that the Doheny companies "sought and corruptly obtained Fall's dominating influence in furtherance of the venture. It is clear that, at the instance of Doheny, Fall so favored the making of these contracts and leases that it was impossible for him loyally or faithfully to serve the interests of the United States." The Pan-American companies are told that they can not expect to be reimbursed for their expenditures by reason "of the ordinary rule that one who seeks equity must do equity." "Let the wrongdoer first restore what it confesses to have obtained from the Government by means of a fraudulent scheme formed by its officers, stockholders, and employees in violation of law." Further, since Congress had not authorized the improvements made by the Doheny companies, the Court thinks it must be assumed that the United States did not want them. The Court's opinion of the Fall-Doheny transactions are finally summed up in this emphatic sentence:
"The contracts and leases and all that was done under them are so interwoven that they constitute a single transaction not authorized by law and consummated by conspiracy, corruption, and fraud."
And so, comments the Jersey City Journal, speaking for newspapers in every section of the country, justice has finally been done the people of the United States. It is reassuring, says the Seattle Times, to have another such proof "that the nation's highest tribunal may be trusted to administer justice irrespective of distinction or wealth of ligitants." "The mills of the gods," declares the Newark News, "have ground Albert B. Fall and Edward L. Doheny exceeding small." "In the pages American history," agrees the Sacramento Bee, "they will forever occupy a dishonored place," and they will have "set an example to other corruptionists to keep their hands off the public domain." Says another Pacific coast paper, the Portland Oregonian'.
"Let those who think there is no limit to the power of money think of Doheny, old, still rich, but indelibly branded with shame as one who conspired to wrong his country under the cloak of patriotism. Let those who believe that public office is an opportunity for private graft and who believe that money can buy immunity think of Fall, who bears the same brand."
To end with a contrasting view, we note the rather weary observation of the Albany Knickerbocker Press that, while justice is served by the Court's decision, "it comes too late to carry any great significance for most citizens."
Source: The Literary Digest for May 7, 1927