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Tempest Over Teapot
When the wheeling and dealing of some of President Harding’s closest friends was revealed, the mud spattered Cabinet members, the heads of oil companies, the chairman of the Republican party, and eventually the President himself
August 1965 | Volume 16, Issue 5
Senator Walsh somehow picked up a rumor that Sinclair had made a very large contribution. Will Hays, who had been made Postmaster General by Harding, and then had become czar of movie morals, was summoned to the witness stand. Unluckily, Walsh’s information was wrong in one detail. It said that Hays had been given not Liberty Bonds, which was a fact, but bonds of the Sinclair Consolidated Oil Corporation. This enabled Hays to deny the whole transaction. Asked whether Sinclair had made a private loan to Hays himself, he refused to answer on the ground that this was a personal matter.
What had happened was this: Sinclair had turned over to Hays $260,000 in bonds, part of his profits from the Continental Trading Company; $75,000 of this was supposed to be a contribution, and $185,000 (in theory) a loan. Hays had then approached several wealthy men and asked each of them to turn over a substantial sum of cash to the Republican National Committee. Each man would in turn be given Liberty Bonds in the same amount to hold as security. If and when the loan was repaid, he would give back the bonds. As far as Hays was concerned, there was of course little or no intention of ever repaying the “loans”; they were simply a device to conceal the large gift from Sinclair. T. Coleman Du Pont, who had been treasurer of the national committee, received bonds worth $75,000; John T. Pratt, a wealthy New Yorker, $50,000; John W. Weeks, a millionaire Bostonian and Harding’s Secretary of War, $25,000. Fred Upham of Chicago, who was treasurer of the Republican National Committee in 1923, took $60,000 worth and sold them to various rich Chicagoans for cash.
On the witness stand in 1924, Hays mentioned only the $75,000 Sinclair contribution. In 1928, when the government knew more about the transaction, he was summoned again and confessed to the $185,000. And why had he kept silent four years earlier? “Nobody,” said the moralist indignantly, “asked me about any Liberty Bonds.”
Another man who figured in this episode was Andrew Mellon, Secretary of the Treasury. A multimillionaire Pittsburgh banker, he had inherited a fortune, greatly expanded it, and while in office had reduced the national debt by one third, from the gigantic sum of twenty-four billion dollars to sixteen billion dollars.
An investigator for the Senate committee found in the personal files of John T. Pratt, who had died some time earlier, small slips of paper that had on them in microscopic writing the names of several wealthy men, with a sum of money written after each one. In the 1928 investigation, the cashier for Pratt’s estate, V. E. Hommel, was asked to look at these names and read them aloud to the committee. He read the first one clearly enough; it was “Weeks.” The next name he professed to be unable to read. He thought it was the word “Candy.” When Senator Gerald P. Nye asked whether the word might not be “Andy,” Hommel admitted it might be, but had no idea who that could be. The spectators in the committee room laughed; there was only one famous Andy in the whole country. Mr. Mellon was now put on the stand and admitted that Hays had indeed sent him $50,000 in Liberty Bonds, suggesting that he regard them as security for a loan by himself of the same amount to the Republican National Committee. Mr. Mellon smelled something disreputable about this proposal, and instantly sent back the bonds, at the same time making an independent contribution of !50,000 of his own to reduce the Republican deficit. And why had he waited so long to tell about this? Like Hays, he was indignant; nobody had asked him.
Year after year, the government went on fighting to unravel the harm that Fall’s greed had produced. Case after case was fought through to the Supreme Court. The oil leases were at last vacated on the ground that fraud and corruption had been employed. Sinclair had to return to the government more than twelve million dollars, and Doheny, almost thirty-five million. (Doheny had spent about eleven million on storage tanks at Pearl Harbor, for which he was not reimbursed.) Sinclair had also obligated himself to pay large sums to a group of blackmailers who had learned early in the game that there was something fishy about Teapot Dome. These blackmailers included the two notorious owners of the Denver Post , Frederick G. Bonfils and H. H. Tammen, who softened up Sinclair by publishing many articles raising questions about the Teapot Dome lease; after he had agreed to pay them off, the articles stopped. The blackmail, most of which was to come out of the profits of Teapot Dome, amounted in all to more than two million dollars.
Doheny died in 1935 at seventy-nine and Sinclair in 1956 at eighty; neither man ever publicly admitted his guilt, nor did Fall, who died in 1944 at eighty-three. Blackmer finally came home from Europe in 1949, at the age of eighty, to face the music; he was immediately arraigned on charges of tax evasion and perjury. He was fined $60,000, and he owed nearly $8,500,000 in unpaid back taxes, penalties, and interest. He finally settled with the government for about $3,600,000, and the charge of perjury was dropped.
O’Neil died in France in 1932 at sixty-four. Seven years earlier a doctor had told him, erroneously, that he had only a year or two to live, and he therefore made a secret trip to Canada. There he told two officials of his company about the bonds he was holding, and turned over the bulk of them; he had cashed a few —by inadvertence, so he said. Ned McLean, who became an alcoholic, was declared incompetent and was put into a mental institution, where he died in 1941 at the age of fifty-five. Colonel Stewart died in 1927 at eighty.