I.
The Trail is Uncovered
[TABLE OF
CONTENTS]
It started with rumors that members of the Harding
Administration had leased a rich naval oil reserve in Wyoming to private interests in
return for bribes. It resulted in numerous investigations, the resignation of several
cabinet members and civil and criminal prosecutions spanning more than six years. Teapot
Dome became the nomenclature for what North Dakota Senator Gerald Nye called "the
slimiest of slimy trails beaten by privilege." S. Rep. No. 70-1326, Part 2, at 3 (1928).
Seventy-five years later, it remains an important chapter in the ongoing debate over how
best to investigate and prosecute alleged criminal activity by high-level government
officials. (1)
A. The Leases
[TABLE OF
CONTENTS]
The naval oil reserves were three oil-rich tracts of land set
aside by the Taft Administration to provide naval ships with fuel in case of a national
emergency. Congress gave the Secretary of the Navy control over the reserves through the
naval appropriation bill approved on June 4, 1920. It provided that the Secretary of the
Navy would have the power "to conserve, develop, use and operate the same in his
discretion, directly or by contract, lease, or otherwise, and to use, store, exchange, or
sell the oil and gas products thereof, and those from all royalty oil from lands in the
naval reserves, for the benefit of the United States." 41 Stat. chap. 228 (1920).
The reserves consisted of three pieces of property: Naval
Reserve Number One, in Elk Hills, California; Naval Reserve Number Two, in Buena Vista,
California; and Naval Reserve Number Three, in Salt Creek, Wyoming, better known as Teapot
Dome because of the shape of a formation on the land.
The protection of the naval reserves was short-lived, however,
as private interests found a receptive ear in members of the Harding administration. Soon
after Albert B. Fall was appointed Secretary of the Interior, he sought to have
jurisdiction over the naval reserve lands transferred to the Department of the Interior.
Fall convinced Secretary of the Navy Edwin Denby that he should support transferring
authority to Fall because he had more experience with such matters. President Harding
agreed and with the signing of Executive Order 3474, authority over the lands shifted from
the Secretary of the Navy to Secretary of the Interior. Executive Order No. 3474. (2)
Critics were skeptical that Fall would adequately protect the
resource, since his record favoring commercial development was well known from his
participation on the Senate Public Lands and Surveys Committee. That skepticism was well
founded.
The first of the oil reserves surrendered to private interests
were in California. Edward L. Doheny was an "old prospecting pal" of Fall's and
the owner of the Pan-American Petroleum and Transport Company. During 1921 Fall and Doheny
began making preliminary arrangements for a lease of part of the Navy's oil reserves.
In November of that year, Doheny made what he and Fall would
later characterize as a loan to Fall. Doheny had his son draw $100,000 in cash from the
son's account, wrap the bills up in paper, put them in a little black bag and bring the
bag to Fall in Fall's apartment. In later testimony some thought implausible, Doheny
claimed that he had received a note from Fall for the money, eventually producing a note
whose signature had been torn off. Busch, Enemies of the State at 112-13.
During 1922, Doheny's company leased portions of California
Naval Reserve Number One (Elk Hills) and Number Two (Buena Vista). Doheny was obliged to
build storage tanks at Pearl Harbor, fill them with oil, erect a refinery in California
and build a pipe line from the naval reserves to the refinery. In return, Doheny received
exclusive rights to exploit about 30,000 acres of proven oil lands, with a profit
estimated by him at one hundred million dollars. Two other companies had expressed
interest but had insisted that Congress approve the proposed contract before it was
executed, a condition rejected by Fall and Navy officers. Werner and Starr, Teapot Dome,
at 42, 54-57, 84-86.
During the same period, Fall was secretly negotiating away
Wyoming's Teapot Dome, believed to be the richest of the remaining oil reserves. See
62 Cong. Rec. 6042 (1922). Harry
F. Sinclair was head of the Mammoth Oil Company. In December, 1921, Fall entertained
Sinclair, his attorney, Colonel J.W. Zevely, their wives, and several others at his ranch
at Three Rivers, New Mexico: "[i]n the evenings, Sinclair and Zevely sat before
Fall's ranch-house fire and discussed a lease to Sinclair of the entire naval reserve at
Teapot Dome." Werner and Starr, Teapot Dome at 56. They also discussed Fall's cattle
needs. After Sinclair returned home, Fall received six heifers, a yearling bull, two
six-months-old boars, four sows and for his foreman, an English thoroughbred horse. Id.
at 57.
On February 3, 1922, Sinclair, Fall, Admiral John Robison
(Chief of the Navy's Bureau of Engineering and at one time in charge of the administration
of the Naval Petroleum Reserves), and others met in Fall's office to outline the terms of
an agreement. Teapot Dome would be leased in its entirety, Sinclair would build a pipe
line with adequate capacity from the Teapot Dome oil fields, and the proceeds from the
Navy's share of oil from the reserve were to be used by Sinclair to build storage tanks on
the Atlantic coast and fill them with fuel oil. Under their arrangement, the Navy would
not receive any cash, as cash would have to be turned over to the United States Treasury
and the Navy could then only benefit in the ordinary way, through congressional
appropriations. Id. at 59.
During these discussions, the participants considered whether
they should obtain an opinion from Attorney General Daugherty on the legality of the
exchange, but Fall rejected the idea:
[W]hen questioned later about his failure . . . [to ask Daugherty for a legal opinion]
he said that he himself had been a lawyer for many years and neither needed nor wanted
outside legal opinions. In this way, Fall protected himself from cutting Daugherty in on
his profit and Daugherty was glad to be able to say later, when he was in trouble for
shady deals of his own, that at least he had had nothing to do with Teapot Dome.
Id. at 60-61. Fall, (Secretary of the Navy) Denby and Sinclair secretly signed
a lease for the entire tract on April 7, 1922, and Fall locked it in his desk drawer.
One month later (after a Senate inquiry into the leases had
already begun), Fall sent his son-in-law, M.T. Everhart, to see Sinclair in Sinclair's
private railroad car. Sinclair gave Everhart $198,000 in Liberty Bonds. Shortly
thereafter, Sinclair gave Everhart another $35,000 worth of the same issue of bonds.
Everhart in turn gave Sinclair a check for $1100, to pay for the livestock shipped from
Sinclair's farm to Fall (presumably because congressmen were now asking questions about
those gifts), and then advised Sinclair that Fall would like a loan. Sinclair obliged with
$36,000 in cash. Id. at 69-70.
As one historian wrote: "By the time he was finished
leasing the navy's reserves, Fall had given his two benefactors reserves which each of
them estimated roughly to be worth $100,000,000, and he had collected from them $409,000
in cash and bonds." Id. at 86. With respect to Teapot Dome, an oil man would
later testify that it was so valuable that the government could have easily gotten "a
bonus of at least $10,000,000, and possibly as much as $50,000,000, over and above the
royalties Sinclair was obligated to pay, if the lease had been awarded after competitive
bidding instead of in the privacy of Fall's ranch house." Id. at 79.
B. Disclosure
[TABLE OF
CONTENTS]
Despite Fall's efforts to keep the Teapot Dome lease secret,
the news began to spread: "[s]ome men in New Mexico became suspicious when they
noticed Fall buying more land and improving his property there, and oil men in Wyoming and
Colorado began to wire their Congressmen in protest and for information." Werner and
Starr, Teapot Dome at 64. On April 14, 1922, the front page of the Wall Street Journal
reported that Fall had leased Teapot Dome to Sinclair. Noggle, Teapot Dome: Oil and
Politics in the 1920's, at 36.
On April 15, 1922 the Senate passed Resolution 277, requesting
the Secretary of the Navy and the Secretary of the Interior to inform the Senate whether
negotiations were in fact pending to lease naval oil reserves and if so, the parties
involved, the terms and conditions of any such proposed agreements and "whether
opportunity will be given the public for competitive bidding for the operation of these
lands . . . ." See Senate
Resolution 277(3)
and S. Res. 277, 67th Cong. (1922)
(enacted).
Responding to Senate Resolution 277, the first defenders of
the lease were Denby and since Fall was out of town, Acting Secretary of the Interior
Edward Finney. Denby and Finney provided the Senate with a copy of the lease. See
S. Doc. No. 67-196 (1922).
They rationalized in a letter to the Senate that the lease had been executed in the public
interest because crude oil in the reserves was unsuitable as fuel for naval ships so it
was necessary to exchange it for fuel oil and provide for the construction of storage
tanks to minimize evaporation. S. Doc.
No. 67-191, at 1 (1922).
They also argued that drilling was necessary because millions
of barrels of oil had already been lost from the California reserves due to drilling from
adjacent lands and that Teapot Dome faced a similar fate. Id. at 1-2. Finally,
they asserted that the lease did not contradict the administration's policies as
"[t]he Interior Department and the Navy Department have been in close cooperation and
have been endeavoring, as they saw it, to carry out the purposes for which these naval
reserves were created, i.e., not the sale of oil for commercial or other purposes but the
securing of a reserve of fuel oil for Navy purposes." Id. at 3.
After the Senate received a copy of the lease, it unanimously
passed Senate Resolution 282 on April 29, 1922, providing for the Committee of Public
Lands and Surveys to conduct an investigation. Senate Resolution 282 (draft version)(4) and S. Res. 282, 67th Cong. (1922)
(enacted). Senator Miles Poindexter, a Republican from Washington, defined the two
issues needing resolution:
In the first place, was it necessary for the Government to sink wells or to have wells
sunk upon its reserve in order to meet an attack upon the oil underneath its own property
by which it was being drained? In the second place, are the means which have been adopted
by the Government for doing that the proper ones, the best ones, to the greatest advantage
of the Government, which could be obtained?
62 Cong. Rec. 6048 (1922).
In response to Senate Resolution 282, Harding sent a
presidential message to the Senate, asserting that "the policy which has been adopted
by the Secretary of the Navy and the Secretary of the Interior in dealing with these
matters was submitted to me prior to the adoption thereof, and the policy decided upon and
the subsequent acts have at all times had my entire approval." S. Doc. No. 67-210, 67th Cong., 2d
Sess., at III (1922). The message included a report from Fall, but Harding made clear
that Fall's explanation "[was] not to be construed as a defense of either specific
acts or the general policies followed in dealing with the problems incident to the
handling of the naval reserves." Id. at 3.
Fall too declared that the report was not "written in the
slightest degree as an attempt at defense of actions or of policies" since
"[t]he writer recognizes no necessity for such defense." Id. at 26.
Closely following the President's message, Fall, in a letter to the Senate, again insisted
that he was in compliance with President Harding's Executive Order of May 31, 1921, giving
him permission to administer the naval reserves for the Secretary of the Navy and thus,
the lease was proper. H.R. Rep.
No. 67-1079, at 9 (1922). Fall also insisted that he had discussed the Teapot Dome
lease with Denby. In his words, "[t]he Secretary of the Interior has proceeded under
this order in constant communication and consultation and cooperation with the Secretary
of the Navy, and is so continuing at the present time." Id.
In the face of continuing reports that Fall's personal
fortunes had mysteriously improved, these assurances were not enough to quell growing
suspicion of wrongdoing. Members of the oil industry expressed their outrage to Wisconsin
Republican Senator Robert La Follette, who presented their point by point letter of
protest on the Senate floor on May 13, 1922:
First. Against the policy of the Secretary of the Interior and the
Secretary of the Navy in opening the naval reserves at this time for exploitation.
Second. Against the method of leasing public lands without
competitive bidding, as exemplified in the recent contract entered into between Secretary
Fall of the Interior and Secretary Denby of the Navy and the Standard Oil-Sinclair-Doheny
interest.
Third. Against the policy of any department of the Government of the
United States entering into a contract of any character whatsoever, whether competitive or
not, which would tend to continue or perpetuate a monopolistic control of the oil industry
of the United States or create a monopoly on the sale of fuel oil or refined oil to the
Navy or any other department of the Government.
For the following reasons:
There exists no emergency or necessity which would warrant the
opening of the naval reserves at this time for exploitation in order that the Navy might
be supplied with the various grades of oil required by it, there being already above
ground and in storage in the United States the greatest amount of oil that has been in
storage in the history of all times.
The prices of fuel oil at the seaboard are lower than they have been
in years, and there is an abundant supply.
The oil industry of the United States is just now convalescing from
the greatest depression it has ever suffered, the daily production now being the largest
in its history, and therefore, the turning over of Government lands to the large pipe-line
interests for exploitation will have the direct result of depressing the price of crude
oil without in any way relieving the people of the onerous and burdensome high prices of
refined products.
62 Cong. Rec. 6893 (1922).
News of the scandal was not only gaining the attention of
Congress and the press, but also weighed heavily on the mind of President Harding, who
commented while traveling across the country: "I have no trouble with my enemies, I
can take care of them. It is my . . . friends that are giving me trouble." Noggle, supra
at 56. Harding died
suddenly on August 2, 1922 while he was in San Francisco. Calvin Coolidge
assumed the presidency the next day.
II.
The Trail Widens: Congress Investigates
the Teapot Dome Lease
[TABLE OF
CONTENTS]
Hearings on the Teapot Dome oil lease began on October 15,
1923 before the Senate Committee on Public Lands and Surveys. Only three members were in
attendance at the first meeting. Since they lacked a quorum, the meeting was adjourned
until the following week. Senate Public Lands and Surveys Committee, 67th Congress 3rd
Session - 68th Congress, 1st Session: Minutes (October 15, 1923 and
October 22, 1923).(5)
That would be the first and only time the Senate Committee on Public Lands and Surveys
adjourned for want of a quorum during these Teapot Dome hearings.
As the steady stream of witnesses appeared before the
committee, starting on October 23, 1923 and continuing through May 14, 1924, each name was
penned in a small green notebook now housed at the National Archives. Id.
(October 23-25, 1923). Senator Thomas Walsh, a Democrat from Montana, led the committee's
investigation. The committee's first witness was former Secretary of the Interior Fall,
who had resigned from his post effective March 4, 1923. Id. (October 23, 1923).
Fall was followed on the witness stand by Secretary of the Navy Denby. Id.
(October 25, 1923).
Over the next few months, dozens of witnesses testified before
the committee. As the weeks passed, however, the investigation appeared to lose momentum
and was largely forgotten by the public. That changed in January 1924, when a tortured
account of Fall's finances began to emerge. On January 24, 1924, Edward Doheny conceded in
a statement that he read to the Senate committee that he had lent Fall $100,000, and
Doheny's son had carried the cash to Fall. Walsh's next step was to call for appointment
of special counsel.
A. A Call for Special Counsel
[TABLE OF
CONTENTS]
At an executive session of the Public Lands Committee on
January 26, 1924, a Saturday, Walsh proposed that he introduce on Monday a Senate
Resolution calling on President Coolidge to annul the leases of Teapot Dome and Elk Hills
and to appoint a special counsel to investigate and prosecute those involved. The
Committee unanimously agreed. Before Walsh could present the resolution to the full
Senate, however, Coolidge beat him to the punch. Coolidge issued a statement at midnight
that appeared in the newspaper the next day, on Sunday, announcing his intention to
nominate two special counsel:
It is not for the President to determine criminal guilt or render
judgment in civil causes. That is the function of the courts. It is not for him to
prejudge. I shall do neither; but when facts are revealed to me that require action for
the purpose of insuring the enforcement of either civil or criminal liability, such action
will be taken. That is the province of the Executive.
Acting under my direction the Department of Justice has been
observing the course of the evidence which has been revealed at the hearings conducted by
the senatorial committee investigating certain oil leases made on naval reserves, which I
believe warrants action for the purpose of enforcing the law and protecting the rights of
the public. This is confirmed by reports made to me from the committee. If there has been
any crime, it must be prosecuted. If there has been any property of the United States
illegally transferred or leased, it must be recovered.
I feel the public is entitled to know that in the conduct of such
action no one is shielded for any party, political or other reason. As I understand, men
are involved who belong to both political parties, and having been advised by the
Department of Justice that it is in accord with the former precedents, I propose to employ
special counsel of high rank drawn from both political parties to bring such action for
the enforcement of the law. Counsel will be instructed to prosecute these cases in the
courts so that if there is any guilt it will be punished; if there is civil liability it
will be enforced; if there is any fraud it will be revealed; and if there are any
contracts which are illegal they will be canceled.
65 Cong. Rec. 1520 (1924) (as
reported by The New York Herald, January 27, 1924).
At the last minute, Attorney General Harry Daugherty, who had
theretofore demonstrated little interest in the matter, positioned himself as supportive
of the appointments. Daugherty's 11:25 p.m. telegram to Coolidge read:
May I again urge the desirability you immediately appoint two outstanding lawyers who
as such shall at once take up all phases of the oil leases under investigation of the
Senate or others and advise you as to the facts and law justifying legal proceedings of
any kind. As you know, I do not desire to evade any responsibility in this or other
matters; but considering that Mr. Fall and I served in the Cabinet together, this would be
fair to you, to Mr. Fall, and the American people, as well as to the Attorney General, the
Department of Justice, and my associates and assistants therein. I do not desire to be
consulted as to whom you shall appoint. The only suggestion I have to make in that regard
is that those appointed shall be lawyers whom the public will at once recognize as worthy
of confidence and who will command the respect of the people by not practicing politics or
permitting others to do so in connection with this important public business. Their work
can be done with or without the cooperation of the Department of Justice or anybody
connected therewith as you and they may desire. The Department of Justice is at all times
in this or any other matters at your service and at the service of your appointees in this
connection.
65 Cong. Rec. at 1537-1538.
The Washington Post on Monday ran a statement by Senator
Walsh, recounting his intention to present a resolution to the Senate "authorizing
and directing the President to institute suit to annul the leases and to employ special
counsel who should have charge of the litigation." 65 Cong. Rec. at 1520. Walsh,
skeptical of the coincidence that the committee would unanimously call for the appointment
of special counsel and the same day the President would announce the same desire, related
his belief that his plan was leaked to Coolidge. "It was agreed that the action of
the committee should be regarded as confidential. But in the view of the statement from
the White House, to which so obviously the information was conveyed, I give you this
statement." Id.
In the Senate on Monday, offense was taken at Coolidge's
observation that special counsel from each party was needed because members of both
parties were involved. Representative Hatton Sumners, a Texas Democrat, protested:
This reservation of the American Nation against the day of its need was surrendered by
a Republican Secretary of the Navy; it was bartered away by a Republican Secretary of the
Interior. The transfer and the lease were approved by a Republican Cabinet. I do not
prejudge. But why try to dodge responsibility and talk about parties? There happens to be
but one party involved and some dastardly thieves who ought to be in the penitentiary.
But, gentlemen, it does not make any difference whether it were the Republican or
Democratic Party. It is the business of the party in power to face the American Nation,
stand responsible for the conduct of its administration, and to give the people of this
Nation a prosecution in this case that will restore the confidence of the people not in
the party in power merely, or any party, but in their Government, in the integrity of
their public officials.
65 Cong. Rec. at 1582.
Tennessee Representative Finis Garrett, a Democrat, said "we upon this side of the
aisle are not objecting to the employment of special counsel" but he vehemently
objected to what he saw as the President's politicization of the scandal:
[W]hy did the President of the United States, the President of the whole people, for
the first time, so far as I know anywhere, any place, that this matter has been considered
or discussed, suggest the idea of political parties in connection therewith. You know, of
course, that it was an effort to try to stem the tide of suspicion running against so
large a part of this administration.
Id.
The idea of appointing two special counsel was well received
by Congress, in part because there were serious doubts as to whether the Department of
Justice and Attorney General Daugherty should conduct the investigation.
Senator William King, a Utah Democrat, was among those who
questioned whether "the President long before had decided that he had no confidence
in the Attorney General or in any of the officials of the Department of Justice, and
therefore, he felt that somebody outside of the department ought to be selected?" 65 Cong. Rec. at 1537. Representative
Garrett suggested that the President was not the only one who had lost confidence in the
Department of Justice:
[I]n view of the fact that we can not confide in the Department of Justice, in view of
the fact that the public can not confide in the Department of Justice, in view of the fact
that the President can not confide in his own Department of Justice, we feel that the time
has come to give him special counsel.
65 Cong. Rec. at 1582.
Accordingly, the Senate unanimously passed Joint Resolution 54
on January 31, 1924, stating that the leases to the Mammoth Oil Company and the Pan
American Petroleum Company "were executed under circumstances indicating fraud and
corruption" and "were entered into without authority" and "in
violation of the laws of Congress." 65 Cong. Rec. 1728-1729 (1924). It
directed the President to institute suit to cancel the leases "and to prosecute such
other actions or proceedings, civil and criminal, as may be warranted by the facts in
relation to the making of said leases and contract." Id. at 1729. The
President was authorized "to appoint, by and with the consent of the Senate, special
counsel who shall have charge and control of the prosecution of such litigation, anything
in the statutes touching the powers of the Attorney General of the Department of Justice
to the contrary notwithstanding." Id. The joint resolution authorizing
special counsel was signed into law on February 8, 1924. 43 Stat. chap. 16 (1924). The
funding mechanism, a joint resolution for $100,000 to cover the special counsel's
expenses, was approved by the President on February 27, 1924. 43 Stat. chap. 42 (1924).
B. The Appointment of Atlee Pomerene and Owen Roberts
[TABLE OF
CONTENTS]
The Senate was acutely aware that public attention had focused
on the scandal and that the best legal talent was needed to prosecute the case.
Washington's Senator Clarence Dill, a Democrat, spoke:
They think a great national scandal has been unearthed. The case demands the biggest
men that the country has in its legal profession.
. . . May I pause for a moment to remind Senators of the kind of a case that is. It is a
big case. Nobody knows the exact value of the properties involved. It is estimated at
probably a billion dollars. Mr. Doheny, Mr. Sinclair, and Mr. Fall will have the best
attorneys their millions can employ. The United States Government needs the biggest and
best prosecutors that can be had to meet those attorneys in the courtroom and carry the
criminal prosecution to conviction.
65 Cong. Rec. 2548 (1924).
The President's first two nominees, Republican Silas Strawn
and Democrat Thomas Gregory, both had connections with the oil industry. Their nominations
were withdrawn when it became clear that the Senate would not approve their appointment.
Pennsylvania's Republican Senator, George Pepper, thought a
Republican attorney from Philadelphia, Owen Roberts, would make an excellent candidate,
and he suggested Roberts' name to Coolidge. Pepper then summoned Roberts to Washington.
Before meeting Coolidge, Pepper asked Roberts if he would be interested in "a very
delicate piece of business—one which might make him a national figure, and one which
might ruin him because he would be stepping on the toes of some mighty big people."
Werner and Starr, Teapot Dome at 153.
Roberts responded "that he had never been overly
impressed by some mighty big people and asked what his friend had in mind." Id.
Pepper revealed that "he had recommended him to President Coolidge as one of the two
special counsels to try the oil cases and that they had an appointment with the President
for that afternoon at 2:30." Id. An historian described the meeting among
Coolidge, Roberts and Pepper this way:
After Roberts and Senator Pepper entered the President's office, Coolidge waited until
they were seated and then said, "I understand you're a farmer, Mr. Roberts." He
got up from his desk and pointed out a picture of his own farm in Vermont. Roberts, who
operated a farm at Valley Forge, Pennsylvania, in which he took some pride, said
"Guernseys are my money crop, and I've never shown a loss."
Coolidge considered this statement gravely for a moment and then
abruptly launched into the reason for the visit. He asked Roberts what he knew about
public-land laws.
"Nothing whatever," Roberts replied. Senator Pepper tried
to explain away this frankness. The President turned to him and said, "When I want an
interpreter, I'll call on you." Roberts then went on to say that he had been a
professor of the law of property at the University of Pennsylvania Law School for some
years, and that he did not think that he would have much difficulty studying the
public-land laws.
The President walked over to the window and stood gazing for a while
out at the White House lawn. There was a rather long silence. "Pepper," the
President finally said, "I can see no reason why I should not appoint this man."
Then he turned to Roberts and said, "If you are confirmed, there is one thing you
must bear in mind. You will be working for the government of the United states—not
for the Republican Party, and not for me. Let this fact guide you, no matter what ugly
matters come to light. You may call on me for whatever assistance you may need. Don't
hesitate to ask."
Id. at 153-54.
Even though Roberts thus had Coolidge's seal of approval, he
needed Senate confirmation. Pepper highly recommended Roberts on the floor of the Senate:
For 25 years he has been engaged in the active practice of his
profession at a bar which is not without men of ability. He has emerged from the struggles
of the forum with a character unimpaired, a reputation unsmirched. He has stood the fire
test of professional life. He is recognized by his entire community as a gentleman of
integrity and honor.
Senators, the man is in the prime of life. He is 49 years of age and
a tower of physical strength. He is a ceaseless and tireless worker. When he is not in
court he will be found in his office early and late. He has recognized that the law is a
jealous mistress and has given but little time to activities outside the scope of his
profession.
. . . He began his experiences in active practice as an assistant
district attorney in Philadelphia and for several years prosecuted with effect criminals
at the bar of the courts. In the meantime he was building up a civil practice which has
attained proportions second to none in our community. He has been in court continuously
for 20 years. Day after day, week after week, term after term, he has tried all kinds of
cases and has acquired equal facility in the trial of all of them. He is an admirable jury
lawyer. He has the courage, the thoroughness of preparation, the resourcefulness, and the
personality necessary for success in that difficult branch of professional work. And he
has attained it.
65 Cong. Rec. 2637-2638 (1924).
Coolidge paired Roberts with former Senator Atlee Pomerene, an
Ohio Democrat. Pomerene was highly recommended by the man who had taken his seat in the
Senate in 1922, Republican Simeon Fess:
I simply desire to say this much about the man with whom I had a
contest in Ohio. I have known him for many years professionally; I have known him
politically, not much socially; but I know Atlee Pomerene as a man of unusual ability as a
lawyer, which must have been clearly manifested in the remarkable manner in which he
conducted the many investigations that were conducted by order of the Senate. I knew him
as a witness once in one of the investigations. I recognized that no person who knows
ability would question his ability and power as a cross-examiner. As a lawyer it would
appear to me that he would fill the position and meet the requirements contemplated by the
pending investigation.
I knew him very well politically. I do not believe that there is a
more upstanding, honorable, and courageous man in either party in my State than Senator
Atlee Pomerene.
. . . As a man of courage, I know no superior. As a man of probity,
there certainly can be no question about him. With my knowledge of this former opponent of
mine, I am free to say that I stated to the authorities here that it appeared to me that
Mr. Pomerene would be a very good representative of one of the political parties to carry
on the investigation. I have never known his Democracy to be questioned, and certainly I
did not think it was questioned when I was in a contest with him two years ago.
65 Cong. Rec. at 2553.
However, some in the Senate, like Washington Democratic
Senator Clarence Dill, believed the two nominees fell short of the mark:
[I]n the appointment of Mr. Pomerene the President has chosen a man who has had no
experience at all in public land law, a man who has had no practice in equity cases in the
Federal courts, with the exception of one case, since he left the Senate. And this is the
attorney who is to have charge of the prosecution of these cases as the attorney in chief.
Mr. Roberts, the other man suggested, so far as I can learn, is a
reputable trial lawyer at the bar in Philadelphia, but he, too, knows nothing about public
land law. He, too, has no national reputation. He is a stranger to the public mind. Thus
the Senate is asked to confirm the nomination of two attorneys neither of whom has ever
made a national reputation as lawyers, neither of whom is fitted to handle the cases as
compared with the men whom they must necessarily oppose.
Id. at 2548. Dill
stressed the importance of the Senate's role:
I recognize fully, I hope, that ordinarily the power of confirmation in the Senate is
more or less a perfunctory power in most cases and seldom goes further than the
consideration of the reputation and general ability and character of a man. The ordinary
appointee of the President is selected to carry out his particular policies as his agent,
and, as such, is purely an administrative officer; but in this case there is a vast
difference. The attorneys in this case will not be the representatives of the President to
carry out his administrative policy. These attorneys are not to act under the Attorney
General; these attorneys are to represent not merely the President, but all the Senate and
the American people.
Id. Senator David Walsh, a Democrat from Massachusetts, and Dill continued:
Mr. Walsh:
I suppose the Senator will agree with me that these
attorneys will become more or less the agents of the Chief Executive, that they will be in
touch with him, and have to make reports to him from time to time; that their industry and
their enthusiasm will be measured somewhat by his interest and enthusiasm in the
successful prosecution of these cases. I suppose the Senator will agree with that. I ask
this question, has the Senator, as a member of the committee, or has any other member of
the committee, any reason to believe that for the sake of politics or for the sake of
covering up the facts there is any disposition on the part of the Chief Executive or the
executive branch of this Government not to prosecute these oil-scandal cases with
enthusiasm and with zeal and with vigor to a successful completion?
Mr. Dill: Mr. President I do not want to go into the motives of the
President of the United States. There may be justification for the suggestion of the
Senator—
Mr. Walsh: I do not mean to make any suggestion. I have heard it
suggested that the committee have received no cooperation whatever from the executive
department—
Mr. Dill: Certainly not—
Mr. Walsh I want to know if the Senator is convinced, the resolution
having been passed, the people of this country may reasonably expect that the executive
departments, all of them, are going to get behind this prosecution and manifest an
interest in the successful prosecution of these cases?
Mr. Dill: I can only say to the Senator that I hope the President is
anxious and enthusiastic to prosecute these cases. There is a phase of that question which
does require consideration for a moment, and that is that when the President picks men who
are ordinary lawyers, considered from a national standpoint, and who have corporate
connections of which the people are suspicious, there is a probability that the public
will believe that the cases are not being prosecuted with the vigor with which they should
be prosecuted, with which the Senate desires to have them prosecuted. The danger is that
the people will think, because the President selects as attorneys men who are not the
great outstanding members of the profession, that he is not desirous of having these cases
prosecuted to their fullest success, and if the Senate permits this confirmation to go
through the Senate must share the responsibility. As one Senator, I refuse to have any
part in the responsibility. Such a selection will arouse suspicion in the public mind, and
if the cases fail, as they may fail, it will cause a revulsion of feeling in this country
that will endanger the very Government itself.
I want to say, Mr. President, that with the state of the public mind
as it is to-day, this is no time to do things which encourage public suspicion. The
American people everywhere are doubtful about the men here in Washington unearthing all
the facts. They are questioning the sincerity of many of us and the selection of counsel
who do not command public confidence when the counsel are so extremely important as they
are in this case will but add to the public suspicion, already too great.
Id. at 2551-2552.
Nonetheless, Pomerene was approved by a vote of 59 to 13 on
February 16, 1924. Two days later, Roberts was approved by a vote of 68 to 8. That same
day, Secretary of the Navy Edwin Denby sent his resignation to Coolidge.
One account states:
Offices were assigned to the special counsel in the Transportation
Building at 17th and H Streets. On their first day of work, Roberts and Pomerene had an
interview with Coolidge. Roberts reported to the President on his interview with Walsh and
the senator's warning about the uselessness of the Department of Justice under the
circumstances [see following section]. Coolidge listened to this account in silence and
then decided that the only solution was to turn over to special counsel Treasury
Department Secret Service men, who had a long tradition of quiet effectiveness and were
known to be incorruptible. As they were leaving, the President reiterated his invitation
to call upon him whenever help was needed, and he added that he had no doubt that they
would need it. "And stop by the way," Coolidge said to Roberts with a faint
smile, "stop back sometime and tell me more about those Guernseys."
Werner and Starr, Teapot Dome at 160.
Within a month of the Senate's approval of Roberts and
Pomerene as special counsel, the two sought indictments against Fall, Doheny, and
Sinclair.
C. Loss of Confidence in the Justice Department
[TABLE OF
CONTENTS]
Shortly after his confirmation as special counsel, Roberts met
with Senator Walsh who gave him this advice about Attorney General Daugherty:
I wouldn't depend on the Justice Department for investigative purposes, nor would I
approach the Attorney General's office for information if I were you. . .. It is my
conviction that the man would go to any lengths to protect himself and his
friends—and make no mistake about it, the people we are after are friends of the
Attorney General. Harry Daugherty has had a hand in every dirty piece of business which
has come out of the Harding administration. There is every reason to believe that, at the
very least, Daugherty is one of the men who knows the whole sordid story of the oil
leases—and there is enough evidence to warrant the suspicion that he himself might
have profited from them. In addition, the Department of Justice and its Bureau of
Investigation are hand-picked by Daugherty and rotten to the core.
Werner & Starr, supra at 159.
The Senate immediately moved to address the acute loss of
confidence in the Department of Justice that had necessitated the appointment of special
counsel. Amid calls for Daugherty's resignation, Montana Senator Burton Wheeler, a
Democrat, introduced Senate Resolution 157, providing for an investigation of the
Department. Wheeler articulated the reasons for investigating Daugherty and the Department
of Justice on the Senate floor:
Ever since the Attorney General has occupied the important position
which he now holds various charges have been made against him in the newspapers and by
individuals from one end of the country to the other. Recently when the oil scandal first
developed it appears that the Attorney General's name was mixed in it. It appeared, if you
please, that he was the friend of Ned McLean. Everybody knows that he was the friend of
Sinclair. Everybody knows that he was the friend of Doheny. Everybody knows that those
three men met in the apartment of the Attorney General from time to time . . . .
The newspapers in New York carried the details of how the Attorney
General's former partner and friend, Mr. Felder, was collecting money for the purpose of
selling offices, appointments, and for the dismissal of whisky (sic) cases in the city of
New York. Everybody who knows anything about the history of the matter knows that other
friends and confidential advisors of the Attorney General of the United States were
collecting money and were giving as their reasons for collecting it that they could use
influence with the Attorney General of the United States of America . . . .
Not only that, but when the startling testimony came out in the oil
investigation that McLean had given money to Fall there was not any prosecution. Then when
McLean subsequently testified that he did not give the money and when the testimony was
produced that Mr. Fall got the money from Doheny, that the money was sent in a sack by
Doheny's son, and taken in connection with the other testimony given by Doheny upon a
subsequent occasion, what effort was made on the part of the Attorney General or the
Department of Justice to arrest or prosecute Fall? On the contrary he was allowed to be at
large. He was allowed to stay in the house of Sinclair's lawyer. Throughout the entire
investigation not one scintilla of evidence has been offered to the committee by all or
any of the investigators of the Department of Justice.
65 Cong. Rec. at 2769-2770.
Wheeler would have gone further, but was persuaded to remove the following two clauses
from his resolution:
Whereas it appears that said Harry M. Daugherty has lost the
confidence of the President of the United States, as exemplified by the President's
statement that he intends to employ, at great expense to the Government, special attorneys
not connected officially with the Department of Justice, indicating that this department
can not be trusted with the prosecution of the cases which have arisen by reason of the
disclosures before the Senate Committee on Public Lands and Surveys and the United States
Veteran's Bureau; and
Whereas said Harry M. Daugherty has lost the confidence of the
Congress of the United States and of the people of the country, and the Department of
Justice has fallen into disrepute.
Id. at 2769.
Daugherty responded to Wheeler's charges by writing a letter
to Ohio Republican Senator Frank Willis:
It is interesting to remind you that before the introduction of this
resolution I requested the President to relieve me of the responsibility of prosecuting
Albert B. Fall, and those with whom he is alleged to have been acting in collusion,
because of the fact that Mr. Fall had been a member of the Cabinet in which I also served,
and that the country might be better satisfied to have the conduct of the prosecution in
control of lawyers in no way connected with the Government. You know that the President,
approving this suggestion, did place this whole matter in the hands of two of the ablest
lawyers in this country, Hon. Atlee Pomerene and Hon. Owen J. Roberts, whose appointments
have been confirmed by the Senate, and who are now in full charge of the particular
matters referred to in this resolution.
. . . .
. . . I desire to say further that since I have been Attorney General I
have never acted upon any information received as Attorney General which resulted in my
personal profit. I was not called upon by Secretary Fall or anyone else for an opinion,
written or oral, in regard to the wisdom or legality of the oil leases, and I never
volunteered an opinion either written or oral, to Secretary Fall or anyone else. I had no
part of any kind of character, directly or indirectly, in the negotiations leading up to
the execution of the oil leases; no information ever came to me in connection therewith,
and the leases were executed without my knowledge and without any official requirement or
opportunity on my part to know of their execution.
65 Cong. Rec. 3307 (1924).
Senate resolution 157, directing a Senate committee to
investigate Daugherty's failure to prosecute, among others, the cases arising from the
Teapot Dome scandal passed by a vote of 66 to 1. 65 Cong. Rec. at 3410. The
investigation also included "numerous charges of illegality, graft, and
influence-peddling in the Justice Department." Hasia Diner, Congress Investigates --
A Documented History 1792-1974 15 (1983).
After much pressure from Coolidge and under protestations of
innocence, Daugherty resigned on March 28, 1924. Daugherty was replaced as Attorney
General by Harlan Stone, who was succeeded by John Sargent when Stone was appointed to the
Supreme Court in 1925.
With the change in Justice Department leadership, the need to
maintain separation between the two special counsel and the Department evidently
diminished. Roberts and Pomerene "were 'specially retained' by the Attorney General
of the United States, to serve as special assistants to the Attorney General," and in
prosecuting Fall, worked with the U.S. Attorney for the District of Columbia and another
counsel retained by the Attorney General. See United States v. Fall, 10 F.2d 648,
649 (D.C. Ct. App. 1925).
III.
The Special Counsel Follow the Trail
[TABLE OF
CONTENTS]
Roberts and Pomerene began their investigation by studying the
Senate record, briefing the law and drafting complaints against the Pan American and
Mammoth Oil companies. Then they investigated the records of the Navy and Interior
Departments and sent out private detectives to gather evidence in California, New Mexico,
Texas and New York. Within six months, the two were managing a complicated and diverse web
of civil and criminal cases that would reach witnesses in Canada, France and Cuba. A
chronological list located in the Department of Justice Government Oil Case Files
memorializes the intensity of their effort during the first three years of their
investigation. Chronological Index of Activities of Special Counsel.(6)
Their investigation was not without dramatic incident. Secret
Service Agent Thomas B. Foster was detailed to the investigation and proceeded to examine
Fall's financial transactions. On his trail were both agents of the Department of
Justice's Bureau of Investigation and private detectives, assigned to follow him and find
out what he was discovering. On the trail in Colorado, he found his hotel room ransacked.
Werner and Starr, Teapot Dome at 171-73.
Atlee Pomerene's notes from 1925 reveal his thoughts on the
investigation:
The issues involved in the pending litigation are far-reaching . . . Can the Naval Oil
Reserves of such great value be bargained away in secret by public officials to their
favorites? Can millions of barrels of royalty crude oil be delivered to these same
favorites, without competitive bidding, for the construction of steel tankage and for fuel
oil? Can duel depots be thus established by the Secretary of the Interior and the
Secretary of the Navy, when this power never was lodged in the Secretary of the Navy by
the repeal legislation of 1913? Can the public business be thus transacted and in secret?
Shall men be permitted to make alleged "loans", (not to use an uglier term), to
public officials with whom they are dealing for the public domain? Shall these officials
be justified in representing to the public that the Naval Oil Reserves are not to be
leased while they are privately negotiating with and executing leases to others? Shall an
Admiral's course be approved, when he says: "It was the intention that the public and
Congress should not get knowledge of what was being done until it had been in fact
done"? These questions are involved in the pending litigation.
AP-TO dated 4/29/1925.(7) Pomerene's questions
would receive a variety of responses from the courts in the coming years.
A. The Cases
[TABLE OF
CONTENTS]
Pomerene and Roberts brought numerous civil and criminal
actions against those involved in the fraudulent leasing of Teapot Dome and the Elk Hills
reserves. Two civil trials and six criminal trials ensued. Ultimately, these cases
restored the naval reserves to the United States, put Sinclair in jail for nine months for
contempt of Congress, and landed Fall in prison. Francis Busch, an historian, writes:
Today these cases have a dual significance. For lawyers they record
a highly complex and bitterly contested litigation in which both sides were represented by
some of the most brilliant advocates of their generation. For laymen these cases
demonstrate democracy's boast that no man, rich or poor, of high or low estate, is above
the law.
Busch, Enemies of the State 91.(8)
1. Civil litigation
[TABLE OF CONTENTS]
On June 30, 1924,
a criminal indictment was filed in the District of Columbia charging Doheny and his son
with offering a bribe to Fall -- the same bribe which Fall had been convicted of receiving
from the Dohenys. The evidence "was practically identical" in the two cases,
with "one important difference -- [at the Dohenys' trial] no testimony was offered on
Fall's financial transactions with Sinclair. Werner and Starr, Teapot Dome at 167. The
Dohenys were acquitted by a jury.
B. Roberts Seeks to Resign
[TABLE OF
CONTENTS]
Roberts had a successful law practice before he became special
counsel, one to which he attempted to return in the waning days of the prosecutions.
However, it was Attorney General John Sargent's opinion that since Roberts was appointed
by the President, with the "advise and consent of the Senate" that Roberts was
an officer prohibited from practicing before different departments of the federal
government. H.R. Rep. No. 70-1959, at
2-3 (1928). He contended that Roberts' representation of a client before the Board of
Tax Appeals, would violate the law that prohibited United States officers from
representing parties against the United States.
Roberts grew increasingly frustrated with the limitations thus
imposed on his practice. When Pomerene requested advice from Roberts concerning the case
involving the Elk Hills tract, Roberts responded "I note that you have advised the
parties that you will not agree to anything without conferring with me. As I have
heretofore advised you that I cannot take any part in this trial I think that you should
do exactly what you want about the matter without any reference to me." Letter from Owen Roberts, Special Counsel
to Atlee Pomerene, Special Counsel (September 20, 1928).(25)
The following day Roberts again wrote to Pomerene distancing
himself from the litigation and expressing his intention to resign:
I am going to Washington next week to see the Attorney General and to ask him to permit
me to formally resign from all of my appointments other than the appointment of President
Coolidge in the oil cases. I am doing this preliminarily prior to going to the Treasury
Department and trying to get straightened out the question of my right to practice before
the Treasury. I have spoken to you about this matter before, that the Treasury's attitude
up to date has been one that has caused me a great deal of inconvenience and loss.
Letter from Owen Roberts, Special
Counsel, to Atlee Pomerene, Special Counsel (September 21, 1928).(26)
Senator Walsh then sent Roberts a letter disagreeing with the
Attorney General's position and expressing his hope that Roberts would reconsider his
decision:
I notice by the press that you have apparently severed your connection with the work
that devolved on you in connection with the lease of the oil reserves. I hope there is
some mistake about this. I understood your employment was "for the duration of the
war," and if so I am sure you will feel, as I do that you ought to stay with the
fight to the end.
. . . .
The intimation has reached me in some way that you quit because of the
loss to which you are subject in consequence of a supposed inability to represent clients
before the departments or Government boards or commissions. I can not believe that you are
subject to any such inhibition. The place you fill is one of employment, rather than an
official situation, I would say without giving study to the subject.
S. Rep. No. 70-1338, at 1 (1928).
Walsh suggested that the matter be resolved by Congressional
action and proposed to "undertake to get through an appropriate joint resolution,
relieving you from the operation of the law." Id. Roberts welcomed the
suggestion and commented that President Coolidge had made a similar proposal. See id.
at 2-3. As Roberts characterized it, the Attorney General's position forced him "to
sit here and twiddle my thumbs for 18 months or 2 years to come while the Senator and I
finished up the few matters that remain in the oil cases and practically stay out of all
business." Id. at 2.
The joint resolution met with little opposition in the Senate.
There was one lone voice raised in opposition in the House, that of New York Republican
Representative Fiorello La Guardia:
It simply singles out one man and sets aside wise, sound, and
necessary provisions of the law in order to obtain the legal services of one particular
lawyer . . . .
I do not believe and can not agree that there is only one man in the
United States who can prepare the briefs and argue the particular case for the Government
in this particular instance . . . .
But assuming that . . . a lawyer has the government, so to speak, by
the throat, assuming that he is the only man who can prepare these briefs and argue the
case, then I submit it is manifestly unfair for him to say, "I will not continue. I
will resign unless you amend the law especially for me so that I can come in and practice
before the departments of the Government in matters against the United States, even though
I am retained as special counsel for the same United States."
70 Cong. Rec. 830 (1928). La
Guardia observed that the Teapot Dome investigation had become a sacred cow:
When the oil cases are mentioned, it seems everybody is afraid to speak. . . . [i]f you
are going to annul the law prohibiting a Government official from appearing against the
Government, you are going to destroy a great protection for the government and Government
resources.
I will state frankly that considerable pressure has been brought for
the passage of this resolution. This matter was mentioned in the message from the
President of the United States. He recommends the passage of the resolution. It has passed
the Senate and the Committee on the Judiciary of the House has reported it out without a
dissenting vote except my own; but if I am the only Member of this House to-day to take
this position, I am going to take it and stand here and oppose it, because I
conscientiously consider it unwise and dangerous.
Id. The resolution passed both the House and Senate and was signed by the
President on December 21, 1928. See 45 Stat. chap. 45 (1928).
C. Special Counsel Face Financial Difficulties
[TABLE OF
CONTENTS]
Congress made a number of $100,000 appropriations for the work
of the special counsel. The first $100,000 appropriation was signed on February 27, 1924. See
43 Stat. chap. 42 (1924).
Even though appropriations for expenses of the special counsel
went smoothly from 1924-1927, problems arose in 1928. In a meeting with Coolidge, Pomerene
told him that since February 3, 1928, no payments had been made for "ourselves, or
assistants, or clerks, or expenses." Memorandum from Atlee Pomerene In Re:
Naval Oil Litigation - Special Counsel, Conferences with President and Attorney General, 1
(May 27, 1930).(27)
On the same day, May 26, 1930, Pomerene so advised the
Subcommittee of the House Committee on Appropriations. He explained that the special
counsel had received no money for more than two years and asked for a reappropriation of
$149,707.51, the balance of the appropriation that had been made the year prior. Pomerene
suggested that "[n]ot much of that appropriation has been expended, due perhaps to
our negligence in presenting bills, I guess." Second Deficiency Appropriation Bill,
1930: Hearings Before the Subcomm. of House Committee on Appropriations, 71st Cong. 826
(1930).(28)
Pomerene explained, "Mr. Roberts has paid the assistants in his office, and my firm
of Squire, Sanders & Dempsey have paid my assistants. We have paid our own hotel and
other expenses-except, of course, our railroad fares and Pullman fares were paid by travel
vouchers, also telegraph and telephone charges were largely paid by the Government." Id.
at 831. Pomerene told the committee "all that money is subject to disbursement by the
President." Id. By Executive Proclamation, the President extended the
balance of the available appropriations to June 30, 1932 to enable Roberts and Pomerene to
conclude their work.
IV.
The Trail Ends
[TABLE OF
CONTENTS]
In the wake of the Teapot Dome investigation tumbled the
resignations of Secretary of the Interior Fall, Secretary of the Navy Denby and Attorney
General Daugherty. The scandal would forever cast a shadow on the Harding administration.
On February 25, 1928, the President returned the administration of the oil and gas naval
reserves to the Secretary of the Navy. 45 Stat. chap. 104 (1928). The
"slimy trail" finally ended, as North Dakota Senator Gerald Nye observed:
The investigation has shown, let us hope, privilege at its worst. The trail is one of
dishonesty, greed, violation of law, secrecy, concealment, evasion, falsehood, and
cunning. It is a trail of betrayals by trusted and presumably honorable men--betrayals of
a government, of certain business interests and the people who trusted and honored them;
it is a trail showing a flagrant degree of the exercise of political power and influence,
and the power and influence of great wealth upon individuals and political parties; it is
the trail of despoilers and schemers, far more dangerous to the well-being of our Nation
and our democracy than all those who have been deported from our shores in all time as
undesirable citizens. And in the end the story is one of the crushing of brilliant careers
when finally the light was played upon those who schemed those unhealthy schemes born in
darkness.
S. Rep. No. 70-1326, at 3 (1928).
Owen Roberts ceased his work as special counsel when he was
appointed as a Justice to the Supreme Court in 1930.
Atlee Pomerene saw the litigation to the end. Among his last
acts as special counsel was to pursue compensation from companies that had bought Teapot
Dome oil from Mammoth Oil Company when Mammoth's bankruptcy meant recovery was impossible.
Pomerene recovered more than $26,000 from Sinclair Pipe Line Company and Midwest Refining
Company. Pomerene was later appointed by President Hoover to head the Reconstructionist
Finance Corporation but was replaced when Franklin Delano Roosevelt took office.
The two were widely praised, even though some of their prosecutions were unsuccessful:
[They] left no stone unturned to win their case. No avenue of evidence was left
unexplored, and no pains or expense were spared in preparing for trial. The government's
side could not have been in more able hands. The skill with which the evidence was amassed
and arranged, and the ability with which it was presented to the jury, left no possible
room for adverse criticism. Messrs. Roberts and Pomerene adhered to the finest traditions
of American jurisprudence throughout the preparatory and trial stages of this celebrated
case; and no one who followed the case could doubt that if a verdict of guilty had been
forthcoming it would have been due to the extraordinary efforts and ability of the
government's counsel.
The Doheny-Fall Verdict, The
Washington Post, December 17, 1926).(29)
Note: The views expressed in
this piece are those of the author and should not be attributed to the staff, officers or
trustees of the Brookings Institution.
Copyright © 1999 The Brookings Institution
