Prohibition & Depression

The two decades between 1920 and 1940 represent one of the most corrupt periods in American history, producing scandals that ranged from the highest levels of the federal government to the most local precincts of city politics. Three factors drove this explosion of corruption. First, the 18th Amendment and Prohibition (1920–1933) created an illegal liquor industry worth billions of dollars annually, generating an unprecedented flow of bribe money to police, prosecutors, judges, and politicians at every level. Second, the Teapot Dome scandal demonstrated that even cabinet-level officials would sell the nation's strategic reserves for personal profit. Third, the Great Depression and the New Deal's massive spending programs created new opportunities for political machines to extract graft from relief funds meant for the destitute.

This era produced three of the most colorful and destructive corrupt figures in American political history: Albert Fall, the Secretary of the Interior who became the first cabinet member sent to prison; Huey Long, the Louisiana governor and senator who built a near-dictatorial political machine; and Tom Pendergast, the Kansas City boss who controlled Missouri politics for two decades and launched Harry Truman's career. Each represented a different variety of corruption, but all demonstrated the same underlying truth: American institutions were far more vulnerable to corruption than their designers had intended.

The era also demonstrated the corrosive effect of corruption on public trust. The Teapot Dome scandal, coming after the idealism of World War I, contributed to the cynicism about government that characterized the 1920s. Prohibition's corruption of law enforcement undermined respect for the law itself. And the political machines' exploitation of Depression relief funds eroded faith in the government's ability to respond honestly to crisis. The damage to institutional legitimacy outlasted the individual scandals that caused it.

The Teapot Dome Scandal

The Teapot Dome scandal is among the most consequential corruption cases in American history and produced the first imprisonment of a sitting cabinet member. At its center was Albert Bacon Fall, Secretary of the Interior under President Warren G. Harding, who secretly leased federal oil reserves to private companies in exchange for at least $404,000 in bribes; equivalent to roughly $7 million today.

The scandal involved two federal petroleum reserves that had been set aside for future Navy use: Teapot Dome in Wyoming and Elk Hills in California. In 1921, Fall persuaded Harding to transfer control of these reserves from the Navy Department to the Interior Department. He then secretly leased Teapot Dome to Harry Sinclair's Mammoth Oil Company and Elk Hills to Edward Doheny's Pan American Petroleum Company, without competitive bidding. In exchange, Fall received approximately $404,000: $100,000 in cash delivered to Fall's ranch in a "little black bag" by Doheny's son (Doheny later characterized this as a "loan"), and over $300,000 in cash and Liberty bonds from Sinclair, some of it laundered through a cattle company.

The scandal was exposed through a Senate investigation led by Senator Thomas J. Walsh of Montana, which began in October 1923 and continued for over a year. Walsh's persistent questioning gradually unraveled Fall's cover story and revealed the payments. Fall had initially claimed that the improvements to his New Mexico ranch (which had been in financial difficulty before the leases) were funded by a $100,000 loan from newspaper magnate Edward McLean. When McLean denied this under oath, Fall's defense collapsed.

The legal aftermath was protracted and produced a remarkable double standard. Fall was convicted of accepting a bribe from Doheny in October 1929 and sentenced to one year in prison and a $100,000 fine. But in a separate trial, Doheny was acquitted of paying the same bribe; a logical impossibility that became a symbol of the different standards applied to the wealthy and the merely corrupt. Sinclair was convicted of contempt of Congress and jury tampering but acquitted of conspiracy. Fall entered the New Mexico State Penitentiary in July 1931, the first cabinet member in American history to go to prison. He served nine months and 19 days.

The Broader Harding Administration Scandals

Teapot Dome was only the most prominent of the Harding administration's scandals. Attorney General Harry Daugherty was forced to resign in 1924 amid allegations that he had sold Justice Department favors, including pardons, paroles, and the dropping of prosecutions, through his associate Jesse Smith (who committed suicide when the scandal broke). Charles Forbes, the director of the Veterans Bureau, was convicted in 1925 of conspiracy and bribery in connection with the construction and supply of veterans' hospitals, stealing an estimated $200 million from the agency. Harding himself was not directly implicated, but his administration became a byword for corruption that would not be matched until the Nixon era.

Prohibition: The Corruption Superhighway (1920–1933)

The 18th Amendment, which prohibited the manufacture, sale, and transportation of alcoholic beverages beginning January 17, 1920, created the most extensive and systematic corruption of law enforcement in American history. By criminalizing a product that the vast majority of Americans wanted to consume, Prohibition generated an illegal market worth an estimated $3 billion annually, equivalent to roughly $50 billion today, and the torrents of cash flowing through that market corrupted every institution they touched.

In Chicago, Al Capone's organization paid an estimated $30 million per year in bribes to police, prosecutors, judges, and politicians. A 1928 survey of the Chicago police department estimated that more than half the force was on the take from bootleggers. The city's mayor, William "Big Bill" Thompson, ran an openly corrupt administration that cooperated with organized crime. When reformer Anton Cermak defeated Thompson in 1931, he reportedly told associates, "I'm going to get the gangsters out of Chicago"; then proceeded to redistribute the graft to his own machine.

In New York, the situation was similar. Mayor Jimmy Walker's administration (1926–1932) was soaked in Prohibition-era corruption. The Seabury Commission investigation of 1930–1932 documented systematic bribery in the magistrates' courts, police protection of speakeasies, and Walker's own acceptance of gifts and payments from individuals doing business with the city. Walker resigned in September 1932 rather than face removal by Governor Franklin Roosevelt.

In Kansas City, Tom Pendergast used Prohibition to build one of the most powerful political machines in American history. Pendergast controlled the liquor supply, the gambling operations, and the political apparatus simultaneously, creating an interlocking system of corruption that was virtually immune to prosecution because the prosecutors themselves were Pendergast appointees.

Huey Long's Louisiana Machine

Huey Pierce Long Jr. was the most powerful and most dangerous political boss in American history; a figure whose control over his state approached genuine dictatorship and whose ambitions extended to the presidency of the United States. As governor of Louisiana (1928–1932) and then U.S. senator (1932–1935), Long built a political machine that controlled virtually every aspect of Louisiana state government, from the judiciary to the highway department, from the university system to the state police.

Long's power rested on several pillars. The "deduct system" required every state employee to contribute a percentage of their salary, typically 5% to 10%, to Long's political organization. With tens of thousands of state employees, this generated hundreds of thousands of dollars annually for the machine. Long controlled the state legislature so completely that he personally dictated legislation, sometimes standing on the House or Senate floor and ordering members how to vote. When legislators resisted, Long gerrymandered their districts out of existence, cut their patronage, or used the state tax authorities to investigate their finances.

Long's control extended to the judiciary (he packed the courts with loyalists), law enforcement (the state police served as his personal enforcers), the university system (he fired professors who opposed him and micromanaged Louisiana State University, down to selecting the football team's plays), and the state's regulatory agencies. His power was so complete that opponents described Louisiana under Long as "the nearest thing to a totalitarian state the American republic has ever known."

What made Long unique was that his corruption coexisted with genuine populist achievement. He built thousands of miles of paved roads (Louisiana had only 300 miles of paved roads when he took office), constructed bridges, provided free textbooks to schoolchildren, expanded public hospitals, and established night literacy classes for adults. His "Share Our Wealth" program, which proposed redistributing the fortunes of the very rich, attracted millions of followers nationwide and made him a credible threat to President Franklin Roosevelt's reelection. Long was assassinated on September 10, 1935, by Dr. Carl Weiss in the Louisiana State Capitol. He was 42 years old.

Aftermath: The Louisiana Scandals

After Long's death, federal investigators finally obtained the evidence they needed to prosecute his machine. Between 1939 and 1942, a series of federal trials produced convictions of Long's key associates, including Governor Richard Leche (sentenced to 10 years for mail fraud), Louisiana State University president James Monroe Smith (sentenced to 8–24 years for embezzlement), and several other officials. The total documented theft from state coffers exceeded $100 million. Leche's administration was so corrupt that it became known as the "Louisiana Scandals"; a remarkable distinction for a state whose politics had never been characterized by integrity.

Tom Pendergast's Kansas City Machine

Thomas Joseph Pendergast was the boss of the Kansas City Democratic machine from the early 1920s until his conviction for income tax evasion in 1939. At the peak of his power in the 1930s, Pendergast controlled not only Kansas City but much of Missouri state government, including the governor's office and, through his protege Harry Truman, a United States Senate seat. His machine was sustained by a combination of patronage, voter fraud, control of the liquor and gambling trades, and the systematic extraction of tribute from businesses seeking city contracts.

Pendergast's vote fraud operation was legendary. In the 1936 election, a subsequent investigation documented approximately 60,000 fraudulent votes cast in Kansas City; including votes from vacant lots, cemeteries, and nonexistent addresses. Election judges loyal to the machine certified the fraudulent ballots, and any challenger who protested risked physical violence from machine enforcers. The 1934 Kansas City election was so violent that four people were killed at polling places by machine operatives.

The machine's revenue came from multiple sources. City contractors were required to kick back a percentage of their contracts to the organization. The concrete industry was a particular favorite: Pendergast owned the Ready Mixed Concrete Company, and city contracts for paving and construction invariably specified Pendergast's concrete. The illegal liquor and gambling trades provided additional revenue. Kansas City was one of the most "wide open" cities in the country during Prohibition, with hundreds of speakeasies, gambling houses, and brothels operating under police protection.

Pendergast's downfall came from a bribery scheme involving fire insurance rates. In 1935, he accepted $315,000 from fire insurance companies to arrange a favorable settlement of an insurance rate case pending before the Missouri insurance department. The bribe was paid in cash and was not reported on Pendergast's tax returns. Federal investigators, led by U.S. Attorney Maurice Milligan, followed the money trail and secured an indictment for income tax evasion. Pendergast pleaded guilty in May 1939 and was sentenced to 15 months in federal prison. He died in 1945, his machine in ruins.

Depression-Era Relief Fund Theft

The New Deal relief programs of the 1930s, the Works Progress Administration (WPA), the Civilian Conservation Corps (CCC), the Public Works Administration (PWA), and others, pumped billions of federal dollars into state and local economies. These programs saved millions from destitution and built lasting infrastructure, but they also created opportunities for corruption that political machines eagerly exploited.

The WPA was the most vulnerable target. With a peak employment of 3.3 million workers and a total expenditure of approximately $11 billion between 1935 and 1943, the WPA distributed more money than any previous federal program. Political machines used WPA jobs as patronage, requiring workers to register with the party, attend rallies, and contribute to campaigns. In some cities, WPA foremen were machine operatives who used their authority to reward loyalists and punish dissenters. A Senate investigation in 1938 documented extensive political manipulation of WPA employment in Pennsylvania, Kentucky, and Tennessee.

The most systematic exploitation occurred in Pendergast's Kansas City, where WPA projects were directed to benefit machine allies, WPA workers were required to vote as instructed, and WPA materials were diverted for private use. Similar patterns were documented in the Hague machine in Jersey City, the Curley machine in Boston, and smaller machines throughout the country. Federal investigators eventually convicted several local officials for misuse of WPA funds, but the political exploitation of the programs was far more extensive than what was prosecuted.

Timeline of Key Events

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