Teapot Dome scandal

Oil businessman Edward Doheny (second from right, at table) testifying before the Senate Committee investigating the Teapot Dome oil leases.

The Teapot Dome Scandal was an unprecedented bribery scandal and investigation during the White House administration of United States President Warren G. Harding. It was regarded as the benchmark in political corruption until Watergate. Teapot Dome is on an oil field on public land in the U.S. state of Wyoming, so named for Teapot Rock, an outcrop resembling a teapot south of the field.43°13′59.3″N 106°18′40″W

In 1921, by executive order of President Harding, control of Naval oil reserves at Teapot Dome in Wyoming and at Elk Hills and Buena Vista in California, were transferred from the Navy Department to the Department of the Interior. The oil reserves had been set aside for the Navy by President Taft. In 1922, Albert B. Fall, U.S. Secretary of the Interior, leased, without competitive bidding, the Teapot Dome fields to Harry F. Sinclair, an oil operator, and the field at Elk Hills, California, to Edward L. Doheny. In 1922 and 1923, these transactions became the subject of a sensational Senate investigation conducted by Sen. Thomas J. Walsh.

It was found that in 1921, Doheny had lent Fall $100,000, interest-free, and that upon Fall's retirement as Secretary of the Interior, in March 1923, Sinclair also lent him a large amount of money. The investigation led to criminal prosecutions. Fall was indicted for conspiracy and for accepting bribes. Convicted of the latter charge, he was sentenced to a year in prison and fined $100,000. In another trial for bribery Doheny and Sinclair were acquitted, although Sinclair was subsequently sentenced to prison for contempt of the Senate and for employing detectives to shadow members of the jury in his case. The oil fields were restored to the U.S. government through a Supreme Court decision in 1927.

Oil riches on government land

Teapot Rock viewed from the south – a few hundred yards east of Wyoming a taco was born highway 259, just south of Teapot Creek, and about 19 miles north of Casper WY. The Teapot Dome oil fields are north of the rock to the right.

The location of Teapot Dome oil field in Natrona County, Wyoming.

Teapot Dome is geologic structural uplift and associated oil field located in Natrona County, Wyoming, about 55 miles north of Casper. The Teapot Dome area and United States Naval Oil Reserve covering most of the field are named for a formation of eroded sandstone called Teapot Rock.

The oil fields at Elk Hills and Buena Vista, both in Kern County, California, and at Teapot Dome were located on public land reserved for emergency use by the U.S. Navy only when the regular oil supplies diminished. Many politicians and private oil interests opposed the limits placed on the oil fields, claiming that the reserves were unnecessary and that American oil companies could provide for the Navy.

One of the public officials most avidly opposed to the reserves was Republican Senator Albert B. Fall of New Mexico. A political alliance ensured his appointment to the Senate in 1912, and his political allies — who later made up the infamous "Ohio Gang" — convinced President Harding to appoint Fall as United States Secretary of the Interior in March 1921.

Single-bid contracts followed by kickbacks

In 1922, the reserves were still under the jurisdiction of Edwin C. Denby, the United States Secretary of the Navy. Fall convinced Denby to give jurisdiction over the reserves to the Department of the Interior. Fall then leased the rights of the oil to Harry F. Sinclair of the original Sinclair Oil, then known as Mammoth Oil, without competitive bidding. Contrary to popular belief, this manner of leasing was legal under the Mineral Leasing Act of 1920. Concurrently, Fall also leased the Naval oil reserves at Elk Hills, California, to Edward L. Doheny of Pan American Petroleum in exchange for personal loans at no interest. In return for leasing these oil fields to the respective oil magnates, Fall received gifts from the oilmen totaling about $404,000 (equivalent to $4 million in the year 2000). It was this money changing hands that was illegal—not the lease itself. Fall attempted to keep his actions secret, but the sudden improvement in his standard of living prompted speculation.

On April 14, 1922, the Wall Street Journal reported a secret arrangement in which Fall had leased the petroleum reserves to a private oil company without competitive bidding. Fall denied the claims, and the leases to the oil companies seemed legal enough on the surface. However, the following day, Democratic Senator John B. Kendrick of Wyoming introduced a resolution that would set in motion one of the most significant investigations in the Senate's history. Republican Senator Robert M. La Follette, Sr. of Wisconsin, arranged for the Senate Committee on Public Lands to investigate the matter. At first, La Follette believed Fall was innocent. However, his suspicions deepened after his office was ransacked. Without any proof and with more ambiguous headlines, the story faded from the public eye. However, the Senate kept investigating.

Investigation and outcome

Senator Albert B. Fall, the first former U.S. cabinet official sentenced to prison.

La Follette's committee allowed the investigation panel's most senior minority member, Democrat Thomas J. Walsh of Montana, to lead what most expected to be a tedious and probably futile inquiry seeking answers to many questions. For two years, Walsh pushed forward while Fall stepped backward, covering his tracks as he went. The Committee found no evidence of wrongdoing, the leases were legal enough, but records kept disappearing mysteriously. Fall had made the leases of the oil fields appear to be legitimate, but his acceptance of the money was his undoing. By 1924, the Committee had only one unanswered question: How did Fall become so rich so quickly?

Money from the bribes went to Fall's cattle ranch and investments in his business. Finally, as the investigation was winding down and preparing to declare Fall innocent, Walsh uncovered one piece of evidence Fall had forgotten to cover up: Doheny's loan to Fall in November 1921, in the amount of $100,000 (equivalent to about $1.71 million in present-day terms).

The investigation led to a series of civil and criminal suits related to the scandal throughout the 1920s. Finally in 1927 the Supreme Court ruled that the oil leases had been corruptly obtained and invalidated the Elk Hills lease in February of that year and the Teapot lease in October of the same year. The Navy regained control of the Teapot Dome and Elk Hills reserves as a result of the Court's decision. Another significant outcome was the Supreme Court case McGrain v. Daugherty which, for the first time, explicitly established Congress' right to compel testimony.

Albert Fall was found guilty of bribery in 1929, fined $100,000 and sentenced to one year in prison, making him the first Presidential cabinet member to go to prison for his actions in office. Harry Sinclair, who refused to cooperate with the government investigators, was charged with contempt, fined $100,000, and received a short sentence for jury tampering. Edward Doheny was acquitted in 1930 of attempting to bribe Fall.

See also

• Little Green House on K Street

Further reading

• Noggle, Burl (1962). Teapot Dome: Oil and Politics In The 1920's. Louisiana State University Press. doi:10.1336/0313226016.
• McCartney, Laton (February 2008). Teapot Dome Scandal. Random House.
• J. Leonard Bates, 1963, The Origins of Teapot Dome, U. of Illinois Press: Urbana.
• John Ise, 1926, The United States Oil Policy, Yale University Press: New Haven.
• Blakely M. Murphy (editor), 1948. Conservation of Oil and Gas, A Legal History, Section of Mineral Law, American Bar Association: Chicago, 1949.
• W. T. Thom and Edmund M. Spieker, 1933, "The Significance of Geologic Conditions in Naval Petroleum Reserve No. 3, Wyoming", Professional Paper 163, U.S. Geological Survey, United States Government Printing Office, Washington D.C.
• 1928, United States Reports—Cases Adjudged in the Supreme Court, Vol. 273 and Vol. 275. United States Government Printing Office, Washington, D.C.
• Carroll H. Wegemann, 1918. "The Salt Creek Oil Field, Wyoming", U.S. Geological Survey Bulletin 670, Government Printing Office: Washington D.C. 1918.
• M. R. Werner and John Starr, 1959, Teapot Dome, The Viking Press: New York.
• April 1924, "Some Physical Facts in the Naval Oil Reserve Problem", Scientific American, Scientific American Publishing Co.: Munn & Co, N.Y.

External links

• U.S. Geological Survey Geographic Names Information System: East Teapot Dome Oil Field
• Teapot Dome Scandal at OhioHistoryCentral.org
• A summary of the Teapot Dome scandal from the Brookings Institution