John B Thompson Financial Scandal Analysis

Existing at the susceptible intersection of money and power, financial scandals are "based on the allegations of misuse of money or other financial irregularities" (Chapter 6, p. 178). Scandals of a financial nature differ from others in that they are centered around the influence, misappropriation, embezzlement, and misrepresentation of capital that is exchanged for favorable political outcomes. According to John B. Thompson, financial scandals may be divided in to one of four subcategories. The first is constituted by any impropriety relative to undue influence. Forms of misconduct that would fall in to this category include any form of bribery or kickbacks. Thompson's second subcategory involves dishonest practices in relation to the management

it is important to understand that three components of American society deeply contributed to their frequency. With industrialization and progress in the late 19th and early 20th centuries, came the rapid expansion of metropolitan centers around the United States. As these locales rapidly expanded, the exisiting institutions were not capable of meeting increasing demands for service. As a result, political parties filled the void by creating powerful political machines on the municipal level and instituting a system of financial kickbacks on municipal contracts to fund party coffers. Firm control over local politics by political party machines greatly diminished electoral competition and fostered an environment in which a system of "spoils" thrived. The practice during this time was for elected officials to reward loyal supporters with government jobs - particularly in an effort to win broad support from immigrant communities. Widely accepted in its era, this "spoils system" was largely promulgated by the Tenure of Office Act of 1820. This legislation effectively limited the terms of many federal employees to four years in an effort to render public office more accountable. However, the adverse effect of the measure was the implementation of political appointments based on partisan allegiance rather than capability

Harding's tenure. Involving misconduct categorized under the first column of political scandals - those relative to undue influence - the scandal centered on members of Harding's cabinet. Transpiring between 1921 and 1923, the original impropriety involved Harding's Secretary of the Interior, Albert Bacon Fall. In 1921, President Harding transferred the authority over naval strategic petroleum reserves in Wyoming and California, from the Department of the Navy to the Department of the Interior. However, it was not until Secretary Fall encouraged Navy Secrtary Edwin Denby to cede control in 1922 that the reserved came under Fall's purview. Several months later, Fall leased the reserves to two large oil corporations without competive bidding (as was acceptable under the Mineral Leasing Act of 1920). Favorable to the oil companies, the leases themselves were not illegal, but financial considerations (totaling nearly $7 million today) that were granted to Secretary Fall violated the law. As is standard in the cycle of a scadal, the impropriety did not become a public matter until April of 1922, when a letter from a Wyoming oil operator alleging secret deals in the land transfer reached the desk of Senator John B. Kendrick (D-Wyoming). Two days later, Kendrick filed a resolution to empanel a committee to