Old Oil

If two men have three coats, each owning one and sharing the third equally, they may take money from their pockets and put it into their other pockets in such ways that wise men will not know whether to call them fools, thieves or geniuses.

Of like sort is the problem that has long confronted the Federal courts and square-jawed Thomas James Walsh, Arch-inquisitor of the Senate Committee on Public Lands, in the strange transactions of three oil companies remotely connected with the Oil Scandals. The ultimate object of reviewing these transactions is to expose the supposed source of the Liberty Bonds which Oilman Harry Ford Sinclair is known to have given Albert Bacon Fall, defamed Secretary of the Interior who leased Teapot Dome to Sinclair. But the immediate motive, when Inquistor Walsh renewed his inquiries last week, seemed compounded as much of professional pique as of public conscience.

One day in 1921 some portly oil barons met in a Manhattan hotel room and the now-extinct Continental Trading Co. of Canada bought 33,333,333 bbls. of oil for $1.50 per barrel. The same day, the Continental Co. sold the same oil for $1.75 per barrel to the Standard Oil Co. of Indiana, instantly netting some eight million dollars on paper.* The strange thing was that a third company, which guaranteed the Continental purchase, was jointly owned by Sinclair, who controlled Continental and the Standard Oil Co. of Indiana, which was buying from Continental.

Did Col. Robert W. Stewart, brisk, bulky board chairman of the Standard Oil Co. of Indiana, know where Continental was buying $1.50 oil? He did. He also knew that the oil would cost him $1.75 from the same source, for reasons beyond his control. Since oil was commanding $2 per barrel elsewhere at the moment, he felt he was serving his Indiana Standard stockholders well in helping to guarantee to Sinclair, as cunningly inevitable middleman, a profit which Indiana Standard could equal in turn. "It was a good buy," he said.

All this Col. Stewart explained last week to Inquisitor Walsh. Col. Stewart was patient, considering his own full-blooded pique at being peremptorily summoned from business-mixed-with-pleasure in Havana. But patience turned to indignation, blandness boiled into wrath, when Senator Walsh wondered what such an accommodating purchaser might have known or felt or perhaps shared privately from the cunning middleman's profit.

Senator Walsh said: "It looks as if you had some good reason for signing that guarantee."

Crash went a massive Stewart fist upon the table. "No, Sir!" he shouted. "Except what appears on the face of it. If you are intimating by that that I ever made a dollar out of it personally you are absolutely mistaken!"

Senator Walsh soothed the large witness and continued: "But you know that some one made--"

Stewart: "Absolutely, that's a cinch."

Senator Walsh suggested that the witness might have heard how the "cinch" profits were distributed. Again Col. Stewart grew irate.

"I am not here to tell you what I have heard!" he boomed. "... I am not going to tell you what I have heard or any hearsay testimony!"

Col. Stewart was soothed again. The hearing neared its close, with the Continental phase of the Oil Scandals as obscure as ever. But boyish Senator Nye, chairman of the Public Lands Committee, had the temerity to ask once more:

"Do you know of anyone who received these bonds that the Continental Trading Co. is reported to have dealt in?"

"... I do not think that question is entirely pertinent to this inquiry. ... I regret it exceedingly--and I am really not doing it through any lack of respect to the committee--but I have to decline to answer."

The inquisitors regretted it exceedingly, too. They had to ask Col. Stewart to take the stand again next day. Again he professed ignorance and unconcern as to how Sinclair and his associates* of the Continental Trading Co. "rigged the deal."

Bronson Cutting, New Mexico's new six-foot Senator, could not feel that Col. Stewart's attitude was "plausible." Said he:

"Knowing your business ability--"

"Let us pass that up," snapped big Col. Stewart.

Cutting: "Well . . . then we might assume that you are an imbecile--that is possible?"

Stewart: "Absolutely."

Cutting: "There is another possible assumption, a logical assumption--that you are committing perjury."

Col. Stewart's big face burned crimson. ". . . I say you have no right!" he shouted. "I don't mean to be insulted and I shall leave this room instantly if this goes on--"

Apologies ensued. But still Col. Stewart would not remember whether he had heard how Sinclair paid Secretary Fall from Continental profits, as alleged. The Committee reported Col. Stewart's reluctance, technically known as "contempt," to the Senate.

Immediately and unanimously the Senate voted that its Sergeant at Arms should "take into custody the body of the said Robert W. Stewart, wherever found, and . . . bring the said Robert W. Stewart before the bar of the U.S. Senate."

Thus was protraction protracted. Many another oil bigwig--including Beman Gates Dawes, brother of Vice President Dawes and board chairman of the Pure Oil Co., which was one of the original owners of the much-bickered oil bought and sold by Continental--yielded nothing illuminating on the witness stand. Col. Stewart submitted to the Senate's arrest in his hotel room, ate his meals under surveillance. Then he got a court to free "his body, wherever found," by a writ of habeas corpus. Perhaps he reflected, as did observers, that at least it was lucky he was not Beman Gates Dawes, to whom a Senate trial would involve fraternal embarrassment.

The old, old oil stream continued flowing. . . .

*Of this sum only three millions were realized. Then the Continental Trading Co. was disbanded. The Sinclair Crude Oil Purchasing Co. (mentioned above as "a third company") bought the remaining contract for $400,000.

*Including Harry M. Blackmer and James E. O'Neill, both of whom fled the U. S. in 1924 when the Continental Co.'s affairs were first questioned, and both of whom refuse to return to the U.S. to testify.