Though Deb Haaland was the first Native American to serve as Secretary of the Interior, she isn’t the first New Mexican to serve in that role. Her predecessor, Albert Bacon Fall, didn’t fare well in that position. He served as Secretary of the Interior from 1921 -1923 under President Warren G. Harding, resigning in disgrace when a Senate investigation exposed his corruption in what became known as the Teapot Dome Scandal. In fact, he became the first cabinet secretary to serve prison time for felonies committed while in office. The Teapot Dome Scandal was considered the worst case of political corruption in American history until Watergate, both of which pale compared to more recent history.
From the vantage point of the 21st century, the underlying scandal seems like garden-variety, greed driven corruption; the type of “pay to play” scheme that the American public has largely come to expect from politicians over the the last century. However, at the time, it was shocking to the American public, providing the proverbial “last nail” in the coffin of the scandal plagued Harding administration. That is probably a bad metaphor considering Harding had a heart attack and died while he was still in office. As a result, he didn’t live to see the scandals exposed and scant attention was paid to his role in the scams perpetrated during his administration.
Warren G. Harding Administration
I have no trouble with my enemies. I can take care of my enemies in a fight. But my friends, my goddamned friends, they’re the ones who keep me walking the floor at nights!”
President Warren Harding in an interview with newspaper editor William Allen White
Warren Harding was elected President in 1920. He was a senator, and former newspaper publisher, from Ohio. Though Harding was not directly implicated in the scandals associated with his administration, he had a noteworthy knack for consistently surrounding himself with corrupt and craven men.
Oil Industry Opportunists
The U.S. Navy began converting coal-fueled ships into oil-powered vessels in 1909. As a result, oil reserves were considered a critical component of national security. The Pickett Act of 1910 authorized President William Taft to set aside large swaths of oil-rich land in California and Wyoming for the U.S. Navy. The reserves included the Teapot Dome oil field in Wyoming and the Elk Hills and Buena Vista oil fields in California. The California reserves encompassed about 70,000 acres of land. The Teapot Dome reserve in Wyoming was smaller, but oil rich, estimated to hold about 150 million barrels.
The demand for oil was growing rapidly by the end of World War I. Both the U.S. and the British converted their naval fleets from coal to oil and cars were becoming more common. The oil industry soared to 240 million barrels in the U.S. in the 1920s. The oil boom made a handful of men very wealthy.
American Petroleum and Transport Company
Edward Doheny, owner of American Petroleum and Transport Company, struck oil in April 1893 near the La Brea Tar Pits in Los Angeles. He had 81 well pumping in Los Angeles within a year. He expanded his oil empire into Mexico in 1916, but due to the national security implications, the President of Mexico wanted to take back the country’s oil fields. Doheny needed help from the U.S. government to maintain control over his foreign assets. He began to look for friends and allies in D.C.
Sinclair and Mammoth Oil
Harry Sinclair, owner of Sinclair and Mammoth Oil, leased oil fields in Kansas and Oklahoma, becoming one of the richest men in the United States by 1920. Like Doheny, Sinclair was expanding overseas, with oil fields in Venezuela and Columbia and he needed friends with political power to help him circumvent uncooperative foreign officials. Sinclair’s ambitions weren’t limited to overseas expansion. He also wanted to lease the Teapot Dome oil field in Wyoming. Doheny, Sinclair, and several other oil barons realized that the best way to get access to more oil fields was to elect a cooperative president.
Oil Barons & Bribery
The oil industry enthusiastically supported the Harding campaign, with the expectation that Harding would appoint oil-friendly cabinet picks in return. He didn’t disappoint them. He nominated a cabinet of political supporters and “friends” who proceeded to raid the country’s coffers, leveraging their positions to skim money and pilfer resources. Due to their ties to the state of Ohio, the cabal of cabinet opportunists became known as the “Ohio Gang.”
Harry Sinclair donated $1 million to Harding’s campaign, eventually becoming a “good friend” of the incoming president. Harding often invited Sinclair to stay overnight at the White House when he visited D.C. Though Edward Doheny didn’t make a notable donation to the Harding campaign, he was quick to send a congratulatory letter when Harding took office, offering him the use of his 375-foot yacht for a post-election vacation cruise.
Albert Bacon Fall was a U.S. Senator from New Mexico, a former prospector, lawyer, and rancher from the Tularosa Basin. He joined the Harding administration as Secretary of the Interior. Using his role as a cabinet secretary, he convinced Harding to transfer oversight of the petroleum reserves from the Navy to the Interior Department.
Once the transfer was complete, Fall covertly negotiated leases in 1922 without competitive bidding or public announcements. He leased the reserves at Teapot Dome to Mammoth Oil and leased the Elk Hills reserve to Pan American Petroleum and Transport Company. In return, Sinclair and Doheny made Mr. Fall a very rich man, with a variety of payoffs, including a $100,000 no-interest loan from Pan American. To be clear, issuing the no-bid leases was totally legal under the Mineral Leasing Act of 1920. However, accepting bribes in return for favorable terms or preferential treatment was illegal.
A Scandal Brewing
Wyoming oilmen noticed trucks with the Sinclair logo hauling equipment up to Teapot Dome. They weren’t happy about it. Several wrote to their Senator, outraged that Sinclair had secured a contract via a secret deal. The Wall Street Journal broke the story on April 14, 1922 and Wyoming Senator John Kendrick introduced a resolution to open a Senate investigation the following day.
When Fall stepped down as Interior Secretary in January, 1923, less than two years after taking office, he returned to New Mexico to “spend time with his family” (on his newly expanded ranch). He continued to participate in lucrative oil deals in Mexico and the Soviet Union with his buddies Doheny and Sinclair. However, in D.C., a Senate investigation was underway.
Fall initially covered his tracks effectively, with investigators finding no evidence of wrong doing. In his testimony to the Senate Committee, he claimed that he kept the lease agreements secret to protect the location of valuable national resources and to prevent other oil companies from draining adjacent sites.
Follow The Money
Back in New Mexico, Albert Fall’s sudden financial affluence piqued curiosity. Carl Magee, the founder of the Albuquerque Tribune, wrote extensively about Fall’s change of fortune. For example, he paid off his ranch taxes in in 1922 despite running a decade or more behind on taxes throughout his life. The Senate summoned Magee to provide testimony to the Senate Committee.
As the Congressional investigation came to a close, with Fall presumably cleared, Senator Thomas Walsh from Montana found out about Doheny’s no-interest loan, which prompted renewed scrutiny of financial transactions and assets. Investigators discovered that Sinclair had delivered a large herd of livestock to Fall’s New Mexico ranch. Additionally, Mammoth Oil had transferred $300,000 in cash and bonds to Fall’s son-in-law.
Calvin Coolidge Appoints Special Prosecutors
In the meantime, Albert Fall wasn’t the only scandalous member of the Harding Cabinet. Numerous members of the “Ohio Gang” were under scrutiny for corruption ranging from influence peddling to running liquor through government warehouses. The stress took a toll on Harding. As the scandals involving his administration were beginning to dominate the news cycle, President Harding had a fatal heart attack at 57, which was halfway through his third year in office.
Calvin Coolidge, the vice president, was sworn in on August 2, 1923. To distance himself from his predecessor’s scandals, Coolidge appointed two special prosecutors, one from each party, to take over the Senate investigation into Fall’s oil deals.
The Court Cases
The Special prosecutors appointed by President Coolidge spent six years working on the Teapot Dome investigation. They filed two civil lawsuits in federal court to cancel the leases and recover the naval reserves once the loan and other assets were discovered. Both cases were successful. Additionally, they filed four criminal cases: charging Doheny and Fall with conspiracy to defraud the United States, with a similar case filed against Sinclair and Fall. They also charged Albert Fall, Edward Doheny and Doheny’s son, Ned, with bribery.
Albert Fall was convicted for accepting bribes in 1929. He was given a $100,000 fine and sentenced to one year in prison. He served nine months at the New Mexico State Penitentiary before being released due to failing health. Albert Fall died in 1944.
The rest of the criminal prosecutions were largely unsuccessful. The jury acquitted Sinclair and Doheny on the conspiracy charges. In a separate case, the court cleared Doheny and his son of bribery charges since both Doheny and Albert Fall claimed the money was a loan. Based on that categorization, Doheny’s company, Pan American, foreclosed on Fall’s ranch in the Tularosa Basin based on the “unpaid loan.”
Though it may seem like the oil barons avoided justice, that wasn’t really the case. Doheny’s son Ned was murdered in 1929 at the family’s Beverly Hills mansion. He was shot by his friend, Hugh Plunkett, in a murder-suicide. Investigators believe Plunkett was worried that he would be charged for helping Ned deliver the bribe to Albert Fall.
Harry Sinclair wasn’t convicted on the criminal charges, but he refused to answer some of the Senate team’s questions, claiming that Congress had no right to probe his private affairs. His refusal was challenged, eventually reaching the Supreme Court in 1929. The ruling in Sinclair v. United States gave Congress the power to fully investigate cases where the country’s laws may have been violated. The court sentenced Sinclair to six months in prison for contempt of Congress and jury tampering.
The Senate investigations also led to legislation that increased the power of Congressional oversight, including providing the House and the Senate with subpoena power for review of tax records of all U.S. citizens regardless of their elected or appointed position. A subsequent Senate inquiry spawned several court cases testing the extent of the Senate’s investigative powers. McGrain v. Daugherty resulted in the 1927 decision that Congress has the right to compel witnesses to testify before its committees, a power that is relevant today.