The Teapot Dome Scandal

Federal Trials and Great Debates 

in United States History

Case Summary:

• Teapot Dome was one of the biggest government corruption scandals in American history.

• In 1912 and 1915, the U.S. government set aside oil lands in California and Wyoming for the 

exclusive use of the U.S. Navy.

• Shortly after taking office in 1921, Secretary of the Interior Albert Fall took over management of 

the naval oil reserves.

• In 1922, Fall granted two major oil companies leases to drill in the reserves.

• A congressional investigation of the leases revealed that Fall had accepted large sums of money 

from the owners of the oil companies, Harry Sinclair and Edward Doheny.

• The government brought civil suits to cancel the leases for fraud and won.

• The government also brought criminal charges against Fall, Sinclair, and Doheny. Fall was 

convicted of bribery and spent nine months in prison. He was the first cabinet official to go to 

prison.

History of the Case:

In the early twentieth century, the U.S. Navy converted its fleet from coal-burning to oil-burning 

ships. To assist in this technological advancement, Presidents William H. Taft and Woodrow Wilson 

designated oil lands in California and Wyoming as reserves to be used exclusively for the benefit of the 

Navy. Naval Reserves No. 1 and No. 2, in California, were known as Elk Hills and Buena Vista, while 

Reserve No. 3 in Wyoming was called Teapot Dome due to the shape of an unusual rock formation on 

the land.

A 1920 statute provided that the Secretary of the Navy was primarily responsible for making 

decisions regarding the management of the reserves. In 1921, newly elected president Warren Harding 

appointed Albert B. Fall, who had an anti-conservation record as a U.S. senator from New Mexico, as 

secretary of the Interior. Fall quickly moved to take control of the oil reserves, convincing Navy Secretary 

Edwin Denby to join him in presenting Harding with a proposed executive order transferring management 

of the reserves to the Interior Department. Harding immediately signed the order.

During 1921 and 1922, Fall conducted secret negotiations with two oil magnates, Harry Sinclair of 

Sinclair Oil Company and Edward Doheny of Pan-American Oil and Transport Company. Eventually, the 

Interior Department granted both men contracts (known as leases) allowing them to drill in the naval oil 

reserves, Pan-American in Elk Hills and Mammoth Oil Company (incorporated by Sinclair) in Teapot 

Dome.

Members of the Senate were upset to learn that the naval oil reserves had been leased to private 

companies. They were also angered that the transactions had apparently been negotiated in secret, and 

that other oil companies were not given the opportunity to bid on the contracts, which would have ensured 

that the government received the most favorable terms possible. As a result, the Senate Committee on 

Public Lands and Surveys began an investigation of the transactions, holding extensive hearings in 1923 

and 1924.

The hearings eventually revealed that Fall—who resigned his Interior post in early 1923—had 

received large sums of money from both Sinclair and Doheny around the times the Elk Hills and Teapot 

Dome deals were completed. When the committee learned that the previously cash-strapped Fall had 

recently become significantly more prosperous, it endeavored to find out how this had happened. Doheny 

admitted that he gave Fall $100,000 in cash, which he characterized as a loan. Other testimony 
established that Sinclair had paid $68,000 to the foreman of Fall’s ranch in New Mexico. (Further 

investigation later revealed that Sinclair had also given Fall $233,000 worth of Liberty Bonds generated 

by a money-laundering scheme known as the Continental Trading Company.)

These revelations turned Teapot Dome into a national scandal. Calvin Coolidge, who became

president when Harding died of a heart attack in 1923, appointed two special counsels to continue to 

investigate the matter and bring any necessary lawsuits on behalf of the government. Attorneys Owen 

Roberts (a future Supreme Court justice) and Atlee Pomerene (a former U.S. senator) brought civil suits 

against the oil companies in federal courts in California and Wyoming, claiming that the oil leases were

fraudulent and should be canceled. They also brought criminal cases against Fall, Sinclair, and Doheny 

for conspiracy to defraud the U.S. government and against Fall and Doheny for bribery.

In seven different federal trials and related appeals, the government claimed that both oil lease 

deals were the product of corruption. In response, the defense argued in the various cases that Doheny’s 

payment to Fall was a loan between friends and did not influence the Elk Hills transaction; that Navy 

Secretary Denby, and not Fall, had truly been in charge of the negotiations of both deals; that drilling in 

Teapot Dome was made necessary by the threat of drainage from drilling on an adjacent oil field; and that 

the Elk Hills deal, which included the construction of a fuel storage depot at Pearl Harbor, was motivated 

primarily by a concern for national security.

In the end, the government secured the cancelation of both oil leases. The Supreme Court 

declared both deals to be corrupt and Fall to be a “faithless public officer.” In addition, Fall was convicted 

of bribery, becoming the first former cabinet official to go to prison. A different jury acquitted Doheny of 

paying a bribe, despite Fall’s conviction for accepting the same money. Fall and Doheny were acquitted 

of conspiracy. Sinclair was also acquitted of conspiracy in a second trial after his first trial with Fall ended 

in a mistrial. Fall was not retried on the charge due to health issues. In two additional trials, Sinclair was 

convicted of contempt of Congress and contempt of court for refusing to answer questions before the 

Senate and for having jurors surveilled in his first conspiracy trial. 

Teapot Dome has an enduring legacy as one of the most significant government scandals in 

American history and as a prime example of the rampant corruption that plagued the administration of 

Warren Harding. The federal courts played a crucial role in resolving the crisis brought about by the illfated oil leases.

Legal Issues:

• Did the oil companies obtain the Elk Hills and Teapot Dome leases by fraud?

• Did the Navy and Interior Departments have legal authority to grant the leases?

• Did Fall conspire with Sinclair and with Doheny to defraud the U.S. government?

• Was Fall guilty of accepting a bribe?

• Was Doheny guilty of paying a bribe?

Questions for Discussion:

• Why was the Teapot Dome affair a major national scandal?

• Should Fall receiving money from Doheny and Sinclair necessarily have made the oil leases 

invalid? What if the leases were beneficial to the country? What if Fall would have made the 

same decisions absent the money?

• What were the reasons given for and against allowing private oil companies to drill in the naval 

reserves? Which do you find more persuasive?

• If Congress and the president believed the leases to be fraudulent, why could they not just cancel 

the contracts? 

• Was it fair that Fall was convicted of accepting a bribe while Doheny was acquitted of paying the 

same alleged bribe?