Scoundrels: Political Scandals in American History—Teapot Dome
Updated: Apr 1, 2021
The most infamous example of government corruption before the Watergate era was a scandal that occurred during the presidency of Warren G. Harding in the 1920s. Harding had transferred supervision of oil-reserve lands from the United States Navy to the United States Department of the Interior. After the transfer, the president’s unscrupulous secretary of the interior, Albert Bacon Fall, leased oil deposits at Elk Hills, California, and Teapot Dome, Wyoming, to petroleum companies in exchange for kickbacks. When the United States Senate investigated the leases, they learned that Fall had received a suspicious loan, among other consideration, from oilmen, including a long-time friend, Edward L. Doheny. I discuss the case in my forthcoming book Scoundrels: Political Scandals in American History.
Early in the twentieth century, oil was important to commerce because the internal combustion engine ran on the material. The United States Navy, upgraded in the last years of the nineteenth century, was an especially large consumer. By 1912, the navy had converted almost all ships from coal-burning to oil-burning ships. Consequently, national security depended in large measure on the ability to secure plentiful oil supplies.
Public officials worried that oil supplies were subject to wild price swings and potential shortages. To ensure the availability of necessary supplies, in September 1909, President William Howard Taft issued an executive order withdrawing public lands to use as oil reserves for the United States Navy. In 1912, Taft issued an executive order establishing the Naval Petroleum Reserves. Naval Petroleum Reserve No. 1 at Elk Hills, Kern County, California, consisted of 38, 969 acres. Naval Petroleum Reserve No. 2 at Buena Vista Hills, Kern County, California, consisted of 29,341 acres. In 1915, President Wilson created Naval Petroleum Reserve No. 3, consisting of 9,481 acres, at Teapot Dome, Natrona County, Wyoming.
As soon as he came into office during the Wilson administration in 1913, Navy Secretary Josephus Daniels found himself besieged by aggressive oil executives desperate to lease the naval reserves. To handle the requests, Daniels created the Naval Fuel Oil Board in 1916, with Commander H. A. Stuart installed as its head. Daniels and Stuart found the pressure unrelenting as oil lobbyists argued that valuable oil was draining into adjacent field and was being was wasted. Oilmen promoted legislation to allow private leases of the public oil fields.
Daniels resisted the pressure thanks to full support from President Woodrow Wilson, but he worried that future administrations might be less resilient. He recalled watching Congress debate the issue, “fearing that some act might be passed that would turn over these invaluable oil reserves to parties who laid claim to them without even decent shadow of title.” His fears were prescient.
In the 1920 election, many oilmen threw their support behind the Republican nominee, Senator Warren G. Harding of Ohio. On the surface, Harding was an attractive candidate—handsome and barrel-chested with a deep, baritone voice and a full head of silver hair. He looked “presidential.” His career in the United States Senate had been undistinguished, but he promised a return to “normalcy” at a time when many Americans longed for an end to the upheaval and grim news flowing in from European battlefields during the Great War of 1917 and 1918. Best of all for petroleum producers, Harding was a non-entity, an empty vessel so easy-going and compliant that he could be used for all sorts of purposes.
When Harding won the presidency and stepped into office in March 1921, oil prices were the highest they had been in two decades. Competition among oil producers was fierce, and ruthless. The problem was that capital costs were high, and no guarantees existed that an oil well would produce sufficient yields. Finding the right land, drilling wells, striking oil, tapping the well, and bringing the oil to market were enormous gambles. Fortunes could be earned quickly, but they could be lost just as quickly. Oil speculators desperately sought a “sure thing” to maximize their return on investment.
Enter Albert Bacon Fall, who soon became Harding’s secretary of the interior. Born in Frankfort, Kentucky, on November 26, 1861, Fall received little formal education. As he grew to adulthood, he engaged in a wide range of activities, including cowboy, farmhand, prospector, and miner. He studied law on his own in his spare time. As a young man, Fall headed to the Southwest. He became a member of the New Mexico bar in 1889.
Three years before he joined the bar, Fall met a young man, Edward L. Doheny, in Kingston, New Mexico. Fall’s senior by five years, Doheny hailed from Fond du Lac, Wisconsin. Doheny, like Fall, came from a poor family and had tried numerous means of earning a living. He was a fruit picker, mule driver, and waiter. He decided early on that he would set out to make a living searching for precious metals and minerals underground, a quest that led him to Arizona and New Mexico.
The friends parted as Doheny headed off to Los Angeles, California, while Fall settled down in New Mexico, eventually pursuing a political career. During the waning years of the nineteenth century, Fall was a self-professed Democrat, a strong supporter of President Grover Cleveland. Fall’s support paid off when Cleveland appointed the self-made lawyer to the Supreme Court of the New Mexico Territory. Later, Fall recognized advantages in being a Republican, so he switched parties.
When New Mexico became a state, Albert Fall won election to the United States Senate representing his adopted state. He was a distinctive figure as he prowled the halls of the Senate. He typically dressed in black and spotted a large hat. His ever-present cigar jutted from beneath his teeth. One observer commented that “With a long drooping mustache, he looks like a stage sheriff of the Far West in the movies. His voice is always loud and angry. He has the frontiersman’s impatience. From his kind lynch law springs.”
Senator Fall was a zealot on matters of law and order. New Mexico shared a border with Mexico, and a revolution south of the border ensured that bandits struck at Americans upon occasion. Fall urged President Woodrow Wilson to take an aggressive stance toward Mexicans, even if that meant engaging in armed intervention across the border. The senator had another reason for urging military intervention in Mexico. He had acquired ranch property and was interested in mineral rights, especially oil reserves. Fall saw the value of tapping Mexico’s vast petroleum reserves.
Fall detested Woodrow Wilson, and he was relieved that the approaching 1920 election would lead to a new man, hopefully a Republican, in the White House. He had a more immediate concern, however. By early 1920, Fall’s finances were, to put it mildly, in disarray. He seriously considered resigning from the United States Senate to pursue private sources of capital. He worried that he could not even pay the taxes on ranch land that he owned.
When Fall’s friend and fellow senator, Warren G. Harding, became the Republican presidential nominee and went on to win the general election, the calculation changed. Perhaps Fall could use his contacts to his advantage. Harding wanted Fall in his administration, initially considering him as secretary of state. They finally settled on secretary of the interior. Harding initially thought that Fall would be disappointed. Interior was a cabinet position, but it was not as prestigious as the State Department. The incoming president need not have worried. Fall recognized the possibilities inherent in the position.
Always an opportunist, Secretary Fall lobbied the new navy secretary, Edwin C. Denby, to transfer control of the Naval Petroleum Reserves to the Department of the Interior. Many Navy officers were dismayed by the prospect of losing control of the reserves, but President Harding approved the initiative. He believed that centralization of control over all federal lands under the Interior Department was astute management. The president eventually issued an executive order transferring Teapot Dome in Wyoming as well as the Elk Hills and Buena Vista Oil Fields in California to the Department of the Interior.
Secretary Fall contacted his long-time friend Edward L. Doheny as well as oilmen Jake Hamon, Colonel Robert W. Stewart, chairman of Standard Oil Company of Indiana, and Harry Ford Sinclair, president of the Sinclair Consolidated Oil Corporation. These men were desperate to lease the government’s oil fields, and Fall was desperate to accommodate them. The secretary lost no time in negotiating leases with them.
Within six weeks of Harding’s executive order, Fall awarded the first lease to Doheny. In an amazing display of chutzpah, Doheny complained that he had paid too much for the lease. To placate his friend, Fall offered him preferential leases on other oil fields. Doheny ended up with leases on the California fields while Harry Sinclair won access to Teapot Dome. Fall assisted his friends in acquiring leases on other federal lands outside of the oil reserves. He even designated portions of Navajo reservation acreage as public lands so that oil companies could drill there as well. Always compliant, President Harding agreed to allow his interior secretary to open public lands in Alaska for development.
Fall was not satisfied to wait for his rewards after he left government service. He pocketed money for the Teapot Dome contact from Doheny and Sinclair. Considering his dire financial straits, the money saved his ranch and allowed him to improve the property. Back taxes had been strangling Fall, but suddenly he settled with the government for the full amount, which dated back to 1912. Not content to increase his own property values, he bought an adjacent ranch for $100,000, a princely sum for a man who until recently had been a step away from bankruptcy. He bought a $35,000 hydroelectric plant, a racehorse, and fine cattle. With no source of revenue save his government position, Fall could not account for the large sums of money he was spending. It was a clear case of selling his high office for personal gain.
Fall had hoped to keep the transactions secret, but his suddenly opulent lifestyle raised public questions about the origins of his new-found wealth. Clinton W. Anderson, a New Mexico newspaperman and later a United States senator, learned of Fall’s extravagant purchases and inquired of his fellow reporters if they knew anything about Fall’s finances. Anderson worked for the Albuquerque Journal, and he brought his suspicions to the owner, Carl Magee. Intrigued, Magee published stories about the suspicious transactions as well as the Teapot Dome lease.
April 1922 proved to be a turning point. That month, independent oil operators in Wyoming, acting through their trade association, Rocky Mountain Oil and Gas Products, telegraphed their United States senator, John B. Kendrick, complaining about the lease to Sinclair without competitive bids. Kendrick contacted the Department of the Interior, but he could not get answers to his questions. On April 15, the senator introduced a resolution in the Senate requesting that the secretary of the interior and the secretary of the Navy address the issue. Specifically, the secretaries were required to disclose the nature of the Teapot Dome contract, the terms and conditions of any and all agreements, and whether competitive bids had been entertained. In the wake of this resolution, which passed the Senate, other members of Congress intervened.
The Committee on Public Lands and Surveys was tasked with leading the investigation. Despite the initial outrage over the sweetheart leases for Fall’s favored oilmen, Republican senators feared what a detailed investigation might reveal. Chairman Reed Smoot of Utah dragged his feet. The committee did not begin its investigation in earnest until October 1923, seven months after Fall had resigned from office and two months after President Harding’s unexpected death in August.
If Smoot hoped to launch a perfunctory investigation with little due diligence, he was sorely disappointed. Montana’s Democratic senator, Thomas J. Walsh, hated Albert B. Fall, and he was determined that the interior secretary would not escape justice. A true believer in elected officials as sentinels of the public trust, Walsh had spent much of his career combating corruption. He viewed the Teapot Dome shenanigans as unprecedented malfeasance on a grand scale.
Public hearings commenced on Monday, October 23, 1923. Fall was the first witness, followed by Navy Secretary Denby, Harry Sinclair, and Edward Doheny. The former interior secretary took the stand in a cavernous caucus room in the Senate Office Building. Anticipating the possibility of lively, acrimonious testimony, reporters crowded into the room to observe Senator Walsh spar with the first witness. By this time, details of the Teapot Dome transactions were filtering into the press, and it seemed likely that Fall and his associates would be bludgeoned by the weight of the evidence.
In Fall’s view, the murky world of oil leases and the government’s business had not been sufficiently regulated by Congress. Accordingly, a cabinet secretary was justified in stepping into the breach and using his own judgment. “The Congress of the United States has very little to do with this whole proposition,” Fall asserted. “We took the responsibility, and I am very proud of the contract.”
Throughout his testimony, Fall cloaked his behavior in patriotism. He acted in secrecy without competitive bidding and without alerting Congress because he valued military security above all else. To hear him tell it, Secretary Fall was above reproach, and the congressional hearings were a sham. Try as he might, Walsh could not dissuade the witness from offering his fanciful narrative. Observers who hoped to glimpse even a modicum of remorse from Albert Fall came away from his performance with little to show for their faith.
Following a convoluted series of congressional hearings, the committee chose to allow the courts to determine Fall’s fate. Litigation involving the oil leases stretched across the 1920s. As the facts emerged, it was clear that Fall had spent a total of $140,000 improving his New Mexico property at a time when he earned approximately $12,000 a year. His accounts held $230,500 in Liberty Bonds that bore the serial numbers of bonds earlier provided to Harry Sinclair as well as to Colonel Robert W. Stewart, chairman of Standard Oil Company of Indiana.
The defendants Fall, Doheny, and Sinclair were subjected to numerous civil and criminal proceedings. The final legal proceedings of the Teapot Dome era occurred in late in 1929 and early in 1930. First up was Albert Fall’s trial for accepting a bribe from Edward Doheny. Fall was in poor physical shape by this time. Frail and sickly, he walked, when he walked at all, with the aid of a cane but spent much of his time nestled in a wheelchair. Earlier in the year, a sheriff’s sale of his 700,000-acre ranch in New Mexico fetched $168,250 from none other than Doheny.
Wallowing in pathos, the defense made a great show of Fall’s deteriorating health. To ensure that the jury would not be overly influenced by the sight of this broken man shuffling into court each day, prosecutors asked, and the judge agreed, that Fall’s entrances and exits be timed so the jury was never present. Nonetheless, defense attorneys arranged it so that Fall was covered with a blanket as he sat in either his wheelchair or another chair brought in especially for his comfort. Members of his family solicitously attended to the old man.
The jury deliberated for over 11 hours before calling it a night. The next day, the jurors announced a guilty verdict. Fall slumped in his chair while his wife and daughter broke into sobs. His lawyer Mark Thompson fainted and had to be revived with a heart stimulant. “That damned court,” Edward Doheny muttered.
Judge William Hitz sentenced Fall to serve a year in jail and pay a $100,000 fine. The judge said he would have sentenced the defendant to the maximum sentence allowed by law—three years of confinement and a $300,000 fine—but for Fall’s frail physical condition.
In a public statement, Fall insisted that he was innocent. “My borrowing the money may have been unethical,” he conceded. “I certainly did not realize it at the time, and my employing a falsehood to prevent a volcano of political abuse pouring upon the administration that had honored me deserves condemnation; but neither one nor the other justified the charge that I was disloyal or dishonest as Secretary of the Interior and as a member of President Harding’s Cabinet.”
Fall repeatedly appealed his conviction, but to no avail. Several petitions for clemency went to Herbert Hoover, but the president refused to intercede. Having exhausted his options, Albert Fall climbed into an ambulance on July 18, 1931, and rode to his temporary prison home in Santa Fe, New Mexico. He became the first, but by no means the last, cabinet official in American history to serve a prison term owing to misdeeds that occurred while he was in office. He sought parole, unsuccessfully, in November 1931, but he was released the following May. His $100,000 fine was never paid. He died 12 years after his release, on November 30, 1944, at the age of 83.
Edward L. Doheny spent his twilight years battling stockholders’ suits and civil suits instituted by the United States government. After he died at the age of 79 on September 8, 1935, 1,200 people crowded into St. Vincent’s Cathedral in Los Angeles, which he had built for the Roman Catholic Church, to bid him farewell. He died a rich man, with assets in the range of $100 million (or $1.45 billion dollars in 2019).
With the cancellation of the Teapot Dome lease, the United State Navy recovered $12 million from Harry Sinclair. The Doheny lease also was cancelled, bringing back $35 million into the government’s coffers. The Teapot Dome oil field was left idle for almost half a century before production recommenced in 1976. The United States Department of Energy sold the oil field for $45 million in February 2015.
One legacy of the Teapot Dome scandal was a United States Supreme Court opinion, McGrain v. Daugherty (1927), holding that Congress could compel witnesses’ testimony. Several defendants had refused to testify before the Senate committee investigating the oil leases owing to a lack of jurisdiction. The high court laid the matter to rest, deciding that each chamber of Congress has the power to compel a private individual to appear before it or one of its committees and provide testimony needed to enable Congress to exercise a legislative function under the United States Constitution.
Perhaps the most enduring legacy was the indelible image of political corruption created by Teapot Dome. From the 1920s until the 1970s, when the Watergate coverup eclipsed it in the national lexicon, the term “Teapot Dome” became a well-known shorthand designation for malfeasance by public officials. Warren G. Harding had been a beloved president when he died in August 1923, but within a few years, his name became synonymous with a weak president who allowed his friends to run roughshod over him as they cashed in on government service. Harding was reputed to have said, “In this job, I’m not worried about my enemies. It’s my friends, my Goddamned friends, who are keeping me awake nights.” Thanks to men such as Albert B. Fall and Edward L. Doheny, the Harding administration and Teapot Dome were reminders that a government is only as virtuous and devoted to public service as the people who occupy its offices and do business with its agencies.