The Teapot Dome Trials: 1926-30

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The Teapot Dome Trials: 1926-30

Defendants: Sherman Burns: trial 3; William J. Burns: trial 3; Henry Mason Day: trial 3; Edward L. Doheny: trials 1 and 8; Albert B. Fall: trials 1, 3, and 7; Harry F. Sinclair: trials 2, 3, and 4; and Robert W. Stewart: trial 6
Crimes Charged: Conspiracy to defraud the U.S. government: trials 1 and 4; Contempt of the U.S. Senate: trials 2 and 5; Contempt of court for jury shadowing: trial 3; Perjury: trial 6; Accepting a bribe: trial 7; Giving a bribe: trial 8
Chief Defense Lawyers: Frank J. Hogan, George P. Hoover, Wilton J. Lambert, William E. Leahy, Martin W. Littleton, R.W. Ragland, G.T. Stanford, and Mark B. Thompson
Chief Prosecutors: Neil Burkinshaw, Peyton C. Gordon, Atlee W. Pomerene, Owen J. Roberts, and Leo A. Rover
Judges: Jennings Bailey, William Hitz, Adolph A. Hoehling, and Frederick L. Siddons
Place: Washington, D.C.
Dates of Trials: November 22-December 16, 1926; March 3, 1927; December 5, 1927-February 21, 1928; April 16-21, 1928; May 31-June 14, 1928; November 12-20, 1928; October 7-25, 1929; March 12-22, 1930
Verdicts: 1: Not guilty; 2: Guilty; 3: Guilty; 4: Not guilty; 5: Not guilty; 6: Not guilty; 7: Guilty; 8: Not guilty
Sentences: Three months imprisonment and $500 fine: trial 2; Sinclair, six months, Day, four months, Sherman Burns, $1,000, William Burns, 15 days: trial 3; One year and $100,000: trial 7

SIGNIFICANCE: Teapot Dome in the "roaring twenties" was the largest scandal in the U.S. government since the administration of President Ulysses S. Grant. It became a permanent symbol of corruption in government. It marked the first time in U.S. history that an officer in a president's cabinet was convicted of a felony and served a prison sentence.

Oil for the U.S. Navy mixed with the greed of men in power to produce the Teapot Dome trials. American naval ships had been converted from coal to oil power before World War I. In 1909, President William Howard Taft had reserved public lands containing oil as Naval Petroleum Reserves in case of war. One such area, in Wyoming, was called Teapot Dome.

Civilian use of oil was expanding rapidly. Throughout President Woodrow Wilson's Democratic administration (1913-20), freshly made multimillionaire oil barons tried unsuccessfully to obtain leases from the government to drill the naval reserves, arguing that valuable oil was draining into private fields nearby. Finally, in 1920, Congress gave the Navy secretary broad powers to lease naval reserves, selling oil or exchanging it for supplies or construction the Navy needed.

Shortly, Republican candidate Warren G. Harding was elected president. Assembling his cabinet, Harding appointed his friend Albert Bacon Fall, with whom he had served in the U.S. Senate, as secretary of the interior.

Fall Owed Eight Years' Back Taxes

Fall had been elected as New Mexico's first senator when that state entered the Union in 1912. Born in 1861, he was a self-educated lawyer who had worked as a cowboy and prospector and, with drooping handlebar moustache and constant cigar, looked the part. He even toted a gun in the Senate. But now he owed eight years' taxes on his rundown ranch at Three Rivers, New Mexico, and had recently sold his major interest in the Albuquerque Journal to raise cash. Nearly broke, he was ready to quit the Senate. He took the cabinet post without hesitation.

The word "conservation" was not in Fall's vocabulary. He believed the government's lands—particularly the Naval Petroleum Reserves—should be held by private interests. He revised an executive order giving the Navy control over the reserves so that leasing did not require the approval of the Navy secretary. Next he recommended that the Navy take any royalties on oil sold from leased reserves not in cash but in oil certificates, which could be used to pay for construction done for the Navy.

By early 1922, Fall, playing on fear of drainage of the oil fields, was urging the Navy to develop Teapot Dome, build a pipeline to storage tanks on the Atlantic coast, and build storage tanks at Pearl Harbor in the Pacific. As Pacific builder, he proposed oilman Edward L. Doheny, who had prospected with him in 1886, leased profitable oil lands in California (Doheny brought in the first gusher in Los Angeles), and was currently worth $100 million.

Meantime, Harry F. Sinclair, head of the Sinclair Consolidated Oil Corporation, who had oil holdings worth $380 million, invited himself to visit Fall at his ranch. They talked about Sinclair's Mammoth Oil Company (he owned all the stock) obtaining a lease on the entire 9,481-acre Teapot Dome naval reserve.

In Washington, without competitive bidding, Fall signed the lease and locked it in his desk drawer. It gave Mammoth Oil exclusive rights to Teapot Dome oil for 20 years, with the government getting a royalty of 16 to 17 percent of the price per barrel, paid in oil certificates, which were to be used to buy fuel oil and storage tanks from Mammoth.

Word of the contract leaked. Neighbors observed sudden prosperity at Fall's ranch: A race horse and fine cattle arrived; Fall paid $100,000 to buy the ranch next-door and built a $35,000 hydroelectric plant; he also paid taxes owed since 1912.

"Sluice-way for Ninety Percent of the Corruption"

The Albuquerque Journal began an expose in February 1922. By April, its publisher was forced to sell the Journal to a bank controlled by a Harding crony. Soon Senator Robert M. La Follette of Wisconsin, saying Fall's Interior Department was "the sluice-way for ninety percent of the corruption in government," demanded an investigation. Fall resigned.

The Senate started hearings in October 1923, soon after President Harding's sudden death. Edward Doheny testified that Fall had not profited by his Navy contracts. But he had "loaned" Fall $100,000. To show for it, however, he could produce only a note from which the signature had been torn. Secretary of the Navy Edwin Denby admitted that the contract with Mammoth Oil was his responsibility and that, having had no part in its preparation, he had not sought the competitive bids required by law. Harry Sinclair, on the stand, stonewalled so the Senate learned nothing more.

"Everything Points to Sinclair"

Called before the committee, Fall relied on the Fifth Amendment's right to not incriminate himself. President Calvin Coolidge appointed Republican Owen J. Roberts and Democrat Atlee W. Pomerene as special counsel to prosecute the oil cases. "Everything about Fall's sudden wealth points to Sinclair as the source," said Roberts.

Investigation disclosed that Fall, who had earned $12,000 a year in the Senate, had recently spent $140,000 improving his ranch and that $230,500 in Liberty Bonds deposited in his accounts bore the serial numbers of bonds distributed earlier to Sinclair and to Colonel Robert W. Stewart, chairman of the Standard Oil Company of Indiana. Indictments followed.

In 1924, Roberts brought civil suits to cancel the government's leasing contracts with Doheny and Sinclair because they were obtained fraudulently. He won against Doheny, then lost against Sinclair but won on appeal as three U.S. Circuit Court of Appeals judges agreed that:

A trail of deceit, falsehood, subterfuge, bad faith, and corruption, at times indistinct but nevertheless discernible, runs through the transaction incident to and surrounding the making of this lease.

With the contracts proved fraudulent, Roberts tried Fall and Doheny in November 1926 for criminal conspiracy to defraud the government. Defense lawyer Frank J. Hogan dramatically compared his clients' situation to the Crucifixion and invoked the ghost of President Harding "from his sacred tomb in Marion [Ohio]" as a character witness. Debating all night, the jury acquitted both men.

In March 1927, a one-ay trial found Sinclair guilty of contempt of the Senate for refusing to answer committee questions. He was sentenced to three months in jail.

Now Fall and Sinclair were tried for conspiracy to defraud the government with the Teapot Dome lease. Sinclair brazenly put 12 William J. Burns detectives to work shadowing the 12 jurors, one of whom boasted that he expected to make $150,000 to $200,000 for deadlocking the case. Judge Frederick L. Siddons declared a mistrial, then put Sinclair, his export official, Henry Mason Day, and two Burnses (father and son) on trial for criminal contempt. All were found guilty. Sinclair's six-month sentence was the stiffest.

At the fourth trial—Fall and Sinclair for conspiracy to defraud the government—in April 1928, Fall was excused, as his doctors reported him dying. Sinclair admitted giving Liberty Bonds and cash to Fall. The jury confounded the prosecution by acquitting the oil baron.

Trial five, in May, charged Colonel Robert W. Stewart with contempt of the Senate. He had told its committee he did not know where the Liberty Bonds had come from and had not profited from the deal when he helped pass them on to Fall. But he had changed his story when he made a second committee appearance, recounting the bonds' history and revealing his share in the profits. The jury said, "Not guilty."

That trial produced trial six, charging Stewart with perjury as a result of his changed story in his second Senate testimony. The jury acquitted him. Meantime, in June 1929, the U.S. Supreme Court upheld Sinclair's conviction for jury tampering, sending him to prison.

October 1929 brought Fall to trial for accepting a bribe from Doheny. In a wheelchair, frail and gasping, he heard his defense lawyer, Frank Hogan, tell the judge he should be vindicated "before he passes into the Great Beyond." The jury said, "guilty," but recommended mercy. Judge William Hitz sentenced him to one year in jail and a $100,000 fine.

When Judge Hitz held Doheny's trial in March 1930 for giving Fall the bribe, a different jury heard the same basic evidence. But Hogan dramatized Doheny's patriotism in building Navy tanks and the elderly Fall's innocent backing of a longtime friend. The jury said, "Not guilty."

Fall appealed for a year. The District of Columbia Court of Appeals upheld his bribery conviction. The U.S. Supreme Court refused to hear the case. President Herbert Hoover turned down several petitions for a pardon. On July 18, 1931, Fall went by ambulance to prison in Santa Fe, New Mexico—the first cabinet officer ever convicted of a felony and imprisoned. Parole was denied in November, but he was released in May 1932. His $100,000 fine—unpaid—remained as a judgment against him (in case he acquired the money) until he "passed into the Great Beyond" 12 years later at age 83.

As a result of cancellation of the Teapot Dome lease, the Navy recovered more than $12 million from Sinclair. The Doheny cancellation brought back nearly $35 million. The Naval Petroleum Reserves were utilized extensively in World War II and have continued to generate money, through limited exploitation, for the government.

Edward Doheny died at 79 in 1935, Harry Sinclair at age 80 in 1956. Owen J. Roberts, who persisted in the Teapot Dome prosecutions through 6&/2 years (much of that time without remuneration), was appointed a justice of the U.S. Supreme Court by President Hoover in 1930 and retired in 1945 after a distinguished career. He died at the age of 80 in 1955.

—Bernard Ryan, Jr.