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, as well as 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". It permanently damaged the reputation of the Harding administration, already severely diminished by its handling of the Great Railroad Strike of 1922 and Harding's 1922 veto of the Bonus Bill.
Congress subsequently passed legislation, which remains in effect today, granting Congress subpoena power over tax records of any U.S. citizen, regardless of position. These laws are also considered to have empowered Congress generally.
History
In the early 20th century, the U.S. Navy largely obtained fuel oil by converting coal. 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; this was legal under the Mineral Leasing Act of 1920.
The lease terms were very favorable to the oil companies, which secretly made Fall a rich man. Fall received a no-interest loan from Doheny of $100,000 in November 1921 (equivalent to $ million in ). He received other gifts from Doheny and Sinclair totaling about $404,000 (equivalent to $ million in ). While the leases were legal, these transactions were not. Fall attempted to keep the deal secret, but the 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 respond, but two days later on April 15, he introduced a resolution calling for an investigation of the deal. 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. Fall had made the leases appear legitimate, but his acceptance of the money was his undoing. By 1924, the remaining unanswered question was how Fall had become so rich so quickly and easily.
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.