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"Teapot Dome" Scandal: 1922 - Social Welfare History Project

The Teapot Dome Scandal

Editor’s Note:  This entry is composed of two separate sources: One from Wikipedia, The free encyclopedia and the other from the U.S. Congress. Senate files.

Introduction: The Teapot Dome scandal was a bribery incident that took place in the United States from 1921 to 1922, during the administration of President Warren G. Harding.  Secretary of the Interior Albert Bacon Fall had leased Navy petroleum  reserves at Teapot Dome in Wyoming and two other locations in California to private oil companies at low rates without competitive bidding. In 1922 and 1923, the leases became the subject of a sensational investigation by Senator Thomas J. Walsh.  Fall was later convicted of accepting bribes from the oil companies and became the first Cabinet member to go to prison. No person was ever convicted of paying a bribe, however.

Before the Watergate scandal,  Teapot Dome was regarded as the “greatest and most sensational scandal in the history of American politics”. The scandal damaged the public reputation of the Harding administration, which was already severely diminished by its controversial handling of the Great Railroad Strike of 1922 and the President’s veto of the Bonus Bill  in 1922.

History: 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 Hill 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 Edward C. Denby to transfer control.

Later in 1922, 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 I. 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.

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 $1.33 million today) in November 1921. He received other gifts from Doheny and Sinclair totaling about $404,000 (about $5.36 million today). It was this money changing hands that was illegal, not the leases. Fall attempted to keep his actions secret, but the sudden improvement in his standard of living was suspect

Further Reading: .

  • Bates, J. Leonard. The Origins of Teapot Dome. Urbana, IL: University of Illinois Press, 1963.
  • Bennett, Leslie E. ” One Lesson From History: Appointment of Special Counsel and the Investigation of the Teapot Dome Scandal”. Washington, D.C.: Brookings Institution, 1999.
  • Ise, John. The United States Oil Policy. New Haven, CT: Yale University Press, 1926.
  • Murphy, Blakely M. (ed.) Conservation of Oil and Gas: A Legal History. Chicago: Section of Mineral Law, American Bar Association, 1949.
  •  Noggle, Burl. Teapot Dome: Oil and Politics in the 1920s. Baton Rouge, LA: Louisiana State University Press, 1962.
  • Werner, M. R. and Starr, John. Teapot Dome. New York: Viking Press, 1959.

(Source: Wikipedia, The free encyclopedia – https://en.wikipedia.org/wiki/Teapot_Dome_scandal)

April 15, 1922: Senate Investigates the “Teapot Dome” Scandal

On April 15, 1922, Wyoming Democratic Senator John Kendrick introduced a resolution that set in motion one of the most significant investigations in Senate history. On the previous day, the Wall Street Journal had reported an unprecedented secret arrangement in which the secretary of the Interior, without competitive bidding, had leased the U.S. naval petroleum reserve at Wyoming’s Teapot Dome to a private oil company. Wisconsin Republican Senator Robert La Follette arranged for the Senate Committee on Public Lands to investigate the matter. His suspicions deepened after someone ransacked his quarters in the Senate Office Building.

Expecting this to be a tedious and probably futile inquiry, the committee’s Republican leadership allowed the panel’s most junior minority member, Montana Democrat Thomas Walsh, to chair the panel.  Preeminent among the many difficult questions facing him was, “How did Interior Secretary Albert Fall get so rich so quickly?”

Eventually, the investigation uncovered Secretary Fall’s shady dealings and Senator Walsh became a national hero; Fall would end up as the first former cabinet officer to go to prison. This and a subsequent Senate inquiry triggered several court cases testing the extent of the Senate’s investigative powers. One of those cases resulted in the landmark 1927 Supreme Court decision McGrain v. Daugherty that, for the first time, explicitly established Congress’ right to compel witnesses to testify before its committees.

Reference Items:

Diner, Hasia. “Teapot Dome, 1924,” Included in Schlesinger, Arthur M., Jr., and Roger Bruns, eds.  Congress Investigates: A Documented History, 1792-1974.  New York: Chelsea House Publishers, 1975.

Source: U.S. Congress. Senate. The Senate, 1789-1989, by Robert C. Byrd, S. Doc.100-20, 100th Congress, 1st sess., Vol. 1, 1988. http://www.senate.gov/artandhistory/history/minute/Senate_Investigates_the_Teapot_Dome_Scandal.htm

 

 

 

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