| Part of thepresidency of Warren G. Harding and theOhio Gang | |
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| Date | March 6, 1923 (1923-03-06) – October 14, 1929 (1929-10-14) |
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| Participants | Harding administration, particularlyAlbert B. Fall, and oil executiveHarry Ford Sinclair |
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U.S. Senator from Ohio 29th President of the United States Appointments Tenure   | ||
TheTeapot Dome scandal was apolitical corruption scandal in theUnited States involving the administration of PresidentWarren G. Harding. It centered onAlbert B. Fall, theInterior Secretary, who had leasedpetroleum reserves designated for theNavy atTeapot Dome inWyoming, as well as two locations inCalifornia, to private oil companies at low rates without competitive bidding.[1] The leases were the subject of an investigation by SenatorThomas J. Walsh. Convicted of accepting bribes from the oil companies, Fall became the firstpresidential cabinet member to go to prison, but no one was convicted of paying the bribes.
Before theWatergate scandal, Teapot Dome was regarded as the "greatest and most sensationalscandal in the history of American politics".[2]
Congress subsequently passed permanent legislation granting itselfsubpoena power over tax records of any U.S. citizen, regardless of position.[3] These laws are also considered to have empowered Congress generally.[4]
To ensure that the Navy would always have enough fuel,President Taft designated several oil-producing areas as naval oil reserves. In 1921, President Harding issued anexecutive order to transfer control ofTeapot Dome Oil Field inNatrona County, Wyoming, and theElk Hills andBuena Vista Oil Fields inKern County, California, from theNavy Department to theDepartment of the Interior. This was not implemented until the next year, when Interior Secretary Fall persuadedNavy SecretaryEdwin C. Denby to implement the order.
Later in 1922, Fall leased oil production rights at Teapot Dome toHarry F. Sinclair of Mammoth Oil, a subsidiary ofSinclair Oil Corporation.[5] He also leased the Elk Hills reserve toEdward L. Doheny ofPan American Petroleum and Transport Company. Both leases were issued without competitive bidding; leasing without bids was legal under theMineral Leasing Act of 1920.[6]
The lease terms were very favorable to the oil companies, and secret transactions associated with the two deals made Fall a rich man. He received a no-interest loan from Doheny of $100,000[7] in November 1921 (equivalent to $1.76 million in 2024[8]). He received other gifts from Doheny and Sinclair totaling about $404,000 (equivalent to $7.12 million in 2024[8]). While the leases were legal, these transactions were not. Fall attempted to keep them secret, but a sudden improvement in hisstandard of living raised suspicions. He paid up his ranch taxes, for example, which had been as much as 10 years past due.Carl Magee, who later foundedThe Albuquerque Tribune, wrote about this sudden affluence and also brought it to the attention of the Senate investigation.[9]
In April 1922, a Wyoming oil operator wrote to his senator,John B. Kendrick, angered that Sinclair had been given a contract to the lands in a secret deal. Kendrick did not write back to the man, but two days later on April 15, he introduced a resolution calling for an investigation of the deal.[10] In March 1923, the U.S. Senate launched their first investigation into Teapot Dome.[11]Republican SenatorRobert M. La Follette ofWisconsin led an investigation by the Senate Committee on Public Lands. At first, La Follette believed Fall was innocent. However, his suspicions were aroused after his own office in theSenate Office Building was ransacked.[12][13]
DemocratThomas J. Walsh ofMontana, the most junior minority member, led a lengthy inquiry.[14] 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. By 1924, the remaining unanswered question was how Fall had become so rich so quickly and easily.
Harding-era U.S. Attorney GeneralHarry M. Daugherty and others in theHarding Administration were implicated byThomas W. Miller, theAlien Property Custodian, for pressuring him to deposit funds in the Midland National Bank where Daugherty's brother Mally "Mal" S.[15] Daugherty served as president, when Daugherty refused to investigate the Teapot Dome Scandal.[16] On January 17, 1927, in theMcGrain v. Daugherty ruling, the U.S. Supreme Court upheld a contempt conviction against Mally Daugherty which was related to a contempt citation which was issued against him in 1924[15] for his refusal to cooperate with a U.S. Senate committee investigating his brother's failures to prosecute the perpetrators in the Teapot Dome Scandal.[17] However, the Supreme Court decision to uphold Mal's contempt conviction would also result in the Midland Bank case against Daugherty passing into history.[15]
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 failed to cover up: Doheny's $100,000 loan to Fall. This discovery broke open the scandal. Civil and criminal suits related to the scandal continued throughout the 1920s. In 1927, theSupreme 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.[18] Both reserves were returned to the Navy.[19]
In 1929, Fall was found guilty of accepting bribes from Doheny.[20][21][12] Conversely, in 1930, Doheny was acquitted of paying bribes to Fall.[9] Further, Doheny's corporation foreclosed on Fall's home[22] in theTularosa Basin of New Mexico, because of "unpaid loans" that turned out to be that same $100,000 bribe. Sinclair served six months in jail on a charge ofjury tampering.[23]
Although Fall was to blame for this scandal, Harding's reputation was permanently sullied[24] because of his involvement with people associated to it. Evidence proving Fall's guilt only arose after Harding's death in 1923.[25]
The Teapot Dome oil field was idle for 49 years following the scandal, but went back into production in 1976. After Teapot Dome had earned over $569 million in revenue from the 22 millionbarrels (3,500,000 m3) of oil extracted over the previous 39 years, theDepartment of Energy in February 2015 sold the oil field for $45 million to New York–based Stranded Oil Resources Corp.[19][26]
The scandal had occurred beforeCalvin Coolidge became president after Harding's death, and the investigations increased his reputation for honesty. Coolidge easily won the1924 United States presidential election.[27]
The Supreme Court's ruling inMcGrain v. Daugherty (1927) for the first time explicitly established thatCongress had the power to compel testimony.[28]
In response to the scandal, theRevenue Act of 1924 gave the chairman of theUnited States House Committee on Ways and Means the power to obtain the tax records of any taxpayer.[29] TheFederal Corrupt Practices Act, which regulates campaign finance, was strengthened in 1925.
The Teapot Dome scandal has historically been regarded as the worst such scandal in the United States[27] – the "high water mark" of cabinet corruption. It is often used as a benchmark for comparison with subsequent scandals. In particular it has been compared to theWatergate scandal, in which a cabinet member, Attorney GeneralJohn N. Mitchell, went to prison, the second time in American history that a member of the cabinet has been incarcerated.[30]
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