Teapot Dome scandal

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Oil businessman Edward L. Doheny (at table, second from right) testifying before the Senate committee investigating the Teapot Dome oil leases, 1924 Edward Doheny Testifying 2 crop.jpg
Oil businessman Edward L. Doheny (at table, second from right) testifying before the Senate committee investigating the Teapot Dome oil leases, 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, and two locations in California, to private oil companies at low rates without competitive bidding. The leases were the subject of a seminal 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; no one was convicted of paying the bribes.

Warren G. Harding 29th president of the United States

Warren Gamaliel Harding was the 29th president of the United States from 1921 until his death in 1923. A member of the Republican Party, he was one of the most popular U.S. presidents to that point. After his death a number of scandals, such as Teapot Dome, came to light, as did his extramarital affair with Nan Britton; each eroded his popular regard. He is often rated as one of the worst presidents in historical rankings.

United States Secretary of the Interior head of the Department of the Interior in the United States government

The United States Secretary of the Interior is the head of the United States Department of the Interior. The Department of the Interior in the United States is responsible for the management and conservation of most federal land and natural resources; it oversees such agencies as the Bureau of Land Management, the United States Geological Survey, and the National Park Service. The Secretary also serves on and appoints the private citizens on the National Park Foundation board. The Secretary is a member of the President's Cabinet. The U.S. Department of the Interior should not be confused with the Ministries of the Interior as used in many other countries. Ministries of the Interior in these other countries correspond primarily to the Department of Homeland Security in the U.S. Cabinet and secondarily to the Department of Justice.

United States Navy Naval warfare branch of the United States Armed Forces

The United States Navy (USN) is the naval warfare service branch of the United States Armed Forces and one of the seven uniformed services of the United States. It is the largest and most capable navy in the world and it has been estimated that in terms of tonnage of its active battle fleet alone, it is larger than the next 13 navies combined, which includes 11 U.S. allies or partner nations. with the highest combined battle fleet tonnage and the world's largest aircraft carrier fleet, with eleven in service, and two new carriers under construction. With 319,421 personnel on active duty and 99,616 in the Ready Reserve, the Navy is the third largest of the service branches. It has 282 deployable combat vessels and more than 3,700 operational aircraft as of March 2018, making it the second-largest air force in the world, after the United States Air Force.

Contents

Before the Watergate scandal, Teapot Dome was regarded as the "greatest and most sensational scandal in the history of American politics". [1] It damaged the reputation of the Harding administration, which was already severely diminished by its controversial handling of the Great Railroad Strike of 1922 and Harding's veto of the Bonus Bill in 1922. [2] Congress subsequently passed legislation, enduring to this day, giving subpoena power to House and Senate for review of tax records of any US citizen without regard to elected or appointed position, nor subject to White House interference. [3]

Watergate scandal Political scandal that occurred in the United States in the 1970s

The Watergate scandal was a major political scandal that occurred in the United States during the early 1970s, following a break-in by five men at the Democratic National Committee (DNC) headquarters at the Watergate office complex in Washington, D.C. on June 17, 1972, and President Richard Nixon's administration's subsequent attempt to cover up his involvement. After the five burglars were caught and the conspiracy was discovered—chiefly through the work of a few journalists, Congressional staffers and an election-finance watchdog official—Watergate was investigated by the United States Congress. Meanwhile, Nixon's administration resisted its probes, which led to a constitutional crisis.

Great Railroad Strike of 1922

The Great Railroad Strike of 1922, commonly known as the Railway Shopmen's Strike, was a nationwide strike of railroad workers in the United States. Launched on July 1, 1922, by seven of the sixteen railroad labor organizations in existence at the time, the strike continued into the month of August before collapsing.

World War Adjusted Compensation Act

The World War Adjusted Compensation Act, or Bonus Act, was a United States federal law passed on May 19, 1924, that granted a benefit to veterans of American military service in World War I.

History

Teapot Dome around the time of the scandal, featuring Teapot Rock (from postcard circa 1922) Teapot Rock postcard crop.jpg
Teapot Dome around the time of the scandal, featuring Teapot Rock (from postcard circa 1922)

In the early 20th century, the U.S. Navy largely converted from coal to fuel oil. To ensure that the Navy would always have enough fuel available, several oil-producing areas were designated as naval oil reserves by President Taft. In 1921, President Harding issued an executive order that transferred 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 1922, when Interior Secretary Fall persuaded Navy Secretary Edwin C. Denby to transfer control.

Coal A combustible sedimentary rock composed primarily of carbon

Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements; chiefly hydrogen, sulfur, oxygen, and nitrogen. Coal is formed if dead plant matter decays into peat and over millions of years the heat and pressure of deep burial converts the peat into coal. Vast deposits of coal originates in former wetlands—called coal forests—that covered much of the Earth's tropical land areas during the late Carboniferous (Pennsylvanian) and Permian times.

Fuel oil A heavy fraction obtained from petroleum distillation burned to generate power

Fuel oil is a fraction obtained from petroleum distillation, either as a distillate or a residue. In general terms, fuel oil is any liquid fuel that is burned in a furnace or boiler for the generation of heat or used in an engine for the generation of power, except oils having a flash point of approximately 42 °C (108 °F) and oils burned in cotton or wool-wick burners. Fuel oil is made of long hydrocarbon chains, particularly alkanes, cycloalkanes and aromatics. The term fuel oil is also used in a stricter sense to refer only to the heaviest commercial fuel that can be obtained from crude oil, i.e., heavier than gasoline and naphtha.

William Howard Taft 27th president of the United States

William Howard Taft was the 27th president of the United States (1909–1913) and the tenth chief justice of the United States (1921–1930), the only person to have held both offices. Taft was elected president in 1908, the chosen successor of Theodore Roosevelt, but was defeated for re-election by Woodrow Wilson in 1912 after Roosevelt split the Republican vote by running as a third-party candidate. In 1921, President Warren G. Harding appointed Taft to be chief justice, a position in which he served until a month before his death.

Later in 1922, Interior Secretary Albert Fall leased the 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 manner of leasing was legal under the Mineral Leasing Act of 1920. [4]

Harry Ford Sinclair American businessman

Harry Ford Sinclair was an American industrialist, founder of Sinclair Oil. He was implicated in the 1920s Teapot Dome Scandal, and served six months in prison for jury tampering. Afterwards he returned to his former life and enjoyed its prosperity until his death.

Sinclair Oil Corporation American petroleum corporation

Sinclair Oil Corporation is an American petroleum corporation, founded by Harry F. Sinclair on May 1, 1916, as the Sinclair Oil and Refining Corporation by combining the assets of 11 small petroleum companies. Originally a New York corporation, Sinclair Oil reincorporated in Wyoming in 1976. The corporation's logo features the silhouette of a large green dinosaur. It is ranked on the list of largest privately-owned American corporations. It owns and operates refineries, gas stations, hotels, a ski resort and a cattle ranch.

Edward L. Doheny Irish American oil tycoon

Edward Laurence Doheny was an American oil tycoon who, in 1892, drilled the first successful oil well in the Los Angeles City Oil Field. His success set off a petroleum boom in Southern California, and made him a fortune when, in 1902, he sold his properties.

The lease terms were very favorable to the oil companies, which secretly made Fall a rich man. Fall had received a no-interest loan from Doheny of $100,000 (about $1.4 million today [5] ) in November 1921. He received other gifts from Doheny and Sinclair totaling about $404,000 (about $5.67 million today [5] ). This money changing hands was illegal, not the leases. Fall attempted to keep his actions secret, but the sudden improvement in his standard of living was suspect.

Investigation and outcome

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. [6] Republican Senator Robert M. La Follette Sr. 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. [7]

John B. Kendrick American politician

John Benjamin Kendrick was an American politician and cattleman. He served as a United States Senator from Wyoming and as the ninth Governor of Wyoming.

Republican Party (United States) Major political party in the United States

The Republican Party, also referred to as the GOP, is one of the two major political parties in the United States; the other is its historic rival, the Democratic Party.

Wisconsin A north-central state of the United States of America

Wisconsin is a U.S. state located in the north-central United States, in the Midwest and Great Lakes regions. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin is the 23rd largest state by total area and the 20th most populous. The state capital is Madison, and its largest city is Milwaukee, which is located on the western shore of Lake Michigan. The state is divided into 72 counties.

Albert B. Fall was the first U.S. cabinet official sentenced to prison. Albert B. Fall with map background.jpg
Albert B. Fall was the first U.S. cabinet official sentenced to prison.

Democrat Thomas J. Walsh of Montana, the most junior minority member, led a lengthy inquiry. 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. 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. Both reserves were returned to the Navy. [8]

In 1929, Fall was found guilty of accepting bribes from Doheny. Conversely, in 1930, Doheny was acquitted of paying bribes to Fall. Further, Doheny's corporation foreclosed on Fall's home in 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. [9]

Although Fall was to blame for this scandal, Harding's reputation was sullied because of his involvement with the wrong people. Evidence proving Fall's guilt only arose after Harding's death in 1923. [10]

Another significant outcome was the Supreme Court's ruling in McGrain v. Daugherty (1927) which, for the first time, explicitly established that Congress had the power to compel testimony. [11]

The oil field was then idled for 49 years, but went back into production in 1976. After earning over $569 million in revenue having extracted 22 million barrels (3,500,000 m3) of oil over the previous 39 years, in February 2015, the Department of Energy sold the oil field for $45 million to Standard Oil Resources Corp. [8]

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. [12] [13] [14] [15] 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 for only the second time in American history. [16] [17] During the Trump administration news outlets compared alleged misconduct by members of the Trump cabinet, [12] [18] [14] [19] and specifically by Secretary of the Interior Ryan Zinke [20] [21] [22] to the Teapot Dome scandal.

See also

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Edwin Denby (politician) American politician

Edwin Denby was an American lawyer and politician who served as Secretary of the Navy in the administrations of Warren G. Harding and Calvin Coolidge from 1921 to 1924. He also played a notable role in the infamous Teapot Dome scandal which took place during the Harding presidency. He was the son of Charles Harvey Denby, grandson of Graham N. Fitch, brother of Charles Denby, Jr., and uncle of dance critic Edwin Orr Denby.

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Teapot Rock

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The Pan American Petroleum and Transport Company (PAT) was an oil company founded in 1916 by the American oil tycoon Edward L. Doheny after he had made a huge oil strike in Mexico. Pan American profited from fuel demand during World War I, and from the subsequent growth in use of automobiles. For several years Pan American was the largest American oil company, with holdings in the United States, Mexico, Colombia and Venezuela. In 1924 Pan American was involved in the Teapot Dome scandal over irregularities in the award of a U.S. government oil concession. Standard Oil of Indiana obtained a majority stake in 1925. The company sold its foreign properties to Standard Oil of New Jersey in 1932. What was left of Pan American was merged with Standard Oil of Indiana in 1954 to form Amoco.

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References

  1. 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.
  2. "Warren G Harding: Domestic & foreign affairs", Grant-Eisenhower, President profiles.
  3. Paletta, Damian (9 April 2019). "Mnuchin reveals White House lawyers consulted Treasury on Trump tax returns, despite law meant to limit political involvement". The Washington Post. Retrieved 9 April 2019.
  4. "Mineral Leasing Act of 1920 as Amended (re-transcribed 2007-08-07)" (PDF). Bureau of Land Management, U.S. Department of the Interior. Retrieved 2014-09-08.
  5. 1 2 Federal Reserve Bank of Minneapolis Community Development Project. "Consumer Price Index (estimate) 1800–". Federal Reserve Bank of Minneapolis. Retrieved January 2, 2019.
  6. 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.
  7. "Senate Investigates the "Teapot Dome" Scandal". Historical Minutes: 1921–1940. Art & History, United States Senate.
  8. 1 2 Government sells scandalized Teapot Dome oilfield for $45 million, Denver Post , Associated Press , January 30, 2015. Retrieved 4 June 2017.
  9. 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.
  10. 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.
  11. "McGrain v. Daugherty". Oyez.org. Retrieved 2 November 2010.
  12. 1 2 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.
  13. Cria, Bryan (April 11, 2017). "Making the Teapot Dome Scandal Relevant Again! President Trump can learn from Harding's disaster". University of Virginia . Retrieved December 19, 2018.
  14. 1 2 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.
  15. Krugman, Paul (June 7, 2018). "Corruption Hits the Small Time". The New York Times .
  16. 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.
  17. Roberts, Chalmers M. (June 9, 1977). "Uncovering a Coverup on Teapot Dome". The Washington Post .
  18. 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.
  19. Tusk, Bradley (April 4, 2018). "Why Is Corruption So Common in the Trump Administration?". The Observer . Retrieved December 19, 2018.
  20. 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
  21. Alvarez, Joshua (December 17, 2018). "Happy Trails, Ryan Zinke". Washington Monthly . Retrieved December 19, 2018.
  22. Benen, Steve (October 24, 2017). "Private contracts for work in Puerto Rico raise eyebrows". Rachel Maddow Show . MSNBC . Retrieved December 19, 2018.

Further reading

Coordinates: 43°17′19″N106°10′24″W / 43.2885808°N 106.1733516°W / 43.2885808; -106.1733516