The Teapot Dome Scandal
1921–1923
FALL ACCUSED OF RAW DEAL ON OIL LEASE
Such is Allegation Made by Denver Post in Teapot Dome Controversy
August 18, 1922Lease of the Teapot Dome oil lands to the Sinclair oil interests by Secretary of the Interior Albert B. Fall has been the subject of controversy and attack in the United States Senate and in the press throughout this country.
In an impartial summing up of the situation, the Denver Post, of Denver, Col., makes the following charges:
That the lease of the Teapot Dome to the Sinclair company was a private agreement between Secretary Fall and Harry F. Sinclair.
That the Government will lose $15,000,000 in addition to a possible $9,000,000 total bonus and the gift of a pipe line monopoly under the terms of the lease.
That all oil developed will be sold to the navy at market prices created by the Standard Oil and Sinclair companies without competitve bidding.
That provision for use of funds to be paid to the Government for the building of schools and roads will be nonoperative by trick lease stipulations.
That mining rights and claims were overridden and private owners ejected without trial by the use of force.
What you just read is an excerpt from an article in the Denver Post from 1922, detailing the charges in one of the biggest political scandals in the United States. Until the Watergate scandal, it was regarded as the “greatest and most sensational scandal in the history of American politics.”
In 1921, President Harding passed an executive order that handed control of two Navy oil fields — Teapot Dome Oil Field in Wyoming and Elk Hills and Buena Vista Oil Field in California — to the Department of the Interior.
Though passed in 1921, the executive order wasn’t carried out for another year. It recorded as having finally been transferred in 1922 only because Interior Secretary Albert Fall persuaded Navy Secretary Edwin Denby to do so. Shortly after, Secretary Fall leased oil production rights on each of the two government-controlled fields to a private corporations one field to Sinclair Oil Corporation and the other field to Pan American Petroleum and Transport Company.
Fall, the man who architected this, was only implicated after colleagues noticed a significant change in his lifestyle. It was later learned that he had accepted an interest-free loan from one of the companies for $100,000, as well as other gifts totaling over $400,000. These illegal transfers would have been worth $7 million today.
Technically, the act of awarding the companies the leases to production wasn’t illegal at the time. But the gifts and loans obviously were. Because of all that, Fall became the first US Cabinet-member to be sent to prison while in office. And other than Watergate, to this day it is the largest known example of Cabinet corruption in United States history. President Harding was not officially implicated in the scandal, but the Supreme Court ruled that giving Fall the authority over the whole affair was illegal as well.
This story is important, not just for the stain it left on our politics, but for the two implications it has had on our laws in the years since. Because of the scandal, Congress passed legislation giving it the power to subpoena the tax records of any citizen, regardless of office or position, and without interference from the White House. Then in a Supreme Court hearing, for the first time it was established explicitly that Congress has the power to compel testimony from any US citizen.
SMEARED WITH OIL
February 15, 1959LIKE the Black Bottom, Lindbergh’s Atlantic crossing and the Dempsey-Tunney “long count,” Teapot Dome is a perdurable monument of the Nineteen Twenties. The story of it has been told often before, and many of its somber details are well known. But M. R. Werner, an old hand at political biography, and John Starr have drawn on the Secret Service reports in the National Archives. Their book is the fullest account yet written.
The dramatic interest of Teapot Dome is neither murder, violence, nor sex. The leading characters are not excusable as young and suggestible or as lovable and weak. This is simply a tale of primitive avarice and of cynicism and arrogance in high position. The figure ultimately responsible is Warren G. Harding of Ohio who was nowhere when the Republican National Convention of 1920 opened, yet won the Presidential nomination. The idiom he employed to explain his triumph is telltale: “We drew to a pair of deuces and filled.”
The luck of the draw did not stay with him. His Cabinet selections included some egregious blunders. The most notorious was the Secretary of the Interior, Albert B. Fall of New Mexico. Fall, soon after assuming office, persuaded Harding to allow Secretary of the Navy Edwin Denby to transfer to the Department of the Interior two valuable oil fields held as reserves. They were Elk Hills in California and Teapot Dome in Wyoming. Fall’s purpose is clear: he proposed to turn over these lands, respectively on long-term leases to his friends, Edward L. Doheny and Harry F. Sinclair, in return for sufficient money to enable him to solve his personal financial problems. The sum proved to be half a million dollars.
AFTER prolonged Senate investigations and a series of interminable trials, only Fall and Sinclair were imprisoned. Almost all of the other culprits were able, through the help of the ingenious lawyers, to avoid punishment even though the evidence of their guilt appeared to be substantial.
Werner and Starr write about the exposure of this gross malfeasance without bogging down in the fascinating intricacy of the plot. They treat convincingly of the iron courage of Senator Thomas Walsh of Montana and Special Counsel Owen J. Roberts, who brought to light the whole shabby business. In their researches the authors have been forced to tread the labyrinth of high finance, and their most important contribution is the section dealing with the splendid detective work of the Treasury agents in tracing to their source the Liberty Bonds which figured in the bribery. It is lamentable, however, that the book contains neither footnotes nor bibliography.
Scandals like Teapot Dome invariably change in importance as they recede into history, and as their links to life gradually wither and die. Teapot Dome was once regarded principally as a measure of the depths to which Harding carried the Presidency in a few short years. Today we see Teapot Dome as suggesting the fate that awaits the Republic if it is profligate with its natural resources, indifferent to performance in public office, and satisfied to take as Presidents men whose chief qualities are good looks, apparent sincerity and an incapacity to distinguish between wishbone and backbone.
NAVAL OFFICERS CONNECTED WITH NAVY’S OIL RESERVES WERE UNIT IN OPPOSING FAMOUS TEAPOT DOME GRAB
September 15, 1923Washington, D.C., Sept. 7. — Information made available through confidential sources to International Labor News Service enable this newspaper to make public what is perhaps the most astounding fact yet revealed in connection with the famous raid on the U.S. naval oil reserve by which the Sinclair interests secured the lease of Teapot Dome reserve in Wyoming.
It is now made known for the first time that every naval officer connected with the naval oil reserves, including one admiral, filed recommendations with Secretary of the Navy Denby opposing the lease before it was entered into. It is now further revealed that every one of these naval officers, except the admiral, was subsequently ordered to duty far removed from Washington and from all contact with the naval oil reserves. The admiral was retired ahead of time.
This astonishing information will be brought out before the U.S. Senate Committee on Public Lands which will re-open the Teapot Dome hearings, probably in December, when the new Congress convenes.
The admiral who protested to Secretary Denby was Admiral R.S. Griffin, who during the war was chief of naval operations, and admired and loved by the entire service. Other naval officers who recorded their protests were Commander Steuart, Commander Wright and Captain Halligan. One of these officers has been sent to the Canal Zone, another to insular duty in the Pacific possessions and another to sea service with the Atlantic fleet.
Denby Disregarded Evidence
For the government the lease was signed by Secretary Fall and by Secretary Denby. In signing the lease Denby totally disregarded the evidence and recommendations submitted to him by the naval officers in charge of the reserve. There is a possibility that Denby may be called before the senate committee to explain his low estimate of the opinion of the naval authorities who were presumably the best informed men in the service on the question of the naval oil reserves. It is of course well known that it is customary for department heads to have regard for the technical advice of subordinates who have been selected for their technical ability.
TEAPOT DOME DECISIONS WIN SUPREME COURT HIGH PRAISE
October 19, 1927The decision of the United States Supreme Court restoring the Teapot Dome oil reserve to the Government for the use of the Navy is made the occasion for striking tributes to that tribunal from the press of the country. Emphasis is placed upon the unanimous utterance of the court charging unfaithfulness in office on the part of former Secretary Fall and corruption in the transactions with Harry F. Sinclair. The plainness of the court’s language is a subject of comment.
“Since it was created by the framers of the Constitution,” says the Toledo Blade (independent Republican), “the Supreme Court of the United States has commanded the confidence of the people in its ability and absolute integrity, and the Fall-Doheny-Sinclair decisions prove the wisdom of the words of an old French publicist, ‘it has no guards, palaces or treasures, no armies but truth and wisdom, and no splendor but the justice and publicity of its judgements.’” The Albany Evening News (independent Republican) adds that “Sinclair will find eventually that neither he nor any man is bigger than the Government of the United States.
…
“Their culpable acts were denounced in almost the language of judicial wrath,” according to the Fort Wayne Journal-Gazette (Democratic), and the Providence Journal (independent) expresses the hope that “never again will the use of Federal property be signed away in the circumstances that the Supreme Court says surrounded the first transaction.” The Kansas City Post (independent) comments: “The American people have become extremely cynical about their system of justice, it often being charged that only the poor criminal goes to jail. Here is an excellent opportunity to disprove such contentions.” The Milwaukee Journal (independent) asks: “Were there ever plainer words of condemnation?”
