California State Military Department
The California State Military Museum
Preserving California's Military Heritage
Californians and the Military
The Forgotten Bagman of Teapot Dome:
Edward "Ned" Laurence Doheny, Jr.
By Lieutenant Colonel Norman S. Marshall
California Center for Military History
 
By the end of World War I, the oil industry had become a large and fantastically profitable business which in part had replaced in influence other industrial interests dominating American Politics.

A key player in this game was Edward L. Doheny, a man whose vast holdings in both the United States and Mexico caused his only son to play significant and tragic role in its history.

Edward Laurence Doheny, Jr. was born in Los Angeles on November 1893 and he graduated from Los Angeles High School in 1912. He went to Stanford University for one semester and transferred to the University of Southern California in January 1913. He married his wife and the mother of his five children in June 1913. He graduated from the University of Southern California with a degree in business in 1916. He then joined his father's many companies. He was at an executive capacity with the ultimate purpose being to succeed to the presidency upon his father's retirement.

Doheny, Sr. had first worked as a government surveyor in Kansas and New Mexico. He prospected for gold, leaving a long time friend and business partner, Albert Bacon Fall.

In 1890, he came to San Bernardino, California and met another acquaintance and business associate who prospered with him in the early oil industry, Charles A. Canfield.

They formed the Pacific and Silver Extracting Company.

The story is told how one day Doheny was sitting in front of a Los Angeles hotel thinking about his future when he spotted a wagon coming down the street loaded with a dark tar like material. He asked the driver what it was and the driver said it was "brea"; it was used for fuel at a local ice plant. Doheny contacted Canfield and the two set out to find the source of the "black gold" which was at the La Brea Tar Pits. Thereupon he entered in numerous leases and sank a shaft at the corner of Second and Glendale Street in Los Angeles, bringing in his first gusher in November of 1892.

Subsequently Doheny had 81 wells in Los Angeles and he began to inquire other properties in Fullerton and in the San Joaquin Valley including the Coalinga Fields near Bakersfield.

He soon became a major player in the petroleum business and within a few years he went into petroleum production and refining in a big way in Mexico where he brought in the greatest gusher in history. At one time, he was so powerful that, to protect his oil properties in Mexico he had a private army of 6000 men and with the outbreak of World War I he persuaded President Wilson to send a squadron of destroyers to protect his interests there in the Yucatan Peninsula.

By 1922, his wells were providing 6 million barrels a month.

Between 1910 and 1925, Doheny took home ten million dollars a year from his oil investments in the United States and Mexico.

With young Doheny's graduation from the University of Southern California at age 23 in 1916 he entered his father's business and knowing many social luminaries he was persuaded by Frank Seaver, who was then a young up an coming lawyer and the commanding officer of the Second Battalion of the California Naval Militia to participate in its programs. Frank Seaver persuaded him to join the Militia.

That organization was actively supported by his father E.L. Doheny. Doheny was jingo and a month before the United States declared war in 1917 he established the Practical Patriots League in Los Angeles. The main purpose of the organization was to stimulate recruitment for the Navy and to provide for National Assistance to the families of the Militia men who had been called to active duty.

Doheny was commissioned a full lieutenant on January 22, 1917 and four months later was called into active federal service, although he was then the father of two children.

He was assigned to the USS HUNTINGTON (ACR-5), an armored cruiser. Although he had requested recruiting duty in Los Angeles which was denied by the Commandant of the Southern California Naval Militia District, Commander Alfonso Henry Woodbine. Commander Woodbine insisted that he join Captain Robinson on the staff of the HUNTINGTON. Woodbine was the HUNTINGTON's Executive Officer and First Lieutenant.

The armored cruiser HUNTINGTON was first launched on April 18, 1903 bearing the name USS WEST VIRGINIA. With the new battleships coming on line, she was renamed HUNTINGTON, a city in West Virginia on 11 November 1916. In late 1914, she became part of the Pacific Reserve Fleet and was overhauled to accommodate catapult sea planes on the boat deckways.

With the approach of war, the HUNTINGTON was placed in full commission in early April 1917 and within days numerous Naval Militia men reported aboard to augment the crew and make her ready for sea. HUNTINGTON departed Mare Island on May 11, 1917, transited the Panama Canal and arrived at Pensacola on May 28, spending two months at the Naval Aeronautic Station at Pensacola engaging in a series of early flight experiments with sea planes being launched from her deck. During that Pensacola period, Frank Simpson, Jr., the subject of another article, was a California acquaintance of Doheny then undergoing Naval Flight instruction at Pensacola. He knew Edward L. Doheny well and in writing home to his parents on May 31, 1917, said the following:
"Had lunch with Commander Woodine on board USS HUNTINGTON today – and he had dinner with me tonight.

He evidently didn't think much of young Doheny –Doheny wanted to stay in Los Angeles on recruiting duty and Woodbine said he had enough trouble makers at home –so he took him along on board ship.... Morgan Adams is wild at having been stuck in the Farragut on patrol duty (his regular job is the same thing I thought it such a hardship to have to do for a few days).

When Commander Woodbine came home from San Francisco this spring he found Adams and the Dohenys had cooked up a fine deal – so he Commander Woodbine – phoned the Practical Patriots League and said – ‘send your authorized representative to my office at the Armory this afternoon.'

Mr. and Mrs. Doheny and somebody else came. Commander Woodbine said ‘People you are evidently sincere in desire to help the Naval Militia – but in order that we come to a proper working basis – let me tell you that I am the boss of the Naval Militia in So. Cal – and everything must go through my hands and be approved by me. He said he had no more trouble."
 
After an affectionate letter closing to his parents, he went on to say by way of a footnote:
 
"Commander Woodbine said that he didn't think young Doheny would pass the mental exams a fine bunch of pikers and four flushers, those Dohenys – courtesy to even acknowledge my letters – patriotism? Not at all – just an attempt to gain notoriety. Have that fine son of theirs detailed to a soft berth at home – I may yet be able to use them so will sit tight but someday Mr. Doheny Sr. is going to hear the straight from me."
 
 

 

Within a few days after arrival of the ship at Pensacola, Doheny, Sr. arrived and visited the ship and a conversation with Captain John Taylor Robinson, its Skipper. By Robinson, what he thought of the Navy's handling of its oil reserves Doheny said "well it is being handled very well for the people you have for neighbors, but you were not going to have any property there in a very few years. Robinson later said that conversation from such a practical expert as Doheny had opened his eyes to the danger to the Navy from drainage by adjacent wells. In that conversation, something else must have been said for Doheny was detached within days from the ship on June 13, 1917 and assigned to duty in the Judge Advocates office in Washington, D.C. although he was not a lawyer. He spent the duration there.

Upon entry of the United States into the war, Doheny his family and his various companies did the patriotic thing, the Pan American Petroleum and Transport Co. and his Mexican Petroleum Company, bought two million dollars in Liberty Bonds, while Doheny Sr. and his family bought another 1.5 million dollars individually. More bonds were bought by Doheny and his businesses in subsequent Liberty Loan Drives. Doheny's companies also contributed one hundred thousand dollars to the war work of the Young Mens Christian Association while Doheny and his family contributed an equal amount. This patriotic generosity did not go unnoticed in Washington.

The war ended on November 11, 1918 and on November 17 Doheny was detached from the Judge Advocate's Office and sent to the submarine base in San Pedro, California to rejoin his family. He was released from active duty on January 14, 1919, but continued to participate in the Naval Reserve with the Lieutenant's commission until his murder on February 16, 1929.
Civilian Life
 
Upon release from active duty, Doheny joined his father's petroleum empire as a Senior Executive being a Vice President on the staff of the Petroleum Securities Corporation. He entered into the social life of Los Angeles becoming the President of the University of Southern California Alumni Association and was a great benefactor of the University and other causes, while his wife watched after a growing family. He enjoyed significant social contacts with the Los Angeles Athletic Club, the Los Angeles Country Club and membership on the boards of leading civic organizations. He became a trustee of the University of Southern California and was a generous contributor giving a two hundred thousand dollar endowment.
 
The Washington Scene
 
In 1920, there was a change in the administration in Washington. President Harding assumed the office and appointed various department officials. Edward Edwin Denby of Michigan and a former congressman was appointed by Harding to the Office of Secretary of the Navy. Denby, in turn, appointed Captain Robinson to head the Navy's Bureau of Engineering raising him to the temporary rank of Rear Admiral and placing him in charge of the Navy's Petroleum Reserve.

In the meantime, Albert Bacon Fall had become Secretary of the Department of the Interior and knowing Doheny's interests in acquiring additional domestic reserves began a scheme to have the petroleum transferred from the Navy Department to the Department of Interior under his control. Fall was pressured with financial obligations.

Earlier, President William Howard Taft had withdrawn the Public Lands for the use of the Navy in 1910 and by executive order created the Naval Petroleum Reserve consisting of 69,310 acres in the Elk Hills, Kern County, California and an additional 29,341 acres in the Tea Pot Dome area of Natoma County, Wyoming.

The Navy had converted from coal to oil burning ships by 1912 and the government wanted to be sure that petroleum reserves will be available if the commercial sources became scarce. Additionally, the availability of cheap government oil would act as a cap to extortionate prices charged by the commercial producers.

The fear of drainage from adjacent wells to Naval properties was a common fear and Secretary Josephus Daniels felt that under certain circumstances it may be necessary to lease parts of the Reserve. At his urging on June 4, 1920, Congress passed a law giving the Secretary of the Navy power to develop operate or lease parts of the Naval Reserve and giving him the power to sell or exchange petroleum products for the Navy, a small budget of half a million dollars was also appropriated for the project.
 
By May 31, 1921, President Harding signed an executive order giving the Secretary of Interior, Fall, complete control of the Naval Reserves and a few weeks later Fall wrote to Doheny,
"there shall be no further conflict with Navy officials" as he had told Denby, he would take complete charge, "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 this department, but only with himself and such a consultation shall be confined strictly and entirely to matters of general policy".
 

Transfer of the petroleum reserves embittered powerful figures in the Navy Department. Fall decided to pacify he Navy brass by helping them deal with an old problem for many years the Navy had wanted to build petroleum storage depots at Pearl Harbor, Hawaii and along the Atlantic Coast, but with the downsizing of the Military Congress had denied these funds.

The Navy thought that it could fund the construction work with royalties from some small oil leases it had granted. Although that Congress demanded these royalties be deposited in the Treasury's General Fund, but in any event the storage depot project would cost two hundred million dollars which was more than the Navy's oil income.

Fall found a way around this suggestion that Navy take its royalties and certificates from the Oil Companies which could be used to pay for the construction of the depots, that is if more of the Naval Reserves were leased there would be enough money and certificates to pay for the construction of oil storage depots by the oil companies.

On November 28, 1921, Doheny signed a proposal to build the oil storage depot at Pearl Harbor in exchange for the Navy's crude oil. The very next day, Fall called Doheny and told him to go ahead and said the "loan" they had talked about was due.

Doheny then dispatched his son, Edward L. Doheny, Jr. and Doheny, Jr.'s employee and friend, Hugh Theodore Plunkett, to deliver the loan. The two men went to the brokerage house of Blair and Company withdrew one hundred thousand dollars in cash from Ned's account wrapped the money in paper and put it in a little black bag and took it to Fall in his apartment at the Wardman Park Hotel in Washington. Later Ned Doheny claimed that Fall had given him a receipt for the "loan".

On April 17, 1922, the government accepted Doheny's bid to build the Pearl Harbor storage facilities in exchange for its choice of any lease on the Elk Hills Reserve in exchange for building a storage capacity of 1.5 million barrels of fuel oil, he would receive 6 million barrels of crude oil. Later, another agreement was made by which Doheny agreed to build oil storage tanks and build a refinery in San Pedro, California (the Port of Los Angeles) and build a separate pipeline from the Elk Hills in Kern County, California southward to San Pedro in exchange for which Doheny got the right to lease the entire Elk Hills Reserve for 15 years.

The oil in the ground at Elk Hills was estimated at between 75 and 250 million barrels being worth at least one hundred million dollars. Fall signed the contract on December 11, 1922. This undoubtedly a sweetheart deal and within a matter of months indictments were issued. Congressional hearings were held and indictments were issued against Albert Fall, Doheny and Harry Sinclair (Standard Oil of Indiana and a beneficiary of the Tea Pot Dome lease hold).

The first civil case, to rescind the Doheny oil lease contracts came to trial on October 21, 1924. This was Admiral John Keeler Robinson, Ned's former Commanding Officer who portrayed the whole thing as a patriotic project to ensure that there was fuel for the Pacific Fleet. He said that Doheny had told him that his company would bid on the construction of the storage facilities and "what is more, I will tell you admiral", said Doheny, "If you get a bid from me or my company it will be one that won't involve one cent of profit to me".

One of Doheny's lawyers laid it on thick, "America can sleep tonight secure from danger of being overrun by a Mongol country because the patriotism of such men as E. L. Doheny, Edwin Denby and Admiral John K. Robinson and their work in establishing a great Naval base in Hawaii. These men have been humiliated and vilified because they endeavored to save you and me and our country".

The civil trials were followed by criminal trials against Doheny and Fall. Fall was convicted of accepting a bribe.

Doheny was represented by lawyer Frank Hogan, a successful criminal attorney, who once remarked the ideal client is a rich man who was scared. Doheny paid Hogan $1,000,000 for his work on the case and he succeeded in having Doheny acquitted, although Fall went to jail.

Summation: The close of the case was a masterpiece of forensic showmanship. He made an emotional appeal to the jury portraying his client as a pioneer or prospector or patriot and pointing to Ned Doheny, he declared,
"That old man offered that young man's life upon the alter of patriotism. He went on the ships of war over the turbulent and submarine infested oceans in his country's service." He reminded the jury that Ned was an only son, "and you are asked to believe that when Edward L. Doheny near the end of his life corruptly intended to bribe Albert B. Fall, a Secretary in the Cabinet of Warren G. Harding, he deliberately and purposely used as an instrument, therefore his son, the pride of his youth, the hope of his maturity, the solace of his old age!! And yet, unless you believe that, you cannot believe there was a bribe. You cannot believe that there was a criminal mind and a corrupt heart motivating this thing; you cannot believe in all the labored argument of our opponents. Do you believe that man is a crook? If he's a crook, convict him. But can you believe that his mind was so corrupt that he conceived bribery and that he had fallen so low that he selected his own son, whom a few years before he had given to the Navy, as an instrument of his bribery. Now Doheny says to you from the grave that which in life he said from this very witness stand. This indictment charges that young Doheny was a briber. Can you believe that? Can you believe that a man who a few years before had offered his only son to his country and fallen so low that he took him, the expected solace of his old age, and made him an instrument of his bribery? It isn't human to believe it!"
 

Doheny was acquitted in less than one hour after the jury was charged.

The United States Supreme Court handed its decision on October 11, 1927 declaring that the leases had involved fraud and were therefore rescinded as void. However, Sinclair and Doheny had to return to the government the Navy's Reserves at Tea Pot Dome in Elk Hills along with over 24 million dollars from Doheny's Pan American Petroleum Company and 500,000 dollars from Sinclairs Mammoth Oil Company. That ended the civil suits.
 
Plunkett's Role
 
Theodore Plunkett was born in Kansas and worked at a job changing tires in service stations. When World War I broke out, he served as a machinist on a submarine chaser. Returning from the War he went to work for the Doheny's and became a "secretary" of Ned Doheny. He was involved in many of the family's financial affairs and was a trusted gopher. He was given to nervous breakdowns and had been hospitalized at the Doheny expense.

At the time of the trial, Doheny, Sr. was still facing a trial in the criminal court for bribing Fall. Doheny knew that if Fall, who would be tried first were found guilty, he would have to convince the jury that he had not given the bribe that Fall had already been convicted of accepting. The case could be expected to hinge on the testimony of Ned Doheny and Hugh Plunkett who had actually delivered the money in the black bag. Obviously if Plunkett was diagnosed as psychotic and residing in sanatorium, Plunkett could not be called to testify about the bribe to Fall. Even if he were out of the institution, the testimony of a man with mental problems would lack credibility. Doheny, Sr. brought his friend and physician, Dr. Fishbaugh, who attempted to convince Plunkett to enter a sanatorium. That same day Mr. and Mrs. Doheny visited Plunkett at his apartment at Greystone in an attempt to convince him to enter the sanatorium and there was an argument. Later that evening when Plunkett showed up at the Doheny mansion. Ned decided the time had come to put him in a mental institution. The Los Angeles Times account said it was because of Ned's inability to quiet the mad man and his belief that a showdown on the plan to have Plunkett placed in a sanatorium for rest should be had then that caused Doheny to put in a hurried telephone call for Dr. Fishbaugh who later received the message at a Hollywood Theater.

On the evening of February 18, 1929, something happened. Plunkett apparently shot Ned to death and turned the gun on himself. There was apparently cover ups by the family physician and a delaying in reporting the events to the police department, with contrary reports of what really transpired.

Both Ned and Plunkett were the apparent victims of Old Man Doheny's ambition. It is with a bit of irony that the Teapot Dome Scandal caused Fall to be convicted of accepting a bribe and that Doheny Sr. was found innocent of offering to bribe.
 
 


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