CONNECTIONS: Tales of corruption, past and presentMore Info
About Connections: Love it or hate it, history is a map. Those who hate history think it irrelevant; many who love history think it escapism. In truth, history is the clearest road map to how we got here: America in the 21st century.
In its essentials, the Teapot Dome scandal was a simple bribery case. From 1921 to 1923, Secretary of the Interior Albert Bacon Fall, under President Warren G. Harding, leased Navy petroleum reserves to private oil companies.
The naval oil reserves were established (in the interest of national security) by President William Howard Taft. In 1921, President Harding issued an executive order that transferred control of the oil fields from the Navy to the Department of the Interior.
Once in control, Secretary Fall leased the oil production rights at Teapot Dome in Wyoming to Harry F. Sinclair of Mammoth Oil, a subsidiary of Sinclair Oil Corporation. He also leased the Elk Hills reserves in California to Edward L. Doheny of Pan American Petroleum and Transport Company.
This manner of leasing was legal under the Mineral Leasing Act of 1920. What was not legal was leasing the rights without competitive bids, with terms more favorable to the oil companies than the government, and accepting bribes to do it. In the end, Fall received about $500,000 in bribes, worth approximately $5.67 million today. He would have gotten away with it, but he spent so lavishly that it raised suspicion. Sen. Thomas J. Walsh began an investigation.
For half a century, Teapot Dome was regarded as the “greatest and most sensational scandal in the history of American politics.” Fall was convicted of accepting bribes from the oil companies and became the first presidential Cabinet member to go to prison. Harding was not indicted nor implicated; nevertheless, his reputation was destroyed. Why? For having very poor judgment in those he appointed, hired and kept around him.
An important consequence of the scandal was that the Supreme Court granted Congress the powers to subpoena and compel testimony.
It was 1872 when the New York Sun broke the story. They called it an “infamous boondoggle,” in which businessmen, congressmen and the vice president were involved.
In the 1860s, during the building of the transcontinental railroad, the Union Pacific hired Crédit Mobilier of America, a construction company. Or at least, it pretended to be a construction company. What appeared to be an arm’s length contract was anything but.
Crédit Mobilier was a front for an amalgam of Union Pacific executives. Those same men acting as Union Pacific executives granted Mobilier exorbitantly lucrative contracts and lined their own pockets.
Massachusetts was prominently represented. Our own Mark Hopkins (Searles Castle – Barrington House) laid the track, 3,004 miles of it, but was not implicated in the scandal. To avoid embarrassing questions about Crédit Mobilier, Congressman Oakes Ames, R-Mass., a chief conspirator, handed out bribes on Capitol Hill.
Finally, in 1872, a whistleblower and a newspaper ended the ride, but not before Crédit Mobilier had pocketed $23 million, destroyed Union Pacific and contributed to the “long depression” of 1873–79.
In an ensuing investigation, Ames and James Brooks, D-N.Y., were officially censured. Neither was expelled from Congress, and no criminal charges were filed. No politicians who reputedly accepted bribes were indicted.
The Whiskey Ring
As the Union Pacific executives were getting impossibly rich, so were alcohol distillers. Called the Whiskey Ring, government officials and businessmen plotted to defraud the government of its 70-cents-a-gallon tax on liquor.
The scheme was as simple as it was lucrative. Federal agents and the distillers simply underreported whiskey sales and pocketed the money otherwise due as sales taxes.
The ring was established in 1871 in St. Louis by Republican Party officials. However, it was too good not to share and soon it extended to Chicago, New Orleans and Milwaukee. By 1875, it was grossing as much as $1.5 million per year in illicit funds.
In 1874 the party was over. Benjamin Bristow was appointed Secretary of the Treasury. Bristow organized a secret investigation that exposed the fraud and led to indictments against several hundred liquor sellers and government officials. The scandal even reached as far as the administration of President Ulysses S. Grant’s personal secretary Orville Babcock. Babcock was exonerated when Grant gave a deposition swearing to his innocence.
So, what do we have so far? Bribery, tax fraud and extortion. Now, the triple crown winner: the 39th vice president of the United States (1968–73), Spiro Agnew, accused of all three.
Agnew was a good speaker and fashioner of epithets such as “nattering nabobs of negativism” and “hopeless, hysterical hypochondriacs of history.” He was also quick to accuse opponents of candidate Richard Nixon. For example, he repeatedly accused Hubert Humphrey of being “soft on communism.” Nixon selected Agnew as his vice president.
During his tenure as governor of Maryland (1966), it was alleged Agnew engaged in extortion, bribery and tax fraud. Agnew countered that the investigation was a “witch hunt.” The investigators were “liberals and biased.” Loudly, Agnew argued that the allegations were false, politically motivated and a sitting vice president could not be indicted. More quietly, Agnew agreed to a deal.
He resigned the vice presidency on Oct. 10, 1973, in exchange for a plea of “no contest” to a single charge of failing to report and pay tax on $29,500 in income received in 1967 while governor of Maryland. Acknowledging that the plea amounted to a felony, Agnew became the only vice president to resign as a criminal, but claimed he resigned “in the national interest.” He was fined $10,000, sentenced to unsupervised probation and disbarred. He then became an international trade executive.
And there you have it: The more things change, they more they remain the same. The schemes always seem so silly, the consequences so serious and the defenses of the guilty so eerily similar.