Support The Bulwark and subscribe today.
  Join Now

Trump-Era Corruption Eclipses Even Teapot Dome

That legendary scandal, which originated 100 years ago, involved Americans paying off Americans. Trump’s corruption is transnational.
September 13, 2021
Trump-Era Corruption Eclipses Even Teapot Dome
(Photos: GettyImages / Shutterstock)

Exactly a century ago, a scandal began gurgling in the White House that would eventually consume the nation’s attention, the administration’s fortunes, and the president’s legacy. The scandal’s name became a byword for corruption of a scale not surpassed until our own era.

The Teapot Dome saga began in 1921, in the first months of Warren Harding’s administration. At the center of the scandal loomed Albert Fall, a lawyer from New Mexico who was in his second term in the U.S. Senate when his close friend Harding tapped him to be secretary of the interior. Harding’s first choice for the job—the oilman whose money had done much to win Harding the Republican nomination—died after being shot by his mistress. Harding knew Fall, an anti-conservationist, would be amenable to using the office to pay back the oil interests.

Fall knew he could use the office to line his pockets. Accepting bribes from a range of leading oil companies, Fall granted access to reserves in California and Wyoming, including the eponymous Teapot Dome field—so called because of a distinctive teapot-shaped rock nearby. These reserves, bearing hundreds of millions of barrels of oil, were supposed to be held for the U.S. Navy. In doling out these reserves, Fall grew stupendously wealthy, receiving overnight the equivalent of millions of dollars.

Yet Fall, the only official later jailed for his crimes—and the first cabinet official in American history to be imprisoned for crimes committed while in office—hardly operated in a vacuum. Treasury Secretary Andrew Mellon, who never raised any red flags about the oil field transfers, revealed that he’d been offered millions of dollars’ worth of bonds from one of the oil companies involved. (The stupendously wealthy Mellon turned down the offer, but when later questioned about why he hadn’t reported the offer amid the scandal, responded, “What purpose would that have served?”) And when rumors of Fall’s bribery began slipping out, Attorney General Harry Daugherty slow-walked any investigation into how the oil fields had ended up in these companies’ possession. It’s not difficult to see why. Daugherty was a leader of the “Ohio Gang” surrounding Harding. Not only did the attorney general oversee what one historian described as a “diversified criminal enterprise,” from selling pardons to illegally profiting from boxing matches, but he eventually faced investigation for his own role in the sprawling Teapot Dome affair. While Daugherty eventually escaped imprisonment, he resigned in disgrace—but not before burning as many of Harding’s papers as he could find.

Harding, meanwhile, died in office, collapsing of a heart attack before the secrets of his own involvement in Teapot Dome could spill out. The president was, at best, indifferent to the unprecedented corruption washing through his administration, waffling through a forgetful presidency. But later investigations revealed that Harding may have known far more than even his detractors assumed. As Laton McCartney recounts in The Teapot Dome Scandal, his seminal 2008 book about the affair, one of the key moments snuffing out investigations into the scandal came when the Sinclair oil company bribed editors at the Denver Post to kill investigations into the Teapot Dome payment details. And according to at least one witness, the mastermind of such hush money payments wasn’t Sinclair but was, rather, Harding himself. As Harding demanded, the Post had to “let up on that oil business in Wyoming,” agreeing to shovel $1 million to the Post’s editor.

Of course, bribes were hardly the only means of smothering investigations into the scandal. When senators began poking into the oil deals’ financing, some of them found their offices broken into and ransacked. Daugherty ordered FBI Director William Burns to illegally tap the phones and surveil the mail of Sen. Burton Wheeler, then leading the investigation, while his crusading colleague Sen. Thomas Walsh later revealed that a stranger had stopped his daughter and 3-year-old granddaughter and “threatened her with harm if she did not force her father to drop the investigation.” (On his own end, Fall simply resorted to issuing death threats against any journalists poking around his finances.)

All told, Teapot Dome was, as Walsh recounted, “the most stupendous piece of thievery known to our annals, or perhaps to those of any other country.” And for a century, he was right. Nothing—no administration, no presidency—could top Teapot Dome’s legacy of outright fraud, or of outright abuse of the public trust.

Until, that is, Donald Trump. A century on, it’s clear that Teapot Dome is no longer the lodestar of presidential larceny, the shorthand for shortchanging the public, the metric against which all other corruption scandals are compared. Thanks to the reign of Donald Trump, the United States now has a new yardstick against which all future administrations will be measured—and an insight into just how much corruption has changed over the past century.

Scan over the past few years and the stench of corruption wafting from Trump’s orbit is staggering. Campaign chairmen who secretly worked for foreign officials while skimming millions on the side. Presidential lawyers defrauding banks and taxpayers alike, or ushering in whichever foreign patron they could find. All of this while Trump tossed open the doors of his business to any and all comers, regardless of sources of their funds, regardless of whether Americans ever learned any details of their payments. (In a depressing bit of historic resonance, Trump’s first interior secretary, Ryan Zinke, resigned in disgrace under a cloud of his own corruption allegations—a move that few will remember, given the cascade of ethics violations and conflicts of interest deluging the administration throughout Trump’s four years.)

We’re still just scratching the surface of the depths of Trump’s and his administration’s rank corruption. Only just this summer, we learned that one of Trump’s former foreign policy and economic advisers, Tom Barrack, was indicted for allegedly working at the behest of a foreign dictatorship in the United Arab Emirates, secretly whispering policy advice in the president’s ears, all while his private equity firm received $1.5 billion from the UAE and their Saudi allies. It was a breathtaking revelation of a successful foreign espionage case, predicated on gobsmacking financial flows—and it barely cracked the news cycle.

Against the past few years, Teapot Dome appears almost quaint—a relic of a bygone, back-slapping era, a time when Americans paid off Americans, all for other Americans’ benefits, all in a neat, tidy circle of domestic graft. It’s not just the magnitude of the Trump-era corruption that challenges our notion of what an American president dedicated to financial misconduct can accomplish. It’s that now, the players are transnational in scope—crossing borders, crossing boundaries, taking full advantage of the financial secrecy tools wherever they may be, and the fecund opportunities that a president like Trump can provide.

This makes a certain sense. Not only has the rise in transnational corruption and money laundering—this kind of modern kleptocracy, in which regimes dedicated to pilfering and pillaging look to Western jurisdictions for all their financial secrecy needs—exploded in the past few decades, but Trump, as the overlord of a sprawling luxury real estate empire, was perfectly positioned to watch this large-scale laundering and larceny bloom. It’s no surprise that Trump was the first global leader to emerge from one of these pro-kleptocracy industries; the exact number of oligarchs, despots, and their cronies who used Trump properties, and the luxury American real estate market writ large, to launder their money is impossible to know. According a New York Times estimate, “over 200 companies, special-interest groups and foreign governments . . . patronized Mr. Trump’s properties while reaping benefits from him and his administration.” But given the number of anonymous shell companies involved, any picture we have is woefully incomplete. We’re still only looking through a keyhole at a kingdom of illicit finance.

Presidential corruption is no longer limited to a roster of crooked Americans swiping oil reserves in distant states or sliding duffel bags of cash to members of the executive branch. Now anyone with a bit of dirty money—anyone who’s looted national treasuries, or who’s blended their organized criminal racket into a formal state apparatus—has a way directly into the White House. No matter the national security concerns. No matter the links to malign regimes, or malignant kleptocrats. Thanks to Trump, we know that the White House can be transformed into a node in the sprawling transnational networks of illicit finance—and the latest tool in these oligarchic arsenals, bent on pillaging local populations as long as they can.

If Donald Trump, then, has replaced Teapot Dome as the benchmark for presidential corruption, one logical question follows: What now? After Teapot Dome, a number of court rulings took aim at preventing another similar scandal, allowing Congress to compel witness testimony and demand tax returns. And after Trump, we’re already seeing momentum toward preventing the rise of a similar figure in the future. Congress earlier this year passed legislation effectively eliminating anonymous American shell companies, but that’s just a start. Real estate, hedge fund, and private equity industries should all face similar legislation, requiring basic due diligence to learn more about how they’ve turned into sieves of suspect money. And Congress must continue digging into as much of Trump’s personal financing as it can.

If there’s one lesson from Trump-era corruption—and one distinguishing factor from Teapot Dome—it’s that this corruption is no longer just a domestic concern. It no longer remains confined to national borders, or to national polities. Which is why, in a century’s time, when future American students think of presidential corruption, they’ll immediately think of Donald Trump—and how he illustrated how presidential corruption stopped being an American concern, but something for all the kleptocrats of the world to enjoy.

Casey Michel

Casey Michel, a journalist who covers transnational corruption, is the author of American Kleptocracy: How the U.S. Created the World’s Greatest Money Laundering Scheme in History (St. Martin’s Press, 2021). Twitter: @cjcmichel.