Long, Long Trial

(See front cover)

Destiny is a strange thing. For some men it flows evenly, broadening like a river. For others it expands like a gas. If the expansion is hurried there may be an explosion and a man's career will settle to earth in floccules of soot.

Harry Ford Sinclair, oilman, who last week faced trial, a second time and less hopefully, for criminal conspiracy to defraud the U. S., has learned a lot about Destiny. Sinclair is not yet 52 years old. He was born in Wheeling, W. Va. It is less than 25 years since he was first heard of in Wall Street and on Long Island as a wealthy young parvenu from the midwestern oilfields. It is not 30 years since he was the son of a village druggist in Kansas, a son who, when his father died, lacked the patience to keep the little business going. One day he came in from rabbit-hunting with a wound in his foot. He had shot himself. An insurance company paid him $5,000 for the loss of a toe. Something told him where to put the money; not into the drug business, but into "mud sills," the big logs men were using then in Kansas to bolster their oil derricks.

Young Sinclair's logs brought a profit. He sank the money in an Oklahoma oil pool and came out with $100,000. Soon he was a millionaire producer with properties dotted all through the midwest, from southern Kansas to northern Texas. He would spot a place, buy or lease it, develop it, sell out and look for another place. He kept control of richest wells.

In those early years, Harry Sinclair helped fix the standard type of U. S. oil-boom promoters. His energy was tremendous. His big smile and loud, harshly good-natured laugh would persuade strong men to work and inspire other gamblers' confidence. But, if necessary, Harry Sinclair could drive strong men to work and outsmart the money fellows. He was, and still is, as shrewd as they come in the whole shrewd oil game. His big laugh and heavy hand are the foils of a cunning mind.

Not until 1916 did he start branching out from production into Oil's subtler phases--transportation, refining, marketing. He formed the Sinclair Oil & Refining Co. out of seven small enterprises and built his own pipe-line to the Great Lakes. In 1917 he formed the Sinclair Gulf Corp. with his own fleet of ships. While larger companies were getting War contracts, he, an alert independent, developed a Latin-American trade. In 1919 he let his friends in on various "ground floors" of the Sinclair Consolidated Oil Corp., a towering organization of world-wide schemes.

In the U. S., outside of oil, he was making his dominance felt by bucking the baseball business with a league of his own. The National and American leagues were too much for him, however, and his costly Federal League died in its 2nd year (1915). With racehorses he did better. He bought the services of famed Trainer Sam Hildreth and out of his Rancocas Stables, in 1923, came Zev, world's champion. He bought a yacht, a private car, a Fifth Avenue mansion, an estate at Great Neck, L. I.

The world-wide reach of Sinclair Consolidated was flung out by the burly Destiny Man to Mexico, Nicaragua, Costa Rica, Panama; to Angola, in Portuguese West Africa; to Russia. Sinclair's technique was to approach the government of a country with the flyleaf of his checkbook showing. "Men mumble but money talks," is an old oil adage. He would ask for a franchise to prospect for petroleum. If he found some, the government could have it all, except for a million or so acres. Sinclair always got his acres along the coast, where his tank-ships could put in. The oilfields he obtained this way soon brought Sinclair Consolidated's holdings up to $380,000,000. At the same time, Sinclair learned how to handle governments.

Soon after President Harding was inaugurated, Sinclair was a frequent visitor in Washington, D. C. He knew Edward Beale ("Ned") McLean, sportsman-publisher of the Washington Post, and Harry Micajah Daugherty, the U. S. Attorney-General. He cultivated Albert-Bacon Fall, whom he had known only casually as a Senator from New Mexico, but who now, in 1921, was Secretary of the Interior. Sinclair began to be invited to stay at the White House.

President Harding's favorite evening game was poker, but there came an evening when President Harding had to think about Oil instead of drawing to a straight flush. Sinclair and another big oilman, Edward L. Doheny from the Pacific Coast, an old friend of Fall's, were anxious for some leases on the naval oil reserves at Elk Hills, Calif., and the Teapot Dome in Natrona County, Wyo. To accommodate them, Secretary Fall and Edwin Denby, Secretary of the Navy, prepared an executive order, transferring these reserves from the Navy to the Department of the Interior. President Harding was badly worried, but he signed the orders. Then Fall signed the leases. "Well, I guess there'll be hell to pay," said President Harding, "but these fellows seem to know what they are doing."

After receiving the Elk Hills lease, Oilman Doheny loaned Fall $100,000 without security. Publisher McLean "went down the line" (i. e., acted as a blind) for this friendly transaction.

As for Sinclair, he took Fall's son-in-law, Mahlon T. Everhart, aboard his private car in the Washington railroad yards one night and handed over $198,000 in Liberty Bonds, supplementing this sum with $35,000 at his Manhattan office some days later. He was supposed to be buying a one-third interest in a run-down ranch of Fall's at Tres Rios (Three Rivers), N. Mex. They were going to turn the ranch into a country-club. But no club eventuated. Fall used the money to pay off debts and improve the property.

In 1922, the late Senator La Follette demanded a Senate investigation of the leases. President Harding covered his Secretaries with a long letter of explanation which Fall had prepared. "The policy decided upon and the subsequent acts have at all times had my entire approval," said the President's letter. But the inquiry went ahead and Senator Walsh of Montana plunged undaunted into a truckload of documents which Fall delivered as evidence of his good faith. It took Senator Walsh a year and a half to digest the whole mass of documents. Six months before Walsh finished, Secretary Fall resigned "to devote his time to his private interests." Fall went abroad with Sinclair, receiving $10,000 for his expenses.

Suits. Spurred by the Senate's findings, the Department of Justice began five suits--two civil suits to void the Elk Hills and Teapot Dome leases; three criminal suits, charging Fall-and-Doheny and Fall-and-Sinclair with conspiracy to defraud, and Fall-and-Doheny with bribery. Last autumn, the last of the civil suits was settled. The U. S. recovered all its oil reserves, plus improvements which the "tainted" lessees had to default. In the Fall-Doheny conspiracy case, a District of Columbia jury found the defendants not guilty. The Fall-Doheny bribery case has yet to be tried.

When Fall and Sinclair went to trial last autumn, Sinclair or his friends hired Burns detectives to shadow the jury. At this they were caught and a mistrial was declared. Sinclair, earlier sentenced for contempt of the Senate, was sentenced to six months in jail for contempt of court. The present trial is a new version of last autumn's mistrial, with Fall temporarily excused as a defendant on account of sickness.

Plans. Long trials do not, however, a prison make, nor sentences a cage--not for Harry Ford Sinclair. The thousands of dollars of bail which keep him at large are scarcely pin-money for a man whose financial operations have been called "cosmic" by his admirers. Last week came reports that other oil companies, such as Standard of Indiana, with which Sinclair is closely affiliated, were buying control of Sinclair Consolidated. And Sinclair's $500,000 town house in Manhattan went on the market last week. But underlings at the Sinclair office in Manhattan indignantly denied a rumor that Sinclair was retiring. A popular view in Wall Street was that the Sinclair holdings were to be "made respectable" through mergers and changed names. And if and when Harry Ford Sinclair goes to jail, his obscure, presumably honest brother, E. W. Sinclair, will remain to look after his interests.

New Testimony. Counsel for Sinclair, led by Daniel Thew Wright, last week journeyed to El Paso, Tex., to take the aged Fall's testimony for the new trial. Atlee Pomerene, onetime (1911-23) U. S. Senator from Ohio and since 1924 one of the government's special prosecutors, was there, too, to cross-examine the witness. One of the first things Mr. Fall told was that the late J. W. Zevely, Sinclair's personal attorney and the man for whom he named his famed racehorse "Zev", conducted all the early negotiations for the Teapot lease. Then Sinclair went with Zevely to Fall's office (according to Fall) and protested he would lose money the way the lease was drawn. In the end he signed it "reluctantly."

Mr. Fall also talked about his famed lie of 1923--his letter to the Senate saying that Publisher McLean and not Oilman Doheny had "loaned" him $100,000. He named Senator Reed Smoot, onetime Senator Irvine L. Lenroot and a Harding Cabinet Member as the persons who had advised him to write the lying letter. Senators Smoot and Lenroot were quick to deny having anything to do with the letter.

With the new Sinclair trial impending, the Oil Scandal progressed on other fronts.

P: Inquisitor Walsh propounded a question of legal ethics, suggesting that plump, dapper, white-haired Lawyer Martin W. Littleton might well resign as Sinclair's lawyer. At Sinclair's last trial, Lawyer Littleton said that Sinclair was in no wise connected with the Continental Trading Co., a mysterious, short-lived oil-trading company out of whose profits, transformed into Liberty Bonds, the G. O. P. is now known to have received $160,000 from Sinclair for its Harding campaign deficit. Unless Lawyer Littleton lied to the jury, which Inquisitor Walsh felt was unthinkable, Sinclair must have lied to his lawyer.

"Meddlesome Matties! Scandal mongers!" replied Lawyer Littleton.

P: Inquisitor Nye announced that his secretary, who was secretary to the late Senator Edwin F. Ladd of North Dakota, Senator Nye's predecessor as chairman of the investigating committee, had told him how, when the Oil Scandal had just broken four years ago, Will H. Hays asked Senator Ladd to meet him at the White House and then, during a taxi ride, tried to persuade him to "call off" the inquiry. Senator Ladd refused.

P: Presumably acting on orders from President Coolidge, the Department of Justice began an investigation of Sinclair's lease in the Salt Creek oilfields, adjacent to Teapot Dome. This lease, awarded on a royalty basis to Sinclair by Fall in 1922, was renewed last February by Secretary of the Interior Hubert Work, who explained to the Senate Public Lands Committee that it was "a good one for the Government."