# Teapot Dome scandal

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Teapot Dome scandal
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The Teapot Dome scandal was a political corruption scandal in the United States involving the administration of President Warren G. Harding. It centered on Interior Secretary Albert Bacon Fall, who had leased Navy petroleum reserves at Teapot Dome in Wyoming, as well as two locations in California, to private oil companies at low rates without competitive bidding. The leases were the subject of an 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, but 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". It permanently damaged the reputation of the Harding administration, already hurt by its handling of the Great Railroad Strike of 1922 and Harding's 1922 veto of the Bonus Bill.
Congress subsequently passed permanent legislation granting itself subpoena power over tax records of any U.S. citizen, regardless of position. These laws are also considered to have empowered Congress generally.

## History

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 an executive order to transfer 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 the next year, when Interior Secretary Fall persuaded Navy Secretary Edwin C. Denby to implement the order.
Later in 1922, Fall leased 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; leasing without bids was legal under the Mineral Leasing Act of 1920.
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 in November 1921 (equivalent to $1.76 million in 2024). He received other gifts from Doheny and Sinclair totaling about $404,000 (equivalent to $7.12 million in 2024). While the leases were legal, these transactions were not. Fall attempted to keep them secret, but a sudden improvement in his standard 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 founded The Albuquerque Tribune, wrote about this sudden affluence and also brought it to the attention of the Senate investigation.

## Investigation and outcome

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. In March 1923, the U.S. Senate launched their first investigation into Teapot Dome. Republican Senator Robert M. La Follette of Wisconsin 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 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. By 1924, the remaining unanswered question was how Fall had become so rich so quickly and easily.
Harding-era U.S. Attorney General Harry M. Daugherty and others in the Harding Administration were implicated by Alien Property Custodian Thomas W. Miller for pressuring him to deposit funds in the Midland National Bank, which Daugherty's brother Mally "Mal" S. Daugherty served as president of, when Daughterty refused to investigate the Teapot Dome Scandal. On January 17, 1927, in the McGrain v. Daugherty ruling, the U.S. Supreme Court upheld a contempt conviction against Mally Daughterty which was related to a contempt citation which was issued against him in 1924. 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. However, the Supreme Court decision to uphold Mal's contempt conviction would also result in the Midland Bank case against Daugherty passing into history.
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, 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, Fall was found guilty of accepting bribes from Doheny. Conversely, in 1930, Doheny was acquitted of paying bribes to Fall. Further, Doheny's corporation foreclosed on Fall's home in the Tularosa 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 of jury tampering.
Although Fall was to blame for this scandal, Harding's reputation was permanently sullied because of his involvement with people associated to it. Evidence proving Fall's guilt only arose after Harding's death in 1923.
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 $569 million in revenue from the 22 million barrels (3,500,000 m$^3$) of oil extracted over the previous 39 years, the Department of Energy in February 2015 sold the oil field for $45 million to New York–based Stranded Oil Resources Corp.

## Legacy

The scandal had occurred before Calvin Coolidge became president after Harding's death, and the investigations increased his reputation for honesty. Coolidge easily won the 1924 United States presidential election.
The Supreme Court's ruling in McGrain v. Daugherty (1927) for the first time explicitly established that Congress had the power to compel testimony.
In response to the scandal, the Revenue Act of 1924 gave the chairman of the United States House Committee on Ways and Means the right to obtain the tax records of any taxpayer. The Federal Corrupt Practices Act, which regulates campaign finance, was strengthened in 1925.

## Comparison

The Teapot Dome scandal has historically been regarded as the worst such scandal in the United States – 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 the Watergate scandal, in which a cabinet member, Attorney General John N. Mitchell, went to prison, the second time in American history that a member of the cabinet has been incarcerated. During the first Trump administration, news outlets compared alleged misconduct by members of the Trump cabinet, and specifically by Secretary of the Interior Ryan Zinke, to the Teapot Dome scandal.