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The Longest Campaign — Part Two

Teapot Dome and other scandals beget big reforms … with, as usual, big loopholes

Henry Ford ushered in not only the age of mass production, but also the age of scandalous excess in political campaigns. World War I riveted his interest in politics, and, in 1918, he ran for the U.S. Senate from Michigan. He lost, surprisingly, to a Republican opponent who ran what was branded a “money barrel” campaign.

Ford’s opponent, Truman H. Newberry, a lawyer, was later convicted of spending about $180,000 on his campaign, nearly a hundred times the state limit. (As it turned out, nearly 90 percent of his campaign money came from his brother and other family members.) Newberry challenged his conviction on the ground that Congress could not regulate state primaries. As the case proceeded, Newberry and 16 of his campaign staffers and supporters were convicted of conspiring to violate the state spending limits, which had been made a federal crime in 1911. The Supreme Court narrowly overturned Newberry’s conviction, holding that Congress had overreached its powers regarding primaries.

But that was just the beginning of the scandals. In the early 1920s there was “Teapot Dome,” which grabbed headlines and gripped the nation’s attention for years. In 1921, President Warren G. Harding’s secretary of interior, Albert B. Fall, had persuaded the ill-informed president to agree to give the Interior Department control over large oil reserves under a rock formation resembling a teapot in Wyoming, and another in California, both previously administered by the Navy Department for use in the event of war. The oil reserves were subsequently leased to two well-connected oilmen, Harry F. Sinclair and Edward L. Doheny, raising suspicions that something might have been amiss. After Harding’s death of a heart attack in 1923, Senate investigations into the deals found that Fall had received more than $400,000 in loans and government bonds from the oilmen.

The investigations also uncovered the fact that Sinclair had made major contributions to the Republican Party, which, in winning the election of 1920 for Harding, had incurred $1.5 million of debt. Because Sinclair had not made the contributions in the election year itself, he had not been required to report them under federal law—a glaring loophole.

The scandals ushered in the Federal Corrupt Practices Act of 1925, which sounded tough but turned out to be as much loophole as law, with creative political operatives quickly devising ways to skirt its provisions. As the decades unfolded, reform after reform met a similar fate, until the most sweeping reform law of all was enacted in 1974 in response to a scandal that dwarfed even Teapot Dome – Watergate.

The 1925 law revised spending limits but applied them only to party committees; campaigns evaded the limits by establishing separate committees for candidates. It established personal contribution limits; donors evaded them by giving more money through family members, and corporations evaded them by providing funds to employees who would then give them to campaigns in their own names. The act also removed the disclosure loophole that Sinclair had exploited—but it didn’t specify enforcement powers or rules for publicizing the contributions.

Laxity continued into the New Deal years of President Franklin D. Roosevelt. As FDR instituted liberal policies and expanded the federal bureaucracy, Republicans and conservative Democrats feared that he was creating a permanent political money machine to fund the campaigns of their opponents. In 1938, House Speaker Alben W. Barkley of Kentucky was said to have financed his reelection by soliciting thousands of relief workers hired under the Works Progress Administration. Reports of Barkley’s excesses led to the enactment in 1939 of the Clean Politics Act, which is more commonly called the Hatch Act after its sponsor, Democratic Senator Carl Hatch of New Mexico. It broadened the prohibitions of the Pendleton Act by barring the solicitation of campaign money from all federal employees and specifically from workers on public works payrolls.