Real Lace

by Birmingham, Stephen;

  As a President, Warren G. Harding was a man who, at his best, was never exactly certain what the office entailed. Once, when a problem involving taxation had come to his desk, Harding complained to an aide, “John, I can’t make a damn thing out of this tax problem. I listen to one side and they seem right, and then—God!—I talk to the other side and they seem just as right, and here I am where I started. I know somewhere there is a book that will give me the truth, but, hell, I couldn’t read the book. I know somewhere there is an economist who knows the truth, but I don’t know where to find him, and haven’t the sense to know and trust him when I find him. God, what a job!” Most administrative decisions, he admitted, gave him a headache, and he eagerly delegated as much authority as he could to the members of his Cabinet, most of whom were his card-playing cronies. In the White House poker games, on the other hand, Harding was exceptionally lucky—which was perhaps not too surprising; it may have been to the advantage of men like Fall and Denby to let their boss be a frequent winner. As a Secretary of the Navy, Edwin Denby was a man who preferred to have as little to do as possible, and was always pleased when a problem could be shuttled from his desk to someone else’s. When Fall approached Denby about transferring the naval oil reserves from the Department of the Navy to the Department of the Interior, Denby was delighted. It was one less chore for him.

  Others in the Navy Department were less sanguine about Fall’s notion. Admiral R. S. Griffin, who was then Chief of the Bureau of Engineering, which administered the reserves, reminded Denby that the Navy had been struggling for over a decade to keep its oil, and said “if he turned the administration over to the Interior Department we might just as well say good-by to our oil.” But Secretary Denby told the Admiral that the President was in favor of the scheme, and within a few days Fall was able to write to his friend Doheny in California:

  There will be no possibility of any further conflict with Navy officials and this Department, as I have notified Secretary Denby that I should conduct the matters of naval leases under direction of the President without calling any of his force in consultation unless I conferred with himself personally upon a matter of policy. He understands the situation and that I shall handle matters exactly as I think best and will not consult with any officials of any bureau of his department but only with himself and such consultation will be confined strictly and entirely to matters of general policy.

  Originally, Doheny had wanted the entire naval oil reserves for his own company, but Fall decided that it was more to his advantage if at least one other company was involved and, after all, Doheny wasn’t Fall’s only friend. Another was the Eastern oil magnate, Harry F. Sinclair, head of the Mammoth Oil Company. Doheny eventually agreed to split the pie with Sinclair, and Sinclair received leases on the entire Wyoming acreage at Teapot Dome, with Doheny getting the two vast tracts in Kern County. As if by sleight of hand, all the Navy’s emergency oil supply thus went into private hands.

  Sinclair was obviously not as good a friend of Fall’s as Doheny was, and so, for a smaller number of acres, Sinclair had to pay Fall a considerably higher price. Altogether, Sinclair paid the Secretary close to $400,000 in cash and bonds for his good deed, and also presented him with six prize Holstein heifers, a yearling bull, two six-month-old boars, four sows, and an English thoroughbred horse for the Secretary’s New Mexico ranch. Doheny, meanwhile, managed somewhat to mollify Navy officials who were horrified over the transfer by agreeing to build the Navy some oil-storage tanks in Pearl Harbor, Hawaii, that the Navy had long wanted but had been unable to get from Congress. Now it was time for Doheny to pay Fall or, as Fall put it in a telephone call to Doheny, “I am now prepared to receive that loan.”

  Doheny sent for his only son, Edward L. Doheny, Jr., and instructed him to go to the brokerage firm of Blair & Company, where both father and son had accounts and in which the former owned a considerable interest, and to withdraw from the younger Doheny’s account $100,000 in cash, giving two checks for the money. Doheny told his son to take the bills, wrap them in paper, put them in a small black valise, and carry them personally to Secretary Fall in Washington. In November, 1921, young Doheny carried out this mission and arrived, with his little black bag full of banknotes, at Secretary Fall’s apartment in the Wardman Park Hotel. Doheny, with his secretary, watched as Fall counted out the money and then—or so he claimed later—received Fall’s note for the amount. At the time, Doheny said, he remarked to Fall that no interest rate had been placed on the note, and Fall had loftily replied that his old friend Ed Doheny could insert any rate he wished to.

  Within days, Secretary Fall was back home in New Mexico, where he paid cash for a large piece of property adjoining his Three Rivers Ranch. During this visit, his daughter testified later, she walked into her father’s room and saw large piles of money lying on his desk. She snatched one of the piles and cried, “Here’s my trip to Mexico!” and started out of the room with it. But her father ordered her back, and to return the money, saying that it was to pay off the mortgage on their house. Secretary Fall’s New Mexico neighbors were somewhat surprised at the Fall family’s sudden affluence—a relatively hardscrabble ranch being expanded into something of a showplace, with prize cattle and thoroughbred horses. But then it was known that Albert Fall had many rich friends and occupied a high position in the government.

  On January 9, 1923, Fall had completed all his various deals and announced his intention to retire from public life. To the press, President Harding expressed profound sorrow at Fall’s decision and said that, to keep him in Washington, he had offered Fall a judgeship on the United States Supreme Court. But Fall had turned the offer down, saying that he wished to return to the land and the humble chores of tending his little Southwestern ranch. And well he might have wished to get out of Washington. He had collected some half a million dollars in bribes and payoffs, and his only regret may have been that he sold himself too cheaply. At the time, when for a mere $100,000 Doheny had acquired roughly 30,000 acres of proven oil lands whose contents were estimated to be between 75 and 250 million barrels of oil, Doheny had commented, “We will be in bad luck if we do not get $100 million in profit. But that will depend on the price of gasoline.”

  At the time also, though he did not show it, Albert Fall may have been one of the most frightened men in the United States. There had already been rumblings of dissatisfaction in Washington about the turnover of oil leases to Doheny and Sinclair, and dark mutterings about corruption. There had also been a curious meeting between Mrs. Fall and the President, when Harding was passing through Kansas City and Mrs. Fall appeared and asked to see him. She arrived at the President’s hotel suite looking nervous and agitated, and, after a private conversation behind locked doors that lasted for a full hour, the President emerged looking haggard and shaken. What the two talked about has never been revealed, but it cannot have been a pleasant topic, and the next day, speaking with William Allen White, editor of the Emporia, Kansas, Gazette, Harding said to White, “In this job, I am not worried about my enemies. I can take care of them. It’s my friends who are giving me trouble.”

  President Harding accepted Fall’s resignation “with deep and sincere regret,” and Fall departed—but not without first ordering that the elegant Jacobean antique furniture, with which his Washington office had been supplied from taxpayers’ money, be shipped to his home in New Mexico. The transfer of the furniture was all perfectly legal. Fall wrote out his check to the government for $231.25 to pay for it. It was worth about $3,000.

  Chapter 10

  THE BUBBLE BREAKS

  The Doheny family of Los Angeles has never, for all its wealth, been a particularly “social” family—in the American sense in which society survives almost entirely on publicity. Even before the scandal which became known as Teapot Dome (after the quaintly named Wyoming town where a dome-shaped rock looked, to the pioneer settlers, a little like a teapot) and their involvement in it, the Dohenys disliked seeing their names or picture
s in the paper, and tried to conduct their lives and businesses as discreetly and quietly as possible in the secluded and policed vastness of “Chester Place.” With Teapot Dome, however, all attempts at family privacy came abruptly to a halt.

  The mounting corruption of the Harding administration was dramatically punctuated by the President’s sudden death on August 2, 1923, while his wife was reading him a Saturday Evening Post article praising him. The cause of his death was said to have been some bad crab meat he had eaten on a trip to Alaska (though there was grisly speculation that he had been poisoned by a “friend”), and all the problems of his administration—of which Albert Fall’s activities were only a part—descended upon the shoulders of his taciturn successor in the White House, Calvin Coolidge. And, slowly and laboriously, under President Coolidge, the legislators in Washington began to investigate some of the things that had gone on during the Harding regime. The Senate Committee on Public Lands and Surveys—organized to look into what had become of the naval oil reserves—held its first hearing on October 23, 1923. The chief examiner was Senator Thomas J. Walsh, a Democrat from Montana, and the first witness called was Albert Fall.

  As a witness, Fall was arrogant, contemptuous, and evasive, taking the position that everything he had done had been for the good of the government and the glory of America and had, furthermore, been done on instructions from his President. He suggested that Walsh “look at the records”—which, of course, was difficult to do because the records of the Harding office had been so sloppily kept that it was almost impossible to tell what the President had ordered and what he had not. Walsh pressed Fall to admit that in such matters as the Navy’s oil lands, and national security, it was proper to consult the Congress and not highhandedly take matters into his own hands, and did succeed in getting Fall to admit that he had not sought any legal opinions in connection with his maneuvers. “But I’m a lawyer myself,” Fall added, and then said that, “law or no law,” he would have done anything in his power to prevent the Navy’s oil from draining away into neighboring fields. Asked why he had turned over Teapot Dome to Sinclair without any competitive bidding, Fall’s haughty reply was “Well, I did it.”

  He told the first of many lies. “Did you get any compensation at all?” Senator Walsh asked him. “I have never suggested any compensation at all and have received none,” Fall answered. Not a penny from Sinclair. Not a penny from Doheny. “So long as I was in an official position,” he said, “I did not feel I could accept any gift of any kind.” No horses, no cattle, boars, or sows. “I shall go into no further detail in discussing this matter,” he added. “The entire subject, of course, is more or less humiliating even to refer to.” When asked about his obviously improved life style, Fall admitted that he had received a $100,000 “loan” from a friend, but lied again when he said that the loan had not come from Doheny, or from anyone connected with the oil industry, but had come from another friend, the Washington publisher Edward B. McLean, husband of Evalyn Walsh McLean of Hope Diamond celebrity. Hastily, Fall got in touch with McLean and got him to promise to “back me up in this.”

  Ed Doheny made his first appearance before the Walsh committee on December 3. He was then sixty-seven years old, but still full of restless, bristling energy. After a brief lecture to the assembled Senators on the dangers of oil leakages, he stated that he “knew” that the Navy had lost at least one hundred million barrels of oil from its California reserves prior to the Doheny takeover. He, he said, had stepped in out of sheerest patriotism to save America’s oil. When Senator Walsh asked him why the Bureau of Mines had not been aware of this grievous loss, Doheny said flatly, “No man on earth has access to the same information I have, because my information comes from twenty-nine years of close study of the proposition, such as no other living man has given to the business. That sounds egotistical, I grant you, but that is absolutely the truth, since you have asked me the question.” Doheny admitted that, though a Democrat, he was “sometimes a Republican,” and had contributed $25,000 to the Harding campaign and paid for the advertisement portraying Harding’s parents. But there was nothing wrong with that. Asked whether he had ever given Fall any money, Doheny replied, “Not yet. I want to say right here, though, that I would be very glad to take Mr. Fall in my employ if he ever wanted to come to us.” Technically, of course, he was telling the truth since it had been his son, not he, who had presented Fall with the $100,000.

  The hearings wore on, with other witnesses called—they would continue, all told, for the better part of four years—and Doheny’s next appearance was in January, 1924. He appeared voluntarily, and, because it was rumored that he was now about to “tell all,” the Senate Caucus Room was packed to capacity. He did not tell all, exactly, but he told a bit more than he had told before. Yes, he admitted, he had loaned Fall $100,000 because Fall was an old friend and needed money to improve his ranch. He told about the cash and the little black bag. Wasn’t that, Walsh wanted to know, an unusual way for a businessman to carry out a financial transaction? Not at all, said Doheny. In the last five years alone he had carried out at least one million dollars’ worth of cash transactions in Mexico because it was difficult to deal with banks from one country to another. But, Senator Walsh reminded him, they were talking now of a transaction between Washington and New York, where there was no international banking problem to deal with. Doheny countered by saying that, after all, $100,000 to him was the equivalent of pocket change, and amounted to “no more than $25 or $50 to the ordinary individual.” Walsh replied dryly that he could see Doheny’s point but that $100,000 was still a lot of money to a man in Fall’s position. “It was indeed,” Doheny admitted, “there is no question about that.” He then added, “And I am perfectly willing to admit that it probably caused him to favor me,” in terms of granting the oil leases. Was the loan directly responsible? the committee wanted to know. Doheny replied that he didn’t think Fall was “more than human,” a remark that drew laughter from the spectators. Pressing on for more details about the loan, Walsh wanted to know whether Fall had paid Doheny any interest on it. No, Doheny said, he had not, but Doheny was perfectly willing to hire Fall for his company and let him work off the indebtedness. Yes, Doheny said, Fall had given him a note for the loan, but Doheny had misplaced it somewhere and couldn’t find it.

  Doheny’s appearance concluded with an odd scene. Walsh asked him if he had communicated with any member of the Senate committee prior to the hearing, and Doheny replied that he had not. “I was told that Senator Smoot handed you a note as you were coming in the room,” Walsh said. Doheny hesitated, and then admitted that this was true. “Let us see the note,” Walsh demanded. Certainly, said Doheny, smiling broadly, and reached into his jacket pocket and withdrew a clenched fist. With a dramatic gesture, he opened the fist and scattered a small snowstorm of shredded paper onto the green baize table. The contents of the note, he said haughtily, would make “very painstaking” reading. “Can you tell us what was on it?” the Senator asked him. “Yes,” said Doheny. “After we finish, I would like to see you in my room.” In disgust, Senator Walsh dismissed the witness.

  Pieces of paper had a curious habit of getting torn when in Ed Doheny’s possession. When he made his second appearance before the committee in January, 1924, he had found Fall’s note for $100,000. It had, it seemed, been in his wallet all along. But, for some reason, the lower half of the document, which had contained Fall’s signature, had been torn off and was missing. Why was this? the Senators wanted to know. Doheny offered a strange and rambling explanation. Before leaving New York for California after receiving the note, he said, he and Mrs. Doheny had been afraid that their train might have an accident. If that should happen, and he and his wife were killed, it had occurred to Doheny that the executors of his estate might find the note and demand immediate payment on it from his old friend Fall. This, of course, would be a dreadful state of affairs—disaster piled upon disaster—and so he had torn the note in half, given the lower portio
n to his wife to carry, and she had unfortunately lost it. As evidence, Fall’s note—if it indeed was Fall’s note—was meaningless. The Senators remarked that they had been “very greatly misled” by Doheny, who shrugged and said he was sorry they felt that way.

  On June 30, 1924, a Washington grand jury handed down four indictments against Fall, Sinclair, Doheny, and Doheny’s son. Fall and the two Dohenys were charged with felony in entering into a conspiracy to defraud the Government of the United States in an effort to control the Elk Hills oil reserves in California. Fall and Sinclair were charged with similar conspiracy in connection with Teapot Dome. The third indictment charged Fall with accepting a $100,000 bribe from Doheny, and the fourth charged Doheny with giving the bribe to Fall. The first civil case involving the oil scandals came to trial in Los Angeles on October 21, 1924.