The Teapot Dome Scandal

The United States Navy transitioned from coal to oil-powered ships in the early 1910s due to the significant advantages in speed and efficiency. USS Nevada-class battleships were designed to be entirely coal-free by 1911. As a result, the Navy became concerned about securing a reliable oil supply. In 1912, President William Howard Taft established the first Naval Petroleum Reserves, which designated areas of land containing significant oil deposits exclusively for use by the Navy. Naval Petroleum Reserve Number 1 was established in Elk Hills, California, and Naval Petroleum Reserve Number 3 was established in Salt Creek, Wyoming. The Salt Creek oil reserve was known as Teapot Dome due to the oil rock being teapot-shaped. The reserves were intended to provide an oil supply for the Navy during times of national emergency. World War I emphasized the importance of oil in modern warfare and contributed to a growing awareness of potential oil shortages in a globalized landscape. The early 20th century also saw the rapid growth of the oil industry. Many individual fortunes were created by exploiting newly discovered fields. These so-called “oil tycoons” had significant political and economic influence. Edward Doheny was a leading tycoon and pioneer in the California oil industry. His oil company, Pan American Petroleum and Transport Company, was a major player in the global market. Harry Sinclair was another prominent tycoon and the founder of Mammoth Oil Co. The naval oil reserves represented a valuable source of oil, and for Doheny and Sinclair, gaining access to these reserves was a lucrative opportunity.

On March 4, 1921, Warren Harding was inaugurated as the 29th president of the United States. On the same day, Harding announced his cabinet picks, including Albert Fall for Secretary of the Interior. Fall was previously a senator from New Mexico and was acquainted with Harding from the Senate. Fall gained control of the oil reserves in May and, in July, leased Elk Hills to Doheny. The lease was granted without competitive bidding. Doheny later provided Fall with $100,000, describing it as a loan. In February 1922, Fall leased Teapot Dome to Sinclair. The Wall Street Journal published news of questionable dealings on the part of Fall in April 1922, as rumors circulated that alleged that he was accepting bribes. On January 2, 1923, Fall announced his resignation effective March 4th. A Senate Committee headed by Senator Thomas Walsh of Montana announced an investigation into Fall’s actions in March 1923. On August 2, 1923, Harding died of a heart attack in San Francisco while on a western tour. He served as President for 882 days, the fourth shortest term in presidential history. Harding was succeeded by Vice President Calvin Coolidge. Coolidge, in a statement on the Teapot Dome investigation, stated that the “public is entitled to know that in the conduct of such actions no one is shielded from any party, political, or other reasons… I propose to employ special counsel of high rank, drawn from both political parties, to bring such actions for the enforcement of the law.” Coolidge appointed two investigators, Owen Roberts- a Republican from Philadelphia, and later an Associate Justice of the Supreme Court- and Senator Atlee Pomerance, a Democrat from Ohio. In February 1924, the Senate investigation found that Fall received large sums of money in exchange for rights over the reserves. Sinclair and Doheny were implicated in the investigation. Between 1924 and 1927, Walsh and the Senate Committee on Public Lands investigated Fall. In 1927, the Supreme Court invalidated the Elk Hills and Teapot Dome oil leases. Fall was charged with accepting bribes in March 1927. He was the first cabinet member to be convicted of a felony and was sentenced to one year in prison in 1929. Sinclair and Doheny were acquitted but faced public scrutiny. Historical evidence suggests that the Teapot Dome Scandal weakened public trust in the government by exposing high-level corruption and abuses of power. Additionally, the scandal revealed the government’s vulnerability to corruption and tarnished the Harding administration’s image. The scandal solidified Congress’s role in executive oversight, empowering Congress to later confront and hold accountable the Nixon administration during the Watergate scandal.

The Senate investigation and newspaper reporting revealed the quid pro quo of oil reserves for compensation, weakening public trust in the Harding administration. According to historian Allen Pussey, “Fall began lobbying Harding to wrest control over the reserves,” even before Harding was inaugurated. Fall’s lobbying of Harding before the inauguration highlights a deliberate attempt to exploit their relationship. In 1921, President Harding issued Presidential Executive Order 3474, granting the Department of the Interior full control over the oil reserves. It stated that “the Secretary of the Interior is authorized and directed to perform any and all acts necessary for the protection, conservation, and administration of the said reserves subject to the conditions and limitations contained in this order and the existing laws or such laws as may hereafter be enacted by Congress pertaining thereto.” The executive order granted the Department of the Interior broad authority over the oil reserves and empowered Fall to make decisions with minimal oversight. The broadness was intentional, as Theodore Roosevelt Jr, the assistant Secretary of the Navy under Secretary Edwin Denby, stated that the Executive Order was “written by Fall and with Denby’s approval [given] to President Harding [who] then signed it,” suggesting Fall deliberately intended there to be little oversight. After Fall was given control over the oil reserves, he “negotiated lease agreements with private oil companies that provided the navy with refined oil for storage (in exchange for crude), as well as agreements to build oil facilities for both the Pacific and Atlantic.” Fall’s choice to assign the leases rather than establish a competitive bidding process showcases his intention to benefit from the deals. Competitive bidding to ensure fairness and the best deal for the government was standard practice. Instead, Fall steered the contracts to favored companies in exchange for compensation. In April 1922, Mammoth Oil Co. “secretly agreed to build a pipeline and stock the Navy’s East Coast storage tanks in exchange for full control of [Teapot Dome]- another no-bid, no-royalties deal.” The deal deprived the government of maximum return on its assets. Fall used his position to enrich himself and private individuals at the expense of the American taxpayers.

The scale of corruption demonstrated how easily a government institution could be manipulated. During the investigation into Fall, Walsh secured testimony from an Albuquerque newspaper editor, Carl Magee, who stated that Fall’s property had undergone significant upgrades, paid for by Doheny. Magee testified that “the conditions were so changed that I couldn’t recognize it.” The description of Fall’s home reinforced the idea that the government’s safeguards and oversight were inadequate. Magee’s testimony suggests that the system failed to police itself, as the government had not uncovered Fall’s unethical behavior. In his inaugural address on March 4, 1921, Harding stated that “Our most dangerous tendency is to expect too much of government, and at the same time do for it too little.” Harding argued that the public viewed the government as an entity capable of solving problems, while the scandal exposed corruption stemming from unchecked power.

Americans’ willingness to trust their government without demanding accountability created a fertile ground for exploitation. When investigating the scandal, Walsh said “The climax was reached when on January 24 Doheny voluntarily appeared to tell that on November 30, 1921, he had loaned $100,000 to Fall without security, moved by old friendship and commiseration for his business misfortunes…he secured, without competition, a contract giving him a preference right to a lease of a large part of Naval Reserve No. 1, to be followed by the lease of the whole of it.” The statement exposes how easily Fall’s judgment was compromised by money and manipulated through personal relationships. Doheny’s attempt to justify the loan based on personal sentiment reveals vulnerability to emotional appeals. Additionally, Doheny’s voluntary appearance suggests he attempted to portray himself as innocent. According to The New York Times, the oil executives were “charged by the United States Government with having engineered an oil deal out of which, it is alleged, Mr. Fall received more than $80,000 in liberty bonds.” The oil deal implies that the executives provided compensation to government officials in exchange for being granted favorable treatment. Payment in Liberty Bonds shows a calculated attempt to hide the real reason for the bond exchange. Furthermore, as a Congressional probe was gearing up, “Sinclair gave $269,000 in Liberty Bonds and cash to Fall’s son-in-law, M.T. Everhart, who delivered the bundle to Fall.” Sinclair continued to provide payments even as an investigation was underway, suggesting his high level of confidence that the government was vulnerable to influence. The use of family to transfer the funds shows deliberate planning to hide corruption. Fall and Sinclair believed that if they were careful, they could evade detection even with the investigation looming. It was later revealed that Sinclair gifted “a lot of fancy cattle and horses to Fall.” Extravagant gifts indicate a significant personal benefit for Fall. Accepting such lavish gifts is still bribery, as government officials could be easily influenced by non-monetary benefits.

The revelations of unethical private sector behavior were matched by the discovery of high-level corruption in the government. During Walsh’s investigation, he discovered that “in November 1921, Doheny’s son, Edward Jr, arrived at Fall’s apartment bearing a black bag containing [cash].” The delivery of cash directly to Fall shows that he directly profited from his illicit actions. This sum, delivered clandestinely, strongly suggests that Fall and Doheny were trying to keep their actions and deal secret from those in the government. The magnitude of the sum of money highlights the potential favors that Fall was expected to deliver to the oil executives. Additionally, the fact that the money was delivered directly to Fall at his home establishes that the pair wanted to bypass any official record. Furthermore, Edward Doheny Jr. personally delivered the cash, underscoring the importance of trusting few people with the knowledge of their actions. In the 1927 legal case, United States v Mammoth Oil Co, stemming from the Teapot Dome scandal, the court stated that “If a government official, engaged in making contracts for the government, receives pecuniary favor from one with whom such contracts are made, a fraud is committed on the government.” The court emphasizes that the illicit actions done by Fall during the scandal were a breach of trust and a form of corruption.

The careful planning and weak alibis contributed to a loss of public trust in the Harding administration. Following the transfer of the oil reserves to the Department of the Interior, Fall “then followed intimations of Mr. Sinclair to Three Rivers of confidential conferences between Mr. Fall and Edward L. Dohenym, all of them atendating the negotiations that culminated in the transfer of the Navy’s great oil reserves to the interests dominated by those two oil men.” Fall’s involvement in the conferences demonstrates premeditated corruption. The deals violated the public’s expectation of a fair and transparent form of government. Transferring of public resources to private investors without adequate compensation erodes the public’s trust in the government. These meetings suggest that the corruption was planned from the start. In a letter from Pomerene to Everhart, Pomerene wrote, “Our contention is that in the bribery case, evidence of similar transactions is competent for the purpose of showing the intent; in other words, to characterize the end. It will be contended on the part of the defendant that the $100,000 was a loan. You and I feel confident that it was never intended that it should be repaid. Similarly, the Sinclair-Fall transaction in the form it took was a mere ruse.” The letter revealed that the prosecution was building a case against Fall on a pattern of corrupt behavior. Pomerene also made clear they were not simply interested in the fact that the money changed hands but also in Fall’s motives. Fall’s attempts to disguise the bribes as loans and normal contracts showcased a calculated level of deception. During the investigation, The New York Times reported on the case, writing that Fall “insisted that the $100,000 loan was a legitimate transaction; that even though it was made just before the lease was given to Mr. Doheny, it was nevertheless nothing more than what Mr. Doheny said it was, namely, a loan from one friend to another. The Government contended that it made no difference whether it was a bribe, a loan, or a gift. Whatever it was, Messrs. Roberts and Pomerene insisted, there was but one construction to put it on, namely that the money went to Fall to influence his actions in the matter of the disposition of Elk Hills.” Fall’s insistence that the loans were a legitimate transaction reveals his attempts at a cover-up. The pair claiming that the loan was friendly implies that they knew they had done something wrong. In a hearing before an enraged Congress, “oil and gas experts estimated that Fall had given away at least $100 million ($1.5 billion today) in government-owned oil for little or nothing.” Experts provided concrete evidence of the massive scale of corruption.

The repercussions of the scandal damaged the reputation of President Harding’s administration and cast a shadow over his legacy. Most historians of the modern era consider Harding to be “the worst of all American Presidents.” The scandal left a lasting stain on Harding’s legacy, solidifying his place in history as a symbol of systematic corruption. In a letter to Fall, Harding wrote that “I have no concerns about Wyoming oil matters. I am confident you have adopted the correct policy and will carry it through in a way altogether to be approved.” Harding had complete trust in Fall regarding matters of significant public importance. The blind trust reveals a critical failure of oversight. Harding’s mismanagement of Fall was a key factor in allowing corruption to occur. Additionally, Harding’s writing implies and endorses Fall’s action, creating the idea that Harding was complicit. In a meeting with historian Nicholas Murray Butler, Harding admitted that he was “not for this office and should never have been there.” Harding’s reflection suggests that he recognizes the gravity of the situation and the poor decisions he made that put corrupt officials in charge. He realized that his judgment was flawed, and he put the trust of the American people into the wrong hands.

The President’s damaged legacy was largely the result of a lack of oversight and failure to be aware of the corruption. George Norris, a senator from Nebraska, wrote about the scandal in his autobiography, saying that the scandal “had its origin in the early months of the Harding administration. It became the subject of common gossip in Washington, and yet no betrayal of public trust resisted exposure and punishment more tenaciously.” Norris implies a degree of responsibility and a failure of oversight within the administration. The scandal’s oversight issues suggest the corruption was a systematic issue within Harding’s government and not just an isolated incident. Norris’s description of the scandal as common gossip implies that it was a prominent topic of discussion, reflecting a loss of confidence. Furthermore, the scandal was not just a rumor but a widely discussed topic, suggesting that the government was aware of the potential wrongdoings yet did nothing to stop it. The widespread awareness and lack of action led to distrust in Harding’s administration. Norris implies that the administration and involved parties actively worked to conceal their actions, further eroding the public’s trust when the truth broke. In January 1923, Harding complained to newspaper editor William Allen White that he had “no trouble with my enemies. I can take care of my enemies all right. But my damn friends, my god-damned friends, White, they’re the ones who keep me walking the floor nights!” At its core, Teapot Dome was a betrayal of trust by people within Harding’s circle. The scandal was not the work of external enemies but of those close to him. Harding was not entirely ignorant of the corruption of his administration, even if he was not directly responsible. Later, Norris noted that “out of it came the evidence supporting the inescapable conviction that immense combinations of wealth, large corporations, under leases fraudulently obtained, were systematically robbing the government of the oil stored in the public lands by Nature.” The scandal involved powerful people, implying that Harding enabled corruption within his administration. Additionally, the government being robbed painted Harding as a weak leader who could not control his cabinet. Historian John Dean states that “the fact that Harding had done nothing wrong and had not been involved in any criminal activities became irrelevant.” The scandal’s impact on Harding’s administration’s reputation was so intense that his innocence did not make a difference in his legacy.

The Congressional response to Fall’s plans had implications for future presidents. The scandal set critical precedents that enabled the investigation of the Watergate Scandal under Richard Nixon to be effective. Congress had concrete power to investigate the executive branch’s actions. In the early 1970s, as Nixon prepared to run for re-election, his administration became increasingly concerned about political opposition. Nixon’s aides created a covert unit known as the “plumbers,” tasked with stopping government leaks. Over time, the group expanded its role to include illegal activities aimed at discrediting opponents. The Plumbers planned break-ins and surveillance operations. On June 17, 1972, five men were arrested for breaking into the Democratic National Committee headquarters at the Watergate Office Buildings. In January 1973, the Senate Select Committee on Presidential Campaign Activities was created to investigate the Watergate break-in. The committee, led by Senator Sam Ervin (D-NC), drew on the investigative framework established during the Teapot Dome investigation. The Watergate committee used the precedent to assert its right to investigate misconduct that was linked to the president. They relied on many similar investigative pieces, such as demanding internal documents, subpoenaing witnesses, and holding public hearings. During the Teapot Dome, public outrage over corrupted government officials led to discussions about whether or not independent legal figures were needed to avoid conflicts of interest during investigations into the executive branch. While the Nixon administration initially tried to contain the scandal, under pressure from Congress and the media, Attorney General Elliot Richardson appointed a special prosecutor- Archibald Cox- in 1973. Cox demanded the secret White House tapes that could prove Nixon’s involvement with the June 1972 break-in. Nixon refused and ordered Cox’s firing on October 20th. As it became known, the “Saturday Night Massacre” triggered massive public and political backlash. Richards and Deputy Attorney General William Ruckelshaus resigned in protest. During the Teapot Dome, newspapers’ demand for accountability played an important part in creating political momentum for sustained investigations. Much of the government hoped the scandal would quietly fade, but persistent reporting forced the Senate to act. The dynamic of media coverage fueling public demand for justice set an important precedent that would be followed during Watergate. Investigative journalism by Bob Woodward and Carl Bernstein, formerly of The Washington Post, proved critical in the early stages of the scandal. They connected the break-in at the Watergate complex to Nixon’s re-election campaign. Their words kept public attention focused on the case. The Teapot Dome investigation’s outcome showed the American public for the first time that top officials would be held legally accountable, regardless of the position they held. The Watergate investigation led to the indictment and conviction and 25 people, including top Nixon aides, such as John Mitchell and John Ehrlichman. President Nixon resigned in 1974 to avoid impeachment, becoming the first US president to do so.