Teapot Dome scandal

Oil businessman Edward L. Doheny (at table, second from right) testifying before the Senate committee investigating the Teapot Dome oil leases, 1924

The Teapot Dome scandal was a bribery scandal involving the administration of United States President Warren G. Harding from 1921 to 1923. Secretary of the Interior Albert Bacon Fall had leased Navy petroleum reserves at Teapot Dome in Wyoming, and two locations in California, to private oil companies at low rates without competitive bidding. The leases were the subject of a seminal investigation by Senator Thomas J. Walsh. Convicted of accepting bribes from the oil companies, Fall became the first presidential cabinet member to go to prison; no one was convicted of paying the bribes.

Before the Watergate scandal, Teapot Dome was regarded as the "greatest and most sensational scandal in the history of American politics".[1] It damaged the reputation of the Harding administration, which was already severely diminished by its controversial handling of the Great Railroad Strike of 1922 and Harding's veto of the Bonus Bill in 1922.[2] Congress subsequently passed legislation, enduring to this day, giving subpoena power to House and Senate for review of tax records of any US citizen without regard to elected or appointed position, nor subject to White House interference.[3]

History

Teapot Dome around the time of the scandal, featuring Teapot Rock (from postcard circa 1922)

In the early 20th century, the U.S. Navy largely converted from coal to fuel oil. To ensure that 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, Interior Secretary 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.[4]

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 (about $1.4 million today[5]) in November 1921. He received other gifts from Doheny and Sinclair totaling about $404,000 (about $5.67 million today[5]). This money changing hands was illegal, not the leases. Fall attempted to keep his actions secret, but the sudden improvement in his standard of living was suspect.