Teapot Dome scandal

"Teapot Dome" redirects here. For other uses, see Teapot Dome (disambiguation).

Oil businessman Edward L. Doheny (at table, second from right) testifying before the U.S. Senate committee investigating the Teapot Dome oil leases in 1924

The Teapot Dome scandal was a bribery scandal involving the administration of United States President Warren G. Harding from 1921 to 1923. Secretary of the Interior Albert Bacon Fall had leased Navy petroleum reserves at Teapot Dome in Wyoming, as well as two locations in California, to private oil companies at low rates without competitive bidding. ^[1] The leases were the subject of an investigation by Senator Thomas J. Walsh. Convicted of accepting bribes from the oil companies, Fall became the first presidential cabinet member to go to prison, but no one was convicted of paying the bribes.

Before the Watergate scandal, Teapot Dome was regarded as the "greatest and most sensational scandal in the history of American politics". ^[2] It permanently damaged the reputation of the Harding administration, already hurt by its handling of the Great Railroad Strike of 1922 and Harding's 1922 veto of the Bonus Bill. ^[3]

Congress subsequently passed permanent legislation granting itself subpoena power over tax records of any U.S. citizen, regardless of position. ^[4] These laws are also considered to have empowered Congress generally. ^[5]

History

Teapot Dome around the time of the scandal, including Teapot Rock depicted in a c. 1922 postcard

To ensure that the Navy would always have enough fuel, President Taft designated several oil-producing areas as naval oil reserves. In 1921, President Harding issued an executive order to transfer control of Teapot Dome Oil Field in Natrona County, Wyoming, and the Elk Hills and Buena Vista Oil Fields in Kern County, California, from the Navy Department to the Department of the Interior. This was not implemented until the next year, when Interior Secretary Fall persuaded Navy Secretary Edwin C. Denby to implement the order.

Later in 1922, Fall leased 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 L. Doheny of Pan American Petroleum and Transport Company. Both leases were issued without competitive bidding; this was legal under the Mineral Leasing Act of 1920. ^[6]

The lease terms were very favorable to the oil companies, which secretly made Fall a rich man. Fall received a no-interest loan from Doheny of $100,000 ^[7] in November 1921 (equivalent to $1.71 million in 2023 ^[8] ). He received other gifts from Doheny and Sinclair totaling about $404,000 (equivalent to $6.9 million in 2023 ^[8] ). While the leases were legal, these transactions were not. Fall attempted to keep the deal secret, but the sudden improvement in his standard of living raised suspicions. He paid up his ranch taxes, for example, which had been as much as 10 years past due. Carl Magee, who later founded The Albuquerque Tribune , wrote about this sudden affluence and also brought it to the attention of the Senate investigation. ^[9]

Investigation and outcome

Albert B. Fall was the first U.S. cabinet official sentenced to prison in the scandal.

In April 1922, a Wyoming oil operator wrote to his senator, John B. Kendrick, angered that Sinclair had been given a contract to the lands in a secret deal. Kendrick did not respond, but two days later on April 15, he introduced a resolution calling for an investigation of the deal. ^[10] Republican Senator Robert M. La Follette of Wisconsin led an investigation by the Senate Committee on Public Lands. At first, La Follette believed Fall was innocent. However, his suspicions were aroused after his own office in the Senate Office Building was ransacked. ^{[11] [12]}

Democrat Thomas J. Walsh of Montana, the most junior minority member, led a lengthy inquiry. ^[13] For two years, Walsh pushed forward while Fall stepped backward, covering his tracks as he went. No evidence of wrongdoing was initially uncovered, as the leases were legal enough, but records kept disappearing mysteriously. Fall had made the leases appear legitimate, but his acceptance of the money was his undoing.^{[ citation needed ]} By 1924, the remaining unanswered question was how Fall had become so rich so quickly and easily.

Money from the bribes had gone to Fall's cattle ranch and investments in his business. Finally, as the investigation was winding down with Fall apparently innocent, Walsh uncovered a piece of evidence Fall had failed to cover up: Doheny's $100,000 loan to Fall. This discovery broke open the scandal. Civil and criminal suits related to the scandal continued throughout the 1920s. In 1927, the Supreme Court ruled that the oil leases had been corruptly obtained. The Court invalidated the Elk Hills lease in February 1927, and the Teapot Dome lease in October. ^[14] Both reserves were returned to the Navy. ^[15]

In 1929, Fall was found guilty of accepting bribes from Doheny. ^{[16] [17] [11]} Conversely, in 1930, Doheny was acquitted of paying bribes to Fall. ^[18] Further, Doheny's corporation foreclosed on Fall's home ^[19] in the Tularosa Basin, New Mexico, because of "unpaid loans" that turned out to be that same $100,000 bribe. Sinclair served six months in jail on a charge of jury tampering. ^[20]

Although Fall was to blame for this scandal, Harding's reputation was permanently sullied ^[21] because of his involvement with the wrong people. Evidence proving Fall's guilt only arose after Harding's death in 1923. ^[22]

The Teapot Dome oil field was then idled for 49 years, but went back into production in 1976. After Teapot Dome had earned over $569 million in revenue from the 22 million barrels (3,500,000 m³) of oil extracted over the previous 39 years, the Department of Energy in February 2015 sold the oil field for $45 million to New York–based Stranded Oil Resources Corp. ^{[15] [23]}

Legacy

The Supreme Court's ruling in McGrain v. Daugherty (1927) for the first time explicitly established that Congress had the power to compel testimony. ^[24]

In response to the scandal, the Revenue Act of 1924 gave the chair of the United States House Committee on Ways and Means the right to obtain the tax records of any taxpayer. ^[25] The Federal Corrupt Practices Act, which regulates campaign finance, was strengthened in 1925.

Comparison

The Teapot Dome scandal has historically been regarded as the worst such scandal in the United States – the "high water mark" of cabinet corruption. It is often used as a benchmark for comparison with subsequent scandals. In particular it has been compared to the Watergate scandal, in which a cabinet member, Attorney General John N. Mitchell, went to prison, the second time in American history that a member of the cabinet has been incarcerated. ^{[26] [9]} During the Trump administration, news outlets compared alleged misconduct by members of the Trump cabinet, ^{[27] [28] [29] [30]} and specifically by Secretary of the Interior Ryan Zinke, ^{[31] [32] [33]} to the Teapot Dome scandal.

See also

• Little Green House on K Street
• List of federal political scandals in the United States
• Teapot Dome Service Station

References

1. "Teapot Dome Scandal". HISTORY. June 10, 2019. Retrieved April 14, 2020.
2. Cherny, Robert W. "Graft and Oil: How Teapot Dome Became the Greatest Political Scandal of its Time". History Now. Gilder Lehrman Institute of American History. Archived from the original on July 9, 2010. Retrieved May 27, 2010.
3. "Warren G Harding: Domestic & foreign affairs", Grant-Eisenhower, President profiles.
4. Paletta, Damian (April 9, 2019). "Mnuchin reveals White House lawyers consulted Treasury on Trump tax returns, despite law meant to limit political involvement". The Washington Post. Retrieved April 9, 2019.
5. Jurecic, Quinta (May 11, 2020). "The Supreme Court Case That Could Destroy the Balance of Powers". The Atlantic. Retrieved May 17, 2020.
6. "Mineral Leasing Act of 1920 as Amended (re-transcribed 2007-08-07)" (PDF). Bureau of Land Management, U.S. Department of the Interior. Retrieved September 8, 2014.
7. "FALL AND DOHENY FIGHT TO BAR SENATE RECORDS ON $100,000 CASH LOAN; VITAL POINT IS RAISED : Defense Halts Move to Bare Admissions Made by Doheny. COURT AWAITS ARGUMENT McLean Testifies That Fall Asked Him to Subscribe to a Falsehood on Loan. LENROOT RELATES EVASIONS Senator Says the Ex-Secretary Finally Asserted Publisher Was Source of Funds. Witnesses Tell of Efforts by Fall to Hide Source of $100,000 Loan". New York Times. November 23, 1926.
8. 1634–1699: McCusker, J. J. (1997). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States: Addenda et Corrigenda (PDF). American Antiquarian Society. 1700–1799: McCusker, J. J. (1992). How Much Is That in Real Money? A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States (PDF). American Antiquarian Society. 1800–present: Federal Reserve Bank of Minneapolis. "Consumer Price Index (estimate) 1800–" . Retrieved February 29, 2024.
9. Roberts, Chalmers M. (June 9, 1977). "Uncovering a Coverup on Teapot Dome". The Washington Post .
10. Davis, Margaret L (2001). Dark Side of Fortune: Triumph and Scandal in the Life of Oil Tycoon Edward L. Doheny. University of California Press. p. 149. ISBN   9780520927056.
11. "Senate Investigates the 'Teapot Dome' Scandal". Historical Minutes: 1921–1940. Art & History, United States Senate.
12. Quentin R. Skrabec Jr. (2018). The Ohio Presidents: Eight Men and a Binding Political Philosophy in the White House, 1841–1923. McFarland. p. 199. ISBN   978-1-4766-6930-4 – via Google Books.
13. "Thomas J. Walsh: A Featured Biography". US Senate.
14. Sandy Franks; Sara Nunnally (2011). Barbarians of Oil: How the World's Oil Addiction Threatens Global Prosperity and Four Investments to Protect Your Wealth. Vol. 22. John Wiley & Sons. ISBN   978-1-118-00182-0 – via Google Books.{{cite book}}: |work= ignored (help)
15. Government sells scandalized Teapot Dome oilfield for $45 million, Denver Post , Associated Press , January 30, 2015. Retrieved 4 June 2017
16. "Cabinet member found guilty in Teapot Dome scandal". On ThisDay In History. History.com.
17. "On This Day: Interior Secretary Fall found guilty in Teapot Dome scandal". UPI. October 25, 2019.
18. Chalmers M. Roberts (June 9, 1977). "Uncovering a Coverup on Teapot Dome". Washington Post.
19. W. C. Jameson (2020). Cold Case: The Assassination of Pat Garrett: Investigating History's Mysteries. Rowman & Littlefield. p. 204. ISBN   978-1493045891 – via Google books.
20. McCartney, Laton (2008). The Teapot Dome Scandal: How Big Oil Bought the Harding White House and Tried to Steal the Country . New York: Random House. ISBN   978-1-4000-6316-1.
21. Scott B. MacDonald (2017). Separating Fools from Their Money: A History of American Financial Scandals (2 ed.). Routledge. p. 70. ISBN   978-1-351-30678-2 – via Google Books.
22. MacDonald, Scott B.; Hughes, Jane E. (2015) [1st pub. 2007]. Separating Fools from Their Money: A History of American Financial Scandals . New Brunswick, N.J.: Transaction. ISBN   978-0-7658-0356-6.
23. Alleghany Capital (January 30, 2015). "Alleghany Capital Corporation Announces Acquisition Of "Teapot Dome Oilfield" By Standard Oil Resources Corporation" (Press release). PR Newswire.
24. "McGrain v. Daugherty". Oyez.org. Retrieved November 2, 2010.
25. What the Teapot Dome Scandal Has to Do With Trump’s Tax Returns
26. Watergate & the Teapot Dome Scandal: The History and Legacy of America's Most Notorious Government Scandals (Kindle ed.). Charles River Editors. November 2, 2016. ASIN   B01N9IMB2P.
27. O'Brien, Timothy L. (November 1, 2018). "Politics & Policy: Ryan Zinke and the Murky Interior of Trumpworld". Bloomberg News . Retrieved December 19, 2018. Even in a department with such a colorful history, the current secretary stands out for his plethora of ethical investigations.
28. Nazaryan, Alexander (November 2, 2017). "Trump is Leading the Most Corrupt Administration in U.S. History, One of First-Class Kleptocrats". Newsweek . Retrieved December 20, 2018.
29. Waxman, Olivia B. (December 17, 2018). "Where Embattled Interior Secretary Ryan Zinke's Resignation Fits in the History of Cabinet Scandals". Time . Retrieved December 18, 2018.
30. Tusk, Bradley (April 4, 2018). "Why Is Corruption So Common in the Trump Administration?". Observer . Retrieved December 19, 2018.
31. Okeson, Sarah (November 25, 2018). "Zinke is ready to hand over vast Alaska wilderness to energy companies". Salon . Retrieved December 19, 2018. Call it Teapot Dome 2.0: The Interior Secretary wants huge national petroleum reserve open for exploitation
32. Alvarez, Joshua (December 17, 2018). "Happy Trails, Ryan Zinke". Washington Monthly . Retrieved December 19, 2018.
33. Benen, Steve (October 24, 2017). "Private contracts for work in Puerto Rico raise eyebrows". Rachel Maddow Show . MSNBC . Retrieved December 19, 2018.

Further reading

• Bates, James Leonard (1963). The origins of Teapot Dome; progressives, parties and petroleum, 1909–1921 . Urbana: University of Illinois Press.
• Bennett, Leslie E. (1999). One Lesson From History: Appointment of Special Counsel and the Investigation of the Teapot Dome Scandal. Brookings Institution.
• History.com Editors. "Teapot Dome Scandal". History. 2017.
• Ise, John (1926). The United States Oil Policy. Yale University Press.
• Murphy, Blakely M., ed. (1948). Conservation of oil & gas, a legal history, 1948 (1972 ed.). New York: Arno Press; American Bar Association. ISBN   978-0405045226.
• Noggle, Burl (1965). Teapot Dome : oil and politics in the 1920's . New York: Norton. ISBN   978-0393002973.
• Werner, M. R. (Morris Robert); Starr, John (1959). Teapot Dome . New York: Viking Press.