Teapot Dome Becomes a Major Scandal

Corruption Taints the Harding Administration

Sep 28, 2009

Teapot Dome was one of the largest political scandals of the early twentieth century and one of many scandals under President Warren Harding.

Teapot Dome was a region of oil-rich land in Wyoming. In 1909, a presidential order set aside this land, along with oil-rich lands in Elk Hills and Buena Vista, California, for potential use by the U.S. Navy. Meanwhile private companies refined oil near each of these three regions, and federal officials became concerned that these companies may start siphoning oil from the government lands.

As a result, Congress authorized the Secretary of the Navy to administer the lands in Teapot Dome, Elk Hills and Buena Vista as he saw fit. There were two viable options: 1) Drill offset wells on the land boundaries to minimize siphoning, or 2) Lease the land to the companies for drilling if they promised to set aside sufficient oil for the Navy in case of emergency. The Secretary of the Navy chose the first option.

The Harding Administration Takes Over

In 1921, the Wilson administration became the Harding administration, and newly appointed Secretary of the Interior Albert B. Fall persuaded President Warren Harding that the second option would be better. Furthermore, Fall convinced Harding to transfer authority over the lands from the Navy Department to the Interior Department. Thus Fall was now in charge of the oil reserves.

Upon gaining control, Fall leased the land at Teapot Dome to Harry F. Sinclair, owner of Mammoth Oil, and the land at Elk Hills to Edward L. Doheny, owner of Pan-American Oil. Both oil reserves were leased without competitive bidding.

Fall’s Arrangement Revealed

On April 14, 1922, the Wall Street Journal revealed the arrangement between Fall and Sinclair for Teapot Dome. Fall confirmed to Congress that the story was true, explaining that there was no competitive bidding because these were military lands and he wanted no publicity in the interest of national security. Upon Senate investigation, it was determined that the deals were legal under the Mineral Leasing Act of 1920. However something did not seem right.

Republican Senator Robert M. LaFollette of Wisconsin, chairman of the Senate Committee on Public Lands, assigned the committee’s most junior minority member, Democratic Senator Thomas J. Walsh of Montana, to investigate the matter. Since it was already determined that the deals were legal, the question turned to how Fall got so rich so quickly because it was noticed that his living standards suddenly improved.

The investigation escalated and Fall finally resigned under pressure. It was soon discovered that in November 1921, prior to leasing the lands, Fall accepted an interest-free loan of $100,000 from Doheny. It was also discovered that shortly after Fall resigned, he accepted $260,000 in bonds from Sinclair. Altogether Fall had accepted gifts or loans totaling $404,000 from oil executives. These revelations led to Fall’s indictment for accepting bribes and became known as the Teapot Dome scandal.

Legal Results

The charges against Albert Fall were for bribery, not for leasing the oil fields. In 1924, Fall was convicted of accepting bribes, sentenced to one year in prison and fined $100,000. This made him the first presidential cabinet member to ever be convicted of crimes committed while in office.

In separate bribery trials, Doheny and Sinclair were acquitted of bribing Fall. However Sinclair was convicted of contempt of court for refusing to cooperate with investigators. He was also convicted of jury tampering by hiring detectives to investigate jurors. He served a short prison sentence and was fined $100,000. The Supreme Court ultimately ruled that the oil fields were leased through "corrupt" means. The leases were invalidated and the land was returned to government control.

While Teapot Dome was a major scandal, it was by no means the only scandal that plagued the Harding administration. Separate incidents included:

Although President Harding was not directly linked to any of these scandals (and he died before most of the corruption came to light), Teapot Dome was the prime indication that Harding was either unwilling or unable to stop the corruption in his administration.

One lasting legacy of the Teapot Dome scandal came when it was revealed that the Bureau of Investigation had illegally monitored and wiretapped the offices of congressmen investigating the scandal. This revelation prompted Bureau reform, leading to the creation of the Federal Bureau of Investigation (FBI) and the appointment of J. Edgar Hoover as its first director.

Sources

Wallechinsky, David and Wallace, Irving: The People’s Almanac (Garden City, NY: Doubleday & Company, Inc., 1975)

The copyright of the article Teapot Dome Becomes a Major Scandal in Modern US History is owned by Walter Coffey. Permission to republish Teapot Dome Becomes a Major Scandal in print or online must be granted by the author in writing.