Teapot Dome scandal

overlooking the field.

In 1921, by executive order of President Harding, control of naval oil reserves at Teapot Dome in Wyoming and at Elk Hills, California, was transferred from the Navy Department to the Department of the Interior. The oil reserves had been set aside for the navy by President Taft. In 1922, Albert B. Fall, U.S. Secretary of the Interior, leased, without competitive bidding, the Teapot Dome fields to Harry F. Sinclair, an oil operator, and the field at Elk Hills, Calif., to Edward L. Doheny. These transactions became (1922–23) the subject of a Senate investigation conducted by Sen. Thomas J. Walsh.

It was found that in 1921, Doheny had lent Fall $100,000, interest-free, and that upon Fall's retirement as Secretary of the Interior, in March 1923, Sinclair also “loaned” him a large amount of money. The investigation led to criminal prosecutions. [ [http://www.sinclairoil.com/history/history_p28.htm] ] Fall was indicted for conspiracy and for accepting bribes. Convicted of the latter charge, he was sentenced to a year in prison and fined $100,000. In another trial for bribery Doheny and Sinclair were acquitted, although Sinclair was subsequently sentenced to prison for contempt of the Senate and for employing detectives to shadow members of the jury in his case. The oil fields were restored to the U.S. government through a Supreme Court decision in 1927.

Oil riches on government land

Teapot Dome is a geologic structural uplift and associated oil field located in Natrona County, Wyoming, about 55 miles north of Casper. It is named for a formation of eroded sandstone called Teapot Rock that rises above the bare sagebrush. Teapot Rock overlooks the tract of land containing the Teapot Dome structure and oil field, and the United States Naval Oil Reserve covering most of the field.

Teapot Dome, Elk Hills and Buena Vista Hills in Kern County, California, were oil fields located on public land reserved for emergency use by the U.S. Navy only when the regular oil supplies diminished. Many politicians and private oil interests had opposed the limits placed on the oil fields, claiming that the reserves were unnecessary and that American oil companies could provide for the Navy.

One of the public officials most avidly opposed to the reserves was New Mexico Republican Senator Albert B. Fall. A political alliance ensured his appointment to the Senate in 1912, and his political allies — who later made up the infamous Ohio Gang — convinced President Harding to appoint Fall as United States Secretary of the Interior in March 1921.

ingle-bid contracts followed by kickbacks

In 1922, the reserves were still under the jurisdiction of Edwin C. Denby, the United States Secretary of the Navy. Fall convinced Denby to give jurisdiction over the reserves to the Department of the Interior. Fall then leased the rights of the oil to Harry F. Sinclair of the original Sinclair Oil, then known as Mammoth Oil, without competitive bidding. Contrary to popular belief, this manner of leasing was legal under the Mineral Leasing Act of 1920. [ [http://www.mrm.mms.gov/laws_r_d/FRNotices/PDFDocs/ICR0122LeasingAct.pdf Mineral Leasing Act of 1920 - Amended re-transcribed 2007-08-07 ] ] Concurrently, Fall also leased the Naval oil reserves at Elk Hills, California, to Edward L. Doheny of Pan American Petroleum in exchange for personal loans at no interest. In return for leasing these oil fields to the respective oil magnates, Fall received gifts from the oilmen totaling about $404,000 [equivalent to $4 million in the year 2000] . It was this money changing hands that was illegal—not the lease itself. Fall attempted to keep his actions secret, but the sudden improvement in his standard of living prompted speculation.

On April 14, 1922, the "Wall Street Journal" reported a secret arrangement in which Fall had leased the petroleum reserves to a private oil company without competitive bidding. Fall denied the claims, and the leases to the oil companies seemed legal enough on the surface. However, the following day, Wyoming Democratic Senator John B. Kendrick introduced a resolution that would set in motion one of the most significant investigations in the Senate's history. Wisconsin Republican Senator Robert M. La Follette, Sr., arranged for the Senate Committee on Public Lands to investigate the matter. At first, La Follette believed Fall was innocent. However, his suspicions deepened after his office was ransacked. [ [http://www.senate.gov/artandhistory/history/minute/Senate_Investigates_the_Teapot_Dome_Scandal.htm U.S. Senate: Art & History Home > Historical Minutes > 1921-1940 > Senate Investigates the "Teapot Dome" Scandal ] ] Without any proof and with more ambiguous headlines, the story faded from the public eye. However, the Senate kept investigating.

Investigation and outcome

La Follette's committee allowed the investigation panel's most junior minority member, Montana Democrat Thomas J. Walsh, to lead what most expected to be a tedious and probably futile inquiry seeking answers to many questions. For two years, Walsh pushed forward while Fall stepped backward, covering his tracks as he went. The Committee found no evidence of wrongdoing, the leases were legal enough, but records kept disappearing mysteriously. Fall had made the leases of the oil fields appear to be legitimate, but his acceptance of the money was his undoing. By 1924, the Committee had only one unanswered question: How did Fall become so rich so quickly?

Money from the bribes went to Fall's cattle ranch and investments in his business. Finally, as the investigation was winding down and preparing to declare Fall innocent, Walsh uncovered one piece of evidence Fall had forgotten to cover up: Doheny's loan to Fall in November 1921, in the amount of $100,000.

The investigation led to a series of civil and criminal suits related to the scandal throughout the 1920s. Finally in 1927 the Supreme Court ruled that the oil leases had been corruptly obtained and invalidated the Elk Hills lease in February of that year and the Teapot lease in October of the same year. The Navy regained control of the Teapot Dome and Elk Hills reserves as a result of the Court's decision. Another significant outcome was the Supreme Court case "McGrain v. Daugherty" which, for the first time, explicitly established Congress' right to compel testimony.

Albert Fall was found guilty of bribery in 1929, fined $100,000 and sentenced to one year in prison, making him the first Presidential cabinet member to go to prison for his actions in office. Harry Sinclair, who refused to cooperate with the government investigators, was charged with contempt, fined $100,000, and received a short sentence for jury tampering. Edward Doheny was acquitted in 1930 of attempting to bribe Fall.

Aftermath

The Teapot Dome scandal became an issue in the presidential election of 1924, but as the investigation had only just started earlier that year, neither party could claim full credit for exposing the wrongdoing. The only political casualty was Fall's Senate replacement, Holm O. Bursum, whom Fall had handpicked to succeed him. Bursum, guilty only of being associated with Fall, lost his 1924 re-election. Eventually, when the Depression hit, the scandal was part of a snowball effect that damaged many of the big business Republicans of the 1920s.

The concentrated attention on the scandal made it the first symbol of government corruption in 20th Century America. The scandal revealed the problem of natural resource scarcity and the need to provide reserves against the future depletion of resources in an emergency. President Calvin Coolidge, in the spirit of his campaign slogan, "Keep Cool with Coolidge," handled the problem very systematically and quietly, and his administration avoided damage to its reputation by blaming congressional Republicans for the scandal. The Teapot Dome scandal came to represent the corruption of American politics over the preceding decades. This sort of thing had happened before. Teapot Dome was just the first time this kind of corruption had been exposed nationally.

Warren G. Harding had apparently no knowledge of the scandal. It seems that at the time of his death in 1923 he was just beginning to learn of the actions of his appointee when he undertook his "Voyage of Understanding" tour of the United States in the summer of 1923 (also visiting British Columbia, Canada). Largely as a result of the Teapot Dome scandal, Harding’s administration has been remembered as one of the most corrupt to occupy the White House. Harding may not have directly acted inappropriately, but Fall was his appointee. This situation has resulted in Harding's name being linked to the infamous (but somewhat misnamed) Ohio Gang. It was revealed in 1923 that the FBI (then named the Bureau of Investigation) monitored the offices of members of Congress who had exposed the Teapot Dome scandal, including breaking in and wiretapping. When the agency's actions were revealed, there was a shakeup at the Bureau of Investigation, resulting in the appointment of J. Edgar Hoover, who would lead for 48 years as Director.

Following the exposure of Teapot Dome, Harding’s popularity plunged from the record highs it had been at throughout his term. The late President and First Lady Florence Kling Harding’s bodies were interred in the newly completed Harding Memorial, in Marion, Ohio, in 1927, but a formal dedication ceremony was not held until 1930, when enough of the scandal had faded from the American consciousness.

References

External links

* [http://doi.contentdirections.com/mr/greenwood.jsp?doi=10.1336/0313226016 Teapot Dome: Oil and Politics In The 1920's] by Burl Noggle, Louisiana State University Press. 1962
* [http://www.randomhouse.com/rhpg/catalog/display.pperl?isbn=9781400063161 Teapot Dome Scandal] by Laton McCartney, Random House, February 2008
* [http://en.wikiquote.org/wiki/Richard_Nixon Wikiquote Richard Nixon] has a quote (attributed to him, but unsourced) about the Teapot Dome scandal
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* [http://www.ohiohistorycentral.org/entry.php?rec=2087 Teapot Dome Scandal at OhioHistoryCentral.org]
* [http://academic.brooklyn.cuny.edu/history/johnson/teapotdome.htm A summary of the Teapot Dome scandal from the Brookings Institution]