Greedy oil barons, government officials taking bribes, naval reserves, rigged contracts, coverups and a president who pays little attention or has no interest.
The year is not 2008, but 1921. Laton McCartney’s heavily researched “The Teapot Dome Scandal” is a primer for Americans who want to get a greater understanding of the oil industry’s ability to manipulate the market and those who are supposed to watch over it.
For most us, the Teapot Dome scandal is something we heard about in school, marked choice “A” on the civics test and forgot. A quick primer: In 1912, President Howard Taft set aside two California oil fields, Elk Hills and Buena Vista, for the Navy, then converted its fleet from coal to oil. In 1915, Woodrow Wilson added Teapot Dome, 50 miles north of Casper, to the stockpile.
In postwar America, oil was in high demand, causing the price to skyrocket. “At war’s end,” writes McCartney, “restless and newly affluent Americans enthusiastically embraced automotive travel. “The transformation occurred with astonishing rapidity,” wrote oil industry historian Daniel Yergin.
This oil rush did not escape the entrepreneurial vision of Edward Doheny and Harry Sinclair, heads of two of the nation’s largest oil companies. They saw hundreds of millions of dollars in their pockets if they could only get at that oil.
Their “in” was Albert Fall, a New Mexico rancher and a major fundraiser for the 1920 Republican National Convention who extracted the job of secretary of the interior under President Warren Harding in exchange for his fundraising efforts. Perhaps the most corrupt public official ever in the federal government, a man lacking any scruples, Fall was a willing foil for Doheny and Sinclair.
Once in office, Fall began grabbing power, moving responsibility for the oil reserves from the Navy to his Interior Department. From there, it was a short jump to negotiating contracts with no competitive bidding. His excuse for giving out leases was that companies drilling on the Salt Creek field near Teapot Dome were “draining” the reserves, although later investigations proved no such thing was going on.
Fall took bribes in the form of Liberty Bonds, which he converted to cash (an estimated $6 million in 2008 dollars) to hide the payoff trail. He gave Sinclair and Doheny access to the White House, and generally hobnobbed on private railroad cars and yachts. The gifts between the oilmen and their man in Washington went both ways.
McCartney doesn’t directly link Harding to the scandal other than to say that Harding, who looked like a president but didn’t have the intellectual capacity to work like one, and perhaps distracted by his many mistresses and his excessive drinking, largely ignored what was going on with his secretary of the interior. Harding died of a heart attack in 1923, just as the Senate investigation of the scandal was gathering steam.
Fall and his co-conspirators might have gotten away with it if not for the tenacity and passion of Thomas Walsh, a feisty senator from Montana who is now largely forgotten. Walsh shepherded congressional hearings that called the principals on the carpet and unraveled their devious scheme.
Said Walsh during the hearings, “Corruption in public life is a vice that eats into the very structure of our system.” He also denounced it as “corruption without parallel in the history of the country.” The hearings, regarded as “just another Senate investigation” in 1922, became front-page news across the country by 1925, threatening the re-election campaign of Republican presidential candidate Calvin Coolidge.
The scandal even reached Denver, where oil giants A.E. Humphreys and Harry Blackmer reigned over their empires. Frederick Bonfils, publisher of The Denver Post, seized an opportunity to blackmail Harry Sinclair for $1 million in the name of a small-time oilman named Leo Stack, who held leases in Teapot Dome before they were taken over by the government, then was cut out of any profits. Bonfils and his newspaper railed against the oil leases — until Stack got his $1 million and Bonfils got his share of the settlement. Then The Post went silent.
Thanks to his breezy writing style, McCartney turns a complicated topic full of double dealings and intricate financial maneuvering that might have been too turgid for the average reader to comprehend into a fascinating piece of history.
“Teapot Dome” demonstrates the pervasive power of oil, then and now. As one senator said in 1924, “Show this administration an oil well and it will show you a foreign policy.”
Dick Kreck is a former staff writer and columnist with The Denver Post.
Nonfiction
The Teapot Dome Scandal, by Laton McCartney, $27
