U.S. Senate Begins Hearings on Teapot Dome Oil Leases Summary

  • Last updated on November 11, 2022

Teapot Dome in Wyoming was the site of one of several naval oil reserves on public land. A number of politicians opposed restrictions preventing oil companies from exploiting the deposits. Albert B. Fall, secretary of the interior, convinced the U.S. Navy secretary to turn over to him control of the oil lands. Fall then leased the lands to oil companies and received gifts of more than $400,000. After knowledge of this became public, the scandal became a major issue in the 1924 presidential election.

Summary of Event

Before U.S. president Warren G. Harding died on August 2, 1923, he knew little about the crimes and corrupt activities of his subordinates. Their activities would ruin his reputation and lead historians to label him the worst president in U.S. history. The public knew even less about what was happening in Harding’s administration. They were shocked when the head of the Veterans’ Bureau[Veterans Bureau] Veterans Bureau was convicted of embezzling government funds and collecting kickbacks on hospital construction contracts and on the sale of surplus goods. They also witnessed a scandal when the government’s alien property custodian was jailed for accepting bribes when returning confiscated German property to legal owners. Furthermore, the attorney general of the United States had avoided prison only because a series of juries could not agree on a verdict. However, the scandal that came to symbolize the corruption of the era and provide a name for the whole tale of what went wrong under Harding involved leases on naval oil reserves at Salt Creek (better known as Teapot Dome) in Wyoming and at Elk Hills and Buena Vista in California. [kw]Teapot Dome Oil Leases, U.S. Senate Begins Hearings on (Oct. 22, 1923) Oil reserves scandal Elk Hills oil reserve Fall, Albert B. Doheny, Laurence E. Sinclair, Harry F. Harding, Warren G. [p]Harding, Warren G.;and Teapot Dome scandal[Teapot Dome scandal] Teapot Dome scandal Coolidge, Calvin [p]Coolidge, Calvin;and Teapot Dome scandal[Teapot Dome scandal] Oil reserves scandal Elk Hills oil reserve Fall, Albert B. Doheny, Laurence E. Sinclair, Harry F. Harding, Warren G. [p]Harding, Warren G.;and Teapot Dome scandal[Teapot Dome scandal] Teapot Dome scandal Coolidge, Calvin [p]Coolidge, Calvin;and Teapot Dome scandal[Teapot Dome scandal] [g]United States;Oct. 22, 1923: U.S. Senate Begins Hearings on Teapot Dome Oil Leases[00320] [c]Corruption;Oct. 22, 1923: U.S. Senate Begins Hearings on Teapot Dome Oil Leases[00320] [c]Government;Oct. 22, 1923: U.S. Senate Begins Hearings on Teapot Dome Oil Leases[00320] [c]Politics;Oct. 22, 1923: U.S. Senate Begins Hearings on Teapot Dome Oil Leases[00320] [c]Business;Oct. 22, 1923: U.S. Senate Begins Hearings on Teapot Dome Oil Leases[00320] Walsh, Thomas J.

Oil wells near Teapot Dome, Wyoming.

(NARA)

When the Navy, U.S.;and Teapot Dome scandal[Teapot Dome scandal] U.S. Navy shifted from coal to oil for fueling its vessels, concern over ensuring emergency supplies led President William H. Taft to set aside California oil lands for government use in 1912; President Woodrow Wilson followed in 1915 by adding a third reserve in Wyoming. Reserved oil would be used only if regular supplies were inadequate. Even at the height of naval warfare during World World War I[World War 01];and oil reserves[oil reserves] War I, reserves went untouched. Most experts during the early 1920’s predicted the world’s oil supply would soon be exhausted, which led to the public’s attention to oil leases. Conservationists, who opposed any use of reserved oil, kept an eager eye on the reserves, knowing that Westerners and their Washington, D.C., political allies believed natural resources on federal land should be open for all citizens.

Albert B. Fall, a U.S. senator from New Mexico, was also a rancher and mine owner who shared this point of view. Conservation supporters, alarmed when Harding appointed Fall secretary of the interior, mobilized and successfully blocked Fall’s attempt to move the Forest Service, U.S.[Forest Service, U.S.] U.S. Forest Service to the Department of the Interior, U.S. Department of the Interior, so that he could open the national forests to lumber and mining interests. The Forest Service had been part of the Department of Agriculture Department of Agriculture since 1881.

In May, 1921, two months after taking office, Fall convinced the secretary of the Navy to transfer control of the naval reserves from the Navy department to the Interior Department. In 1922, Fall proceeded to open exploitation of the oil by secretly negotiating leases with Laurence E. Doheny, president of the Pan-American Oil and Transport Company[PanAmerican Oil and Transport Company] Pan-American Oil and Transport Company, for the California reserves and with Harry F. Sinclair, president of the Mammoth Oil Company Mammoth Oil Company, for Teapot Dome.

Doheny’s first deal involving the Elk Hills reserve had been openly negotiated. During the Wilson administration, the naval department requested bids for drilling offset wells that would block adjoining wells from draining reserved oil. Doheny’s company made the best offer and publicly received a contract to drill twenty-two wells on July 12. The following year, Fall negotiated a contract with Doheny, without competing bids, which opened the Elk Hills and Buena Vista oil reserves Buena Vista reserves to full exploitation; in return, Doheny agreed to build and fill storage tanks at Pearl Harbor for the Navy. At the same time, Fall secretly negotiated a similar lease with Sinclair on April 7, 1922, opening Teapot Dome in return for Sinclair’s pledge to build a pipeline to the Midwest and supply oil to the Navy.

Sinclair’s contract would not remain secret for long. After a Wyoming oilman complained to his senator about activity at Teapot Dome, the Senate began inquiries that forced Fall to reveal the secret lease. His answer aroused suspicion, and the Senate appointed an investigative committee, chaired by Democratic senator Thomas J. Walsh of Montana, to examine the treatment of reserves. Since questions about Teapot Dome spurred the investigation, it provided the name for the scandal, even though it was much less significant than the California fields. Sinclair reportedly said he expected to extract $100 million worth of oil from the field, but when the reserves were opened late in the twentieth century, Teapot Dome proved to have little oil; Elk Hills, though, sold at auction for $3.5 billion in 1998.

The Senate committee demanded all relevant documents from Fall, who complied by supplying thousands of pages of material, accompanied by a letter of transmittal from President Harding asserting he was aware of the secretary of the interior’s activities and that they had his full approval. This statement would destroy Harding’s reputation when Fall’s actions were finally revealed. Walsh proceeded cautiously. He took eighteen months to carefully analyze the submitted material before opening hearings on October 22, 1923, by which time Fall had resigned (in March, 1923), with his reputation intact. Harding had died and Calvin Coolidge was president of the United States.

Initially, the hearings attracted little attention. Fall’s antagonistic response to Walsh’s questions appeared to give him the upper hand as he arrogantly refused to admit to any problematic actions. Geological reports appeared to support drilling offset wells in the reserves. Fall asserted secrecy over the leases was necessary because they involved national defense, ignoring that the Navy Department had publicly negotiated the previous lease at Elk Hills. In December, Walsh heard from Fall’s New Mexico neighbors that shortly after granting the leases, Fall had paid long-overdue back taxes on his ranch, repaid debts, purchased an adjoining ranch, and began extensive improvements on his property. It was after Walsh had asked Fall to explain the source of his new wealth that newspaper reporters began to flock to the hearings, and national attention was focused on the committee room.

Claiming he was too ill to testify in person, Fall responded with a letter stating he had received a personal loan of $100,000 from wealthy newspaper publisher Edward McLean, owner of Washington Post The Washington Post, and denied having received money from Doheny or Sinclair. Fall’s testimony began to unravel almost immediately; Walsh interviewed McLean, who refused to confirm Fall’s account.

On January 28, 1924, Doheny apologized to the committee for not having told them in previous testimony that he had given Fall a loan of $100,000. Asserting he and Fall had been friends for forty years, dating back to when they were prospectors in the same mining camp, and that the amount was a trivial sum to a multimillionaire, he insisted he had merely assisted a comrade in need of help. Doheny admitted he anticipated earning a $100 million profit selling the reserved oil but insisted the loan had nothing to do with the leases he expected Fall to grant. Reporters listened spellbound as Doheny described sending his son from Los Angeles to a New York City bank. The young Doheny withdrew the funds, placed five bundles of twenty thousand dollars each in a black satchel, and hand carried the satchel to Fall’s Washington, D.C., hotel suite. Fall counted the money on his kitchen table and signed a note for the amount.

Republican senators, eager to implicate Democrats in the scandal, questioned Doheny about relations with other politicians. Doheny provided a list of men who had served in the Wilson administration whom he kept on retainer because they were useful to him. Prominent among them was a leading candidate for the 1924 Democratic nomination, former secretary of the Treasury McAdoo, William G. William G. McAdoo. Pundits predicted the revelation would badly damage McAdoo’s presidential hopes.

When Sinclair was recalled, he refused to testify by invoking his Fifth Amendment right against self-incrimination, leading to his indictment for contempt of the Senate. The committee arranged a grant of immunity for Fall’s son-in-law and forced him to describe how, in January, 1922, Fall sent him to Sinclair, who gave him close to $200,000 in 3.5 percent Liberty Bonds. In May, after the leases were granted, Fall received another thirty-five thousand dollars in bonds. Followers of the scandal do not agree on the exact amount that Fall received from the two oilmen, but most place the total at more than $400,000.

After hearing the testimony, Walsh proposed that the Senate call upon the president to cancel the leases and appoint a special prosecutor to bring criminal charges against Fall, Doheny, and Sinclair. Coolidge heard of the plan and moved first, preempting Senate action by appointing two special prosecutors, a Democrat and a Republican, to pursue the investigation together.

The special prosecutors moved expeditiously to have the leases declared invalid and to bring the accused to trial, but the courts moved slowly; the last court ruling would not come until June, 1931. On June 5, 1924, both Doheny and Sinclair had been indicted in Washington, D.C., in separate suits on multiple charges of Bribery;and Teapot Dome scandal[Teapot Dome scandal] bribery and conspiracy to defraud the United States. Fall was a codefendant in both suits. Civil actions to annul the leases began in Los Angeles against Doheny and in Wyoming against Sinclair.

The Los Angeles civil trial opened on October 24 before a judge who would hear the case without a jury. Prosecutors brought special attention to what they considered strange: the carrying of huge amounts of cash from state to state in a satchel. The defense, however, claimed that transfers of large amounts of cash were normal in New Mexico because banks were unreliable. Doheny’s lawyers were shocked when the judge ruled against Doheny and voided the leases on May 30, 1925. Sinclair had won his case in Wyoming; the judge in that case ruled that no fraud had taken place. However the Wyoming judge was overruled on appeal. In 1927, the U.S. Supreme Court, U.S.;and Teapot Dome scandal[Teapot Dome scandal] Supreme Court affirmed the verdicts, canceling all naval-reserve leases as fraudulent.

Criminal conspiracy trials traditionally are less favorable for the prosecution. The case against Doheny and Fall did not start until November 22, 1926, in Washington, D.C. Fall did not testify, but Doheny did, responding effectively under cross-examination. The jury found both Doheny and Fall not guilty. The trial of Sinclair and Fall started October 17, 1927, but ended abruptly in a mistrial two weeks later when Sinclair was discovered trying to tamper with the jury. Sinclair was sentenced to six months for tampering, but a jury declared him not guilty in his conspiracy trial in 1928.

Different verdicts came in the separate bribery trials of Fall and Doheny. Strangely, one jury ruled Fall had accepted a bribe from Doheny but another jury decided Doheny had not bribed Fall. Doheny was a better witness than Fall, and he convinced his jury that he lent Fall money without intending to bribe him. Fall, however, could not satisfactorily explain the falsehoods in his letter to the Senate committee—that he thought it necessary to lie about his behavior was powerful evidence that Fall knew accepting the money was wrong.

On October 25, 1929, Fall was sentenced to one year in jail and fined $100,000. He never paid the fine because he had no money, but after losing a final appeal in 1931, he served nine months and nineteen days in jail, the first federal-level cabinet member to be convicted and jailed for a crime committed while in office.

Impact

Democratic Party strategists had optimistically hoped Teapot Dome and other scandals during Harding’s administration would be the key to victory in the Presidential campaigns, U.S.;1924 1924 presidential campaign. They did not expect the Republicans to easily evade the corruption label nor did they foresee that their party would effectively commit political suicide at its national convention.

The Republicans used a dual strategy in the campaign, blaming specific individuals and asserting Democrats were equally vulnerable. The dead Harding and the discredited Fall were convenient scapegoats for Republicans, while McAdoo’s acceptance of a retainer from Doheny supported assertions that the scandal was bipartisan. Coolidge proved untainted by the scandals. He insisted he knew nothing of the problems while vice president and claimed credit for appointing special prosecutors to pursue the criminals.

Although McAdoo’s association with Doheny weakened him, he entered the Democratic convention with the largest bloc of votes. McAdoo’s candidacy failed, not due to Teapot Dome but over his refusal to condemn the Ku Klux Klan. Infuriated urban and Roman Catholic conventioneers obdurately blocked his nomination. After one hundred three ballots during twenty-nine sessions, the party chose a Wall Street lawyer as its candidate. Fourteen days of vicious debate over religion and race, with the nation listening through the new medium of radio, left a bitterly divided party.

Teapot Dome and its associated scandals decided no elections. Democrats hammered away at corruption scandals in 1924, but Coolidge easily triumphed. In 1928, Democrats unsuccessfully attacked Herbert Hoover, Herbert Hoover over his presence in the Harding cabinet when transfer of the naval reserves to Fall’s department was approved. However, Teapot Dome became enshrined in the popular imagination as an enduring image of political corruption. Oil reserves scandal Elk Hills oil reserve Fall, Albert B. Doheny, Laurence E. Sinclair, Harry F. Harding, Warren G. [p]Harding, Warren G.;and Teapot Dome scandal[Teapot Dome scandal] Teapot Dome scandal Coolidge, Calvin [p]Coolidge, Calvin;and Teapot Dome scandal[Teapot Dome scandal]

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Davis, Margaret Leslie. Dark Side of Fortune: Triumph and Scandal in the Life of Oil Tycoon Edward L. Doheny. Berkeley: University of California Press, 1998. Sympathetic account of Doheny’s career as a pioneering oil explorer, stressing that a jury found him not guilty.
  • citation-type="booksimple"

    xlink:type="simple">Dean, John W. Warren G. Harding. New York: Henry Holt, 2004. Portrays Harding as a hardworking executive whose reputation was ruined by the crimes and misdeeds of his subordinates.
  • citation-type="booksimple"

    xlink:type="simple">Noggle, Burl. Teapot Dome: Oil and Politics in the 1920’s. Reprint. Westport, Conn.: Greenwood Press, 1980. A detailed narrative that considers the scandal in the context of the conflict between conservationists and developers over control of public lands and forests.
  • citation-type="booksimple"

    xlink:type="simple">Schultz, Jeffrey D. Presidential Scandals. Washington, D.C.: CQ Press, 2000. Contains a brief narrative of the Teapot Dome affair, which Schultz considers one of worst national scandals in American history.
  • citation-type="booksimple"

    xlink:type="simple">Sobel, Robert. Coolidge: An American Enigma. Washington, D.C.: Regnery, 1998. Favorable account of Coolidge’s handling of the Teapot Dome scandal.
  • citation-type="booksimple"

    xlink:type="simple">Stratton, David H. Tempest Over Teapot Dome: The Story of Albert B. Fall. Norman: University of Oklahoma Press, 1998. Defends Fall and considers him a scapegoat for political and economic corruption during the 1920’s.

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