The Teapot Dome Scandal

 By Tom Morrow

Most of us have heard of the “Teapot Dome” scandal, but what was it, where was it, and what did it involve?

Teapot Dome was a scandal over oil leases that occurred in President Warren G. Harding’s administration during the early 1920s. It was a decade-long scandal that made countless national headlines.

Teapot Dome is an oil field in Natrona County, Wyoming. The scandal also involved the Elk Hills oil field in Kern County, California.

In the early 20th century, the U.S. Navy began converting warships from coal to oil fuel. To ensure the Navy would always have enough fuel available in case of war, in 1912, President Howard Taft designated Teapot Dome and Elk Hills as Naval oil reserve fields.

In 1921, at the urging of Interior Secretary Albert Fall, President Harding issued an executive order transferring the two oil fields from the Navy Department to the Interior Department.

Then in 1922, Fall issued a lease on the Teapot Dome oil field to Harry F. Sinclair, founder of Sinclair Oil. Fall also issued a lease on the Elk Hills reserve to legendary California oil man Edward L. Doheny. Both leases were issued without competitive bidding, but they were deemed legal under the Mineral Leasing Act of 1920.

The lease terms were very favorable to the oil companies. Fall secretly received a $100,000 interest-free loan from Doheny (about $1.5 million in today’s money). He also received gifts from both Doheny and Sinclair totaling more than $400,000 ($5.5 million in today’s money).

Obviously, it was the loan and gifts that were illegal. Fall attempted to keep his private dealings with Doheny and Sinclair a secret, but the sudden improvement in his standard of living caused concern.

A complaint about the Teapot Dome lease by a small Wyoming oil producer triggered an investigation. By 1924, no evidence of wrongdoing had been uncovered, but the last-minute discovery of Fall’s acceptance of money was his undoing. Probers uncovered critical evidence that Fall had forgotten to cover up: Doheny's $100,000 loan.

The scandal broke wide open, triggering a number of civil and criminal suites. In 1927 the Supreme Court ruled the oil leases had been fraudulently obtained. The Court invalidated both the Elk Hills and Teapot Dome leases. The reserves were returned to the Navy Department.

In 1929, Secretary Fall was found guilty of bribery, fined $100,000 and sentenced to one year in prison, making him the first Presidential cabinet member to go to prison for his actions in office.

Sinclair, who refused to cooperate with investigators, was charged with contempt, fined $100,000, and received a short sentence of six months for jury tampering Doheny was acquitted of bribery in 1930.

One of the most significant outcomes of the scandal was a Supreme Court ruling explicitly giving Congress the power to compel testimony. For those of us today who wonder just how much power the Congress has when calling people to testify, that high-court ruling speaks volumes.

Teapot Dome was one of the primary scandals that, historically, has saddled President Harding’s legacy as having a corrupt administration.

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