Teapot Dome
100th Anniversary of a Government & Oil Scandal
(This essay is adapted from Washington Babylon: From George Washington to Donald Trump, Scandals That Rocked the Nation.)
The Teapot Dome scandal is a century old. Everyone has heard of Teapot Dome. They know it’s a government scandal, but know little more than that. This brief read will explain exactly what happened, and identify the legal and investigative precedents that were established.
The availability of oil had national security implications for the US in the early twentieth century. The United States Navy fleet was converting from coal-fired to oil-fired propulsion plants on its ships. Navy leaders wanted to ensure there was a reliable supply of oil, especially for their warships in the event that there was a national emergency.
In 1915, the federal government set aside three areas of federal land believed to be rich in oil. Elk Hills and Buena Vista Hills, several miles to the west of Bakersfield, California, were designated Naval Oil Reserve numbers one and two, respectively. Number three was located in Teapot Rock on the outskirts of Casper, Wyoming. A nearby rock formation bore a resemblance to a teapot with a dome lid, giving rise to the area’s nickname of Teapot Dome.
By the end of the First World War, the nation’s thirst for oil was dramatically increasing. The proliferation of affordable Ford and General Motors cars was driving the demand for gasoline. So much oil was being consumed, there were warnings the US oil supply was nearly exhausted and the nation would soon run out.
In the 1920 presidential election, first-term Republican Senator Warren Harding of Ohio was the long-shot candidate who was elected in a landslide. He was the first senator to have won the White House.
After he was sworn in, Harding immediately went from his inauguration straight to the US Senate floor to personally read aloud the names of his cabinet nominees. The Senate voted unanimously to confirm all of them in about ten minutes’ time. Fellow Republican Albert Fall, senator from New Mexico, was his choice to be Secretary of the Interior.
One month after he became interior secretary, Fall met with Secretary of the Navy Edwin Denby. Fall thought that all mineral rights, to include oil, should fall under the jurisdiction of the Interior Department. The pair agreed all three Naval oil reserves should be transferred from the jurisdiction of the Navy Department to Interior. They approached Harding with their plan, which he approved on May 31 via Executive Order 3474 (1920).
On July 12th, without any public notice, Fall signed a lease with the Pan American Petroleum and Transport Company, owned by Edward Doheny, to drill offset wells near the two California oil fields. In late 1921, Doheny sent his son, Ned, with a friend to Fall’s Washington, DC, apartment with a black bag filled with $100,000 in cash. The money, both Doheny and Fall would later argue, was merely an interest-free loan and not a bribe for the oil field leases.
The money was a welcomed relief to Fall. He was nearly broke, and one year earlier he had contemplated resigning from the Senate in order to enter a more lucrative career. He even sold his share in the Albuquerque Morning Journal newspaper to an Oklahoma Democratic senator he despised as too liberal. Fall was forced to execute the newspaper sale because he did not have enough money to pay the taxes on his ranch.
In December 1921, Fall entertained Mammoth Oil Company President Harry Sinclair, among others, at his Three Rivers, New Mexico, ranch. Mammoth was a subsidiary of the oil giant Sinclair Consolidated Oil Corporation. Fall and Sinclair did some horse-trading that night. Literally. Sinclair sent to Fall’s ranch six heifers, a bull, two boars, four sows, and a thoroughbred racehorse. In return, Fall agreed to lease the Teapot Dome oil fields to Mammoth.
On April 7, 1922, Fall, Denby, and Sinclair executed a secret lease for Teapot Dome, which Fall promptly filed away in his locked desk. The next month, Sinclair gave Fall $269,000 in cash and bonds. In a matter of days, competing oil companies began asking questions of their senators and congressmen. Why were lease agreements secretly negotiated and signed without a competitive bidding process, many of them asked, even though competitive bids were not required under the Mineral Leasing Act of 1920? This led to Senate Resolution 282 demanding answers from the Navy and Interior Departments.
In less than a year, Fall secretly leased three of the federal government’s most lucrative oil fields to a pair of giants in the oil industry. Fall was handsomely rewarded in return. However, he did not do a very good job of keeping his windfall secret. Fall began buying additional property and making improvements at a conspicuous rate that became noticeable to others who questioned how he came into his newfound riches.
In response to the Senate’s demands, the Navy and Interior Departments sent copies of both leases. Harding offered strong support for his cabinet secretaries by telling the Senate the oil field activities “had my entire approval.”[i] Fall told the Senate that every action he took was proper and was in keeping with Harding’s executive order.
Harding also argued that his action to lease drilling rights was beneficial to the Navy since nearby private wells were siphoning oil from the Navy fields. It was better to drill for oil before it all dissipated, he argued. Despite the secretive nature of the leases, those in the Senate asking questions of the transactions could not find anything illegal.
Questions about the leases did not subside, however. Even the public was taking an interest in the scandal. Under pressure, Fall resigned as interior secretary in January 1923. Although there were plenty of suspicions, it was never proved that Harding received bribes from Sinclair. Then on August 2, 1923, Harding unexpectedly died. Vice President Calvin Coolidge assumed the presidency. Coolidge announced he was committed to rooting out all corruption.
The Senate Committee on Public Lands and Surveys began its formal investigation after Harding’s death. The committee called before it countless witnesses between October 23, 1923 and May 14, 1924. The investigation had gone so poorly, yielding no incriminating information, that several members suggested shutting it down.
It was Doheny’s testimony on January 24, 1924, that opened up an entirely new line of inquiry. Doheny testified that he lent Fall $100,000. Upon questioning, Sinclair admitted he gave Fall some cattle. These revelations caused the Senate to call for a special counsel to be appointed.
There had been a tremendous amount of partisan bickering taking place in Washington, DC, at this time. The Teapot Dome scandal only worsened it. Harding, Coolidge, and Fall were Republicans. Their loudest critics were Democrats.
The Democrats were already planning to campaign on the theme of Republican corruption in the 1924 elections. However, Coolidge undercut their strategy by demonstrating professionalism and integrity. Coolidge responded to the calls for a special counsel in King Solomon fashion. In an action that silenced claims of partisan favoritism, Coolidge appointed two special counsels, one Republican and one Democrat.
The Republican corruption election strategy backfired on the Democrats. Denby and Attorney General Daugherty would soon resign their cabinet posts. Fall had resigned months earlier. The three cabinet members closely identified with the growing scandal would soon be gone. However, it was Doheny who most blunted the Democratic election strategy.
Although Doheny was embroiled in the scandal with the Republican Fall, he was first and foremost a Democrat. Doheny was a generous donor to Democratic candidates and causes. He had four cabinet members from the Woodrow Wilson administration on his payroll. Most damning was he also had on his payroll William Gibbs McAdoo. Until this discovery, McAdoo was the leading contender for the 1924 Democratic presidential nomination.
Coolidge’s special counsel appointments paired Owen Roberts with Atlee Pomerene. A Republican, Roberts was an accomplished and well-respected Philadelphia attorney. Pomerene was a retired Democratic senator from Ohio. Despite some misgivings about their qualifications and experience, both men were overwhelmingly confirmed by the Senate on February 18, 1924. Navy Secretary Edwin Denby immediately resigned after the Senate confirmations.
Coolidge had his doubts about Attorney General Harry Daugherty and Daugherty’s willingness to provide the necessary resources to Roberts and Pomerene in order to conduct a thorough investigation. Instead, Coolidge assigned Secret Service agents to serve as special counsel investigators. Facing an obvious lack of confidence by Coolidge and mounting criticism from not having acted sooner on behalf of the Justice Department, Daugherty resigned as Attorney General on March 28.
Roberts and Pomerene immediately went to work. They were thorough and exhaustive. They sent investigators all over the country and interviewed potential witnesses by the dozens. They scoured financial records. By March, the special counsels pursued criminal indictments against Fall, Doheny, and Sinclair. Roberts and Pomerene also sought civil lawsuits to have the oil leases canceled.
The special counsels pursued civil litigation against Doheny’s Pan American Petroleum. A civil trial began on October 21, 1924. Federal prosecutors argued that the leases for Naval oil reserve numbers one and two in Elk Hills and Buena Vista Hills were obtained fraudulently and should be declared null and void. On May 28, 1925, a federal judge agreed.
A similar suit was filed against Mammoth Oil, but proved to be more problematic. The trial opened in March 1925. Some witnesses refused to testify, others had faulty memories, and still others fled the country. In June, a federal judge ruled against the US government and dismissed the case. The special counsels appealed the ruling and the US Court of Appeals for the Eighth Circuit reversed the decision. The Teapot Dome contract was canceled.
Then the criminal prosecutions began. However, the criminal trials did not go as well for the US government. Fall and Doheny faced charges of conspiracy to defraud the United States over the Elk Hills and Buena Vista Hills oil leases. Their trial began in November 1926. A jury found both men not guilty.
The October 1927 trial against Fall and Sinclair on charges of defrauding the government was declared a mistrial when it was learned that Sinclair hired a team of private detectives to follow the jury. Sinclair faced trial on a separate charge of criminal jury tampering for hiring the detectives. He was found guilty and sentenced to six months in prison.
A new trial began on April 2, 1928, on the fraud charges, but Sinclair was the only defendant this time. Fall was in ill health, and the special counsels declined to pursue criminal charges against him in this matter. The jury found Sinclair not guilty. While he was spared from the fraud trial, Fall still faced bribery charges. Despite his deteriorating health, his bribery trial began on October 7, 1928. Fall was convicted and sentenced to one year in prison and was fined $100,000. He was the first cabinet member to have been convicted of a felony.
Fall’s appeal of the conviction fell short at the appellate court. In July 1930, both Republican and Democratic leaders from New Mexico petitioned President Herbert Hoover to pardon Fall. Hoover, who succeeded Coolidge as President, was the secretary of commerce under both Harding and Coolidge. The president denied the executive clemency request.
Fall finally headed off to serve his prison sentence. To make matters worse, Fall’s 700,000-acre ranch was sold in a sheriff ’s sale because he was unable to repay the $100,000 loan to Doheny. The sad irony for Fall was that he was convicted for bribery, in part because the $100,000 was treated as a bribe, and he lost his home due to his failure to repay the $100,000, which was considered a loan. Fall left prison bankrupt. He died in 1944.
Doheny faced a separate trial for offering the bribe to Fall. The prosecutors presented the same evidence that got Fall convicted. It was not enough. The jury acquitted Doheny. However, tragedy befell Doheny. His son, Ned, who delivered the $100,000 to Fall, was killed by his friend, Hugh Plunkett, in a murder-suicide. Apparently, Plunkett was fearful the pair would be charged as accomplices for delivering the cash to Fall.
Sinclair’s bribery trial ended the same way as that of Doheny. Sinclair was acquitted of the charge.
Coolidge considered Roberts’s work as special counsel to be exemplary. In fact, Roberts received widespread praise by many observers for his performance. For his reward, Coolidge appointed Roberts to the US Supreme Court.
The scandal featured the first felony conviction of a cabinet member. There were a pair of significant legal decisions that arose from the Teapot Dome scandal. In a related matter, the brother of Attorney General Harry Daugherty refused to appear before a Senate committee. In a 1927 decision, the Supreme Court ruled that Congress had the authority to subpoena private citizens to appear before it to carry out an investigation as part of its duty to craft legislation.[ii] In a similar case, the high court held in 1929 that Congress had the investigatory power to question private citizens.[iii]
Mark Hyman is an Emmy award-winning investigative journalist. Follow him on Twitter, Gettr, and Parler at @markhyman, and on Truth Social at @markhyman81.
His books Washington Babylon: From George Washington to Donald Trump, Scandals That Rocked the Nation and Pardongate: How Bill and Hillary Clinton and their Brothers Profited from Pardons are on sale now (here and here).
[i] Laton McCartney, The Teapot Dome Scandal: How Big Oil Bought the Harding White House and Tried to Steal the Country, (New York: Random House, 2008), 28.
[ii] McGrain v. Daugherty, 273 US 135 (1927).
[iii] Sinclair v. United States, 279 US 263 (1929).