Real Lace (15 page)

Like royalty—or like the parish priest—Ma D. believed, when paying calls on her friends, that it was unnecessary to announce her visits ahead of time. Once, when actress Loretta Young and her husband, Tom Lewis, were living in a house hard by “Chester Place,” Miss Young's upstairs maid nervously announced that Mrs. Doheny had just appeared downstairs, and was waiting in the drawing room to be received. As rapidly as she could, Miss Young attended to her hair and make-up, but, for a reigning movie star, this took a bit of time. By the time she got downstairs, Mrs. Doheny had departed.

On the other hand, whatever philanthropies are associated with the Doheny name in California are largely attributable to Ma D. These include an eye hospital named after her, a Catholic church which she built in Adams Street, Los Angeles, and the Doheny Library at the University of Southern California.

One of Pa D.'s cronies from his prospecting days was a young fellow from Kentucky named Albert Bacon Fall. Like Doheny, Fall had had little formal education and a checkered career after heading west as a youth. Fall had worked as a cowboy, a farmhand,
a prospector, and a miner, and had wound up in New Mexico when it was still a territory and where, after studying law in his spare time, he had settled, been admitted to the bar, and gone into politics. He had been an early supporter of President Grover Cleveland, and the latter had rewarded him by appointing him to be a judge of the Supreme Court of the Territory of New Mexico. It was here that Fall and Doheny first met, and became card-playing friends and drinking companions. But, as a judge, Fall had a tendency to take the law into his own hands, as happened one day when he leaped down from the bench to lead a posse that was out to lynch a bandit. When word of this escapade reached President Cleveland's ears, Fall was summarily removed from his judicial post.

Unlike his friend Doheny, Albert Fall never had the luck to strike it rich. With the outbreak of the Spanish-American War, Fall joined the infantry, rose to the not particularly exalted rank of captain and, at the war's end, came home to New Mexico and announced that he had switched his allegiance from the Democratic to the Republican Party. When New Mexico was admitted to the Union in 1912, Albert Fall ran for and was elected New Mexico's first United States Senator.

As a Senator, Albert Fall provided Washington with almost a caricature of the Western hombre. He had cold blue eyes and thin lips from which a large cigar usually drooped. He spoke with a drawl and wore wide-brimmed hats and shoestring neckties. A Washington newspaperman wrote of him, “With a long drooping moustache, he looks like a stage sheriff of the Far West in the movies. His voice is always loud and angry. He has the frontiersman's impatience. From his kind lynch law springs.” Though Fall represented the opposite side of the political fence from his friend Doheny, the two men had a number of beliefs in common. Both were strong advocates—Doheny with particularly good reasons—of armed intervention in Mexico to protect American investments
there. Both were also ardently in favor of the immediate and complete exploitation by private interests, such as Doheny's, of the nation's natural resources, such as oil. In the Senate, because he spoke a little Spanish, Albert Fall presented himself as an expert on Mexican affairs. Also in the Senate, Fall became a card-playing chum of the easygoing Republican Senator from Ohio, Warren Gamaliel Harding. When, in 1920, Harding became one of the unlikeliest Presidential candidates in American history, Albert Fall was one of his staunchest supporters. So, at Fall's urging, was Ed Doheny, who contributed $25,000 to the Harding campaign, and paid for national newspaper advertising which featured full-page photographs of Harding's mother and father—designed to counteract rumors to the effect that Harding had “Negro blood,” in addition to his more obvious shortcomings.

When Harding was elected to office by an overwhelming majority—carrying thirty-seven of the forty-eight states—Harding asked Fall if he would like to be his Secretary of the Interior. Harding had originally considered Fall for Secretary of State, but had been persuaded by his advisers that the Senate would not approve a Southwesterner for the top Cabinet post. In offering Interior to Fall, Harding apologized for not giving him the bigger job. Fall, on the other hand, was not at all disappointed. Interior was known as one of the Cabinet positions most susceptible to graft, and where important money could be made on the side. It was also rumored at the time that Interior was “owned” by the nation's big oil interests. Fall's appointment was greeted with cheers and applause on both sides of the Senate floor, and Fall went sweeping into the job without the usual formality of having the appointment sent to committee. Of his Cabinet appointments Harding had announced that he was picking “the best man” for each job, and the
New York Times
replied editorially that the new President was obviously appointing not the best men but his best friends.

About three years before Harding's election, Ed Doheny had had another meeting that was to prove fateful. His son, Edward L. Doheny, Jr., was a young lieutenant in the Navy assigned to the U.S.S.
Huntington
, and while the
Huntington
was in Pensacola Harbor, the vacationing Mr. Doheny came aboard to visit him. While on board, the oil millionaire was invited to the quarters of the ship's commanding officer, one Captain John Keeler Robison. The visit lasted for about two hours, and the main topic of conversation was, naturally, oil. Oil was of vital importance to the Navy. Nearly all its vessels had been converted from coal- to oilburning, and to ensure that the fleet would have a ready supply of fuel in cases of emergency—and fuel that could be obtained at much lower cost than if it were bought on the open market—the Navy Department, under President Taft, had been given some 78,791 acres of oil lands situated in three principal locations: at Elk Hills and Buena Vista Hills, both in Kern County, California, and at Teapot Dome in Natrona County, Wyoming. Ever since the Taft order, private oil interests, including Doheny's, had been trying to obtain leases to drill and exploit this highly valuable acreage, but had thus far been successfully resisted by the Naval Fuel Oil Board, which had maintained that the land should be kept strictly by the Navy and strictly for Navy use. Captain Robison, an Annapolis man and a career naval officer, may not have known much about oil wells, but he was proud of his Navy, and he commented to Mr. Doheny that he thought the Navy was doing a pretty good job in keeping and maintaining its precious oil reserves. Doheny gave the Captain a little smile and said, “Well, it is being handled very well for the people you have for neighbors. But you are not going to have any property there in a very few years.” Captain Robison asked him what he meant by that, and Doheny explained that neighboring oil companies, operating on the periphery of the Navy lands, were rapidly pumping out oil that was “leaking” from the Navy oil fields into other fields nearby.
Doheny depicted the invisible situation underground as one of a series of huge bathtubs with interconnecting drains. When oil ran out of one tub, it simply drained in from the next.

Captain Robison was aghast at this news. It opened his eyes, he said later, to a problem that he had never dreamed existed. Testifying before a Senate investigating committee, Robison said that Mr. Doheny's words carried particular weight because they did not come “from some $2,500 clerk,” but from a man “who had made millions knowing how.” He assured the Senators, “That is the kind of information I believe.”

The meeting aboard the
Huntington
had been an exceptionally fruitful one. When Harding became President, he appointed Edwin Denby as his Secretary of the Navy, replacing Josephus Daniels, who had served under Wilson. Denby's chief qualification for the Cabinet post seemed to be that he had served as a Marine in the First World War. Denby then placed none other than Captain John Keeler Robison in the post of Chief of the Navy's Bureau of Engineering, and put him in complete charge of the naval petroleum reserves, with the temporary rank of rear admiral.

The problem of “drainage,” meanwhile, was not at all a new one to Navy petroleum engineers. It had been studied under Secretary Daniels, and it had been concluded that while a certain amount of drainage might occur in certain areas of certain fields, the situation was nowhere near as dire as Doheny had painted it to Captain Robison. There was no danger of the Navy's oil simply leaking away. The pressure from private oil interests to obtain leases on Navy land had also been applied upon Secretary Daniels, and, in June, 1920, Daniels had been persuaded to ask Congress for authority to lease to private operators certain Navy lands where “important” drainage might be apt to occur. Congress passed the act, but the small amount of the appropriation—$500,000—was an indication that Congress had not intended to open up the Navy lands to complete exploitation. Under Daniels, only a very few
leases were granted to private companies. Still, under the Wilson administration the door to exploitation had been opened a crack. Under Harding, with Edwin Denby as Secretary of the Navy and Albert Fall as Secretary of the Interior, oil men like Doheny saw a chance to push it fully open. But, Fall explained to his friend Doheny, it was a question of first things first. If Fall was going to do his best job for his friends in the petroleum industry, it was important that he, Fall, first get control of the naval oil reserves into the hands of his own department, which he intended to run as a one-man operation. To do this, he would have to go to work on Denby. Even more important, he would have to go to work on his friend the President. With neither man did Fall foresee any real difficulty.

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.