What Was Teapot Dome?





Mr. Payne is an Assistant Professor of history at St. Bonaventure University in New York.

The Enron scandal has been exploding, to the point where it is threatening to eclipse the War on Terrorism, the economy, and even the State of the Union address. If the country is not in media frenzy over Enron then it soon will be. Journalists and politicians are trying to categorize Enron: Is it a political scandal? Is it a business scandal? The cover of the February 4, 2002, issue of Time features not the economy or the war, but rather a darkened White House with the caption,"The Enron Mess: How Sticky Will It Get?" That seems to be the question of the moment.

HISTORICAL PARALLEL

As revelations regarding Enron unfold, journalists and partisans have begun to look for historical parallels in order to find the lessons of history and the moral of the story. Inevitably they have turned to the Teapot Dome scandal of the 1920s. Like Enron, the Teapot Dome scandal involved the influence of oil money on politics in the Republican administration of Warren G. Harding. Although the extent of the connections between the Bush administration and Enron is not completely clear, it is clear that Enron made large political donations and in turn welded a good deal of influence in Washington. The lesson of Teapot Dome is that it is sometimes difficult to maintain scandals in neat categories.

TEAPOT DOME SCANDAL

So what was the Teapot Dome scandal? The affair took its name from Teapot Dome, a rock formation in Wyoming that looked like a teapot and, more importantly, stood atop a large government naval oil reserve. The scandal was the most famous of several scandals that ruined the reputation of President Warren G. Harding, who served from March 1921 to August 1923 and is often described as the worst president our country has ever had. At its bare bones, Teapot Dome is a simple case of bribery. Secretary of the Interior Albert Fall, a former senator from New Mexico and a friend of Harding's, was convicted of taking bribes from oil executives. Oilman Harry Sinclair obtained leases to drill for oil at Teapot Dome, Wyoming, and Edward Doheny acquired leases for reserves at Elk Hills, California. Fall received in the neighborhood of $400,000 in cash and gifts from Doheny and Sinclair. Like the details of the various Enron accounting maneuvers, the details of the oil leasing were complicated. For the public it was reduced to Fall granting favors to friends who had given him a great deal of money.

TEAPOT DOME AND ENRON PARALLELS

The parallels between the two scandals are only reinforced by the recent suicide of former Enron executive Cliff Baxter. In all likelihood Baxter's death will leave unanswered questions. The suicide of Jess Smith during the 1920s similarly left questions unanswered. Smith had an office at the Justice Department and was the right-hand man of Attorney General Harry Daugherty but was not on the government payroll. By many accounts Smith was not a leader but was at the center of much of the corruption. Smith's suicide provided fuel for conspiracy theorists who saw his suicide as a murder to ensure his silence. There was also the unfortunate murder of Edward L. Doheny, Jr., the son of the oilman who acquired the California leases. Along with his friend, Hugh Plunkett, he had delivered $100,000 in cash to Fall shortly before Fall awarded the oil contracts. Plunkett apparently cracked under the pressure and murdered Doheny.

At first, Fall's oversight of the leasing seemed unimportant. When asked about the secrecy of the arrangements Fall replied that national security required it. Doheny similarly evoked patriotism and security to justify his actions. However, progressives and environmentalists unhappy with Fall's policies continued to pursue the matter, leading to congressional investigations. Fall refused to testify before congressional committees, witnesses pled the Fifth Amendment, and insiders testified to widespread corruption. Eventually Fall earned the dubious distinction of being the first cabinet member to go to prison for a crime committed while in office, thus forever linking Warren Harding's administration with corruption. All told, Teapot Dome was a significant part of the political landscape for close to a decade.

RELATIONSHIP BETWEEN GOVERNMENT AND MONEY

Obviously, Teapot Dome did not lack in drama. Teapot Dome, however, involved more than a simple case of bribery. Teapot Dome became a shorthand description, used in much the same way as the term"Watergate" (or the seemingly ever present suffix 'gate'), to stand for scandal. During the 1920s Teapot Dome stood for the scandalous relationship between money and political influence. As David H. Stratton, author of Tempest Over Teapot Dome, noted, the Teapot Dome scandal"reached far beyond one person's ambitions or a squabble over how to handle the national patrimony. It also involved the Harding administration's government reorganization plans, national defense, and a world oil famine that never materialized." (p. 229) Here, certainly, are themes that sound familiar today.

In retrospect, Teapot Dome seemed the logical culmination to the election of 1920. During the 1920 primaries there were charges that wealthy individual were trying to buy the election and congressional investigations followed. Journalists and progressives charged that the convention that nominated Warren Harding was unduly influenced by oilmen looking to roll back progressive era conservation measures. Doheny became involved in the election because he had enormous investments in Mexican oil and hoped to have a hand in shaping United States Mexican policy. The sticky oil money also touched the Democrats. Democrats and Republicans alike squirmed when Doheny testified that he had given money to members of both parties"for their influence." William McAdoo, Woodrow Wilson's son-in-law and the leading contender for the Democratic presidential nomination in 1924, had served as an attorney for Doheny's oil businesses. This connection would help to derail McAdoo's presidential ambitions. Both parties had ties to the oil industry and a great deal of money at stake.

Enron, of course, could become something bigger than an accounting scandal. In 2000, George W. Bush's record-setting fundraising caused concerns. During the primaries, the issue of the moment was campaign finance reform, prompting Bush to transform himself into a"reformer with results." Enron donated $1.76 million to the Republicans during the 2000 election and Enron chairman Kenneth Lay was the single biggest contributor to Bush's campaign efforts. After the election, the Bush administration set about overhauling the government bureaucracies and energy policy, citing potential oil shortages. They granted Enron officials access to the energy policy task force headed by Vice President Cheney (a former oil executive himself), as well as influence over the selection of the people who would become federal regulators and a hand in shaping foreign policy regarding India's energy policy. Now President Bush backs reforms to protect retirement plans from corporate greed and has intimated that he will sign campaign finance reform legislation. Similarly, Republicans backed clean government legislation in the mid 1920s.

FUTURE CONSEQUENCES FOR THE BUSH ADMINISTRATION FROM ENRON DEBACLE?

Like Teapot Dome, the Enron scandal involves the oil industry and wealthy friends of the president who wanted to influence policy. Teapot Dome, writ large, was about money and elections. By the time Fall and Sinclair were found guilty and Doheny was found innocent in a court of law the scandal had run its course. Teapot Dome never reached President Harding personally. It did, however, contribute greatly to the ruin of his administration's reputation. The true lesson of Teapot Dome lay not in the actions of one man but rather in the uneasy relationship between government and money.


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More Comments:


Kathy Wood - 7/17/2009

The trouble w/Enron began before the Bush Presidency. Questions about Enron were cropping up during the Clinton Administration.


art degenaro - 1/1/2004

A very good review of how money was used to influence government and attain power...No it seems to just be reversed using power to attain money and influence administrations...all held together and a common bond of OIL>


Joseph Reid - 2/16/2003


The Oil Coup: Bush's Master Oil Plan?
A Cyber Research Resource

Introduction

On the PBS News Hour July 31, 2002, James Chace, professor of government at Bard College, observed that, "Going back to the Gulf War of President Bush senior, the real reason that the United States went into that war was to assure the flow of oil at reasonable prices, and that no country such as Iraq would have large control over the region. That was not usually given as the the reason, except when the Secretary of State, James Baker, when asked why we went into Iraq at that time said the reason was 'Jobs, jobs, jobs'. That was as close as we came to really speaking openly about the notion that a vital resource could be denied the United States." On this same broadcast, presidential historian Richard Norton Smith, director of the Bob Dole Institute at the University of Kansas, when asked if the US has taken preemptive military intervention in the past, reminded us that ".....repeatedly in the first half of the twentieth century American presidents of both parties sent the marines.......usually for economic interests. It was sometimes hard to tell if foreign policy was being made at the State Department or the United Fruit Company."

In the first presidential debate of 1992 Ross Perot made the observation that the Gulf War was fought solely for control of oil and nothing more.

To what extent ought the same to be said of the coming Second Gulf War?

In his January 5, 2003 New York Times article, A War for Oil?, columnist Thomas Friedman asserted that "Any war we launch in Iraq will certainly be — in part — about oil. To deny that is laughable."

The June 7, 2002 edition of the PBS show Wall Street Week featured as it's special guest Charles T. Maxwell, Senior Energy Analyst at Weeden & Co. Mr. Maxwell expressed a belief that global oil production is likely to peak sometime within the coming decade. In a report which Maxwell issued in early September of 2001, he states that "The changes in assumption about supply and price is likely to be gradual and even halting at times. But, in the end, it will be perceived as inevitable, and all-encompassing. How to deal with the disappearance of cheap oil supplies will be one of the central social and investment debates, as I see it, of the first half of the 21st Century."

Iraqi oil reserves of 112 billion barrels are seven times those of the combined UK and Norwegian sectors of the North Sea. But the prize could be even greater; Iraq estimates that its eventual reserves could be as high as 220 billion barrels. Is the potential significance of the fact that Iraq contains at least 11 per cent of the world’s oil reserves, second only to Saudi Arabia’s 25 per cent, being sufficiently brought into focus in the public discussion?

Should our increasing national dependence on imported, non-renewable fossil fuel be a crucial element of the public debate regarding the Bush administration's proposed invasion of Iraq?

The following compilation of references may help serve to bring this issue into focus.

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The Oil Coup: Bush's Master Oil Plan?
http://www.mymethow.com/~joereid/oil_coup.html

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