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supplying the business, as it is practically assured interest on its investment.
The shares of the company are largely held by the representative business men of California; there are also many shareholders throughout the East-quite a large number being residents of New Jersey.
The company owns every branch of the oil business, including more proven territory than any other oil company in the world. Its position, as owner, together with its policy of making long-time contracts, has been the basis of its success.
The dry season has now begun on the Isthmus and the company desires to take immediate advantage of this condition to more quickly construct its pipe line and terminal facilities. While the company would exceedingly regret a refusal of its application for permission to traverse the Canal Zone, such refusal would, for reasons given above, force it to immediately begin constructing its pipe line via the Chiriqui route. Once established there—200 miles north of the Canal Zone the pipe line never could be utilized for supplying oil along the route of the Canal, should oil at any time be desired there, and the company would not feel warranted in establishing another half-million-dollar .pipe line plant in the Canal Zone, nor could it name so low a rate for vil as it has in its formal application of November 28. Very respectfully,
Jno. BAKER; jr., Manager Union Oil Company of Californiu. Governor, will you be good enough to show me that direction or instruction of the President of the United States in regard to making contracts for purchase of material or anything else connected with the canal? Have you a copy of it?
Governor Magoon. You mean the provision of the Spooner Act that the President is authorized to make any and all contracts which
be required by the work?
Mr. Magoon. The act provides that he shall act through a commission, but I think that special provision is general in its terms.
Senator MORGAN. I want to get the instructions of the President in regard to the making of contracts given to the Isthmian Canal Commission. You have that here, I think. Is it not in Document No. 127?
Mr. Magoon. I have never seen it in this publication. Are you at all familiar with the location of the papers in this document?
Senator MORGAN: No; I am not:
Senator MORGAN. Mr. Chairman, we will get that paper. That has been used here several times, has it not-the document containing the instructions given to the Commission?
Mr. Magoon. I think I have found here what you want. You mean as regards advertising?
Senator MORGAN. Yes.
Mr. MAGOON. This is it, then. It is in the letter of the President dated April 1, 1905.
Senator MORGAN. To the Commission?
Senator MORGAN. Please. Mr. Magooy. I read from page 3 of the Senate Document 127, Fifty-ninth Congress, first session:
“ Contracts for the purchase of supplies or for construction involving an estimated expenditure exceeding ten thousand dollars shall only be made after due public advertisement in newspapers of general circulation, and shall be awarded to the lowest responsible bidder, except in case of emergency, when, with the approval of the Secretary of War, advertising may be dispensed with. In the making of contracts for supplies or construction involving an estimated expenditure of more than one thousand dollars or less than ten thousand dollars competitive bids should be secured by invitation or advertisement whenever practicable."
Senator MORGAN. The point I wanted to ask you about is this: Within your knowledge, has the Commission ever asked for competitive bids for the establishment of oil pipe lines across the Isthmus?
Mr. Magoon. Not that I know of, Senator. That would be a private
Senator MORGAN. Could such a thing have occurred without your knowing it?
Mr. Magoon. It might, yes; on account of my absence on the Isthmus.
Senator MORGAN. You have never heard of any such advertisement or notice in regard to construction of pipe lines across the Isthmus?
Mr. Magoon. No, sir. All that I have ever heard of were contemplated expenditures of private funds, not of the funds of the United States.
Senator MORGAN. And you have not heard of these applications? Mr. MAGOON. Yes, sir; I have heard of them.
Senator MORGAN. You have heard of these applications for privileges of putting in pipe lines?
Mr. Magoon. Yes, sir. I would like to call attention to the fact that with the exception of some that were received before I was a Commissioner they have all been received subsequent to my leaving the United States for the Isthmus.
Senator MORGAN. I will read an order of the President, dated January 10, 1906 :
“ The President of the United States, upon the recommendation of the Secretary of War, hereby grants to the Union Oil Company, of California, a revocable license to construct, operate, and maintain a pipe line and appurtenances for the transmission and delivery of oil over and across the lands owned by the United States or by the Panama Railroad Company—a company in which the United States is the owner of all the shares of capital stock—and across the territory now controlled by the Government of the United States known as the Canal Zone, in the Isthmus of Panama.
“ The meaning of this revocable license is that, with respect to the lands which are owned either by the Government of the United States or the railroad company, authority for such pipe line across such lands is hereby given. With respect to lands owned by private persons in the Canal Zone said Union Oil Company must also obtain permission from the owners thereof before constructing the pipe line through their lands. This license is intended only to give the revocable right to occupy lands which are the property of the United States and the railroad company with such a pipe, and to extend to the Union Oil Company the revocable right to apply to private owners of the other lands necessary to construct the pipe line, and after having secured their permission, to maintain a continuous pipe line across the Canal Zone during the continuance of this license.
“But said revocable license is granted on the following express conditions:
“ First. That at any time the chief engineer of the Canal Commission may by notice require the removal of the pipe line, not only from the lands owned by the United States and the railroad company, but from the Canal Zone entirely.
“ Second. That the pipe line is to be constructed by the said company in a suitable location to be designated by said chief engineer.
“ Third. That any change or changes in the location of said pipe line that may from time to time be thought necessary by said chief engineer shall be made by said company promptly at its own expense.
“ Fourth. That the said pipe line shall be constructed and in operation on or before the 1st of August, 1906.
“Fifth. That after the pipe line is constructed and ready for the flowing of oil the Union Oil Company shall pay into the treasury of the Canal Zone the sum of $500 a month, in money of the United States, for the support of the public schools of the Canal Zone, on the first of each and every month in advance. Should the line be constructed before the 1st of August, then the monthly payments are to be made from the time that oil begins to flow in the pipe, at the monthly rate before stated. Should this license be revoked, the revocation to take effect at any time after the 1st of the month, there shall be a payment to the Union Oil Company of the rental for the part of the month remaining after the revocation of the license.
“ This revocable license is granted on the further condition that oil shall be furnished, at any convenient point to be selected by the chief engineer of the Canal Commission along the line of the pipe line in the Zone, to the railroad company or the Canal Commission at the rate of 90 cents ($0.90) a barrel for the crude oil, if either the Canal Commision or the railroad company desires it.
“ It is distinctly understood that this is not an exclusive privilege granted to the Union Oil Company, and that the President reserves the right to grant other such revocable licenses as it may seem proper and in the public interest.
"As the railroad company exists under a charter as a New York corporation, and is under the technical control of the President and board of directors, this revocable license should be accompanied by a revocable license from the railroad company concurring in the grant of this revocable license upon the terms and conditions herein stated, in order that the revocable right to enter upon the lands of the railroad company for the construction and maintenance of the pipe line may be made technically complete.
66 THEODORE ROOSEVELT. By the President:
“ Wm. H. TAFT, Secretary of War. “JANUARY 10, 1906."
If that matter was ever submitted to the Commission you have no knowledge of it?
Mr. M'AGOON. No, sir.
Senator MORGAN. Do the records of the Commission show that this contract was ever made?
Mr. Magoon. I do not know.
Senator MORGAN. Have you ever known anything as to whether it has been revoked?
Mr. Magoon. No, sir.
Mr. Magoon. You see, this was January 10, 1906, and, as I say, those are the papers which passed me when I was en route from the Isthmus up here.
Senator MORGAN. At that time was the Commission în session here-- January, 1906 ?
Mr. Magoon. I do not recall. I do not know as to that.
Mr. Magoon. There was a quorum here, you know. They were all here with the exception of myself.
Senator MORGAN. The Commission had frequent sessions in the latter part of the year 1905 and the early part of the year 1906 ?
Mr. Magoon. Yes, sir. Mr. Stevens was here, and they were in conference with him. Senator Morgan. And they transacted a great deal of business? Mr. MAGOON. I think so.
Senator MORGAN. I suppose you know what the business is that they transacted here from the records of the Commission?
Mr. Magoon. Oh, yes; it will come to me. That passed me en route.
Senator Morgan. Have you ever seen on the records of the Commission any allusion to this pipe-line business?
Mr. MAGOON. I have not seen the records yet, Senator, so that I have not seen the record of this, if it is there. I could not say any. thing at all about it.
Senator MORGAN. You have access to the records here, have you not, now?
Mr. MAGOON. Yes, sir.
Senator MORGAN. Will you be good enough to examine them; and if you find that there is an order of the Commission relating to this subject will you inform the chairman of this committee and give a copy of the order?
Mr. Magoon. I will. Or would it suit your convenience as wellbecause it would suit my convenience a little better-for the chairman of the committee to calĩ on the Commission for it?
Senator MORGAN. You are one of the Commissioners, and I wanted to know whether you had any knowledge of this transaction.
Mr. Magoon. I will attend to that, then.
The CHAIRMAN. My attention was diverted for a moment. What was that request !
Mr. Magoox. The Senator asked me to examine the record.
Mr. Magoon. Yes; if that is what is desired. However, I suggested that the committee call on the chairman of the Commission to furnish any record or a copy of any record of the Commission relating to this subject. It would save me the trouble of attending to it personally. But if the Senator wishes it, I will attend to it personally.
Senator Morgan. Where are the original records of the Commission kept; here or at the Isthmus?
Mr. Magoon. Here. That is, for the work of this office, and on the Isthmus for the work of my department and of the work of the chief engineer. I should say that the records of the proceedings in the Commissioners' meetings are in Washington.
Senator MORGAN. If I wanted to find out what had been done by the Commission in Panama, would I go to the office here to get it?
Mr. MAGOON. Yes, sir.
Senator MORGAN. Do you know anything about the composition of this Union Oil Company—who are the members and the controlling people in it?
Mr. Magoon. I do not. I have not the slightest idea. All I know about that company is that I remember that two gentlemen called in Washington on the Commission and stated their desire to do that; but what their names were I have no idea. I had never seen them before, and I do not recall ever seeing either of them since.
Senator MORGAN. They called on the Commission here in Washington ?
Mr. MAGOON. Yes, sir. They called at the Commission offices.
Senator MORGAN. Well, it will come out later. You have no knowledge of any bidding being called for by advertisement in regard to the establishment of a pipe line across the Isthmus?
Mr. Magoon. I have not, and I do not suppose there was any-any more than if some man came down there and wanted to build a house out of his own money. They would not advertise for that. None of the Commission's money is involved in it.
Senator MORGAN. The Commission's property is involved.
Mr. Magoon. Well, we are leasing land down there to people to erect structures on and engage in agricultural pursuits.
Senator Morgan. You say they are doing that?
Senator MORGAN. Can you point out any authority of law for that leasing?
Mr. Magoon. Yes; the act of Congress of 1885, I think it is. I would not be certain of that date, but I can get it for you. That act confers upon the Secretary of War the authority to lease property of the United States which is within his custody for which the United States does not have immediate use.
Senator MORGAN. To lease from others?
Mr. Magoon. No; to lease to others; to lease the property of the United States, or to issue revocable licenses.
Senator Morgan. To lease property “ for which the Government has no use;" is that the way you stated it?