In 1923, President Warren G. Harding, and Edwin Denby, the Secretary of the Navy, requested that Petersen and another former Republican Congressman from New York, Albert B. Rossdale travel to the Panama Canal Zone to make firsthand observations on living and working conditions for Navy sailors, and make recommendations for improvements. Intending to conduct their investigation undercover, Petersen and Rossdale joined the crew of the battleship USS "New York", donned sailors' uniforms, had dinner with the crew, and then departed with them for shore leave. Upon entering a Panamanian cabaret, they were arrested by members of the Navy shore patrol and charged with being at liberty after 11 PM, in violation of Naval regulations. They remained in detention until they revealed their identities and the captain of the "New York" wired the shore patrol instructions to release Petersen and Rossdale. Rather than the planned undercover operation, the investigation Rossdale and Petersen intended degenerated into farce; when the media became aware of the events, they generated satirical headlines that showed the principals and the Harding administration in a negative light.