The Teapot Dome scandal was a bribery incident that took place in the United States from
1920 to 1923, during the administration of President Warren G. Harding. Secretary of
the Interior Albert B. Fall had leased Navy petroleum reserves at Teapot Dome in Wyoming
and two other locations in California to private oil companies at low rates without competitive
bidding. In 1922 and 1923, the leases became the subject of a sensational investigation
by Senator Thomas J. Walsh. Fall was later convicted of accepting bribes from the oil
companies and became the first Cabinet member to go to prison.
Before the Watergate scandal, Teapot Dome was regarded as the "greatest and most sensational
scandal in the history of American politics". The scandal damaged the public reputation
of the Harding administration, which was already severely diminished by its poor handling of
the Great Railroad Strike of 1922 and the President's veto of the Bonus Bill in 1922.
History In the early 20th century, the U.S. Navy largely
converted from coal to oil fuel. To ensure the Navy would always have enough fuel available,
several oil-producing areas were designated as Naval Oil Reserves by President Taft. In
1921, President Harding issued an executive order that transferred control of Teapot Dome
Oil Field in Natrona County, Wyoming, and the Elk Hills and Buena Vista Oil Fields in
Kern County, California from the Navy Department to the Department of the Interior. This was
not implemented until 1922, when Interior Secretary Fall persuaded Navy Secretary Edwin
C. Denby to transfer control. Later in 1922, Albert Fall leased the oil
production rights at Teapot Dome to Harry F. Sinclair of Mammoth Oil, a subsidiary of
Sinclair Oil Corporation. He also leased the Elk Hills reserve to Edward L. Doheny of Pan
American Petroleum and Transport Company. Both leases were issued without competitive
bidding. This manner of leasing was legal under the Mineral Leasing Act of 1920.
The lease terms were very favorable to the oil companies, which secretly made Fall a
rich man. Fall had received a no-interest loan from Doheny of $100,000 in November 1921.
He received other gifts from Doheny and Sinclair totaling about $404,000. It was this money
changing hands that was illegal, not the leases. Fall attempted to keep his actions secret,
but the sudden improvement in his standard of living prompted speculation.
Investigation and outcome
In April 1922, a Wyoming oil operator wrote to Senator John B. Kendrick, angered that
Sinclair had been given a contract to the lands in a secret deal. Kendrick did not respond,
but two days later on April 15, he introduced a resolution calling for an investigation
of the deal. Republican Senator Robert M. La Follette, Sr. of Wisconsin led an investigation
by the Senate Committee on Public Lands. At first, La Follette believed Fall was innocent.
However, his suspicions deepened after his own office in the Senate Office Building was
ransacked. Democrat Thomas J. Walsh of Montana, the most
junior minority member, led a lengthy inquiry. For two years, Walsh pushed forward while
Fall stepped backward, covering his tracks as he went. No evidence of wrongdoing was
initially uncovered as the leases were legal enough, but records kept disappearing mysteriously.
Fall had made the leases appear legitimate, but his acceptance of the money was his undoing.
By 1924, the remaining unanswered question was how Fall had become so rich so quickly
and easily. Money from the bribes had gone to Fall's cattle
ranch and investments in his business. Finally, as the investigation was winding down with
Fall apparently innocent, Walsh uncovered a piece of evidence Fall had forgotten to
cover up: Doheny's $100,000 loan to Fall. This discovery broke the scandal open. Civil
and criminal suits related to the scandal continued throughout the 1920s. In 1927 the
Supreme Court ruled that the oil leases had been corruptly obtained. The Court invalidated
the Elk Hills lease in February 1927 and the Teapot Dome lease in October. Both reserves
were returned to the Navy. In 1929, Albert Fall was found guilty of accepting
bribes from Doheny. Interestingly, in 1930, Edward L. Doheny was acquitted of paying bribes
to Fall. Another significant outcome was the Supreme
Court's ruling in McGrain v. Daugherty which, for the first time, explicitly established
that Congress had the power to compel testimony. See also
Little Green House on K Street Notes
Further reading Bates, J. Leonard. The Origins of Teapot Dome.
Urbana, IL: University of Illinois Press, 1963.
Bennett, Leslie E. "One Lesson From History: Appointment of Special Counsel and the Investigation
of the Teapot Dome Scandal". Washington, D.C.: Brookings Institution, 1999.
Ise, John. The United States Oil Policy. New Haven, CT: Yale University Press, 1926.
McCartney, Laton. The Teapot Dome Scandal: How Big Oil Bought the Harding White House
and Tried to Steal the Country. New York: Random House, 2008.
Murphy, Blakely M. Conservation of Oil and Gas: A Legal History. Chicago: Section of
Mineral Law, American Bar Association, 1949. Noggle, Burl. Teapot Dome: Oil and Politics
in the 1920s. Baton Rouge, LA: Louisiana State University Press, 1962.
Werner, M. R. and Starr, John. Teapot Dome. New York: Viking Press, 1959.
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