Real Lace (16 page)

Within days, Secretary Fall was back home in New Mexico, where he paid cash for a large piece of property adjoining his Three Rivers Ranch. During this visit, his daughter testified later, she walked into her father's room and saw large piles of money lying on his desk. She snatched one of the piles and cried, “Here's
my trip to Mexico!” and started out of the room with it. But her father ordered her back, and to return the money, saying that it was to pay off the mortgage on their house. Secretary Fall's New Mexico neighbors were somewhat surprised at the Fall family's sudden affluence—a relatively hardscrabble ranch being expanded into something of a showplace, with prize cattle and thoroughbred horses. But then it was known that Albert Fall had many rich friends and occupied a high position in the government.

On January 9, 1923, Fall had completed all his various deals and announced his intention to retire from public life. To the press, President Harding expressed profound sorrow at Fall's decision and said that, to keep him in Washington, he had offered Fall a judgeship on the United States Supreme Court. But Fall had turned the offer down, saying that he wished to return to the land and the humble chores of tending his little Southwestern ranch. And well he might have wished to get out of Washington. He had collected some half a million dollars in bribes and payoffs, and his only regret may have been that he sold himself too cheaply. At the time, when for a mere $100,000 Doheny had acquired roughly 30,000 acres of proven oil lands whose contents were estimated to be between 75 and 250 million barrels of oil, Doheny had commented, “We will be in bad luck if we do not get $100 million in profit. But that will depend on the price of gasoline.”

At the time also, though he did not show it, Albert Fall may have been one of the most frightened men in the United States. There had already been rumblings of dissatisfaction in Washington about the turnover of oil leases to Doheny and Sinclair, and dark mutterings about corruption. There had also been a curious meeting between Mrs. Fall and the President, when Harding was passing through Kansas City and Mrs. Fall appeared and asked to see him. She arrived at the President's hotel suite looking nervous and agitated, and, after a private conversation behind locked doors that lasted for a full hour, the President emerged looking haggard
and shaken. What the two talked about has never been revealed, but it cannot have been a pleasant topic, and the next day, speaking with William Allen White, editor of the Emporia, Kansas,
Gazette
, Harding said to White, “In this job, I am not worried about my enemies. I can take care of them. It's my friends who are giving me trouble.”

President Harding accepted Fall's resignation “with deep and sincere regret,” and Fall departed—but not without first ordering that the elegant Jacobean antique furniture, with which his Washington office had been supplied from taxpayers' money, be shipped to his home in New Mexico. The transfer of the furniture was all perfectly legal. Fall wrote out his check to the government for $231.25 to pay for it. It was worth about $3,000.

Chapter 10

THE BUBBLE BREAKS

The Doheny family of Los Angeles has never, for all its wealth, been a particularly “social” family—in the American sense in which society survives almost entirely on publicity. Even before the scandal which became known as Teapot Dome (after the quaintly named Wyoming town where a dome-shaped rock looked, to the pioneer settlers, a little like a teapot) and their involvement in it, the Dohenys disliked seeing their names or pictures in the paper, and tried to conduct their lives and businesses as discreetly and quietly as possible in the secluded and policed vastness of “Chester Place.” With Teapot Dome, however, all attempts at family privacy came abruptly to a halt.

The mounting corruption of the Harding administration was dramatically punctuated by the President's sudden death on August 2, 1923, while his wife was reading him a
Saturday Evening Post
article praising him. The cause of his death was said to have been some bad crab meat he had eaten on a trip to Alaska (though
there was grisly speculation that he had been poisoned by a “friend”), and all the problems of his administration—of which Albert Fall's activities were only a part—descended upon the shoulders of his taciturn successor in the White House, Calvin Coolidge. And, slowly and laboriously, under President Coolidge, the legislators in Washington began to investigate some of the things that had gone on during the Harding regime. The Senate Committee on Public Lands and Surveys—organized to look into what had become of the naval oil reserves—held its first hearing 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 for the good of the government and the glory of America and had, furthermore, been done on instructions from his President. He suggested that Walsh “look at the records”—which, of course, was difficult to do because the records of the Harding office had been so sloppily kept that it was almost 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, and national security, it was proper to consult the Congress and not highhandedly take matters into his own hands, and did succeed in getting Fall to admit that he had not sought any legal opinions in connection with his maneuvers. “But I'm a lawyer myself,” Fall added, and then said that, “law or no law,” he would have done anything in his power to prevent the Navy's oil from draining away into neighboring fields. Asked why he had turned over Teapot Dome to Sinclair without any competitive bidding, Fall's haughty reply was “Well, I did it.”

He told the first of many lies. “Did you get any compensation at all?” Senator 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, “I did not feel I could accept any gift of any kind.” No horses, no cattle, boars, or sows. “I shall go into no further detail in discussing this matter,” he added. “The entire subject, of course, is more or less humiliating even to refer to.” When asked about his obviously improved life style, Fall admitted that he had received a $100,000 “loan” from a friend, but lied again when he said that the loan had not come from Doheny, or from anyone connected with the oil industry, but had come from another friend, the Washington publisher Edward B. McLean, husband of Evalyn Walsh McLean of Hope Diamond celebrity. Hastily, Fall got in touch with McLean and got him to promise to “back me up in this.”

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. After a brief lecture to the assembled Senators on the dangers of oil leakages, he stated that he “knew” that the Navy had lost at least one hundred million barrels of oil from its California reserves prior to the Doheny takeover. He, he said, had stepped in out of sheerest patriotism to save America's oil. When Senator Walsh asked him why the Bureau of Mines had not been aware of this grievous loss, Doheny said flatly, “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 had contributed $25,000 to the Harding campaign and paid for the advertisement portraying Harding's 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.” Technically, of course, he was telling the truth since it had been his son, not he, who had presented Fall with the $100,000.

The hearings wore on, with other witnesses called—they would continue, all told, for the better part of four years—and Doheny's next appearance was in January, 1924. He appeared voluntarily, and, because it was rumored 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 loaned Fall $100,000 because Fall was an old friend and needed money to improve his ranch. He told about the cash and the little black bag. Wasn't that, Walsh wanted to know, an unusual way for a businessman to carry out a financial 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, Senator Walsh reminded him, they were talking now of a transaction between Washington and New York, where there was no international banking problem to deal with. Doheny countered by saying that, after all, $100,000 to him was the equivalent of pocket change, and amounted to “no more than $25 or $50 to the ordinary individual.” Walsh replied dryly that he could see Doheny's point but that $100,000 was still a lot of money to a man in Fall's position. “It was indeed,” Doheny admitted, “there is no question about that.” He then 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? 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, Doheny said, he had not, but Doheny was perfectly willing to hire Fall for his company and let him work off
the indebtedness. Yes, Doheny said, Fall had given him a note for the loan, but Doheny had misplaced it somewhere and couldn't find it.

Doheny's appearance concluded 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 on 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 torn when in Ed Doheny's possession. When he made his second appearance before the committee in January, 1924, he had found Fall's note for $100,000. It had, it seemed, been in his wallet all along. But, for some reason, the lower half of the document, which had contained Fall's signature, 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 been afraid that their train might have an accident. If that should happen, 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, given the lower portion to his wife to carry, and she had unfortunately lost it. As evidence, Fall's note—if
it indeed was Fall's note—was meaningless. The Senators remarked that 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 similar conspiracy in connection with Teapot Dome. The third indictment charged Fall with accepting a $100,000 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.

At the time, it was noted that the local press was showing a certain amount of favoritism to the Dohenys. Partly, it was because Mr. Doheny, as one of the town's richest citizens, had become something of a local favorite son. (A Los Angeles street, cutting across Beverly Hills, would be named Doheny Drive.) But one reporter openly admitted that he had been instructed by his editor to write only nice things about the Doheny family because, the editor pointed out, the newspaper would not want Doheny's oil companies to cancel any advertising. The press was further aided by Doheny's chief lawyer, a shrewd little fellow Irishman named Frank J. Hogan, who saw to it that all pieces of evidence favorable to the Doheny side made their way promptly to the press table as soon as they were offered in court. Doheny's appearance at his trial was also in his favor—that of a jovial, white-haired, bright-eyed, and distinguished-looking gentleman, the picture of merry innocence. Hogan's large staff of lawyers was housed in suites of rooms at “Chester Place,” where they led an active after-hours social life and enjoyed such facilities as the Dohenys' private gymnasium, bowling alley, and swimming pool, and where the members of the press were frequently asked to parties.