Whereas by resolutions duly adopted at a meeting of the board of directors of the Panama Railroad Company, held on January 19, 1906, it was resolved to concur in said license and to grant a revocable license to said Union Oil Company of California, in accordance with said license granted by the President of the United States and upon the terms and conditions therein and in said resolutions expressed, and the executive officers of this company were authorized to execute and deliver all documents which they might deem advisable for the purpose of carrying into effect the grant of license by said resolutions expressed, with the approval of the Secretary of War, as representative of the United States of America as stockholder of the company. Now, therefore, in pursuance of the said resolution, a revocable license is hereby granted to the Union Oil Company of California to construct, operate, and maintain a pipe line and appurtenances for the transmission and delivery of oil over and across the lands owned or held by this company on the Isthmus of l'anama in accordance with the said license granted by the President of the United States and subject to all the terms and conditions therein expressed; and upon the further condition, with respect to any lands held by private persons as lessees of this company, that said Union Oil Company also obtain permission from such lessees before constructing said pipe line or any appurtenances thereof through or upon such leased lands. This license shall cease and all rights of the said Union Oil Company hereunder shall come to an end upon the revocation or other termination of said license granted by the President of the United States or at any time at the pleasure of this company. [L. S.] PANAMA RAILROAD COMPANY, MY DEAR MR. SECRETARY: The President requests me to ask you for a report on the matter referred to in the inclosed letter from the Colinga Oil and Transportation Company and the National Oil and Transportation Company. Very truly, yours, WM. LOEB, Jr., Secretary to the President. Hon. W. H. TAFT, Secretary of War. The PRESIDENT, THE WALDORF-ASTORIA, Executive Mansion, Washington, D. C. DEAR SIR: Referring to the copy of franchise hereto attached, granted by you to the Union Oil Company to construct and operate an oil pipe line across the Isthmus of Panama, we ask that you modify the franchise so as to constitute said pipe line a common carrier, the same as the railroad and as the canal will be when completed. It would be manifestly unfair to accord to any one company practically a monopoly for the transportation of oil across the Isthmus, for the reason that the pipe line will, it is understood, to a great extent occupy the trestles and bridges of the railroad and other Government property, and, furthermore, that it would be unnecessary to construct more than one pipe line with two pumping stations to transport all of the oil that the Union Oil Company can deliver at the Isthmus as well as other companies. As we understand the situation, the distance across the Isthmus for a pipe line is not more than 30 to 35 miles, while we are pumping in California through a 6-inch pipe line from 10,000 to 12,000 barrels a day, going over an elevation of 1,850 feet and a distance of 112 miles, with eight pumping stations, at an operating expense not exceeding 6 cents per barrel. Therefore we think that ene pipe line across the Isthmus could take care of all of the oil that could be furnished by the Union Oil Company and other companies if constituted a common carrier, and all would get a chance to have their oil transported across the Isthmus and to compete for business on the Atlantic side as well as for the Government business along the line of the canal at competitive prices. In this connection we beg to state that our pipe lines in California, although built for the purpose of transporting our own oil, are common carriers. In closing, we beg to suggest that if the Union Oil Company will not agree to a modification of its franchise, allowing its pipe line to be a common carrier, that you exercise the right contained in the franchise to revoke the same, and offer the privilege of constructing a common carrier pipe line across the Isthmus by advertising, as we assure you it will result in a more advantageous arrangement to the public, to the Canal Zone, and to the consumers on the Atlantic coast. A maximum rate for pumping oil across the Isthmus of from 5 to 8 cents could be established, and we are confident that you could get a bid for operating and constructing a common carrier oil pipe line on this basis, which would be of greater advantage to the oil interests of California, to the Canal Zone, and to consumers on the Atlantic coast than can be had under the present arrangement which has been made with the Union Oil Company in the franchise recently signed and issued by you. We beg to state that our company has a capitalization of at least $2,000,000 fully paid, and is well and favorably known on the Pacific coast, as can be testified to by Senators and Representatives in Congress from California, where we are located. Very respectfully, THE COLINGA OIL AND TRANSPORTATION CO. THE NATIONAL OIL AND TRANSPORTATION Co. By WM. MATSON, General Manager. (Printed copy of franchise referred to in above attached to original, taken from Governor Magoon's testimony before Senate committee, 1087-21, pp. 786-787.) WAR DEPARTMENT, Washington, February 26, 1906. MY DEAR SIR: Inclosed I hand you a communication from the Secretary to the President, together with copy of a letter from the Colinga Oil and Transportation Company and the National Oil and Transportation Company, and beg to inquire if you have any objection to making your line a common carrier? Secretary of War, Washington, D. C. DEAR SIR Replying to your communication dated February 26, addressed to our Washington, D. C., attorney, Mr. R. Woodland Gates, and the letter from the Coalinga Oil and Transportation Company and National Oil and Transportation Company therein inclosed, we beg to state that the two companies named were purchased by the Associated Oil Company in June, 1905, but up to within thirty days were operated by the original owners. Mr. Matson is no longer general manager of those companies; the president and vice-persident of the Associated Oil Company are now president and vice-president, respectively, of them, and there is no general manager. The Southern Pacific Railroad Company is heavily interested in the Associated Oil Company, and it is generally understood exerts a controlling influence over its affairs; Mr. E. H. Harriman being personally consulted on important matters of policy. It is a well-recognized fact in this State that the Standard Oil Company, through the Harriman (Southern Pacific) connection really dominates the Associated Oil Company. We make these statements that you may know the source and object of the attack. Our company is and always has been an independent concern. It has never entered into any alliance or affiliation with any other oil company, and does not propose to. On the contrary, the object of this pipe line is to enable us to extend the range of our competition to the Atlantic seaboard and Europe, as will appear by the affidavit of the directors herewith inclosed. In order to hamper us in carrying out our plans, the allies of the Standard Oil Company have made the request that our line be made a common carrier. We have acted promptly and in all respects in good faith in carrying out the terms of the license granted us, and beg to suggest that rather than limit the efficiency of our line you exercise your right and grant the same privilege we have received to any other company that will comply with the same terms and conditions imposed upon us. We can assure you that we will not in any way interfere with any other company entering the field. We are absolutely of the opinion that the communication sent you by the Coalinga Oil and Transportation Company and National Oil and Transportation Company was not made in good faith, and that they have no intention or desire to lay a pipe line across the Isthinus of Panama; that their motive is to hamper us as far as possible in the execution of our plan to compete for business in the markets of the Atlantic seaboard and Europe. We wish to thank you for apprising us of their letter. We have expected and anticipate attacks such as it contains, and would be pleased in the event of similar or other attacks if you would supply us with the information at your convenience. Herewith hand you a letter in reply to the above-mentioned communication from the companies named. JNO. BAKER, Jr. Very respectfully, STATE OF CALIFORNIA, County of Los Angeles, ss: Lyman Stewart, J. S. Torrance, Giles Kellogg, being duly sworn, each for himself deposes and says: Firstly. That the directorate of the Union Oil Company of California is composed of eleven directors, constituted as follows: Lyman Stewart, W. L. Stewart, J. S. Torrance, J. H. Adams, F. C. Bolt, W. R. Staats, John Baker, jr., W. F. Botsford, Frank A. Carbutt, Edwin T. Earl, Giles Kellogg, of which number the subscribers to this affidavit constitute a majority. Secondly. That certain false and injurious rumors and statements are from time to time receiving publicity and appearing in the public prints to the effect that the Union Oil Company is allied with, owned, or controlled by the Standard Oil Company. Thirdly. That such a question seems to have arisen in the investigation now being conducted by the Senate of the United States over the Panama Canal Commission. Fourthly. That this company is now and always has been an absolutely independent corporation and an active and pronounced competitor of all other companies engaged in the oil business. Fifthly. That this company has now taken up and is prosecuting all branches of the refined and fuel oil business and is preparing to greatly enlarge the scope of its activities by entering into the markets of the world as an independent competitor. Sixthly. That these rumors and reports are injurious to the business of the company and are apparently being circulated for the purpose of injuring the company. Seventhly. That the same are absolutely false and unfounded; and Eighthly. That in order to set at rest all such false rumors and reports, the undersigned subscribers to this affidavit desire, in behalf of the corporation which they represent, the Union Oil Company, of California, a public statement be issued, verified by all the accessible directors of this company, setting forth the fact that this company is now and always has been independent of all corporations engaged in the oil business, that it is not under the dominion, influence or control of any other corporation or organization, and, particularly, that this company has no affiliations of any kind with the Standard Oil Company or any of its subsidiary corporations, but is an active competitor of said corporation in all the markets which this company has entered, and that this corporation intends as such competitor to extend the field of its operations into additional markets, both in the United States and in foreign countries. LYMAN STEWART, JOHN BAKER, JR. Subscribed and sworn to before me this 12th day of March, 1906. E. S. DESSEN, Subscribed and sworn to before me this 24th day of March, 1906, by John Baker, jr. [SEAL.] MATTHEW BRADY, Notary Public. UNION OIL COMPANY, OF CALIFORNIA, San Francisco, Cal., March 24, 1906. Hon. W. H. TAFT, Secretary of War, Washington, D. C.DEAR SIR: We have before us a copy of a letter addressed to the President of the United States by the Coalinga Oil and Transportation Company and the National Oil and Transportation Company, dated February 26, 1906, suggesting that our pipe line across the Isthmus be made a common carrier. Our objections to having imposed upon us the obligations of a common carrier are based upon many grounds, but these hereinafter set forth are so well founded that any one of them should be sufficient to defeat such an attack as is contained in the letter to the President. In the first place, such a step would be grossly unjust to us. Such a condition was never considered by or suggested to this company when it made its application for the necessary permit to lay the line. The concession from Panama and the permit granted by our Government were both issued without implying the least obligation either in themselves or through the medium of any verbal agreement or discussion. The terms accepted by our company as a condition for the grants were not based upon any such supposition. Our propositions to the Governments and representations made to them were all based upon the understanding that our pipe line was for the use of our company in carrying on its own business of marketing its own oil. Furthermore, such a condition, if imposed upon us, would be unfair in our competition with others in the oil business. This company is investing its capital in terminal facilities and a pipe line across the Isthmus to the extent of over half a million dollars. Obligations have been paid, or incurred, in relation to water transportation amounting to over $2,000,000, and further and much larger expenditures for additional water transportation will be made to carry on the business we have outlined; all for the purpose of conducting our own business of selling oil on the Atlantic seaboard and in Europe, as a real competitor with those in the same line of business. We can not see the fairness of permitting our competitors to enjoy all the privileges accorded to us without the expenditure on their part of a single dollar. Our company does not ask for, nor has it been granted, "practically a monopoly for the transportation of oil across the Isthmus" in any sense, as is apparent from the language of the two concessions. Neither is exclusive in any sense. We know of no reason why any other oil company desiring to establish its own pipe line on the Isthmus can not obtain permits similar to those granted to us. The pipe line of the Union Oil Company, of California, will not occupy the trestles or bridges so as to preclude the construction over them of other pipe lines. Our line will be 8 inches in diameter; weight, 28 pounds per foot, and it must be apparent that there is room upon all the trestles and bridges of the Panama Railroad for several such lines without in the least degree interfering with the operation of the railroad. We have not the slightest objection to the construction of such pipe lines, whether they are for the purpose of furnishing oil to the Canal Commission, or for the purpose of transportation of oil from the Pacific to the Atlantic, or from the Atlantic to the Pacific. Our company has demonstrated on the Pacific coast the value to the consumer and to the community generally of real competition, and has also shown its ability to sustain itself under the severest competition. We unhesitatingly and unqualifiedly assure you that our competition alone on this coast is resulting in the building up of all classes of manufacturing industries heretofore discouraged by the high price of fuel. With the aid of the railroads on this coast the Standard Oil Company and the Associated Oil Company have practically eliminated all competition but ours. The purpose of the pipe line across the Isthmus is to enable us to enter the eastern markets. That we are acting in good faith along these lines is evidenced by the vast expenditures we are making in preparation. The pipe line we are laying will have a capacity of fully ten times the amount of oil that might be required on the Isthmus. The suggested charge for piping oil is ridiculous. No pipe line could be operated across the Isthmus at from 5 cents to 8 cents per barrel. There has never been such a rate made for such service in the history of the oil business. The conditions on the Isthmus are such that a pipe line will not last to exceed ten years, whereas in this State there are a number of lines in use which have been operated over twenty years and are still in good serviceable condition. We submit, however, that our principal objection to being a common carrier is the damage that would result to our general business, for we have no knowledge of when we might be called upon to handle the public's business, resulting in the interruption of our own. Such a condition imposed upon us would seriously hamper every feature of our expansion plans and subject us to interminable difficulties and delays and increased expense in reaching the eastern markets. We have canvassed the Atlantic and European markets and are in a position to dispose of all of the oil we can deliver. The real and most important requirement in handling such business is the guaranty to the consumer of a regular supply; unless this is assured the consumer would not be justified in contracting for the purchase of our oil. The number of different classes of oil which might be offered for transportation would necessitate a large increase in the storage to keep the different oils separate. It would also decrease the capacity of the line, as it would have to be cleaned at considerable expense after each class of oil had been pumped through it. It would seriously hamper deliveries to the Canal Commission should they call upon us for oil as it is needed. In fact, it would practically eliminate our ability to make such deliveries, and consequently our obligation so to do. Should the Canal Commission equip its apparatus on the canal works for the burning of oil, and should we transport through our pipe line different grades of oil, it would, in all probability, cause trouble with the oil burners. The greatest efficiency in burning oil results from the use of a uniform grade, and any changes in this respect would result in considerable loss. We do not suppose that the canal officials would wish their supply of oil at various points along the line of the canal shut off from time to time to permit the intermittent passage through our pipe line of different classes of oil or oil that they had no right to use themselves. We know that some of the directors of the Associated Oil Company are heavily interested in the development of oil in the Republic of Mexico, where there is now a large production. This foreign product will probably be brought into competition with ours. They would have the advantage in many miles of transportation in reaching the Isthmus, and no further advantage should be given them in their competition with an American corporation. Our company intends to live up in the highest degree to all the promises it has made to the officials of the United States. There is not the slightest obligation on the part of the Government or the Canal Commission to take any oil from us. The obligation is entirely on us to sell them the oil whenever they desire it, if at all, and during a long period of years and at a very low price. We realize that it is a source of great dissatisfaction among many other oil companies that we should have quoted such favorable terms. It is a matter of public record that cur company is the owner of more crude oil territory than any other company in the world, and this assures our ability to meet all the requirements made upon us. If any other company wishes to supply oil to the |