History's Greatest Crimes

Episode 10: Oil, Bribes, and Betrayal: The Scandal That Shook America

• Michael and Alana • Season 1 • Episode 10

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The glittering facade of America's Roaring Twenties masked a political earthquake brewing beneath. After years of war and progressive reforms, President Warren G. Harding swept into office promising a "return to normalcy" that resonated deeply with an exhausted nation. But what began as a comforting retreat into simpler times would culminate in what became the benchmark for political corruption until Watergate.

At its heart, the Teapot Dome Scandal revolves around a betrayal of public trust so brazen it still shocks today. When Harding transferred control of naval oil reserves from military oversight to his Interior Department, he unknowingly handed the keys to the kingdom to his poker buddy, Secretary Albert Fall. These weren't ordinary assets - they were strategic oil fields set aside specifically for national defense as the Navy transitioned from coal to oil power. Fall secretly negotiated sweetheart deals with oil tycoons Harry Sinclair and Edward Doheny, granting them exclusive drilling rights without competitive bidding. The price for this generosity? Approximately $404,000 in "loans" and gifts flowing directly into Fall's pockets - nearly $7 million in today's currency.

The scandal's exposure through dogged investigation by Senator Thomas Walsh revealed the dangers of the administration's "less government in business, more business in government" philosophy when applied without proper oversight. Despite attempts to obstruct justice - including jury tampering - the truth eventually emerged. The Supreme Court invalidated the fraudulent leases in 1927, and Fall became the first Cabinet member in American history to be imprisoned for crimes committed while in office. Yet justice remained uneven: the oil barons who paid the bribes largely escaped punishment, highlighting how wealth and influence could shield the powerful.

The Teapot Dome Scandal's legacy extends beyond its colorful name (derived from a Wyoming rock formation resembling a teapot). It demonstrates both the vulnerability of democratic institutions to corruption and their resilience in eventually holding power accountable. What happened when America tried to "return to normalcy" a century ago offers timeless lessons about vigilance, oversight, and the corrupting potential of unchecked power. How might today's political scandals look to future generations?

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Speaker 1:

Picture America 1921. The Great War is over, the Doughboys are at home and a wave of relief washes over the nation. Automobiles are crowding city streets, jazz music spills from the speakeasies, defying prohibition, and the stock market seems poised for an endless climb up. It's the dawn of the Roaring Twenties, an era of unprecedented prosperity and cultural dynamism. Yet beneath the glittering surface, tensions simmered the lingering trauma of war, the anxieties of rapid social change, the red scares, fading embers. And in the halls of power, a different kind of storm was brewing.

Speaker 2:

Welcome to History's Greatest Crimes. I'm Elena.

Speaker 1:

And I'm Michael. Today we delve into a scandal that rocked the very foundations of American government. A tale of greed, betrayal and abuse of public trust, set against the backdrop of this jazz age paradox. A scandal so immense it would become the benchmark for political corruption for decades. This was the Teapot Dome Scandal.

Speaker 2:

It all began with a promise, a yearning for simpler times after years of upheaval. In the 1920 election, senator Warren G Harding of Ohio captured the nation's mood with a simple, powerful slogan return to normalcy. Harding articulated this yearning in a speech that resonated deeply with the public, exhausted by the strains of war, the fight over the League of Nations and the perceived excesses of progressive era reforms.

Speaker 1:

He declared, quote Ostroms but normalcy, not revolution but restoration, not agitation but adjustment, not surgery but serenity, not the dramatic but the dispassionate, not experiment but equipose, not submergence in internationality but sustainment in triumphant nationality.

Speaker 2:

Now, in general, harding wasn't known for his deep, meaningful speeches. In fact, one of his contemporaries described his speeches as a quote army of pompous phrases moving across the landscape in search of an idea. End quote Burn yeah, but during the presidential campaign, harding's promise of normalcy directly led to his election as president of the United States. That idea really struck a chord with the American public.

Speaker 1:

Harding's administration signaled a sharp turn in American governance treat from the activist-driven regulatory spirit of the progressive era and a conscious embrace of a pro-business agenda echoing the laissez-faire attitudes of the late 19th century. The guiding principle became, as Harding himself promised, quote less government in business and more business in government. End quote. This philosophy was embodied by his key cabinet appointments. Herbert Hoover took over the helm at the Department of Commerce. You might recognize Hoover as a future 31st President of the United States, but he was also a highly efficient millionaire engineer known for his post-war relief efforts At the Treasury. Andrew Mellon yes, that Mellon an immensely wealthy banker and industrialist, brought his corporate mindset directly into government, famously stating the government is just a business and can and should be run on business principles.

Speaker 2:

This pro-business orientation quickly translated into policy. The Harding administration pushed through the Revenue Act of 1921, which significantly cut taxes, particularly for corporations and wealthier individuals. It established the first formal federal budgeting process through the Budgeting and Accounting Act of 1921, creating the Bureau of the Budget. High protective tariffs aimed at shielding American industries were enacted, first through the Emergency Tariff Act of 1921 and then solidified with the Fordney McCumber Tariff of 1922. Simultaneously, reflecting a growing nativism, the administration signed the Emergency Quota Act of 1921, imposing strict limits on immigration and for many, especially in the business community, it seemed prosperity was indeed returning.

Speaker 1:

But this return to normalcy was not merely a passive drift towards quieter times. It was an active political and economic program designed to benefit specific interests and reduce government oversight. This very environment, prioritizing business deals and minimizing regulations, inadvertently created fertile ground for corruption. President Harding himself, while perhaps personally honest, was known for his loyalty to friends and political allies, often appointing them to positions of power. His administration became notorious for the quote Ohio Gang, a group of cronies and poker buddies who saw government service as an opportunity for personal enrichment. While the Harding administration did achieve some notable foreign policy successes, its legacy would ultimately be defined by scandal, and the most egregious of these scandals centered on a resource deemed essential for the nation's defense oil.

Speaker 1:

Before we jump into the story, I do want to take a moment to thank our subscribers to History's Greatest Crime. Smokey Brown and Vivian. Thank you so much for your support. Make sure that you subscribe as well, get access to early episodes, as well as the Discord that is going to come out soon, so that way you can talk and ask questions of Elena and myself. Now back to the show.

Speaker 2:

To understand the Teapot Dome scandal, we need to understand the critical role oil played for the United States military in the early 20th century. The Navy in particular was undergoing a massive transformation.

Speaker 1:

Indeed, the era of coal-powered warships was rapidly drawing to a close. Oil offered undeniable strategic advantages it generated more power per pound, it burned cleaner, it vastly simplified the process of refueling at sea and it significantly extended the operational range of naval vessels. Oil promised greater naval freedom and flexibility. Britain's Royal Navy, recognizing these benefits earlier, had already begun converting its fleet, and the US Navy understood that keeping pace was crucial for maintaining global sea power. The USS Texas, commissioned in 1914, stands as a monument to this transition. It was the last American battleship built with coal-fired boilers.

Speaker 2:

But this technological leap introduced a new strategic concern. While the United States possessed abundant domestic oil resources, ensuring a guaranteed supply became a paramount national security issue. The Navy couldn't risk being left powerless due to fuel shortages, especially during wartime or national emergencies when commercial markets might be disrupted or overwhelmed.

Speaker 1:

Precisely, and this foresight then previously led President William Howard Taft in 1912 to withdraw specific oil-rich federal lands in California from public settlement or private development. Oil-rich federal lands in California from public settlement or private development. These lands were designated as naval petroleum reserves, set aside exclusively for Navy's future fuel needs.

Speaker 2:

Then, a few years later, in 1915, president Woodrow Wilson added an additional naval petroleum reserve, which was located in the Teapot Dome Field in Wyoming. The Teapot Dome Field was named for its distinctive nearby rock formation and the idea was that it would remain largely untapped unless a national crisis demanded its use. The original intent was for the new oil reserves in California and Wyoming to serve as a strategic asset, an emergency stockpile held in the ground. It wasn't supposed to be for immediate commercial exploitation.

Speaker 1:

For several years, these reserves were made under the jurisdiction of the Navy Department, consistent with their purpose. But in 1921, President Harding, swayed by his Secretary of the Interior, made a pivotal and ultimately disastrous decision. On May 31, 1921, Harding signed Executive Order 3474.

Speaker 2:

This executive order transferred administrative control over these vital naval oil resources from the Department of the Navy to the Department of the Interior. The individual who prompted this transfer was the Interior Secretary himself, Albert B Fall. Albert Fall was a former senator from New Mexico and a member of Harding's inner circle of poker buddies. Fall also persuaded the seemingly compliant Secretary of the Navy, Edwin Denby, to go along with the proposal to shift the oil reserves under falls control.

Speaker 1:

Looking at the bigger picture, the establishment of the reserves in California and Wyoming by previous presidents Taft and Wilson had represented a progressive era approach, prioritizing long-term national security and resource conservation over immediate private gain. However, the political winds had shifted dramatically with Harding's election in 1921. Harding and his efforts to return to normalcy favored business interests and minimal government interference. So Albert Hall, the former senator and poker buddy of the president, saw an opportunity to exploit the untapped resources of the naval oil reserves.

Speaker 2:

The transfer of those oil reserves via Executive Order 3474, therefore wasn't a mere administrative adjustment. It was a fundamental policy shift reflecting the ascendancy of private interests over national security concerns within the Harding administration.

Speaker 1:

With the naval oil reserves under his authority. Secretary Albert Falk didn't waste any time. He viewed the vast pools of oil beneath Teapot Dome and the California reserves not as a strategic safeguard for the Navy, but as a golden opportunity an opportunity for his friends in the oil industry and, as it turns out, for himself.

Speaker 2:

His primary beneficiaries were two titans of the burgeoning American oil industry Harry F Sinclair, the ambitious head of Mammoth Oil Company, and Edward Doheny, the founder of Pan American Petroleum and Transport Company. Both were powerful, wealthy men and both were personal friends of Albert Fall.

Speaker 1:

Throughout late 1921 and 1922, Albert Fall engaged in secret negotiations with Doheny and Sinclair. The outcome was swift and decisive. Fall secretly granted Doheny's Pan American Petroleum exclusive rights to drill in the California reserves. Then, on April 7th 1922, he awarded Harry Sinclair's Mammoth Oil exclusive rights to the entire Teapot Dome Reserve in Wyoming. Fall was so determined to maintain secrecy, particularly around the Teapot Dome deal, that he reportedly locked the lease contract away in his desk drawer.

Speaker 2:

Yeah, that's not suspicious at all. Anyways, a critical element of these deals was the complete absence of competitive bidding. Granting such vast and valuable public resources to private companies without allowing others to bid smelled of favoritism and potential corruption. The secrecy surrounding the negotiations only intensified these suspicions when the deals eventually surfaced. Why operate in the shadows if everything was above board right?

Speaker 1:

Of course, and the lease terms themselves were exceptionally favorable to the oil company execs Sinclair and Doney. They gained control over oil fields estimated to be worth hundreds of millions of dollars, paying relatively low royalty rates to the government. Albert Fall attempted to justify the leases, especially the Teapot Dome contract, by claiming it was necessary to drill immediately to prevent oil from being drained by adjacent private wells the so-called drainage argument. However, the justification was weak, particularly as there was no pressing national emergency that required tapping into the Navy's strategic resources.

Speaker 2:

But the true depth of the scandal lay not just in the secretive process or the generous terms. It lay in the quid pro quo. As Albert Fall was finalizing these secret arrangements, his personal financial situation underwent a remarkable transformation.

Speaker 1:

In November 1921, as negotiations for the California reserves were underway, Edward Doney, the Pan American Petroleum founder, provided Albert Fall with a $100,000 so-called loan. This loan was unsecured and, crucially, interest-free. That sounds suspicious. Shortly thereafter, Albert Fall received additional gifts and purported loans from Sinclair, the head of Mammoth Oil. Altogether, Fall received roughly $404,000, equivalent to nearly $7 million today. This money flowed into Albert Falls New Mexico Cattle Ranch and other personal business ventures. So what we can see here is that these weren't friendly loans. They were leaning way into the territory of bribes.

Speaker 2:

That's a lot of money switching hands. The process itself, the secret negotiations, the lack of competitive bidding, reflected a profound disregard for public accountability. It exemplified how the Harding administration's philosophy of running government on business principles could be twisted to prioritize private dealmaking over transparent governance, and this was especially the case when valuable public assets were at stake. The method was inherently scandalous, creating the perfect conditions for outright bribery. Albert Fall had effectively sold off the nation's emergency oil supply, a critical component of national defense, to his wealthy friends in exchange for personal enrichment. The fuse had been lit.

Speaker 1:

Secrets of this scale, involving national resources and high-level officials, are difficult to contain. The first signs of trouble emerged not in Washington DC but in the oil fields of Wyoming. Independent oil operators near Teapot Dome noticed trucks bearing the Sinclair oil logo hauling equipment into the Federal Reserve lands, lands supposedly off-limits to private drilling, and their suspicions were aroused.

Speaker 2:

These local whispers soon echoed in the halls of power and the pages of newspapers. On April 14, 1922, the Wall Street Journal published an expose revealing the secret lease of Teapot Dome to Harry Sinclair's Mammoth Oil Company. The story caused an immediate stir. The very next day, Senator John Kendrick, a Democrat from Wyoming, responded to the concerns of his constituents by introducing a resolution demanding a Senate investigation into the lease.

Speaker 1:

Feeling the heat. Secretary Albert Fall was forced to publicly acknowledge the Teapot Dome lease and, adding fuel to the fire, he also revealed a similar lease for the reserves in California. The admission intensified the calls for scrutiny, and now people were also calling for the release of all documents pertaining to the Naval Reserve leases.

Speaker 2:

The Senate Committee on Public Lands and Surveys was assigned the task of investigating the leases. Initially there was some reluctance, and finding a senator willing to lead the potentially explosive inquiry proved challenging. Ultimately, the chairmanship fell to Senator Thomas J Walsh, a determined Democrat from Montana known for his legal background and methodical persistence.

Speaker 1:

The Teapot Dome investigation officially began hearings in October 1923 and would stretch on for months. It was a painstaking process. Senator Walsh, chair of the investigative committee, faced significant obstacles political pressure, deliberate obstruction from those involved and complex financial trails designed to obscure the truth. Albert Fall and the oil execs initially presented a united front, denying any impropriety and repeatedly justifying the supposed threat of oil drainage. The Harding administration, already grappling with other such emerging scandals, attempted damage control. But here's the thing Elena Harding himself would not see the full extent of the scandal unfold because he died suddenly in office in August 1923 from a likely heart attack.

Speaker 2:

Just to jump in with a tidbit of information about that. Apparently, President Harding's wife, Florence Harding, raised eyebrows when she ordered Harding cremated without an autopsy within an hour of his death. Some people even suggested that Florence Harding may have had something to do with the president's death, but the symptoms Harding experienced suggest that it was indeed a heart attack.

Speaker 1:

And this left Harding's vice president, Calvin Coolidge, to inherit the presidency and the burgeoning crisis. President Coolidge, seeking to restore public trust, appointed special prosecutors to pursue the matter legally.

Speaker 2:

But Senator Walsh, the chair of the original Senate Investigative Committee, continued his own efforts to pursue the truth. He meticulously examined financial records, questioned witnesses and followed the money, focusing on Albert Fall's sudden and inexplicable increase in wealth. The critical breakthrough came when Senator Walsh unearthed the $100,000 payment to Albert Fall from Edward Doheny, the Pan American Petroleum and Transport Company founder.

Speaker 1:

This $100,000 loan, made without interest or security, just as the California leases were being granted, was the smoking gun. It shattered the carefully constructed denials and established a clear link between the secret oil leases and Albert Falls' personal enrichment. Further investigation uncovered the trail of payments from Sinclair connected to the Teapot Dome lease in Wyoming as well payments from Sinclair connected to the Teapot Dome lease in Wyoming as well. The power of congressional oversight wielded persistently by Senator Walsh, combined with the crucial early reporting by the Wall Street Journal, demonstrated that even in an administration that prioritized and prized backroom deals, mechanisms for accountability could prevail.

Speaker 2:

The elaborate facade constructed by Fall Delaney and Sinclair crumbled under the weight of the evidence. The Senate investigation revealed a sordid tale not just of cronyism and poor judgment, but of outright bribery contaminating the highest echelons of the United States government.

Speaker 1:

With Senator Walsh's committee having laid bare the corruption, the focus shifted to the courts. The special prosecutors, directed by President Coolidge, moved forward with both civil suits aimed at canceling the fraudulent leases and criminal prosecutions targeting the key players, albert Fall, harry Sinclair and Edward Doney.

Speaker 2:

The civil litigation proved relatively straightforward. The government argued forcefully that the leases for Teapot Dome and the California Reserves were invalid because they had been obtained through bribery and fraud, and in 1927, in the case of the United States v Albert B Fall, the United States Supreme Court delivered a decisive verdict agreeing with that position. The nation's highest court declared that the leases had indeed been procured corruptly and invalidated them, ordering the reserves returned to the control of the Navy Department. The court's language was scathing, labeling Albert Fall a quote faithless public officer. End quote.

Speaker 1:

Jeez, yeah, supreme Court, don't you hold back Right? The criminal trials, however, unfolded with far more complexity and produced outcomes that baffled and frustrated many observers. Albert Fall faced charges including conspiracy to defraud the government and, most significantly, accepting a bribe from Edward Doherty In 1929, a jury found Albert Fall guilty of accepting the $100, a bribe from Edward Doheny.

Speaker 2:

In 1929, a jury found Albert Fall guilty of accepting the $100,000 bribe from Doheny in connection with the California lease. He was subsequently fined $100,000, the amount of the bribe and sentenced to one year in prison. This conviction was historic. Albert Fall became the first US cabinet secretary ever to be incarcerated for a felony committed while holding office.

Speaker 1:

So is this where the term Fall guy comes from, from Albert Fall?

Speaker 2:

I have no idea.

Speaker 1:

But the story takes a bizarre turn. Edward Doheny the man who provided the $100,000, was tried separately for offering the bribe. Despite Fall's conviction for accepting the very same money, doherty's jury acquitted him.

Speaker 2:

What a stunning contradiction. The act of bribery seemingly occurred, yet only the recipient was found criminally liable by the juries involved.

Speaker 1:

Wow, and Harry Sinclair's legal battles were equally tangled. His initial trial alongside Albert Fall on conspiracy charges related to the Teapot Dome lease ended in a mistrial. In a subsequent retrial, Sinclair was acquitted of conspiracy. However, Sinclair did not escape punishment entirely. He ultimately served six and a half months in jail, but not for bribery or conspiracy. His sentence was for contempt of Congress stemming from his refusal to answer certain questions posed by Senator Walsh's investigating committee, and he was also convicted of jury tampering after it was discovered that his agents had attempted to improperly influence jurors in one of the trials.

Speaker 2:

That's crazy. The convictions, acquittals and punishments were all over the place.

Speaker 1:

That's right, elena. And the public official who took the money went to prison. The wealthy oil magnates accused of providing the money largely escaped conviction on the major charges related to their corrupted leases. This disparity fueled public cynicism and raised questions about whether justice was truly blind or if wealth and influence could still shield the powerful from full accountability. The legal system, while ultimately convicting Albert Fall and canceling the leases, seemed unable or unwilling to hold all parties equally responsible for the core corruption.

Speaker 2:

The Teapot Dome scandal delivered a devastating blow to the reputation of the Harding administration, forever associating it with corruption, despite Harding's death before the full scope was revealed. Harding himself was never directly implicated in the bribery, but his poor judgment and appointments and his failure to check the excesses of his friends in the Ohio gang led to his historical standing plummeting. His successor, calvin Coolidge, inherited the mess and dedicated much of his early presidency to restoring a sense of integrity to the White House.

Speaker 1:

What became known as the Teapot Dome scandal transcended the specific details of oil leases and financial transactions. Instead, it etched itself into the American political lexicon as the ultimate symbol of government corruption, a benchmark against which future scandals would be measured for decades, right up until Watergate with President Nixon in the early 70s, the scandal lay bare the inherent dangers of concentrating power without adequate checks, the insidious influence of corporate money seeking to sway public policy for private gain, and the critical vulnerability of national resources when oversight mechanisms are weakened or bypassed.

Speaker 2:

It's impossible to ignore the context. This explosion of greed occurred precisely at a time when the federal government actively promoted a hands-off pro-business environment. The Teapot Dome scandal serves as a potent illustration of how an ideology prioritizing private enterprise and minimal regulation when applied to vital public assets like the naval petroleum reserves, could be exploited.

Speaker 1:

However, the scandal also offered a counter-narrative. It highlighted the resilience of American democratic institutions. The dogged investigation led by Senator Thomas Walsh and his committee faced down powerful political and corporate opposition and the eventual intervention of the judicial system culminated in the Supreme Court's condemnation of the corrupt leases. This outcome demonstrated that accountability, while often slow and difficult to achieve, remained possible.

Speaker 2:

The legacy of the Teapot Dome scandal is therefore multifaceted. It undoubtedly eroded public confidence in government and confirmed the suspicions of many about the corrupting potential of wealth in politics. Yet it also significantly strengthened the legitimacy and power of congressional investigations as a tool for oversight and power of congressional investigations as a tool for oversight. And, importantly, it established a crucial precedent that even a member of the president's cabinet could be held criminally accountable and imprisoned for abuses of power. It remains a vital and sobering chapter in the ongoing story of the American experiment.

Speaker 1:

A stark reminder of how swiftly the promise of a return to simpler times could sour into complex corruption, and a powerful testament to the perpetual need for vigilance against the temptations of greed and the abuse of public office.

Speaker 2:

Until next time on History's Greatest Crimes. Stay curious, Thank you.

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