California Rich

by Birmingham, Stephen;

  Publicly, meanwhile, Harding accepted Fall’s resignation “with deep and sincere regret,” and Fall departed, but not without one final bit of flimflammery. He ordered that the elegant Jacobean antique furniture, with which his Washington office had been furnished at taxpayers’ expense, be shipped to his home in New Mexico. The transfer was all perfectly legal. Fall wrote out a personal check for $231.25 to the United States government to pay for the furniture. It was worth about $3000.

  All through the early months of 1923 public criticism of the Harding administration mounted, not only against Fall but against others of the Harding Cabinet. Increasingly Harding began turning to his wife, Florence, for advice, and, as usual, Florence Harding formed her responses after consultations with her astrologist. What the stars did not foretell was that, on the evening of August 2, 1923, while Mrs. Harding was attempting to raise her husband’s spirits by reading aloud a eulogy to him in the Saturday Evening Post, the fifty-seven-year-old President’s heart would simply stop. He had been in office less than two years. Officially the cause of his death was said to have been some bad crab meat he had eaten on a trip to Alaska, though most food-poisoning cases give their victims a bit more warning before the onset of death. (At the time, of course, there were dark rumors that one of the President’s “friends,” made desperate by the fear of exposure, had poisoned him.) Now all the untidy mess of the Harding administration descended on the shoulders of his taciturn successor in the White House, Calvin Coolidge.

  Slowly and laboriously, under President Coolidge, the legislators in Washington began to investigate some of the goings-on of the Harding era. The Senate Committee on Public Lands and Surveys, organized to look into what had happened to the naval oil reserves, held its first meeting 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 done for the good of the country and, furthermore, had been done on instructions from the President. He repeatedly and loudly demanded that Walsh “look at the records”—which, it turned out, were quite confused. Indeed, the records of the Harding administration had been so haphazardly kept that it was 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, which involved national security, it was proper to consult the Congress and not high-handedly take matters into one’s own hands. He did succeed in getting Fall to admit he had not sought any legal opinions in connection with his maneuvers, though Fall countered by saying, “But I’m a lawyer myself.” Fall then added that “law or no law,” he would have done anything in his power to prevent the navy’s oil from leaking away into neighboring fields. Asked why he had turned over the Teapot Dome fields to Sinclair without any competitive bidding, Fall’s haughty reply was, “Well, I did it.”

  He told the first of many outright lies. “Did you ever get any compensation at all?” 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 piously, “I did not feel I could accept any gift of any kind.” No heifers, no sows, no boars, bulls, or thoroughbred horses. “I shall go into no further detail discussing this matter,” he concluded. “The entire subject, of course, is more or less humiliating even to refer to.” When asked about his obviously improved style of living, Fall did admit that he had received a hundred-thousand-dollar “loan” from a friend, but when asked who the friend was, Fall lied again and said that it was not Edward Doheny or anyone else in the oil business. The hundred thousand dollars, he said, had been lent him by the Washington publisher Edward B. McLean, husband of Evalyn Walsh McLean of Hope Diamond fame. (Having thus testified to the senators, Fall hastily contacted McLean and asked him to “back me up in this.” McLean promised, but Fall had made a poor choice here. McLean, an alcoholic, promptly forgot the promise and later testified that he had never lent Fall any money at all.)

  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. Unlike Fall, Doheny made a much more likable and convincing witness. Poised and coolly professional, he presented himself as one of the world’s leading experts on the petroleum industry and petroleum science. He began his testimony with a professional lecture to the senators on the dangers of oil leakage from one well into another. If lands under which oil lay were not exploited, they could be pumped dry by neighbors. A single hole punched in the earth’s crust, he implied, could in time siphon away all the oil on the continental shelf. He stated that he “knew” that the navy had lost at least a hundred million barrels of oil prior to the Doheny takeover. It had simply leaked away. He, he said, had stepped in out of the sheerest patriotism to save America’s oil for her fighting boys.

  When Senator Walsh, at the Walsh Committee hearings, asked Doheny why the engineers at the Bureau of Mines had not been aware of this grievous loss of oil through leakage, Doheny replied immodestly, “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 that he had contributed twenty-five thousand dollars to the Harding campaign and had paid for the advertising campaign portraying Harding’s lily-white 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.” This was stretching the truth a bit, but technically it was so, since it had not been Doheny himself but his son Ned who had handed Fall the bag of money.

  The hearings wore on, with more witnesses called; they would consume, all told, the better part of four years, filling thousands of pages of printed testimony. As the scandals of the Harding days unfolded, they would become known collectively as “Teapot Dome,” after that Wyoming settlement where an odd-shaped hill had reminded early settlers of the top of a teapot. Fifty-odd years later the Watergate scandals of Richard Nixon’s administration would be compared with Teapot Dome, but there were actually few similarities. The complexities of Watergate were such that much of the American public had trouble comprehending them. But the details of Teapot Dome—graft, bribery, and corruption—were almost classically simple, and the hearings and trials that ensued, and the characters who populated them, had an almost burlesque quality of opéra bouffe.

  In January 1924, for example, Ed Doheny appeared before the Senate hearings again. He came voluntarily, and because it was widely reported 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 lent Fall $100,000, because Fall was an old friend who needed money to improve his ranch. He told about the cash and the little black bag. But, Senator Walsh wanted to know, wasn’t that an unusual way for a businessman to carry out a 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, Walsh pointed out, they were not talking about an international transaction here—this had been merely a transfer of funds between two nearby cities, New York and Washington. Doheny countered by saying that, after all, $100,000 to him was the equivalent of small change and amounted to “no more than $25 or $50 to the ordinary individual”—hardly a sufficient sum to warrant writing a check. Walsh replied somewhat dryly that while he could see Mr. Doheny’s point, $100,000 was still a lot of
money to a man like Mr. Fall. “It was indeed,” Doheny admitted, “there is no question about that.” Then he 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 for the leases, 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, Mr. Doheny said, he had not, and Doheny then repeated his earlier assertion that he would be perfectly willing to hire Fall for his company and let him work off the indebtedness. Had the loan been secured by a note, the senator wanted to know. Yes, Doheny said, Fall had given him a note for the loan, but Doheny had misplaced it somewhere and couldn’t find it. Once more there was laughter in the hearing room.

  Doheny’s appearance before the committee ended 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 in 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 destroyed or torn or lost when in Edward Doheny’s possession. When he made his second appearance before that January session of the committee he had found Fall’s note for the loan. It had, it seemed, been in his wallet all along. But for some reason the lower half of the document, where Albert Fall’s signature would have been, 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 begun to be afraid that their train might have an accident. If that happened 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 and given the lower portion to his wife to carry in her reticule, and she, unfortunately, had lost it. As evidence Fall’s note—if indeed it was Fall’s note—was worthless. The senators remarked that they felt 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 a similar conspiracy in connection with Teapot Dome. The third indictment charged Fall with accepting a hundred-thousand-dollar 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.

  Doheny’s attorneys were delighted that Los Angeles had been chosen for the trial. After all, Mr. Doheny was one of that still rather small town’s leading citizens, a local favorite son. A street cutting across Beverly Hills had been named after him. In Los Angeles, Ed Doheny was not only much loved but also much feared. It seemed most unlikely that a Los Angeles jury—or judge, for that matter—would vote to convict such a powerful local figure. A few months earlier, meanwhile, there had been a lurid murder in the Doheny family. Young Ned, Doheny’s only son, had been shot and killed by his secretary, Robert Plunkett, who had assisted him in the cash payment to Fall. In Los Angeles it was whispered that the murder occurred because young Doheny had resisted Plunkett’s homosexual advances. But, then, it might have been the other way around, because shortly afterward Plunkett put a pistol to his temple and killed himself. In any case, the suicide-murder effectively removed important witnesses—the two men who had actually delivered the cash to Fall—and there was even speculation that Fall might have had something to do with the killings. In Los Angeles the tragedy had created even greater sympathy for the Doheny family.

  No one could help noticing that the Los Angeles press was treating the Dohenys very kindly indeed. Partly this was because Doheny’s chief attorney, Frank J. Hogan, saw to it that all bits and pieces of evidence favorable to Doheny were delivered to the press table as soon as they were offered in court. Also, Mr. Doheny’s physical appearance worked in his favor: elegantly tailored and shod, distinguished-looking, the picture of self-confidence and sincerity. Hogan and his large staff of lawyers had all been put up in luxurious quarters at Chester Place, where they led an active after-hours social life, making use of the Doheny’s private gymnasium, bowling alley, and swimming pool. Members of the press were invited to Chester Place for parties and their journalistic output showed their appreciation. But one Los Angeles reporter admitted that his editor had given him strict instructions to write only nice things about Doheny. The newspaper did not want to lose the advertising revenue it received from Doheny-controlled oil companies.

  After nine days of testimony the government rested its case, and Doheny’s lawyers embarked on his defense, relying heavily on pathos, patriotism, and even bringing in the “yellow peril.” The defense made much of the claim that Doheny’s oil tanks in Pearl Harbor, which had been built for the navy as part of his deal with Fall, provided a vital national force to protect the Pacific—including the California coastline—from America’s “enemies” in Asia (enemies who would not materialize until nearly twenty years later). In a ringing voice one of the Doheny lawyers told the court, “America can sleep tonight secure from danger of being overrun by a Mongol country because of the patriotism of such men as E. L. Doheny, Edwin Denby, and Admiral John K. Robison and their work in establishing a great naval oil base in Hawaii. These men have been humiliated and vilified because they endeavored to save you and me and our country.” The trial lasted about two weeks and ended on November 12, 1924, after a five-day summation. Judge Paul J. McCormick retired to deliberate the case.

  The judge’s deliberations took him until the following May. In his 105-page decision he decided that the leases to the Elk Hills land were null and void, and that the contract for the Hawaiian storage tanks was equally illegal and had been obtained through fraud. He also held that President Harding had exceeded his authority when he turned over the navy’s oil lands to Fall’s Department of the Interior. Doheny’s payment of a hundred thousand dollars to Fall, the judge decided, was “against good morals and public policy, and tainted with fraud.” He ordered Doheny’s company to pay the government for all the oil it had taken out of Elk Hills. It was a clear and unexpected setback for Doheny, but there was some comfort in it since the judge also ruled that the government had to pay Doheny for the storage tanks. The Doheny lawyers immediately appealed Judge McCormick’s decision, which may have been a mistake. Reviewing the case in October, the Court of Appeals not only upheld McCormick’s decision but took away Doheny’s reimbursement for the storage tanks. Once more the lawyers appealed, this time to the United States Supreme Court.

  Both Doheny and Fall would have to stand trial again, in Washington, on the bribery charge, which, since it was a criminal case, might end up not only costing them money but also sending them to jail. Still, Ed Doheny was undaunted, convinced that the power of his wealth would eventually prevail. For his Washington trial, which opened in November 1926, he was even better prepared than he had been in Los Ange
les. His lawyer, Frank Hogan, marshaled an even larger staff of lawyers. A huge suite of rooms was leased on the third floor of the Columbia Building, opposite Judiciary Square, and this was fitted out as a private club for the Doheny legal aides. Once more the press was regaled. A chef and a staff of waiters were hired, and in addition to ample amounts of food and drink, the men and women of the press were fed a steady stream of releases, all taking the Doheny side. A personal press agent now accompanied Doheny into the courtroom to facilitate the flow of laudatory news.

  But there were sinister notes as well. A few days before the trial was to begin, several jurors complained of threatening and other disturbing telephone calls from strangers. One juror reported that a caller who had identified himself as “the court” had telephoned to ask questions about his bank account, his real estate holdings, his social and religious affiliations, and his relationships with women other than his wife. Because of all this, the presiding justice, Adolph A. Hoehling, ordered that the jury be sequestered during the entire lengthy proceedings. And so, while the defendant and his lawyers partied in the Columbia Building, the jurors languished in locked hotel rooms guarded by marshals. The jurors were not even permitted to join their families for Thanksgiving dinner, nor could they go to church on Sundays. Instead they were given Bibles to read. At the time, someone from the press slyly commented that the jurors were the only ones involved with the whole Teapot Dome mess who had thus far been placed behind bars.