In the first years of the 20th century, the United States of America stepped onto the world stage. The defeat of Spain in the Spanish-American War had not only lead to the US inheriting its possessions in the Pacific and Caribbean, but it also led to the Presidency of San Juan Hill war hero Theodore Roosevelt, who championed an American place in the world, declaring that he would “speak softly and carry a big stick”. That “big stick” was the US Navy. One of the first things Roosevelt did in office was to arrange for the American battleship “Great White Fleet” to make an around-the-world tour as a show of strength. The United States, it demonstrated, was now a global power.
"Museum Pieces" is a diary series that explores the history behind some of the most interesting museum exhibits and historical places.
The US Navy, meanwhile, like others of the time, was undergoing a transition. Until now, the world’s navies were powered by coal. But in the early 1900s, the European powers were switching to ships that were fueled by oil, which offered longer range and better speed. The US followed suit, launching its first oil-powered battleship, the Wyoming, in 1909. Under Roosevelt’s successor, William Howard Taft, a bill was passed which directed the Secretary of the Navy to set aside two tracts of Federal land which were known to contain oil deposits as “naval petroleum reserves”, to insure that the Navy always had a ready supply of oil in the event of war or other national emergency. The first two reserves were near Elk Hills and Buena Vista, in California. Later, during the First World War, President Woodrow Wilson established a third reserve near Salt Creek, Wyoming, in a geological deposit known as “Teapot Dome”. By this time, the oil industry was booming, petroleum companies were some of the richest corporations in the country, and all of them wanted a piece of the huge profits that would result from Navy contracts to drill these reserves.
Enter Albert B Fall. As a New Mexico Senator on the Public Lands and Surveys Committee, Fall, a former mining company owner, was well-known as a friend of the oil industry and an opponent of the conservation movement, who was eager to open up publicly-owned lands to private mining and logging interests. Appointed as Secretary of the Interior by President Warren G Harding, Fall quickly made moves to bring the lucrative naval petroleum reserves under his control: convincing Harding that the Secretary of the Navy, Edwin Denby, was too inexperienced in such matters, Fall persuaded the President to issue an Executive Order transferring the administration of the oil reserves from the Navy to the Department of the Interior.
In 1921, Fall began the process of awarding leases for the oil. The contracts for the two California oil fields went to Edward Doheny, the President of the Pan-American Petroleum and Transport Company, who had long been a friend of Fall’s. Pan-American was to construct a pipeline from Elk Hills and Buena Vista to the coast, build a refinery there, then transfer the oil to storage tanks that would be erected in Hawaii at the Pearl Harbor Navy base. In return, the company would be given rights to 30,000 acres of the oil fields. A short time later, Fall awarded a similar contract for the Teapot Dome reserve in Wyoming to another longtime friend, Harry Sinclair of the Mammoth Oil Company, for a pipeline and refinery in Kansas City. Each oil company anticipated profits of over $100 million (about $1.3 billion in today’s money).
All of this had been done in secret. The Navy did not want potential enemies to know where the US strategic oil reserves were located, and Fall, for reasons that became obvious later, did not want anyone to know the details of the negotiations.
But in early 1922, a Wyoming oil company owner wrote a letter to his Senator complaining that he had been unfairly locked out of getting a piece of the Teapot Dome action by the secret no-bid deal. A panel was set up under the chairmanship of well-known progressive Senator Robert La Follette to look into the matter. The probe was run by Senator Thomas Walsh of Montana.
The Harding Administration had already been implicated in a number of scandals. Accusations of corruption and embezzlement had been leveled at the Veterans Bureau and at the Office of the Alien Property Custodian, which held the property and assets that had been confiscated from German sympathizers during the First World War. The Attorney General, Harry Daugherty, resigned in disgrace after another scandal. An exasperated President Harding was said to have remarked, “I have no trouble with my enemies, I can take care of them. It is my friends, my goddamn friends, that are giving me trouble.” Harding himself became the target of investigation, but he died unexpectedly in August 1923 and was replaced by Vice President Calvin Coolidge.
At first, the Senate’s investigation into the “Teapot Dome affair” revealed nothing. Fall delivered thousands of documents to Walsh’s committee, but few of them had anything to do with the oil leases—Fall claimed “military secrecy”. In January 1923, Fall resigned as Interior Secretary to return to private industry. The probe seemed to be coming to an end.
But then, Walsh began hearing stories indicating that the former Secretary of the Interior had suddenly seemed to have run into a lot of money. Fall began remodeling his ranch house and buying up more land, and a large new herd of livestock unexpectedly appeared. Suspicious, Senator Walsh began talking to Fall’s friends and associates. In January 1924, the case broke when oil company president Edward Doheny admitted to the committee that he had given a “loan” to Secretary Fall of $100,000 (about $1.3 million in today’s dollars), delivered to him in a satchel by Doheny’s son, but denied that it had anything to do with the oil contracts. Then, Mammoth Oil president Harry Sinclair acknowledged that not only had he given Fall his herd of cattle, but had transferred over $300,000 worth of Liberty Bonds to him.
The scandal exploded. President Coolidge declared, “If there has been any crime, it must be prosecuted. If there has been any property of the United States illegally transferred or leased, it must be recovered.” Because the Attorney General’s office itself had been tainted by corruption, the popular view was that it could not be trusted to carry out an impartial prosecution. So, in an unprecedented act, Coolidge appointed two special prosecutors, one Republican and one Democratic, to handle the matter. Fall, Doheny, and Sinclair were quickly indicted on charges of bribery and corruption.
There followed years of hearings, trials, and legal wrangling, with six separate criminal trials and two civil court proceedings. Sinclair refused to testify any further to Walsh’s committee. In response, the Senate tried to have him arrested: Sinclair fought back by arguing the Congress had no Constitutional authority to carry out a criminal investigation. Other witnesses also refused to testify. The matter went all the way to the Supreme Court, which ruled that the ability to compel testimony was a normal part of the Congress’s duty to legislate. Sinclair was convicted of contempt of Congress and later also of jury-tampering (for hiring private detectives to follow the jurors at his bribery trial), and served a total of nine months in jail. When Fall was put on trial for taking bribes from Sinclair and Doheny he was found guilty, fined $100,000, and sentenced to a year in prison: destitute and in failing health, he never paid the fine and spent only nine months in jail. On the other hand, when the two oilmen went on trial separately for bribing Fall, they were both found not guilty.
Interior Secretary Fall thus became the only man to be criminally convicted in the matter, and the first cabinet member ever to be jailed for acts committed in office. The Teapot Dome scandal would remain America’s biggest example of political corruption until the Watergate affair in the 1970s.
Today, the desk that Albert Fall used as Secretary of the Interior is on display at the Tularosa Basin History Museum in Alamogordo NM.
NOTE: As some of you already know, all of my diaries here are draft chapters for a number of books I am working on. So I welcome any corrections you may have, whether it's typos or places that are unclear or factual errors. I think of y'all as my pre-publication editors and proofreaders. ;)