Political Scandals: Teapot Dome - 1921 to 1923
What happened: "President Warren G. Harding&rsquos Secretary of the Interior Albert Fall secretly accepted hundreds of thousands of dollars in Liberty Bonds in exchange for leasing former Navy oil reserves in Wyoming known as Teapot Dome to a private company. He became the first Cabinet secretary to go to prison because of his actions on the job."
Why it was so scandalous: '"The entire administration crumbled in his first term, right out of the gate,' says presidential historian Douglas Brinkley. 'It infected his entire close friend group and Harding became synonymous with cronyism and corruption. Scrutiny into Harding&rsquos personal life led to the discovery that he had a mistress. [The scandal] puts so much pressure on President Harding that he died in office of a heart attack.'"
Grassley Discusses History of Oversight: The Teapot Dome Scandal
WASHINGTON – Sen. Chuck Grassley of Iowa has a long record of conducting government oversight to ensure the government of and by the people works for the people. In today’s video, Grassley details the Teapot Dome scandal, a series of bribes and cover-ups in the Harding administration that shaped Congress’s role in government oversight. The video can be found here and the text can be found below.
Congressional oversight isn’t glamorous. The work is tedious and time-consuming. Take it from me. It’s dog-gone frustrating to butt heads with the federal bureaucracy. And doing it over and over again to get the job done.
Fortunately for taxpayers, I’m the kind of watchdog who doesn’t give up when someone tells me to butt out. As an elected representative, the people’s business is my business. So, when I sink my teeth into a meaty bone marbled with wrongdoing, I don’t let go until I get answers.
Our system of checks and balances is vital to self-government. Article I of the Constitution empowers Congress with legislative, oversight and investigative responsibilities to hold government accountable.
Let’s consider the infamous Teapot Dome scandal way back in the 1920s. So, nearly a century ago, it exposed corruption at the highest levels of government. It involved bribes, cover-ups and sweetheart deals between well-connected oil interests and people in the President’s Cabinet.
The scandal underscores the vital work of checks and balances. Congressional investigators at the time led to a Supreme Court ruling in McGrain v. Daugherty in 1927. The highest court in the land recognized that Congress has the entire power to conduct investigations, and that includes the power to compel testimony, issue subpoenas and hold witnesses in contempt if they failed to comply.
The Teapot Dome scandal reminds us that corruption and secrecy poisons the waters of good government. It affirms why it’s so important to allow independent and congressional investigations to pursue the facts and run their course.
That’s how we uphold the rule of law, hold wrongdoers to account and restore public trust in government “of, by and for the people.”
Teapot Dome Scandal
Early in the Harding administration, Secretary of the Navy Edwin Denby persuaded the president to transfer responsibility of some of the Navy Department’s oil reserves to the Department of the Interior. Oil fields at Elk Hills, California, and Teapot Dome near Casper, Wyoming, were involved. Secretary of the Interior Albert B. Fall, a former senator from New Mexico, secretly leased the Wyoming reserve to oilman Harry F. Sinclair in April 1922 a few months later the California lands were similarly leased to Edward L. Doheny. Neither of these transactions was opened to competitive bidding. In 1923, a Senate investigation was opened by Thomas J. Walsh of Montana. It was found that Secretary Fall had received more than $400,000 in "loans" for assisting Sinclair and Doheny. The leases associated with the Teapot Dome Scandal were canceled in 1927, a move that was challenged by the oil companies. The Federal District Court of Wyoming held the lease valid, but the decision was reversed by the Circuit COurt and the reversal was upheld by the Supreme Court later that year on October 27. In 1929, Fall was convicted of taking a bribe, fined $100,000 and sentenced to a year in prison. His fall from grace earned him the distinction of becoming the first cabinet officer to be jailed for crimes committed in office. Doheny and Sinclair used their wealth to hire expert counsel and were acquitted in their own trials. However, Sinclair was later convicted on a lesser charge of contempt for refusing to provide testimony to a Senate committee. There was no reasonable suggestion that Harding either knew about this affair or profited from it. His failure was not greed, but rather making some poor choices for cabinet positions and failing to monitor them. The Teapot Dome Scandal was lasting blot on the record of his administration.
See other domestic events during the Harding administration.
Teapot Dome Scandal - HISTORY
Misuses of power for private gain had been rampant in the Harding Administration. The extent of these infractions only became clear with the public disclosure of the "Teapot Dome Scandal." A naval oil reserve was leased to private individuals by the Secretary of the Interior. He was convicted and sentenced to a year in prison.
As the US Navy converted its ships from coal burning to oil burning it acquired a strategic reserve of oil in Wyoming and California. The Wyoming field was known as the Tea Pot Dome field. In 1921 President Harding issued an executive order transferring the control of the fields from the Navy to the Interior Department. In 1922 when the transfer was actually implemented Secretary of the Interior Albert Fall leased the fields without competitive bidding at a below market rate. Tea Pot Dome he leased to Harry F. Sinclair of Mammoth Oil, a subsidiary of Sinclair Oil Corporation and the California fields to Edward L. Doheny of Pan American Petroleum and Transport Company. Leasing the fields without bidding was legal, the problem was that Fall received bribes in return for what he did. Fall received a no interest loan of $100,000 and other gift valued at $400,000.
The scandal began to come to light when a competing firm wrote a letter to Senator John B Kendrick. Kendrick then introduced a resolution in the Senate to investigate the matter. The Senate Committee on Public Lands. By 1924 the basic outline of what had taken place had become clear. Fall was charged with accepting bribes and was eventually found guilty and served time in prison. Those doing the bribery were acquitted. In the meantime, the Supreme Court invalidated the lease and returned them to the Navy stating the Harding could not transfer the leases from the Navy.
The Teapot Dome Scandal was part of a larger pattern of misconduct that had taken place during the Harding Administration. In early 1923, Colonel Charles Forbes was found guilty of stealing from the government. It was estimated that he and his accomplices stole tens of millions of dollars in connection with the building of a Veteran's hospital.
Scandal: A Short History of the Teapot Dome Affair
In the Roaring Twenties, the Teapot Dome scandal was infamous. Albert B. Fall, Republican President Warren Harding’s Secretary of the Interior, allowed drilling of oil reserves in the Elk Hills of south-central California and on the central Wyoming high plains near a curiously teapot-shaped rock formation. These lands were legislatively protected during the preceding Roosevelt, Taft and Wilson administrations. Gifford Pinchot, Theodore Roosevelt’s Forest Service chief and the father of modern environmentalism, prodded Democrat and progressive Senators into an investigation. Thorough Senate and legal inquiry exposed Secretary Fall, a colorful Westerner, and those involved in the drilling deals, millionaire oil industry pioneers Harry Sinclair and Edward Doheny. Unmatched until the Watergate and Clinton-Lewinsky affairs, the Teapot Dome hearings and trials, with notorious personalities, nefarious events and racy revelations, made headline fodder for a decade. Procedurally, the Teapot Dome investigations stand as a landmark in the use of congressional and special prosecutorial power.
In the Roaring Twenties, when Al Capone and Babe Ruth reigned, when World Series fixing and Darwinian evolution had their days in court, the Teapot Dome scandal held a unique and infamous place. Grave questions about government integrity arose, questions with which we continue to struggle. In our ongoing debate between the forces of business and environmental conservation over the use of natural resources, still binding parameters were established.
It began when drilling was allowed by President Warren Harding’s administration of oil reserves in the Elk Hills of south-central California and on the central Wyoming high plains near a curiously teapot-shaped rock formation. These lands were legislatively protected during the preceding Roosevelt, Taft and Wilson administrations. A Senate inquiry followed. The debate that emerged questioned both geologic evaluation of the oil reserves, which was the administration’s excuse for its actions, and the motives of those involved in the business transactions allowing the drilling. Thorough Senate and legal inquiry spanning nearly a decade exposed Harding’s Secretary of the Interior, Albert B. Fall, a colorful Westerner and one of New Mexico’s first senators. Similar investigations exposed millionaire oil industry pioneers Harry Sinclair and Edward Doheny and led to costly dream-team style legal defenses.
Unmatched until the Watergate and Clinton-Lewinsky affairs, the Teapot Dome investigations and trials were fodder for headlines from the early 1920s to the early 1930s. The scandal “…picked up where the Standard Oil Trust had left off in ingraining in the public mind a nefarious image of the power and corruption of ‘oil money.’ ” (Yergin 1991/92, p. 218) Personalities such as Harding’s successor, “Silent” Calvin Coolidge, Theodore Roosevelt’s sons, Theodore, Jr., and Archie, and Fall’s New Mexico cowboy crony, Oliver Lee, who once rode with Pat Garrett and Billy the Kid, lent celebrity and notoriety. Events such as the suicide of Jesse Smith, housemate and associate of Attorney General Harry Daugherty, and the mysterious Hollywood Hills murder-suicide involving Edward Doheny, Jr., the oil baron’s son, lent mystery and threat.
Procedurally, the Senate committee investigations of President Harding’s administration stand as a landmark in the use of congressional powers. President Coolidge’s appointment of special prosecutors was simultaneously a political masterstroke and a legal precedent and remains a guidepost whenever there are allegations of governmental corruption. Very definite conclusions about the use of oil and other mineral resources emerged which continue to inform national policy. But questions remain.
a. Albert B. Fall (1861-1944)
New Mexico Senator Albert Bacon Fall (Fig. 1) liked to attend Washington, D.C., poker parties with his Senate compadres and tell yarns about the southwestern frontier. Fall had migrated west from his native Kentucky to the New Mexico territory in the early 1880s to benefit his sickly wife’s health. Always looking for opportunities, Fall was a bookkeeper, then a cowboy, then a miner and, eventually, found his way back to the law and into New Mexico politics. He acquired land near Las Cruces in Dona Ana County and ranched. He developed a reputation as hot-tempered and fearless.
Politics in Fall’s territorial New Mexico was a brutal struggle for land and power fought in dusty saloons and dirt street shootouts. He began as a Democrat and eventually became a Republican. Both sides operated the same way. “On the night before an election party workers customarily primed unsuspecting residents with liquor, held them in a well-guarded corral…and then herded them to the polls the next morning…one side might flush the other party’s captives from the corral and scatter them into the mesquite thickets surrounding the town.” (Stratton 1998, p. 31) Fall once testified on behalf of the man who shot John Wesley Hardin, telling the jury that anyone who killed a man like Hardin “…should be acquitted automatically.” (Stratton 1998, p. 63-64) The man went free. Because of his testimony, Hardin’s nephew twice tried to shoot Fall, before being killed under suspicious circumstances.
Fall took on the legal representation of Texas cowboy and gunman Oliver Lee against the Tularosa Land and Cattle Company. His political rivals accused Fall of being “attorney for a gang of Texas rustlers” (Stratton 1998, p. 44) but Lee, rumored to have killed eight men and ridden with Billy the Kid during the Lincoln County wars, became a fast friend. In the 1892 election, Fall won for territorial Senate despite the Las Cruces polls being “guarded” by forty armed marshals, headed by rival William H.H. Llewellyn. “As Fall confronted Llewellyn outside the polling place, he saw seventeen men with Springfield rifles backing up his adversary and the muzzles of double-barreled shotguns protruding from the building’s windows…One version of this incident has Fall shouting from the street, ‘Llewellyn, get the hell out of here with that dam’d militia inside of two minutes, or I will have you all killed.’ Then he supposedly pointed to the flat rooftop of a nearby adobe store where Oliver Lee and several armed cowboys were stationed.” (Stratton 1998, p. 45)
In 1896, Colonel Albert J. Fountain, Fall’s power-wielding Republican rival, traveled by carriage with his eight-year-old son to the Lincoln County courthouse where Billy the Kid had made a legendary escape in the ‘80s. Fountain’s trip was to circumvent Fall’s protection of Oliver Lee in Dona Ana County and have Lee indicted for rustling. On the return trip, Fountain and his son disappeared and were never seen again. Pat Garrett, sheriff of Dona Ana County, eventually charged Oliver Lee with Fountain’s disappearance. Unwilling to chance the fate of Billy the Kid, who Garrett supposedly shot in custody, Lee became a fugitive. Fall’s complicity in Fountain’s disappearance was rumored but never charged.
After the Spanish-American war, during which Fall formed a New Mexico company like Theodore Roosevelt’s Rough Riders and became a Captain but never saw action, he returned to New Mexico. Oliver Lee had surrendered for the Fountain crime in a newly formed county where Fall could assure a fair trial. Fall’s defense of Lee was impassioned. He closed by telling the jury, “…You would not hang a yellow dog on the evidence that has been presented here…” The jury deliberated for eight minutes and found Lee not guilty. In 1908, Fall won family friend Wayne Brazel a verdict of self-defense in a one-day trial for the shooting of Pat Garrett.
b. Warren G. Harding (1865-1923)
One colleague who loved Fall’s yarns was Senator Warren G. Harding (Fig. 2) of Ohio. “They spent many pleasant evenings together in this potluck, deuces-wild, whiskey-and-soda fellowship where they got to know each other on “Albert” and “Warren” terms…” (Stratton 1998, p. 87)
Warren Gamaliel Harding, an Ohioan from the small town of Marion, was elected to the Senate in 1914 after lengthy service as newspaper editor/publisher and local politician. His early career was one of business-as-usual politics. Harry Daugherty, Harding’s presidential campaign manager in the 1920 race, cleverly positioned his man as the compromise candidate at the national convention and convinced party powers in a “smoke-filled room” at Chicago’s Blackstone Hotel that Harding was available, pliable and looked presidential. (Noggle 1962, p. 5)
Venality was in the air at the 1920 Republican National convention. Oil interests approached General Leonard Wood, the Republican frontrunner, suggesting they could facilitate his nomination if he promised them the opportunity to choose three cabinet positions. “Wood rejected any such proposition.” (Bates 1978, p. 209) Rejected, the oilmen turned to Daugherty’s dark horse. “…[C]orruptionists were busily at work, cynically dispensing their money in the expectation of quick rewards. [Wealthy oilman Jake] Hamon…hoped to control the Interior Department in return for large contributions. [Wealthy oilman] Harry Sinclair and other oilmen harbored the same ambition. Hamon later told one of his friends that Sinclair had 'beat him to the goal,' that [Albert Fall, the soon-to-be Secretary of the Interior] had been 'bought like a steer.' Sinclair, according to one of his employees, said that [the] nomination had cost him $600,000." (Bates 1978, p. 210) When Daugherty cleverly brought in entrenched Republican power brokers and independent southern delegates, Harding won the nomination.
Americans were ready to turn away from the Democrats and Wilsonian idealism. “Harding was shunted into the White House as a passionate protest…For the first time in twenty years, we were tired of men with burning convictions, curative or palliative panaceas or reforms ideas that might develop into causes…The land was more or less afflicted with moral shell-shock…” (White 1928, p. 410) In the election, the country gave Harding the biggest post-Civil War victory in U.S. history except for Franklin D. Roosevelt’s 1936 re-election.
Current revisionists argue that Warren Harding deserves better from historians than he gets. There were many noteworthy accomplishments, though his detractors would ask how involved Harding was with them. He appointed men of distinction to some cabinet posts, though they were tainted by subsequent events. Daugherty became the Attorney General. It is hard to study the Harding administration and not come to the conclusion that the Attorney General was aware of, and a participant in, at least some of what it was his job to prevent, eradicate and adjudicate. In the Alien Property Custodianship improprieties, sensational allegations touched Daugherty through his roommate and unofficial assistant, Jesse Smith. In the Veterans Bureau scandal, illegalities were not attached to the Justice Department, only the failure to act against gross misappropriation of hundreds of millions in government funds.
The Volstead Act, passed in 1919 over Woodrow Wilson’s veto, turned the hipflask, the speakeasy and the flapper into national icons. Some statistics suggest an actual decline in overall drinking but somebody was buying illegal liquor. In the mid 1920s, bootlegging kingpin Al Capone purchased with cash a million-dollar vacation mansion in Miami Beach, Florida, put on the market by a member of the beer baron Busch-family, out of business and down on his financial luck. D.C. society was certainly not dry and booze flowed freely at White House parties. With Daugherty at the Justice Department, however, there was another, more infamous on-going party in town. Even President Harding was there. At the notorious Washington, D.C., residence shared by Attorney General Daugherty and procurer Jesse Smith, the business of the government was done over poker. Smith reportedly provided good cigars, female entertainment and the best booze, possibly because he was alleged to have attended meetings between Daugherty and William J. Burns, Head of the Bureau of Investigations (the predecessor of the FBI), when raids on bootleggers were planned. There were anecdotal reports, from not entirely reliable sources, of wild, Hollywood-style parties. Lurid, sensational stories were told. Most historians discount the many tales of sex, violence and intrigue, but some allegations of irresponsible dalliances by President Harding were eventually substantiated.
Incontrovertible was an affair Harding had from 1905 to 1920 with Carrie Phillips (Fig 3), the wife of a close Ohio friend. Harding admitted the affair to Republican Party leaders in preparation for the 1920 presidential race. His letters to Phillips came to light in the early 1960s, documenting the passionate relationship and revealing Harding’s poetic sensibility: “I love your poise of perfect thighs/When they hold me in paradise…” (Anthony 1998) Phillips, a German sympathizer, threatened to make their affair public if then Senator Harding voted for U.S. entry into the European war. When he defied her, she backed off until 1920 when, in exchange for her silence during the presidential race, Phillips obtained for herself and her husband a trip to the Far East and a large annual stipend. She is frequently mentioned as the only woman known to have successfully blackmailed a U.S. president.
Nan Britton (Fig. 4) was a girl Harding knew slightly from Marion. Arriving in D.C., she went to see her hometown hero. Harding helped her find work. According to her 1927 best selling kiss-and-tell book, The President’s Daughter, they ended up lovers, trysted in hideaway hotels, made a baby in a late night fit of passion in his Senate office, and had carefully secreted assignations in the infamous oval office cloakroom after Harding won the White House. The child, Elizabeth Ann, would be Harding’s only offspring. Harding’s descendants and some contemporary Harding biographers today doubt the validity of Britton’s claims. Against their research goes Harding’s own testimony: “It’s a good thing I am not a woman. I would always be pregnant. I can’t say no.” (ANT) There are also allegations that Jesse Smith and Edward McLean, publisher of The Washington Post (Fig. 5) and a regular at the poker parties, working in conjunction with the Bureau of Investigation, squelched—by providing fees in exchange for written affidavits—the claims of several other women. (ANT) Such allegations come mainly from questionable sources but fit the Harding legend.
In the post-war period, Fall reached the apex of his Senate career. His Senatorial compatriots literally cheered his appointment as Secretary of the Interior. Harding made a surprise visit to the Senate chamber right after taking his oath of office and read out the names of his cabinet nominees. Fall had not yet resigned the Senate to assume his new duties and was present. “A spontaneous round of applause arose when the president read his name. After Harding left, Fall stood up and, in the midst of cheering, submitted his resignation…Senator Lodge [proposed] his immediate confirmation. Lodge’s motion passed unanimously…” (STRATTON 1998, P. 202)
Harding came to office with an impulse and a mandate to reorganize and streamline government. Fall saw opportunity in reorganization. On assuming control of Interior, he embraced Harding’s governmental reforms. One of the first things he did was to propose moving the Forest Service from the Department of Agriculture to his Interior Department.
c. Gifford Pinchot (1865-1946)
Gifford Pinchot (Fig. 6) is called the founder of modern environmentalism. Born to wealth, he was a pioneer in the study of ecological interdependencies and in the selective harvesting of forests. Chief of the Division of Forestry in the Agriculture Department of President McKinley, Pinchot’s concept of “conservative use” appealed to McKinley’s successor, Theodore Roosevelt, more than John Muir’s concept of “preservation.” When Roosevelt created the Forest Service, he appointed Pinchot to head it. T.R. came to think of Pinchot as the keeper of his conscience. (Miller 2001, p. 150) Together, these passionate outdoorsmen popularized the term “conservation” to describe their insight that planned management must replace exploitation for profit if resources were to be available for future needs. Under T.R. and Pinchot, millions of acres were added to National Forest lands and, despite opposition from ranchers, miners and loggers, controlled harvesting replaced indiscriminate logging.
In Pinchot’s time, progressive actions were taken to protect public lands and resources. In 1906, Theodore Roosevelt set a landmark precedent by issuing an executive order withdrawing some sixty-eight million acres of National Forest lands, including much of Alaska, from unapproved, unremunerated private development. This produced a heightened awareness of public lands and resources and a national debate over how to balance development with conservation.
In those wide-open days, oilmen were desperate to get control of as much land as they could before the conservationists got it withdrawn. Observing the unrestrained development of U.S. oil lands, leaders began to worry that oil would not be available for the military, should there be a war or national emergency. Hostilities were growing in Europe. England and Germany were aggressively seeking and developing fields. “…[N]ew policy evolved…from the pressure of petroleum discoveries and from a growing realization of the tremendous importance of oil products.” (Bates 1978, p. 17) In 1909 and 1912 President Taft issued executive orders, meant as compromises, withdrawing specified California and Wyoming oil lands. The government would no longer sell or lease these lands. On already privately owned or leased parcels within the boundaries of these withdrawals, exploration for and development of mineral resources was prohibited. Conservationists were vindicated. Oilmen went to court to have the withdrawals overturned.
Between 1908 and 1912, serious differences developed between Theodore Roosevelt and Taft, his personally selected replacement in the presidency. One was a controversy involving Gifford Pinchot. Pinchot and conservationists accused Richard Ballinger, Taft’s Secretary of the Interior, of improperly approving coal mining on protected Alaskan lands. Taft fired Pinchot. Pinchot’s backers brought public opinion down against Ballinger for violating Roosevelt-Pinchot conservationist ideas. Ballinger was hounded from office. A Pinchot conservationist replaced him.
In 1910, Gifford Pinchot became president of the newly formed National Conservation Association. He brought together a large group of dedicated conservationists to continue working on the Roosevelt-Pinchot progressive agenda. One of his strongest allies was Wisconsin progressive Republican Senator Robert M. La Follette. His Association Secretary was Harry Slattery, a Washington attorney as passionate about environmental and progressive issues as Pinchot. These were the men of what a journalist called the “Gifford Pinchot School of Crusaders.” (Miller 2001, p. 276)
d. The Wilson Administration (1912-1920)
Differences between Roosevelt and Taft produced the momentous election of 1912 and brought Democrat Woodrow Wilson into the White House when T.R. formed the Bull Moose third party and drew off progressive Republican support for Taft. Wilson named Californian Franklin K. Lane as Secretary of the Interior. Lane was a progressive Democrat, but also a westerner sympathetic to oil producers’ pursuit of leases for exploration on publicly held lands. Josephus Daniels, Wilson’s Secretary of the Navy, opposed Lane.
Oilmen already owned, were negotiating for, exploring on, or drilling on parts of the withdrawn lands not in the public domain. And they were pursuing activities in some of the lands withdrawn in the belief their legal claim to them would be upheld by the courts. In 1915, in the landmark Midland Oil Company case, the Supreme Court validated all government actions to control indiscriminate exploration. Judicial support had now been added to policy originated in the executive branch during the Roosevelt and Taft administrations. Wilson immediately issued another executive order, adding the Wyoming salt dome tract with the curious teapot-shaped rock formation to the withdrawn lands. Oilmen and western politicians were outraged. The struggle intensified.
In Wilson’s cabinet, Daniels and Lane fought. Lane pushed hard in anticipation of a pending Supreme Court judgment in the Honolulu Consolidated Oil Company case, which he expected to validate oil industry contentions. But Daniels won the favor of the conservationists and the president.
During the Great War, the struggle between oilmen and conservationists went on uninterrupted. Progressive Democratic Senator Thomas J. Walsh of Montana emerged during this period as an important figure because he straddled the divide between Eastern conservationists and Western oilmen. Walsh and the Wilson administration found an occasional ally in Democratic oilman Edward L. Doheny.
One of the key arguments in favor of development of the Naval Reserves was drainage. Terrains varied. “Strata were not uniform as to dip, thickness, gas pressure, porosity, gravity of oil, and surrounding water.” (Ferrell 1996, p. 107) With “Right of Capture” as the law of the land, any working well might draw off oil in lands set aside as reserves. Oil for the war effort and the home front was becoming more vital than ever. Doheny, as much in service to his own ends as to the needs of the country, vehemently made the case that the oil “…could not be saved by the Navy and ought to be developed for wartime production…this was the best source for new supply.” (Bates 1978, p. 108-09) If there was surplus, Doheny argued, it could be stored in tanks against future need.
But the Navy protected its reserves. “Josephus Daniels…would not surrender his reserves. He would not consent to any leasing bill…Before 1917 was over, he seized the offensive… For better or worse, Daniels had elected to fight this matter through to the end.” (Bates 1978, p.128)
As the Great War wound down, House and Senate Public Lands Committees undertook with renewed commitment mineral lands legislation that would resolve all the questions. The war-weary, idealism-weary country began, though, to turn away from Wilson and progressives. Legislative policies began turning in the favor of the oil industry and expansion. By the time Theodore Roosevelt died in early 1919, the previous November’s Congressional elections had signaled a shift in the political winds, repudiating Wilson by giving control of both houses to the Republicans. Only filibustering and clever political wheeling and dealing by Senator La Follette prevented a leasing bill Democrats and progressives abhorred from being passed by the lame duck Congress in early spring, 1919.
Throughout the postwar period, legislators hoping to end the struggle watched for a legal decision in the Southern Pacific cases. The railroad controlled the single biggest amount of non-public property in the withdrawn lands and its land was checker-boarded throughout the withdrawn regions in such a way as to complicate the drainage question beyond compromise. In 1919, a Supreme Court decision validating Southern Pacific mineral rights was handed down. In the same period, legal matters involving Midwest Oil Company and Honolulu Consolidated Oil Company were decided in favor of the oilmen. “All in all, the outcome was a major setback for the policy of public control. a precedent for later decisions sympathetic toward private claimants.” (Bates 1978, p. 179-80)
With the handover of control in Congress to Republicans in May 1919, all parties were ready to legislate. A coalition of conservationists, among them Gifford Pinchot, Harry Slattery and Robert La Follette, reached a compromise law with Republican westerners, such as New Mexico Senator Albert Fall, and Democratic westerners, such as Montana’s Thomas Walsh. During the debate, the strange logic of compromise was evident when Senator Walsh quoted Doheny that since legal developments were going to allow Southern Pacific to drain the reserves anyway, they might as well go ahead and approve it legislatively. Some minor controls were left to the Navy but conservationist Phillip Wells damned the legislation with faint praise when he called it “about the least harmful compromise.” (Bates 1978, p. 197) Although conservationists got leasing legislation for the withdrawn lands, the long contentious political process left many lingering doubts and questions. “Had they placed too much discretionary power in the hands of the Secretary of the Interior and the President?” (Bates 1978, p. 199)
Long hostile toward Pinchot’s Forestry, Secretary Fall challenged Pinchot and all that he represented “…There can be little doubt that Fall was reacting strongly against ‘Pinchotism’ and ‘Wilsonianism’ from the moment he assumed his office.” (Bates 1978, p. 234) In the guise of bureaucratic reorganization, Fall had Harding sign an executive order to transfer the Forest Service to the Interior Department. Quickly, Pinchot, through Harry Slattery, heard of Fall’s plans for the Forest Service. As in the Ballinger matter during the Taft administration, they set in motion a public relations campaign to discredit Fall’s reorganization plan. Once again, the Pinchot conservationists swayed opinion in the executive branch. Hearing the full force of the conservationist point of view, Secretary of Agriculture Henry C. Wallace took the matter to President Harding in the cabinet and warned the president off. Fall then proposed that Congress legislate the transfer.
But the fight over the transfer of the Forest Service turned out to be a distraction from another transfer Fall was working at the time. Fall may have actually had little real commitment to the Forest Service transfer, telling one associate, “The reorganization plan…seems to have gotten nowhere…Whether it will ever be carried out or not I don’t know, and insofar as I am personally concerned don’t care.” (Noggle 1962, p. 28) Fall was quietly taking up Secretary Lane’s long unsuccessful fight under Woodrow Wilson to move control of the Naval oil reserves to Interior. Fall had two big advantages over Lane. First, while Lane contended with the politically astute and experienced Wilson, Fall contended with his compliant, amicable, trusting old pal, Warren.
Second, the Secretary of the Navy under Wilson, Josephus Daniels, had been dedicated to preserving the oil in the reserves while Edwin Denby, Harding’s man, seemed happy to hand off the whole matter of the naval reserves. Denby, a decorated veteran of the Spanish-American War and World War I, indicated a policy change for the Navy Department in the spring of 1921. Despite Navy officers’ resistance, Denby saw very real drainage losses. Also, Denby saw leases as a creeping reality since the 1920 legislation and probably liked the pending offers by potential drillers to build oil storage facilities at Pearl Harbor and pipelines to the east coast in exchange for exploration rights.
While the Pinchot forces were waging their publicity campaign against the Forest Service transfer, Fall had quietly obtained, on May 31, 1921, an executive order from the President transferring control of the Naval reserves. Harding heard no objections like those registered by Secretary Wallace over the Forest Service from Secretary Denby.
Theodore Roosevelt, Jr. (Fig. 7), who won the Congressional Medal of Honor on D Day in World War II, was Denby’s Assistant Secretary. Washington Post publisher Edward McLean told him about the proposed executive order at a poker party. Roosevelt tried unsuccessfully to convince Denby it was the wrong move, and then went to Fall. Obtaining from Fall a promise that Interior would consult with Navy before making any deals, Roosevelt was satisfied enough to take it himself to Harding. The President “…endorsed the transfer without any other legal or documentary support than the advice of his trusted friend, Secretary Fall…” (Stratton 1998, P. 238)
b. Edward L. Doheny(1865-1935)
Like Albert Fall, Doheny had mined silver and gold throughout the American southwest and northern Mexico with varying degrees of success. In Los Angeles in the early 1890s, he noticed the black muck called brea taken from local tar pits for fuel. He and mining partner Charles Canfield dug down and struck a gusher at what is now Second Street and Glendale Avenue in the city’s downtown. They went on to amass fabulous wealth exploring, drilling and developing Southern California fields from Fullerton to Bakersfield. By the turn of the century, Doheny and Canfield had formed Pan American and were pursuing sources in Mexico’s Golden Lane. The Golden Lane would, by 1921, make Mexico the second biggest oil producing country in the world. But political upheaval made it a difficult place to do business in the post-Great War period and Doheny began looking for other opportunities.
There is a story of a hunting expedition where Albert Fall raised a rifle to shoot a mountain lion and his gun failed. The mountain lion charged. Fall coolly knocked the lion away with the barrel of the rifle, drew a handgun and shot it to death. About Doheny, there is a story that as a miner, he defended himself from a mountain lion with a bowie knife and drove the lion away. In this way, as in others, these men were well matched by time and place and history. Fall’s first use of his control of the Naval reserves was a lease granted July 12, 1921, to Edward L. Doheny’s Pan American Petroleum Company. Open and competitive bidding had been held under Lane. Believing drainage to be a pressing problem, Fall was anxious to begin offset drilling to relieve the losses. That he chose to award the contracts to Pan American was, to Fall, only natural. Doheny was his kind of man.
Too, he and Doheny were in agreement about the Japanese. In the early 1920s some leaders “were nervously anticipating an imminent attack by the Japanese in the Pacific.” (Stratton 1998, p. 240) Following the Washington Disarmament Conference of 1921-22, which produced an international agreement limiting military buildups in the Pacific, the strategic value of Pearl Harbor increased. To some, Japan’s threat was merely a “war scare.” (Noggle 1962, p. 65) In any case, Fall and Naval planners wanted to see Pearl Harbor ready for use. Because of his control of the reserves, Fall “had to figure out how to get the oil and the storage tanks.” (Stratton 1998, p. 240)
In exchange for the opportunity to develop oil resources in the Elk Hills and Buena Vista reserves in California, Doheny undertook not only to do the offset drilling preventing drainage and to pay the government a royalty percentage on all the oil, but to build oil storage tanks and associated facilities at Pearl Harbor and to fully stock them. In a later deal for the Wyoming development rights on the Teapot Dome and Salt Creek lands, Harry Sinclair agreed, in addition to paying royalties and alleviating drainage, to build a pipeline to the Midwest, allowing for delivery of Naval oil supplies to the Great Lakes and the East Coast.
c. Harry F. Sinclair
Harry F. Sinclair (Fig. 8) was a Kansan trained as a pharmacist who took more interest in deal making than in pills. He fell into selling lumber, sold to customers building oil derricks, began buying and selling wells and, by 1922, was “a major independent producer with assets estimated at $380 million…” (Stratton 1998, p. 267) Fall had encountered Sinclair casually on previous occasions, such as the Kentucky Derby and business-government colloquies. In late December 1921, Sinclair visited Fall’s Three Rivers Ranch in his private railroad car. “Ostensibly, Sinclair had come to request a modification of his oil lease on the Osage Indian Reservation…but he also asked about the prospective leasing of Teapot Dome. ” (Stratton 1998, p. 268) Coincidentally, on the same trip, Sinclair “apparently became enthralled with the primeval setting of Three Rivers.” (Stratton 1998, p. 268) Sinclair bought a one-third interest in the ranch. Because Fall, in anticipation of retiring, had been expanding the holdings of the ranch corporation, Sinclair’s $233,000 purchase price was, curiously, exactly the amount needed to pay off the ranch’s indebtedness. Part of the indebtedness which Sinclair’s purchase was calculated to alleviate was a November 30, 1921, $100,000 loan received in cash from Edward L. Doheny, delivered in an infamous “little black bag” by Doheny’s son, Edward, Jr., accompanied by Hugh Plunkett, Junior’s longtime bodyguard/secretary.
In early April 1922, Harry Slattery met with Senator La Follette about obtaining a copy of Harding’s executive order transferring the Naval reserves. It had never been published. “The senator…upon reading it decided that it was illegal and that Harding had not authority to issue it.” (Noggle 1962, p. 34) As La Follette began girding for a fight, Senator John B. Kendrick, a Wyoming Democrat, began noticing letters from constituents, independent oilmen among them, asking about the drilling activity begun in their state. On April 7, 1922, the Department of the Interior announced its deal with Edward L. Doheny for development of a portion of the reserves, designated Naval Reserve Number One, in the Elk Hills region of California. There was no mention that the deal for development of Naval Reserve Number Three in the Teapot Dome region of Wyoming had been closed the same day without open or competitive bidding.
The following week, however, a Wall Street Journal front-page article called the Teapot Dome deal “…one of the greatest petroleum undertakings of the age…” and said it was “…a notable departure on the part of the government in seeking partnership with private capital for the working of government-owned natural resources.” (Noggle 1962, p. 36) More attention followed. On April 15, Senator Kendrick called for more information from the Naval and Interior Departments. More information was released, including the details of Doheny’s commitments to develop Pearl Harbor and the royalty percentages Sinclair had promised, ranging from 50% to 12.5%.
None of this satisfied the growing outrage of conservationists. On April 21, La Follette, in consultation with Slattery, introduced a resolution calling for an investigation. After further study and response to what was announced, he amended the resolution on April 28 in a fiery speech calling the Interior Department “…the sluiceway for a large part of the corruption to which this government of ours is subjected…” and asked if Fall and Denby might be “…the real organizers of the Mammoth Oil Company who were to be favored by the government with a special privilege in value beyond the dreams of Croesus?” (Noggle 1962, p. 41) He concluded with evidence from geologists. “…Teapot Dome lay in a geologic saddle and could not be drained by adjacent wells the excuse of drainage, he argued, was an old and specious plea of the exploiters.” (Noggle 1962, p. 42) A resolution to refer the matter to the Senate Committee on Public Lands for investigation and hearings passed unanimously the next day.
In May 1922, Sinclair delivered the money promised for purchase of one-third of the Three Rivers Ranch Corporation, cash and Liberty bonds, to Fall’s son-in-law and partner Mahlon T. Everhart. It was apparently timed so the fund transfer would take place only after the Teapot Dome deal was closed. Senator Walsh, who eventually took the Democratic leadership of the Senate investigating committee and scrutinized every detail of Fall’s financial activity thoroughly, “…regarded Sinclair’s payment…as nothing but a bribe… ‘a shallow fable.’ But since Everhart was known for his personal integrity and strict business practices, his participation in every phase of the Sinclair ranching transaction tended to enhance the appearance of legitimacy.” (Stratton 1998, p. 269)
In spring/summer 1922, impressive changes began taking place at Three Rivers Ranch. Though Sinclair did not soon return, he did send “six Holstein heifers and a bull, six Duroc-Jersey hogs, and an old prize-winning race horse…” (Stratton 1998, p. 270) Back taxes and debts were settled. More importantly, Fall and Everhart were making many renovations and improvements, things even neighbors noticed. Land was acquired. Cattle herds were infused with blooded stock. “The most spectacular addition was a hydroelectric project costing $53,000…By the time Fall resigned as interior secretary his ranching empire seemed to be running smoothly.” (Stratton 1998, p. 270)
In D.C., Utah Senator Reed Smoot, as Republican chairman of the investigating committee, began a delaying process that would postpone the hearings until October 1923. Secretary Fall contributed to the delay, responding to Democrats’ requests for documentation on the leases by delivering a ridiculous mass of paper, “…between five and six thousand pages of matter…” (Noggle 1962, p. 48) By this time, Senator Walsh had accepted La Follette’s challenge to take the lead for the Democrats. On receiving Fall’s mass of information, he invited Harry Slattery to join him in studying it. In March 1922, Slattery had said there were “…stories about Mr. Fall being quite friendly with large interests of an oleaginous nature.” (Noggle 1962, p. 30) Taking advantage of the long delay, Walsh and Slattery began noticing damning details in the papers proving their suspicions.
During that summer, other oil companies, including Standard Oil and Pioneer Oil, established claims in the Teapot Dome region. In big money deals, Harry Sinclair bought them off. In July, James G. Darden, a Harding insider, made a “meritless” (Stratton 1998, p. 249) claim at Teapot Dome, contracted with Mutual Oil, began drilling operations and would not be bought off. To avoid the lengthy legal delay of filing against Darden, Fall handled it “range war” style. He got Acting Navy Secretary Theodore Roosevelt, Jr., to send a marine detachment and evict Mutual. Darden’s appeals to Harding and Daugherty did no good. Fall was in control.
Sinclair must have been pressuring his people to produce in that period. W.L. Connelly, Sinclair’s on-site manager for Mammoth Oil, reported that despite bringing in No. 1, “the biggest well ever completed in Wyoming” and another, “No. 25, drilled on the northeast part of the Dome…[that] came in for over two hundred barrels an hour” (Connelly 1954, p. 88), he had a breakdown getting the job done. In November 1922, Sinclair made his only other visit to “his” Three Rivers Ranch. He discussed the Salt Creek royalty contract in Wyoming with Fall, and then telegraphed his bid on it to the Interior Department. It was eventually the one accepted. “This trip would later be regarded with suspicion because Sinclair’s proposal arrived after the advertised deadline and immediately after he conferred with Secretary Fall.” (Stratton 1998, p. 270) On December 15, 1922, the Wall Street Journal announced further details of the second Doheny deal, but did not report that drilling leases had been extended to Naval Reserve Number Two at Buena Vista, California, near the Elk Hills reserve. It also made no mention of the Salt Creek deal with Sinclair in Wyoming.
e. The Changing of the Guard
On January 2, 1923, the White House announced the resignation of Secretary Fall, effective March 4, 1923. Throughout the rest of the first half of that year, attention went to other matters, such as suicides and the corruption they suggested in Harding’s administration. “The oil cases were the aristocrats…but there were other scandals juicier and more reeking.” (Allen 1957, p. 149) Charles R. Forbes, Director of the Veterans’ Bureau, resigned in February 1923, and immediately fled to Europe. The next month, Charles F. Cramer, his attorney, shot himself. Rumors about Attorney General Harry Daugherty worsened when Jesse Smith was found dead, his head in a bucket and a pistol on the floor nearby, an apparent suicide. Questions were being raised about Smith’s association with the Alien Property matters and Justice Department activities.
With scandals gathering and his health failing, President Harding and a large entourage left D.C. on June 20, 1923, bound for the West Coast. It was a goodwill and glad-handing tour in anticipation of an announcement for a second term candidacy. With typical Harding administration ineptness, before the president’s train had left the station leaks described it as a re-election campaign tour. It was this general characteristic of those around him which led Harding, while on this trip, to make one of his most famous remarks: “In this job I am not worried about my enemies. I can take care of them. It is my friends who are giving me trouble.” (White 1928, p. 432 & Ferrell 1996, p. 111) While the president traveled, geologists poked around at Teapot Dome, evaluating the claims about drainage. Harry Sinclair took an entourage to Europe and Russia to explore new oil deals. His entourage included the newly retired Albert B. Fall.
On August 3, 1923, Harding died. “Apoplexy” was the given cause of death, the common heart attack, or myocardial infarction, then being little known. (Ferrell 1996, p. 1-29) The country, which loved Harding, grieved. Calvin Coolidge, Harding’s Vice-president, succeeded him.
By autumn, the country had returned again to “normalcy.” On October 22, 1923, the Senate Public Land Committee hearings convened. The first testimony was by committee geologists. “They testified that Teapot Dome, originally estimated to contain 135,000,000 barrels of oil, contained less than 70 per cent of this amount and that the existing reserve was draining steadily into adjacent areas.” (Noggle 1962, p. 64) For Fall, it was a brilliant start. Chairman Smoot told his committee these reports justified Fall’s actions. “The New York Times concluded, ‘The hearings will continue tomorrow, but all interest in its outcome has evaporated with the reports of the experts.’” (Noggle 1962, p. 65) Senator Walsh suggested that perhaps the initial estimates of the reserve capacity were in error, and pushed on.
Fall testified, as did Denby, Sinclair and others. Nothing changed. Interest began waning. But the Democrats were determined to use this scandal against Coolidge in the 1924 presidential election. Harry Slattery and Cordell Hull, chairman of the Democratic National Committee, joined forces with Walsh in creating anti-Republican rancor. They said the leases to Sinclair were unlike anything ever perpetrated by Democrats. Then Walsh found Albuquerque newspaperman Carl Magee, who testified to the many sudden physical improvements at Three Rivers Ranch. Walsh brought the ranch manager, who testified about stock acquisitions. The Republicans brought in Doheny and brought back Sinclair. Both denied giving Fall money in return for favors.
Walsh kept probing for an explanation of the financing behind the improvements at Fall’s ranch. Finally, Fall felt obligated to provide it. Being ill and unable to attend the hearings, he wrote that he had obtained a $100,000 loan from his friend, Washington Post publisher Edward B. McLean. “Sinclair had come to Three Rivers just after Fall had acquired his additional property this, said Fall, ‘invited some evil-minded persons to the conclusion that I must have obtained money from Mr. Sinclair.’ He thought it needless to say that he had never approached Doheny or Sinclair for the money to purchase his property. In fact, he found the ‘entire subject…more or less humiliating even to refer to.’” (Noggle 1962, p. 70) At this point, of course, all had lied under oath and Fall had done so in writing.
In pursuit of confirmation of the McLean loan, Walsh went to Palm Beach, Florida, in January 1924, to see the newspaper publisher, who, like Fall, claimed to be too ill to travel. On January 12, Walsh was “dumbfounded” (Noggle 1962, p. 72) when McLean denied having made the loan. There may have been a miscommunication between Fall and McLean. Or McLean may simply have balked at telling the lie. Fall quickly began to qualify his statements and refuse further comment. But the damage was done.
Even Republican sentiment now turned against Fall. Former President William Howard Taft, then Chief Justice of the Supreme Court, told the New York Times, “they have discovered some real pay dirt apparently…Fall has lied…The Democrats are going to try to embarrass Coolidge with this…” (Noggle 1962, p. 73) Doheny returned to the committee later in January to admit he had provided the $100,000 to Fall. Sinclair admitted making money available to Fall for business expenses on the Europe trip. But Fall had lied and, to his critics, it “…bolstered the rampant suspicion that [he] somehow had been involved in scandal.” (Noggle 1962, p. 75)
Next came the rather notorious involvement of Theodore Roosevelt, Jr. and his younger brother Archie. On Theodore, Jr.’s advice, Archie testified, on January 21, that while a Sinclair employee he overheard G.D. Wahlberg, Sinclair’s private secretary, say something about a payment of $68,000. He also testified that he had been asked by Sinclair to buy for him a steamship ticket to Paris the day after Walsh questioned McLean. Then Wahlberg was questioned. Uneasy before Walsh’s rapid questioning, “…he explained that Archie had misunderstood him Wahlberg claimed to have referred to ‘six or eight cows, and [Archie] probably understood that to mean $68,000 in some manner,’ hearing ‘thous’ instead of ‘cows.’”( Noggle 1962, p. 79) The comedy did not lift the cloud of suspicion around Fall.
Politicking attended the unfolding events. Coolidge was attacked for not doing enough. Harding’s cabinet, in particular Attorney General Daugherty, was attacked for doing too much that was corrupt. Editorializing on the topic of Teapot Dome and other scandals was fervent. Democrats seemed poised to inherit great political capital. The inheritor would be the presumptive 1924 presidential nominee, William Gibbs McAdoo (Fig. 9). Son-in-law of, and heir-apparent to, Woodrow Wilson, McAdoo was, in January 1924, everybody’s favorite to beat Coolidge and lead the Democrats back to the White House. Then, on February 1, 1924, Doheny testified to the committee (Fig. 10) that in addition to his relationship with Fall he had employed many former Wilson cabinet members. Among them were Secretary of the Interior Franklin K. Lane, Attorney General Thomas W. Gregory and Secretary of the Treasury William Gibbs McAdoo. Doheny testified that he had paid McAdoo’s law firm “about $250,000” (Noggle 1962, p. 100) for representation in Mexico.
Though Doheny’s testimony was inaccurate and McAdoo was actually guilty of nothing, he became guilty by association and would not be able to rehabilitate himself for the presidential race. The mud wallowing was now bipartisan. The Boston Evening Transcript wrote, “’McAdoo’ll do’ is proposed as the Democratic slogan—but it looks now as it they were ready to make it ‘McAdieu.’” (Noggle 1962, p. 102) There was a struggle between factions of the party, those loyal to McAdoo and those who wanted a candidate untainted by the scandals.
g. Calvin Coolidge
At this moment, Coolidge (Fig. 7) made a very smart move. A taciturn New Englander, “Silent Cal” had been emphatically undemonstrative in trying to finish Harding’s term without becoming entangled in Harding’s mess. On the last Saturday night of January 1924, however, he learned that the following Monday Walsh would ask the president to begin legal proceedings against the Fall leases. Coolidge acted first. He announced, for the Sunday papers, he was appointing bipartisan special prosecutors. “It is not for the president to determine criminal guilt…but when facts are revealed to me that require action…such action will be taken. That is the province of the Executive…I propose to employ special counsel drawn of high rank from both political parties to bring such action for the enforcement of the law…” (Bennett 1999, Sec. II, Pt. A)
During February 1924, Coolidge sought politically acceptable nominees for the special prosecutorial jobs. This was not simple. Washington state Democrat Senator Clarence Dill cautioned, “The case demands the biggest men the country has in its legal profession…Nobody knows the exact value of the properties involved…probably a billion dollars. Mr. Doheny, Mr. Sinclair and Mr. Fall will have the best attorneys their millions can employ…” (Bennett 1999, Sec. II, Pt. B) The president’s first two nominees were both found to have some small association with the oil industry, disqualifying them. Finally, Coolidge won Senate approval, but not without contention from the very demanding Senator Dill, for Republican Philadelphia attorney Owen Roberts and former Ohio Democrat Senator Atlee Pomerene. Not trusting Daugherty’s Justice Department, Coolidge assigned his prosecutors Treasury Department Secret Service investigators and Transportation Department building offices.
Coolidge also decided to confront accusations regarding leftover Harding cabinet members discredited by the scandals. After some hesitation, he accepted the resignation of Secretary of the Navy Denby, leaving only Attorney General Daugherty to tarnish his cabinet. Scandalous new testimony to a Senate investigative committee by Jesse Smith’s ex-wife Roxy Stinson rocked the country. “Roxy, and others who followed her, put together a shadowy tale: mysterious deals and pardons, permits for liquor, speculation in oil stock, illegal transportation of fight films, and a host of other charges and suggestions. Running through the testimony, as a unifying and motivating force, was the name of Daugherty, who supposedly held scheming conferences in a little green house on K street…” (Noggle 1962, p. 126) Prominent Republicans, particularly Senators Lodge and Pepper, demanded the President ask for Daugherty’s resignation. Coolidge finally did. Harding’s Attorney General resigned March 28. Then Coolidge could claim to be clear of oil and scandal or, at least, more so than McAdoo and the Democrats.
In March and April of 1924, in a last ditch effort to hang the oil scandals on the Republicans, Walsh took his investigations farther back in time and began investigating the activities of Sinclair and Doheny at the Republican National Convention of 1920. Hearing rumors about the statements made by Jake Hamon, Walsh sought him out only to discover that Hamon “had been killed in 1921 by Mrs. Clara Smith Hamon, a woman living with him in bigamy.” (Noggle 1962, p. 142) Walsh also subpoenaed the notorious former Oklahoma train-robber, Al Jennings. “Jennings declared that Hamon told him ‘that Harding would be nominated…and it had cost him a million dollars.’…[But according to contemporary writer/humorist Mark Sullivan]…once Jennings’ testimony was in the record, ‘a considerable portion of the male population of Oklahoma had to be called, some to support the tale, others to denounce it as a fantastic yarn…’ ” (Noggle 1962, p. 142) Senator Walsh’s efforts were inconclusive and he was out of options. From this point on, the work done would be by the special counsel appointments of the President.
On March 23, 1924, Harry Sinclair appeared before the Senate committee to answer lingering questions. He seemed imbued with a new hostility toward the investigation. His hostility was aggravated by the committee’s expeditions away from the Teapot Dome specifics, into the 1920 Republican convention and campaign. On the subject of his contributions, he would not answer, using an unusual legal tactic. “He did not, he said, ‘decline to answer…upon the ground that my answers may tend to incriminate me because there is nothing [about] the lease of Teapot Dome which does or can incriminate me.’ Rather Sinclair claimed that the committee was ‘without jurisdiction to question me further regarding the…lease.’ Ten times Sinclair, when questioned, refused to answer…”( Noggle 1962, p. 145) The next day, the committee requested grand jury action. The grand jury indicted Sinclair for contempt of the Senate. Sinclair pleaded not guilty and posted bail. His lawyers began preparing his defense. It would be one of the first items on the agenda of the special prosecutors.
The Teapot Dome Senate hearings had started with hoopla, escalated into headlines, soared into sordid and unsubstantiated speculations and, finally, dwindled quietly. No audience was in attendance at the May 2 final session. Although Senator Walsh had been a “great impelling force behind the Teapot Dome investigation” and served with heroic nobility, he accomplished little beyond carrying the banner of scandal for his party and preparing the way for the legal process. His report “charged Fall with utter disregard for law and with an unwarranted assumption of authority. It denounced the transactions…” (Noggle 1962, p. 154) Reactions to the report varied according to party loyalty. Evidence on the leases was inconclusive. The allegations around Republican money in the 1920 campaign were startling but unproven. Though Fall had been caught in a lie, other Harding administration officials were exonerated or escaped judgment.
It may have been more than his own satiric candidacy that caused Will Rogers to call it the “Presidential Follies of 1924.” (Fig. 11) Despite opposition from progressive Pennsylvania Governor Gifford Pinchot, Coolidge was nominated at the Republican convention on the first ballot in an era when convention battles were the norm. “Teapot Dome had not handicapped Coolidge it had served him. His austere and taciturn character had become a rock of salvation for Republicans swimming in the wake of the Harding legacy.” (Noggle 1962, p. 164-65) Though convention battles were the norm, the Democratic convention of 1924 was a landmark. Split between delegates committed to McAdoo at any cost and those opposed to him at any cost, it was held in Madison Square Garden, before it was air conditioned, in late June and early July. “The fourteen day spectacle of family bickering was a tragedy for the Democratic party.” (Noggle 1962, p. 163) After twenty-nine sessions and one hundred three ballots, the “acrid and exhausting struggle between William Gibbs McAdoo and Alfred E. Smith ended…when the weary convention finally selected…John W. Davis of West Virginia.” (Noggle 1962, p. 159) Will Rogers once said, “…what hurts our two big Political Parties worse than getting caught, is Party Leaders.” (Day 1962, p. 232) By the end of their convention, many Democrats probably agreed.
There was one other factor in the election. As a result of Doheny’s testimony implicating McAdoo, progressive Democrats defected to a third party, the Conference for Progressive Political Action, and its nominee, Senator La Follette. Capitalizing on his early role in the discovery of, and call for action on, the Teapot Dome affair, La Follette zestfully accepted the nomination in February and quickly took a radical and fervent stance against governmental corruption.
Will Rogers said his party platform “…would be short and simple: ‘WHATEVER THE OTHER FELLOW DON’T DO, WE WILL.’” (Day 1962, p. 232) Each 1924 contender seemed to take that approach to the Teapot Dome affair. Coolidge ignored it. (Noggle 1962, p. 167) Davis told every detail of it and indicted his opponents. (Noggle 1962, p. 166) La Follette crusaded. (Noggle 1962, p. 168) The American electorate demonstrated it did not hold Coolidge responsible for Teapot Dome and the other Harding administration headline scandals, giving him a big victory. In the New York gubernatorial election, however, there was some evidence of the scandal’s potency. Eleanor Roosevelt helped Al Smith upset the frontrunner, Theodore Roosevelt, Jr., by touring the state in an auto towing a teapot mounted on a chassis and wheels, speaking out against her cousin. (Teichmann 1979, p. 127) Though the investigations had cleared the former president’s eldest son, as a Republican and a member of Navy Secretary Denby’s staff, the voters of New York found him accountable. Or perhaps it was the way Eleanor Roosevelt handled the matter, more like Will Rogers than Davis or La Follette.
4. THE TRIALS
a. Roberts, Pomerene and the Leases
In March 1924, Coolidge’s special prosecutors presented their case against Harry Sinclair for refusing to answer questions at the Senatorial hearings to the Supreme Court of the District of Columbia. The charge was Contempt of Congress. The judge found Sinclair guilty. Ruling on the appeal of this case in 1929, the Supreme Court affirmed Congressional power to conduct investigations and require witness testimony. Sinclair’s sentence for this conviction was three months in jail, which was served along with another sentence of six months, for another contempt charge arising later.
The first full scale legal action by the special counsels was a civil suit before the United States District Court for the Southern District of California in Los Angeles in October 1924. The objective of this first oil lease action was to cancel the contracts and leases of the Elk Hills and Buena Vista reserves granted by Secretary Fall to the Pan American Petroleum and Transport Company and the Pan American Petroleum Company. A similar civil suit was brought in March 1925 in the United States District Court for Wyoming, against Mammoth Oil, Sinclair Crude Oil Purchasing and Sinclair Pipe, to cancel the Teapot Dome and Salt Creek leases.
Will Rogers playfully offset the opposing legal forces by describing the supposed arrival of the train bringing the Doheny defense team to Los Angeles (Fig. 12). There were three private cars, Rogers reported, the first carrying “…just the little [lawyers]…to carry the Brief Cases…” At the second car of lawyers, “…we were now getting into the Big Money.” In the third car, “…why, then come the real headliners. Just a few big ones that were in real touch with Mr. Doheny personally…Real Lawyers! Men who, on a Case like this which involved perhaps 400 Million Dollars, why, they consider themselves slumming…” (Day 1962, p. 143) Commenting on preparations for the action in Wyoming, Rogers added, “The Teapot Dome Gang went to Cheyenne…Mr. Sinclair unloaded at least 4 cars there.” (Day 1962, p. 143)
Finally, Rogers described the special counsel “legal talent” arriving on a “wheezing” local train. “Who do you think Emerged? … Why Atlee Pomerene and a Mr. Roberts…They came crawling out of a Day Coach where they had been sleeping on the back of their Necks from Cheyenne. They didn’t even have a Caddy to carry their legal papers…Uncle Sam, no wonder you don’t get anywhere…Of course there is one Silvery lining for the Navy’s fuel…That is the other side has so many lawyers, they may get fighting amongst themselves…and we might win Accidentally…But they are well fortified for that…They have Expert Technicality Lawyers…Then there are Postponement Lawyers who could have the Falls of Niagara put back on account of the Water not being ready to come over and who on the last Judgment Day will be arguing that it should be postponed on account of Lack of Evidence.” (Day 1962, p. 143-44)
In fact, Roberts and Pomerene were up against nine lawyers in California and eight in Wyoming. But Rogers (and the popular expectations his humor represented) proved wrong. Although the Wyoming court found for Sinclair, the California court ruled against Doheny, voiding his leases. Eventually, the Supreme Court voided all leases and contracts granted by Secretary Fall pertaining to the Naval reserves. In both cases, the court’s basic rationale for voiding the leases was the unethical relationships Fall had with Sinclair and with Doheny.
Next, the special prosecutors took up those relationships in criminal court. On November 22, 1926, the jury trial of Edward L. Doheny, Edward L. Doheny, Jr., and Albert B. Fall for conspiracy to defraud the United States began in a D.C. court. Senators of the Public Lands committee testified at length. Though Fall did not testify, Doheny was on the stand for some two hours, admitting making loans to Fall. After nineteen hours of deliberation, to everyone’s surprise except the cynics, the jury found Fall and the Dohenys not guilty of conspiracy to defraud.
On October 17, 1927, Fall and Sinclair faced their conspiracy to defraud charge in the same court. Two weeks into the trial, Pomerene accused Harry Sinclair of employing agents of the William Burns Detective Agency (the very same William Burns who had been head of the Bureau of Investigation under Harry Daugherty in the Harding administration) for “ ‘close, intimate, objectionable and improper surveillance’ of the jury.” (Noggle 1962, p. 185) Pomerene called for a mistrial. The judge granted it and dismissed the jury. Sinclair was charged with Contempt of Court. Found guilty of the charge, this was the second contempt charge and the cause of the additional six months of his jail term. The United States Supreme Court affirmed both verdicts and sentences in the spring of 1929 and Sinclair went to jail on May 6, 1929.
Albert Fall was frequently ill through the mid and late 1920s and unable to meet court dates. For the Sinclair/Fall bribery case retrial, he gave extensive testimony by deposition from his home in the southwest, yet again declaring he did not take any bribes. The trial began April 10, 1928. The prosecutors made extraordinary efforts to get testimony. They obtained Congressional legislation reducing the statute of limitations for fraud against the United States from six to three years so Mahlon T. Everhart, Fall’s business partner/son-in-law, could testify. They dismissed charges remaining against Edward L. Doheny, Jr., so he could testify. Both were thus able to tell the jury of delivering money to Fall without incriminating themselves and were unable to avoid testifying with a plea of privilege. But the prosecutors’ efforts failed. The jury found the defendants not guilty of conspiracy to defraud. “Roberts and Pomerene ‘appeared dumbfounded’ at the decision and sat in silence…” (Noggle 1962, p. 201) The New York Times quoted Senator Gerald Nye that “this is emphatic evidence that you can’t convict a million dollars in the United States.” (Noggle 1962, p. 201)
The trial of Albert Fall for accepting a bribe from Edward Doheny began on October 7, 1928, in the District of Columbia. Fall, his health deteriorating, appeared quite frail. He was unable to rise for the judge. At one point, his lungs hemorrhaged, he spit up blood and required a four-day recess. He spent the rest of the trial in a wheelchair. One juror was seen weeping with pity during the Defense Attorney’s closing argument. But the merits of the case weighed against Fall, despite Edward McLean’s inability to testify against him due to yet another confinement in a Florida asylum. Whereas the conspiracy trials had depended on the prosecution proving harm done to the United States, in this trial they only needed to prove that Fall, as a government official, had received money. There was no need to take up national security needs or drainage. With testimony already on record, especially in the Sinclair trial, the jury could simply not help but find against Fall. On reporting their guilty decision, the jury’s foreman requested the judge be merciful. Fall was sentenced to a year in prison and given a $100,000 fine. The Supreme Court refused to hear an appeal. President Hoover, under political pressure to distance himself from the scandal, denied a pardon. Fall went into the New Mexico State Prison in July 1931. With time off for good behavior, he was released in May 1932. He was in the prison hospital the whole time.
In March 1930, Edward L. Doheny was tried for bribing Albert Fall, the same matter on which Fall was already convicted. The jury found Doheny innocent. Merits differed: Offering a bribe is not the same as accepting one. Evidence differed: Fall had questionable associations with both Sinclair and Doheny to explain while Doheny had only to testify to a loan to an old friend. And circumstances differed: Fall had lied about the $100,000 loan, claiming it came from McLean, whereas Doheny in the end admitted he had made the loan. Finally, Doheny had sympathy on his side.
In an incident so grisly and mysterious it became the factual basis for an incident in a novel by former oil industry executive Raymond Chandler, Edward L. Doheny, Jr., died a violent death, possibly related to Teapot Dome, forcing delay of his father’s trial. On February 17, 1929—at a time when the only criminal trial still pending was that of Edward L. Doheny, Sr., for bribery—shortly after midnight, the Beverly Hills police were called to the huge Doheny mansion. The scene was gruesome. Edward L. Doheny, Jr., was on a bedroom floor in underwear and bathrobe, a bullet hole through his head from ear to ear, blood splattered across his face and pooled around his head. Hugh Plunkett, who in 1921 had accompanied Doheny, Jr., in delivering the loan money from Doheny, Sr., to Fall, was sprawled face down in the hallway across from the bedroom, a similar bullet hole in his head.
The Doheny family physician explained that earlier that day he had met with Doheny, Jr. and Plunkett. Under multiple pressures, including that of the approaching trial, Plunkett seemed to be exhibiting a recurrence of his so-called nervous condition and they were trying to convince him to be admitted to an asylum. The meeting had been inconclusive and the doctor had left, only to be called back at midnight. The police ruled that the distraught Plunkett had, in a fit of madness, shot Doheny, Jr., and then shot himself. But their investigation left many unanswered questions, like the ones in the fictional Cassidy case in Chandler’s third novel, The High Window. Chandler’s Phillip Marlowe declared, “…[E]very crime reporter in town and every cop on every homicide detail knew it was Cassidy [i.e., Doheny, Jr.] that did the shooting, that it was Cassidy that was crazy drunk, that it was the secretary who tried to handle him and couldn’t and at last tried to get away from him, but wasn’t quick enough.” (Chandler 1942, p. 119) Doheny’s son might have been relied on not to incriminate his father. The same cannot readily be assumed of Plunkett. It would have been convenient if he, like McLean, were in an asylum at the time of the trial. The imagination leaps, as did Chandler’s, at murder/suicide scenarios. But scenarios involving corruption, violence and despair seem to be constantly bubbling up from beneath the Teapot Dome affair.
d. New Investigations: Following the Liberty Bonds
In 1928, a reporter did as a 1970s reporter was surreptitiously advised to do by Deep Throat half a century later. He followed the money (Fig. 13). For the Teapot Dome affair, Paul Y. Anderson of the St. Louis Post-Dispatch traced the Liberty bonds used to make the bulk of Sinclair’s payment to Fall. When he got to the Continental Trading Company, Ltd., incorporated in Canada in 1921 and bankrupt in 1924, all books and papers destroyed, Anderson thought he had something the Senate Public Lands Committee should look into. But Senator La Follette had died in 1925. There was nobody like Harry Slattery’s champion to go to.
The Secret Service men working for Roberts and Pomerene had first uncovered the Continental Trading Company in the fall of 1924 but, for technical legal reasons, the evidence was not used. The agents followed the serial numbers of the bonds paid to Fall. Through Treasury Department records, they traced the bonds to stockholders of Continental. By deposing the recorded president of the company, H.S. Osler of Ontario, the agents learned its formation was the result of a November 1921 meeting at the Vanderbilt Hotel in New York City. Acting as private individuals and not for their companies, the men at the meeting represented “a large share” (Noggle 1962, p. 180) of Western Hemisphere oil interests. They included: Colonel A.E. Humphreys of Humphreys Mexia and Humphreys Texas Oil Company, H.M. Blackmer, chairman of the board of Midwest Refining Company, James E. O’Neil, president of the Prairie Oil and Gas Company, Harry Sinclair, head of Sinclair Consolidated Oil Corporation, and R.W. Stewart, president of Standard Oil of Indiana.
November 17, 1921, Continental contracted with Humphreys Mexia and Humphreys Texas Oil Company to purchase 33, 333, 333 barrels of crude at $1.50/barrel. On the same day, Continental sold this contract to Prairie Oil and Gas Company and Sinclair Consolidated Oil Corporation at $1.75/barrel. Sinclair and Prairie took delivery from Humphreys but paid through Continental. Between January 1, 1922, and May 26, 1923, Continental took profits of more than $2,000,000, investing in Liberty bonds and distributing them to the owners. Albert Fall got $90,000 of these bonds. (Noggle 1962, p. 181)
Roberts and Pomerene tried to question Osler further in 1924. Coincidentally, he was deep in the African interior hunting elephants. Blackmer was outside Paris and O’Neil was in Cannes. When finally summoned by legal means, all refused to testify in detail about Continental and swore they had no involvement in Teapot Dome. Subpoena servers could not catch up with Stewart. The prosecutors gave up this seemingly ephemeral line and returned to concrete legal matters.
When, in 1928, Coolidge announced he would not seek re-election, presidential politics became more serious. Anderson finally got Nebraska Republican Senator George W. Norris to bring a resolution for a new investigation. It is likely the majority Republicans, having triumphed in 1924 by displaying a willingness to confront corruption even in their own party, once again saw opportunity. Though Senator Walsh initially rebuffed Anderson’s efforts, once it became an undertaking of the committee, he again took the lead, bolstering his potential presidential candidacy.
The hearings began in late January 1928. The first witness, Mahlon T. Everhart, confirmed his previous testimony of delivering bonds from Sinclair to Fall. This opened the subject of bonds. Oilmen involved with Continental testified but their memories were conveniently vague. In February, following on research that some of the bonds had found their way to the Republican Party, Will Hays, Republican National Chairman in 1920, and John T. Adams, Republican National Chairman from 1921 to 1924, were questioned. They denied having any tainted oil bonds. A mysterious improvement in Democratic indebtedness, from $600,000 in 1920 to $200,000 in 1924, was revealed. Cordell Hull, Democratic National Chairman, could not explain but proclaimed that it wasn’t tainted oil bonds. Testimony by Sinclair in 1923 stating he had contributed to both parties in 1922 was brought to the committee. Then, people researching the bonds revealed proof the bonds had gone into Republican National Committee coffers. Hays reversed himself, admitting he got bonds from Sinclair. The sensation matched that when Fall’s lie about getting the loan from McLean was discovered.
But there was more. Treasury Secretary Andrew Mellon testified that Hays had offered him $50,000 in Liberty bonds in exchange for a matching cash donation to the party. Though Mellon testified he did not accept Hays’ offer, the method of moving the money was now known. Other such transactions were uncovered. Republican Senator William E. Borah of Idaho proclaimed outrage and started a campaign for Republican grassroots donations to pay back the tainted money. He was able to raise only about $8,000, which he eventually returned, but it was a noteworthy public relations move, demonstrating Republican antipathy to corruption. Hundreds of thousands of dollars in Liberty bond manipulations were finally revealed, allowing the government to reassess back taxes due. Any political ambitions Hays may still have harbored gone, he turned his attentions to Hollywood morality.
The last Teapot Dome hearings closed in May 1928. Though revelatory, they had “…even less influence in the 1928 election than…in 1924. ” (Noggle 1962, p. 201) For a while, Walsh was a candidate for the Democratic nomination. But the electorate, satisfied that Republican nominee Herbert Hoover was not one of the corrupt, turned its attention to the questions of prohibition and evolution. The Democrats nominated Alfred E. Smith, who lost big.
Walsh and Republican committee chairman Gerald P. Nye of North Dakota submitted final Teapot Dome reports. Walsh wrote that the Continental Trading Company was “a contemptible private steal, the speculations of trusted officers of great industrial houses, pilfering from their own companies, robbing their own stockholders, the share of the boodle coming to one of the free-booters serving in part as the price of the perfidy of a member of the President’s cabinet.” (Noggle 1962, p. 198) “Conceived in darkness and selfishness,” Nye wrote of Continental, “and dedicated to the proposition that the cause of privilege and the privileged must be served.” He said the committee had uncovered “…the slimiest of slimy trails beaten by privilege…one of dishonesty, greed, violation of law, secrecy, concealment, evasion, falsehood and cunning.” (Noggle 1962, p. 198-99) Then Senator Nye enumerated benefits of the investigation, including oil industry reform, political contribution reform, better natural resource management, the collection of back taxes and proof to the populace that conspirators against the government could be stopped.
From its roots in progressive and conservationist politics to the closing statements of Walsh and Nye, Teapot Dome was about oil development and natural resource preservation. Thanks in part to Gifford Pinchot, we know only too well how precious are nature’s resplendent wonders. Yet it is most ironic that the conspirators were probably right about how best to protect the oil. Pearl Harbor’s centrality in World War II reflects positively on the plans of Fall and Doheny, just as the losses incurred shipping oil to the East Coast at the start of that war affirm the importance of the pipeline Sinclair wanted to complete. As to drainage, our Strategic Petroleum Reserve makes those who advocated drilling and storing the oil seem almost prescient, though their profit motives were very real and the cost to lands now gentrified in California and Wyoming is not easily remembered or valuated.
As to resource use, Albert Fall once told a National Parks official, “You know something about history…Every generation from Adam and Eve down has lived better than the generation before. I don’t know how [succeeding generations will] do it—maybe they’ll use the energy of the sun or the sea waves—but [they] will live better than we do. I stand for opening up every resource.” (Stratton 1998, p. 9) Such a remark makes Fall either a selfish capitalist or a visionary or, perhaps, fairly representative of his time and place but hardly a role model. But if Edward L. Doheny and Harry F. Sinclair were not guilty of making bribes, how was Albert Bacon Fall guilty of taking one? The answer probably resides in the lesson seemingly learned in every public scandal: It’s not the crime—it’s the cover-up. While Fall always contended he took no bribes, he often said his biggest mistake was lying about the source of the money he used to improve his ranch. It begs the question: If it wasn’t a bribe, why lie about it? Will Hays clearly learned the same lesson.
Finally, it seems curious that such an odd, complicated, multifaceted matter could become so famous and enduring. Maybe it was timing. After the Great War, there were new American public excitements and new images of heroes and villains: Babe Ruth, Amos ‘n’ Andy, Al Capone, Tom Mix, Clara Bow. Fads, fame and infamy happened in the era to an unprecedented national extent in an unheard of national hurry because of “…the modern techniques of information and publicity…” (Mowry 1963, p. 69) exploding in the era. Rebounding from the failed idealism of the progressives, distrust of government, inherent from the time of the founding fathers, was finally justified in the Harding administration. Teapot Dome and Albert Fall became the scandal and the villain symbolizing it.
ALLEN, Fredrick, Lewis, 1957, ONLY YESTERDAY: An Informal History of the Nineteen-Twenties: Harper and Row, New York, 370 p.
ANTHONY, Carl Sferrazza, 1998, “A President of the Peephole” in The Washington Post, June 7. at http://www.washingtonpost.com/wp-srv/style/features/harding.htm
BATES, J. Leonard, 1963, The Origins of Teapot Dome: Progressives, Parties and Petroleum, 1909-1921: University of Ilinois Press, Urbana, Illinois, 278 p.
BENNETT, Leslie E., 1999, One Lesson From History: Appointment of Special Counsel and the Teapot Dome Scandal: The Brookings Institution, Washington, D.C. at
CHANDLER, Raymond, 1942, The High Window: Vintage/Random House, New York, 265 p.
DAY, Donald, 1962, Will Rogers: A Biography: David McKay Co., New York, 370 p.
CONNELLY, W.L., 1954, The Oil Business As I Saw It Half a Century with Sinclair, University of Oklahoma Press, Norman, OK 177 p.
FERRELL, Robert H., 1996, The Strange Deaths of President Harding: Columbia, MO and London , University of Missouri Press, , 203 p.
MILLER, Char, 2001, Gifford Pinchot and the Making of Modern Environmentalism: Washington D. C./Covelo/London, Island Press/Shearwater Books, , 458 p.
MOWRY, George E. (Editor), 1963, The Twenties: Fords, Flappers and Fanatics: Englewood Cliffs, NJ, Prentice Hall, , 186 p.
NOGGLE, Burl, 1962, Teapot Dome: Oil and Politics in the 1920s: Baton Rouge, LA, Louisiana State University Press, 234 p.
STRATTON, David H., 1998, Tempest Over Teapot Dome The Story of Albert B. Fall: Norman, OK, University of Oklahoma Press, 376 p.
TEICHMANN, Howard, 1979, ALICE: The Life and Times of Alice Roosevelt Longworth: Englewood Cliffs, NJ, Prentice Hall, 286 p.
WHITE, William Allen, 1928, Masks in a Pageant: New York, NY, The MacMillan Company, 507 p.
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Originally published in: OIL-INDUSTRY HISTORY, Volume 6, Number 1, 2005, Petroleum History Institute, Meadville, PA
In Teapot Dome Case, Supreme Court Cemented Congressional Power to Investigate
Scandals have dotted American politics from the start. In 1798, Representative Matthew Lyon (Democratic-Republican-Vermont) was censured for spitting on a colleague, convicted of violating the Alien & Sedition Act, and reelected—from prison. But save for Watergate, font of America’s sole presidential resignation, no scandal outranks the Teapot Dome Affair, an outrage that effloresced under President Warren G. Harding. Teapot Dome also stands alone in its impact on government operations, since it established the constitutional basis for Congress to investigate how Cabinet members and subordinates implement executive branch functions assigned the President—a precedent with current-day implications.
Corruption riddled Harding’s presidency, but other misdeeds paled beside the fate of two federal oil holdings reserved for Navy use. Interior Secretary Albert B. Fall got Harding to transfer the reserves—Teapot Dome in Wyoming and Elk Hills in California—to his department. In crooked private deals Fall leased the reserves to companies that lubricated the process with $400,000 (today, $5.6 million) in bribes. Officials involved did not pretend to be serving the public. “People in the government were selling the administration to the highest bidder,” historian Robert Dallek wrote. “They weren’t interested in the national interest they were interested in their self-interest.” Royalties paid the public coffers were paltry. Fall’s style of living suddenly grew opulent.
The former Secretary of the Interior, Albert B Fall, left, was convicted of taking bribes in the Teapot Dome scandal when government oil rights were illegally leased out. (Photo by MPI/Getty Images)
An oilman irked that the leases had not been put up for bid griped, triggering a 1922 Senate Public Lands Committee inquiry that exposed Fall’s bribes. After Harding died, the committee told successor Calvin Coolidge to name a special counsel to turn the congressional findings into legal action. Courts canceled the oil leases. In 1929 Fall became the first Cabinet member to do time for misconduct in office.
Congress wondered how Fall had avoided alarming the Justice Department. Despite blatantly violative behavior and Fall’s wallow in filched lucre, Justice had snoozed. The Senate named a five-man panel to examine why. Curiosity fell on U.S. Attorney General Harry M. Daugherty who, as a small-town Ohio attorney, had conceived the gambit that finagled Harding the 1920 Republican nomination when the front-runners deadlocked. A grateful Harding made Daugherty the nation’s top prosecutor.
By this time congressional probes of executive branch actions had become embedded. The first came during the second Congress, in 1792, when the House of Representatives set up a special committee to discover why, the year before, American troops commanded by General Arthur St. Clair had lost so badly to 1,000 Indians in the Battle of the Wabash River 100 miles north of Cincinnati, Ohio.
Investigations became so standard that, though the Constitution gives lawmakers no specific investigative authority, their power to do so seldom was challenged. Investigating seemed to be inherent to legislating. After all, five House members in 1792 had been among those drafting the Constitution, and all five voted for the St. Clair inquiry. The outcomes of the few cases touching on the issue and reaching the Supreme Court suggested congressional investigations were allowed but did not address the question directly. The main such ruling, 1881’s Kilbourn v. Thompson, invalidated a congressional inquiry into how assets of a bankrupt real estate scheme had been distributed among creditors, including the United States. The justices noted that Congress had given no valid legislative aim for its scrutiny. Kilbourn established a test for investigative legitimacy: an inquiry must not only deal with “subjects on which Congress could validly legislate” but the resolution authorizing that inquiry must specify the lawmakers’ interest in considering such legislation.
Fast forward to Teapot Dome. Congress in its resolution setting up the investigation into the Justice Department gave no legislative purpose. That offered an opening for a reluctant witness to challenge a subpoena to appear at the hearings and to impugn the whole process as unconstitutional. The case also gave the Supreme Court a shot at a definitive ruling on the legitimacy of congressional inquiries.
Reluctant witness Mally S. Daugherty, president of Midland National Bank in the attorney general’s hometown, was the AG’s older brother. The Senate ordered Daugherty the banker to appear in person bearing records on safety deposit vault rentals and customer accounts showing large cumulative withdrawals. Daugherty refused. The Senate authorized his arrest and forced appearance.
Deputy Senate Sergeant at Arms John J. McGrain arrested Mal Daugherty. The banker immediately went to the nearest federal court, claiming the inquiry was unconstitutional and demanding his release. The court agreed, finding that the investigation lacked a stated legislative goal and that the Senate was in essence trying the attorney general—a judicial function, not a legislative function.
By the time the Supreme Court ruled in January 1927, much had changed. Coolidge had succeeded Harding. Secretary of State Charles Evans Hughes and Secretary of Commerce Herbert Hoover had persuaded the new president to force Harry Daugherty out. Columbia University Law School dean Harlan Fiske Stone briefly headed Justice before being named to the Supreme Court. Stone recused himself from Mal Daugherty’s case, but his eight colleagues had no trouble finding the lower court wrong and awarding Congress broad discretion to begin an inquiry, to decide what to investigate, and to compel witnesses to testify and produce subpoenaed documents. The core issue in McGrain v. Daugherty was how the Department of Justice was run. “Plainly the subject was one on which legislation could be had and would be materially aided by the information which the investigation was calculated to elicit,” Justice Willis Van Devanter wrote in the unanimous decision.
Van Devanter then went beyond the immediate issue of whether Harry Daugherty had been derelict as U.S. attorney general, decreeing that lawmakers have extensive investigatory power. Van Devanter supported that conclusion by pointing to the long history of congressional investigations and to similar state legislature probes upheld by courts in Massachusetts, New York, West Virginia, Wisconsin, and Missouri.
In a decision The New York Times called “one of the most sweeping ever handed down,” Van Devanter wrote, “A legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect….We are of the opinion that the power of inquiry—with process to enforce it—is an essential and appropriate auxiliary to the legislative function.” Harry Daugherty eventually was cleared by the Senate committee, which decided it had not found evidence that Daugherty knew of the oil lease scheme.
Congressional inquiries had been common, but McGrain removed any legal threat to them. The day after the decision was handed down, the Senate began action to force a reluctant witness, utilities magnate Samuel Insull, to testify in an inquiry into nearly $1 million in suspicious donations to senatorial candidates in Illinois. That impact has persisted.
“McGrain’s rationale and theory has been picked up and cited extensively,” says lawyer Todd Tatleman, the Congressional Research Service expert on the issue.
For instance, the justices cited McGrain in upholding congressional demands for testimony in probes of domestic Communist Party activities and of anti-Vietnam War activities.
Perhaps because McGrain validated existing practices rather than changing practice, it appears on no list of the Court’s most significant decisions, and for most of its existence has been known primarily to lawyers specializing in issues involving separation of powers. That obscurity is gone. All year the case has been invoked repeatedly as politicians and journalists have commented on House and Senate probes of the Trump administration.
This SCOTUS 101 column appeared in the December 2019 issue of American History.
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Albert Fall, President Warren G. Harding’s secretary of Interior. Wikipedia.
In geological terms, a dome is a formation that traps oil underground between layers of rock, with the upper layer bent upward to form a dome. Teapot Dome is a dome north of Casper, Wyoming, which was named for a rock formation that looked like a teapot- complete with a spout and a handle. This rock was unsurprisingly called Teapot Rock. In the early 20th century, the oil deposits were designated by the federal government as Naval Oil Reserves.
President Theodore Roosevelt had dreams of a powerful American Navy that could sail around the world showing off our might. (For more on Theodore Roosevelt, please see this post http://www.historynaked.com/theodore-roosevelt-man-arena/ ) However, the coal fired ships that had served the United States up until that time were not cutting it. There had to be coaling stations everywhere and that was a logistical nightmare. By the time President Taft was in office, the Navy was shifting to oil powered ships. These oil fields were set aside so that in time of war, our Navy would have plenty of fuel to defend our interests. Oilmen throughout the west drooled a the thought of the untapped reserves. However, no drilling would be permitted unless there was a national emergency, such as war. Enter President Warren G. Harding.
Harding was elected in 1920, and was described as a dim but charming man. He appointed one of his card playing friends, Senator Albert Fall to be the secretary of Interior. Fall was a lawyer from New Mexico Territory, and had represented mining and timber companies. He attempted open up Alaska for private development as well as vast tracts of national forests, and was blocked by the conservationists in Congress. Well, what’s a corrupt senator to do to exploit natural resources for money? Honestly. Fall turned to the naval oil reserves. Cutting a deal with Edwin Denby, the Secretary of the Navy, and Harding, Fall had the naval oil reserves transferred to the Department of the Interior. Once the naval oil reserves of Teapot Dome and Elk Hills, CA were under his control, Fall secretly began shopping around drilling rights to the highest bidder. In exchange for a $100,000 interest free “loan” from the head of the Pan-American Petroleum and Transport Company, they were leased drilling rights to Elk Hills. The same rights were leased to Mammoth Oil for Teapot Dome for a $300,000 interest free “loan”. The owners of both of these companies were old friends of Fall’s.
Teapot Rock in the 1920s, before the “spout” broke off the formation that gave its name to Teapot Dome. Wyoming Tales and Trails.
People began getting suspicious when they saw trucks with the Mammoth Oil company logo hauling drilling equipment into Teapot Dome. Leslie Miller, who later became the governor of Wyoming, asked Wyoming Senator John Kendrick to look into it. Simultaneously, the Wall Street Journal broke the story of how Secretary Fall leased the naval oil reserves without competitive bidding. The next day, Senator Kendrick introduced a resolution to begin an investigation into Secretary Fall’s actions, and Wisconsin Senator Robert La Follette arranged to have the Committee on Public Lands investigate. Fall had crossed swords with La Follette before, as La Follette was a prominent conservationist who had thwarted his attempts at privatizing forests and land in Alaska. They must have thought it would be a nothing investigation, so they gave it to their least senior minority member to oversee- Senator Thomas Walsh from Montana. They misjudged that one.
What Walsh found was that Fall had gotten rich very quickly with no discernible source of income. That was quite fishy. The heat was turning up on Harding’s attorney-general, Harry Daugherty, because he had not investigated any of this possible corruption. In desperation, Daugherty got William J. Burns, the director of the FBI, to send an agent to ransack La Follette’s office for blackmail material. All that did was convinced La Follette that what he thought was a nothing investigation was a big deal. La Follette doubled down on the investigation. Fall tried to stall and delivered a mountain of paperwork for the committee to go through. He claimed what he was doing was beneficial to the Navy and he was saving the oil from syphoning from private wells. For anyone who has seen There Will Be Blood, this is the “I drink your milkshake” defence. Fall also claimed there was no competitive bidding because to make this public would make the oil fields a target for foreign enemies, and since Mammoth Oil was making a pipeline from Kansas to Wyoming anyway it all just made sense.
In the middle of all this, Warren G. Harding suffered a massive heart attack and died. His vice president, Calvin Coolidge, was sworn in and the investigation continued. Coolidge appointed two special prosecutors, one Democrat and one Republican, to continue. What they found was a scandal ridden cabinet made up of Harding’s card and drinking buddies who were taking bribes from anyone who would offer and embezzling anything they could get their hands on. Some joked that Harding escaped impeachment only because he died. Senator Walsh became a national hero as Fall was the first cabinet member ever to be sent to prison for crimes committed while in office. Henry Sinclair and Edward Dheny, the heads of Mammoth Oil and the Pan-American Petroleum and Transport Company respectively, were charged, but found not guilty. A reporter quipped on their acquittal, “You can’t convict a million dollars.” Sinclair was sentenced to nine months for contempt of Congress and jury tampering.
Several court cases came out of this episode which defined the Senate’s investigative powers. In 1927, McGrain v. Daugherty explicitly established Congress’ right to compel witnesses to testify before its committees. The government also sued to invalidate the leases to the oil fields Fall granted, but those leases were upheld and were not canceled until the Kennedy administration