New History of Wyoming

 

Chapter 14: Wyoming in the 1920s

               

 This chapter concentrates on two of the “organizing concepts”—state/federal relations (“Washington”), and “boom-and-bust” and colonialism (“Wall Street”).

 

      Most Americans enjoyed prosperity during the decade of the 1920s. In fact, the decade has been nicknamed the “roaring ‘20s” because of the economic times experienced in most of the United States. This was not the case in Wyoming where most residents suffered one of most prolonged economic downtowns in the state’s history. While some people may point to the “great crash of 1929” as the beginning of the “Great Depression” in the United States, Wyomingites already were deep into economic distress.  With the exception of tourism, all of the state’s industries suffered economic misfortunes in the 1920s.

      The decade began on a promising note with Gov. Robert Carey proclaiming the beginning of Prohibition and optimism that the state would avoid a post-war economic downturn. Prohibition, however, did not enjoy widespread support in most Wyoming communities. In fewer than ten years, most Wyomingites favored its repeal while most state officials acknowledged that enforcement had been a failure.

      Government policy as to public lands, however, held out more promise, particularly for returning veterans after World War I. As a result of the Enlarged Homestead Act of 1916 (the so-called Stock-Raising Homestead Act), more homesteads were taken out in Wyoming in the early years of the 1920s than during any previous decade. Veterans filed on lands where only grazing or dry farming was possible. New scientific studies in agriculture, many conducted at the University of Wyoming by such individuals as Bert Buffum and Dr. V. T. Cooke, convinced thousands that crops could be grown successfully even if precipitation was minimal.  Deep-ploughing and crops with resistance to drought  would make most of Wyoming attractive to farmers.  Actually, the experiments seemed positive at first because the state was experiencing an unusually wet series of summers.  Real drought would come a few years later.

Communities grew up to serve the surrounding farm populations. Small banks popped up in even tiny towns like Lost Springs, Yoder, Medicine Bow and Cokeville. Small businesses, most oriented toward serving the farm and ranch clientele, were started, many by other veterans or newcomers to the state.

      The national optimism filtered down to the local communities. State banking laws were extraordinarily loose. Many banks were seriously undercapitalized, but it did not stop bankers from loaning money to area ranchers and farmers in exchange for mortgages on land that was almost certainly continuing to gain in value as time passed.

Commodity prices remained strong during World War I and for the next few years.  However, Wyoming suffered from a serious drought in 1919 which turned out to be a portent of things to come. Few farmers were able to harvest more than half of the usual crop yields in 1919. In the following years, prices continued to fall.

      Conditions were barely better for workers along the southern tier of counties. The Union Pacific, returning to its pre-war condition, laid off almost one-third of its work force during the four months after December, 1920. Employment in the coal mines, which mostly furnished coal to the railroad locomotives, declined during the decade as the market for coal decreased.

      The petroleum industry, strong during the war years, began slowing down in 1923. Exploration declined and production faltered. Just two companies controlled 97 percent of the production in the state by late 1923.  The incident that came to symbolize the corruption of the Harding administration, the Teapot Dome scandal, had its origins in Wyoming’s oil fields. (See Teapot Dome essay in this section).

      By 1922,  many Wyoming ranchers and farmers were having to borrow more money in order to meet the escalating costs of farm equipment and feed. More and more land was placed into production in order to grow enough to pay back the loans. At the same time, commodity prices continued to fall.

      Concern over the deteriorating condition of the economy caused Republicans to defeat the re-election bid of Gov. Robert Carey in the primary election in 1922. He lost to Rock Springs banker John Hay who then lost in the general election to Cheyenne lawyer William Ross, a Democrat who campaigned on a platform of aid to farmers and ranchers. Early in his term, Ross proposed a constitutional amendment which would allow for a mineral severance tax. Most of the state’s coal was being produced by the Union Pacific Railroad’s mining subsidiary and Ross believed the railroad was not paying its share of taxes. Without another source of revenues, an unequal tax burden would continue to fall on ranchers and farmers in the form of ad valorum taxes. No sales or income tax existed. State revenues came from leases of state lands, mineral royalties from state lands and license fees. The Oil and Gas Conservation Act, passed by Congress in 1920, allocated to Wyoming a share of federal mineral royalties. None of these sources, however, produced the income needed to provide more than just the minimal state services. Certainly, there was nothing in place to allow the state to intervene in case of an economic crisis.

      In January 1920, the state counted 153 banks and 32 others opened during the next decade. At the same time, 101 banks closed in the 1920s, beginning with the collapse of four banks in small towns in 1920. The worst year for bank failures in Wyoming was 1924 when 23 state-chartered institutions failed and 12 with national charters closed their doors.[1]

      The closures had a ripple effect on downtown businesses, particularly in communities of fewer than 1,000 people. Farm losses caused foreclosure actions to increase, but the smaller banks were unable to regain sufficient return from the collateral to pay back depositors. Failure of the local bank often brought failure to local merchants.

      Store owners in larger towns with more diversified economies managed to keep the doors open. Few prospered, but the ones located in larger places close to smaller towns benefitted from the decreased competition. A case in point involved the decline of the town of Manville in Niobrara County. The town, just nine miles from the county seat of Lusk, had reached a population of almost 300 by 1920. Oil activity north of town brought prosperity to merchants who also noticed increased school population of children from families occupying dry farms being carved from the surrounding prairie. The small local bank, overextended on loans to the newcomers in agriculture, closed Dec. 11, 1923. By the end of the year, two major businesses--a grocery and a clothier--ceased operations. Workers in the oil fields no longer found any need to shop in Manville. Banks, a grocery and clothing stores were open in Lusk, a few miles further on the highway.  Within another year, downtown Manville contained mostly boarded up storefronts with a few service businesses managing to hang on.[2]

      The consolidation of businesses was spurred by the new highway system. Throughout the country in the 1920s, politicians debated the merits of “farm-to-market” roads compared to “interstate” roads. Local farmers and merchants favored the former while the latter was preferred by truckers, the tourist industry and wholesalers.  The newly formed State Highway Commission was dominated in the 1920s by boosters from communities wanting U. S. highway designation for roads through their towns. Luring tourists to town seemed more promising than attempting to connect the far-flung agricultural community to the larger towns. Consequently, the “farm-to-market” system was left to counties while state funds, including revenues from federal mineral royalties, built highways across the state and to the tourist attractions in Yellowstone National Park. (As the accompanying essay indicates, the economic promise of increased tourism caused communities to adopt festivals and recommit themselves to an “old West” heritage. New highways were crucial for luring tourists into town).

      For the larger towns, particularly along the southern tier of counties, air transportation created opportunities. In an era before pressurized cabins and engines powerful enough to cross over the Rockies in Colorado, airports in Wyoming had planes landing with increasing frequency. Cheyenne became a primary stop for transcontinental flights, particularly for those carrying the mail. The predecessor to United Airlines established its headquarters in Wyoming’s capital city and the maintenance shops for United remained in the city until World War II. The rapid changes in technology and development of “hub” systems after the war caused Cheyenne to lose out in the increasingly important airline passenger business.

      The three “grand old men of Wyoming politics,” Francis E. Warren, Joseph M. Carey and John B. Kendrick, still dominated the state’s politics into the 1920s. Carey died in 1924, but his son, elected governor under Warren’s sponsorship in 1918 and defeated four years later, still maintained considerable support. Warren still dispensed much of the political patronage, including appointments of postmasters and land office officials, through his Republican “machine.” Kendrick, as conservative as Warren on most issues, but the leading Democrat, continued to focus attention on reclamation issues.[3] 

      When Democrat William Ross succeeded Robert Carey in the governorship, like Carey, he favored Prohibition, viewing it as a “righteous cause.” When Ross died a month short of midway through his term, both parties were unprepared to name nominees for the election to fill out the remaining two years of his term. Republicans chose a former house speaker while the Democrats drafted Ross’ widow, Nellie Tayloe Ross, for the nomination. In a historic first, Mrs. Ross won the election becoming the first woman to serve as governor of any state. During her term, she did not concentrate on what could be called “women’s issues.” In fact, her policies reflected those of her late husband. When she sought a full four-year term in 1926, she lost narrowly.

      During the decade of the 1920s, the two senators and Wyoming’s only U. S. Representative, Frank Mondell, shared the commonly accepted view that the various hard-hit industries in Wyoming eventually would come out of their economic difficulties. Government could do little to change the business cycle. The legislature did little to aid desperate farmers and ranchers. One measure did receive overwhelming support: a joint house-senate resolution asking Congress to “return” public lands to the states. (See Document).

      While agriculture and business floundered, a state government employee did move toward consolidating the state’s hold on a resource that would prove crucial for any future development. State Engineer Frank Emerson helped organize a conference of the Colorado River basin states during which allocation of the river’s water was made. Wyoming’s seven percent share of the total flow seemed remarkably generous at the time when little use was being made of waters from the Colorado River system in southwestern Wyoming. He continued to concentrate on water issues after he defeated Nellie Tayloe Ross for governor in 1926.

When the stock market crashed in October 1929, Wyoming residents noticed, but the impact on them was minimal. Wyoming was in economic depression; few citizens owned stocks and fewer still were employed by firms directly affected by the crash.  As an example of how removed Wyoming had become from the national economy, in 1929 as the national economy was declining, a company constructed a massive mill at South Pass City, once again, to try to profit from the only significant gold discovery in the state. Just like earlier operations, however, the Carissa Mill eventually failed.

Even when the national administration changed in 1933, Wyoming was slow to sign on with the New Deal. As Lorena Hickok wrote Eleanor Roosevelt, while the rest of the nation was facing the reality of depression, Wyomingites were already accustomed to it.[4] Changes would come slowly, but only the wartime economy would extract Wyomingites from the depression of the 1920s that stretched into the next decade.

[1] Peter Huntoon, “The Bank Failures of 1924,” Annals of Wyoming, Spring 1983.

[2]Information is derived from an unpublished manuscript, Anne Anderson Whitehead, “A History of Manville.”

[3]The best source for political history of this period remains T. A. Larson, History of Wyoming. (Lincoln: Universtiy of Nebraska Press, 1965, 1977). Readers are advised to consult Larson for specifics about the political scene in Wyoming during these years.

[4]Quoted in Richard Lowitt, The New Deal and the West. (Bloomington: Indiana University Press, 1984), 30.

 

 

Teapot Dome Scandal

 

    The U. S. S. Wyoming, initially launched in 1900 as the U. S. S. Cheyenne, became the first ship in the fleet to be converted to oil-power in 1909. As more ships were converted to oil, Navy officials grew more concerned about he long-term availability of oil. What would happen if oil were to “run out”?  The Navy would be paralyzed. Consequently, the Department of the Navy asked Congress to set aside federally-owned lands in places where known oil deposits likely existed. These “naval petroleum reserves” would not be drilled unless a national emergency made it necessary. One of the three petroleum reserves set aside was near Salt Creek in northern Natrona County. It was in a place named for an unusual rock formation nearby—Teapot Dome.

    Oil men throughout the West coveted the opportunity to drill within these federally-owned “oil reserves.” Soon after Republican Warren G. Harding was elected President in 1920, he appointed his poker-playing friend, U. S. Senator Albert Fall, to be his Secretary of the Interior. Fall, a rancher and New Mexico’s first U. S. Senator, accepted the Cabinet post.  Within a few weeks, he convinced President Harding to allow transfer of the “naval petroleum reserves” from the Department of the Navy to his Interior Department, arguing that Interior was “better able” to oversee the protection of these areas where oil was not to be produced, but kept in case of emergency.

    What resulted from that is what became known as the “Teapot Dome scandal.” It was the most serious Presidential scandal in American history until Watergate in the Nixon administration in the 1970s. Even though the scandal gained its name from a Wyoming place, the wrongdoers in the scandal were from elsewhere.

    Interior Secretary Fall, once the Teapot Dome oil field was under his control, made secret deals with two prominent oil men, Edward Doheny and Harry Sinclair. Both men, close friends of Fall, paid him bribes to authorize them to drill in the three “naval petroleum reserves”—contrary to the letter and spirit of the law.

    Back in Wyoming, independent oilman Leslie Miller became suspicious when he saw trucks with the Sinclair company logo hauling drilling equipment into the Teapot Dome naval petroleum reserve. He asked Democratic U. S. Senator John B. Kendrick to look into the matter. Kendrick, sensing wrongdoing, turned the question over to a special Senate investigating committee.   

    Meanwhile, President Harding took a summer trip west, stopping in Wyoming, enjoying Yellowstone, and continuing on to Alaska and, eventually, to San Francisco. While there, the President died suddenly. Some historians believe Harding escaped impeachment for his role in Teapot Dome by having the “good fortune” of dying as the scandal was unfolding. Of course, such a conclusion can not be proven.  Fall was not so lucky. Following a lengthy Senate investigation, Fall went on trial for accepting bribes. He was convicted and sent to federal prison, the first Cabinet-level officer in American history to go to jail for crimes committed while serving in office. Both Sinclair and Doheny were exonerated of the main charge—giving bribes to Fall. As a newspaper reporter observed when the two wealthy oil men were found not guilty, “you can’t convict a million dollars.”

    The federal government brought suit in federal court in Wyoming to cancel the bribery-induced leases to Teapot Dome that Fall had given to Sinclair. Wyoming’s U. S. District Judge T. Blake Kennedy ruled against the government, but the leases were cancelled when the Supreme Court overturned the Kennedy decision.

 

Wyoming’s  “Other” Governor Ross: The Story of William Ross, Husband of Nellie

 

 

Although few residents realize it, November 29 is a state holiday in Wyoming. Known as Nellie Tayloe Ross Day,” the holiday commemorates the contributions to Wyoming by Ross, the first woman governor of any state. Born in St. Joseph, Missouri, in 1876, she came to Wyoming with her husband, William Ross, in the early 1900s.

Nellie Ross was not only the first woman to be elected governor of any state, but she also had once served as the state’s first lady. Prior to his election as governor, William Ross had been a Cheyenne trial lawyer who represented a variety of clients. He had success with many, but one of his clients was the defendant in the so-called “Indian club murder” in Cheyenne in 1912.

A respected railroad worker, J. Warren Jenkins, was convicted of murdering his wife in their home (that once stood on the site of the Memorial Hospital parking lot).  Mrs. Jenkins, somewhat older than her husband, owned considerable property. Attorney Ross was unable to shake the prosecution’s assertion that Jenkins had killed his wife for her estate.

The incriminating evidence in the case turned out to be buttons from what the prosecution claimed was the blood-soaked shirt that Jenkins was wearing when he murdered his wife. Jenkins couldn’t explain why the shirt was burned that day in the couple’s stove.  Police, in searching the house, found the still warm but fire-resistant buttons in the stove when they investigated the scene. Jenkins was convicted, sentenced to hang and, as if he already didn’t have enough difficulties, the judge fined him $1,000. Jenkins was hanged in the State Penitentiary in Rawlins on Nov. 14, 1913. 

In 1922, Ross was elected governor of Wyoming. Soon after his election, Ross proposed a constitutional amendment to allow the State to collect severance taxes on mineral production in the state. The legislature authorized that the amendment be voted on in the general election of 1924, halfway through Ross’ term as governor. Throughout the fall of 1924, Ross campaigned throughout the state for passage of the amendment.  In late September, 1924, he was speaking in Laramie to a group at “Old Main” on the campus, advocating passage of the amendment when he suddenly became ill. Admitted to the hospital in Cheyenne the next morning, he died four days later from an apparent ruptured appendix.

Because his death came a month before that year’s general election, the law required that a new governor be chosen in that election. Both parties were caught unprepared to run candidates for an office they thought would not be up for election until 1924.

The Republicans nominated the House Speaker, E. J. Sullivan of Casper, while the Democrats turned to Ross’ widow, Nellie Tayloe Ross.  Even though she had never served in any elective office before, she was elected governor, becoming the first woman in the United States to hold that office.  She pledged she would follow through with many of her husband’s policies, but one of them already had met electoral defeat. In the same election where she became governor, the constitutional amendment for a severance tax that her husband had campaigned so strongly for, went down to defeat. The measure actually gained more voters in favor of it than were opposed to it, but under the Wyoming Constitution, the measure had to gain a majority of voters casting ballots in that election. It failed to gain that margin by just a few hundred votes.

Later, Mrs. Ross lost in a re-election bid, but went on to be superintendent of the United States Mint in the Franklin Roosevelt administration.  She died on Dec. 19, 1977, at the age of 101.

And it wasn’t until 1969 that a severance tax, along the lines proposed by William Ross, became law in the state of Wyoming.