Essential Facts
- The Teapot Dome Scandal involved the secret leasing of federal oil reserves at Teapot Dome, Wyoming, and Elk Hills, California, which were initially set up for the U.S. Navy.
- It occurred during the Presidency of Warren G. Harding.
- Secretary of the Interior Albert Fall arranged the leases in exchange for bribes.
- Oil businessmen Harry Sinclair and Edward Doheny gave Fall gifts and loans worth approximately $500,000.
- The deal was exposed by a Senate investigation.
- Fall was convicted, fined $100,000, and sentenced to one year in prison.
- He was the first U.S. cabinet member ever convicted of a crime.
- Other officials, such as Attorney General Harry Daugherty and Veterans Bureau Director Charles Forbes, faced scandals but avoided serious consequences.
Significance
The Teapot Dome Scandal is important to American History because it was one of the largest political scandals of the early 20th Century. Although the immediate effects of the scandal were minimal, it helped expose the reality that politicians at the highest levels of government were willing to use public resources for their benefit and set a precedent for congressional investigations into corruption.
History
Harding’s Promise of a “Return to Normalcy”
Warren G. Harding ran for President in 1920, promising to move away from the intervention and regulation of his predecessor, Woodrow Wilson, by calling for a “return to normalcy.”
- The Harding Administration sought to bring order through laws like the Budget and Accounting Act, which improved federal financial management.
- Harding worked to fix important issues, such as corruption in the U.S. Shipping Board.
- He focused on “honest government” instead of “progressive reforms.”
Warren G. Harding (1865–1923) — Harding was the 29th President of the United States (1921–1923). He was known for his campaign slogan, “Return to Normalcy,” and his desire for stability after World War I. His administration focused on pro-business policies, reducing taxes, and limiting government intervention. However, his Presidency was marred by scandals, such as the Teapot Dome Scandal, and he died in office in 1923.
Scandals in the Harding Administration
By 1923, scandals emerged within the Harding Administration, including corruption in the Veterans Bureau and allegations against Attorney General Harry Daugherty for illegal activities.
- The Teapot Dome Scandal involved illegally leasing federal oil reserves for personal profit.
- Some believed the stress of these scandals contributed to Harding’s sudden death from thrombosis in 1923.
Harry M. Daugherty (1860–1941) — Attorney General under President Warren G. Harding, implicated in multiple scandals, including allegations of accepting bribes and involvement in illegal liquor permits during Prohibition. Though he was never convicted, Daugherty’s tenure ended in disgrace, contributing to the tarnished reputation of the Harding Presidency.
Federal Oil Reserves — Public lands set aside by the U.S. government to produce oil for national security and emergency purposes. These reserves became central to the Teapot Dome Scandal in the 1920s, where private companies gained access to them through bribery. The reserves are managed to ensure a stable energy supply and were created to protect U.S. interests in times of war or crisis.
Albert B. Fall, Secretary of the Interior
In 1921, President Harding appointed Albert B. Fall as Secretary of the Interior, which gave Fall control over federal lands and natural resources. Fall was a Senator from New Mexico who opposed conservation.
- Fall’s appointment to the position was unpopular with conservationists.
- Many were concerned he would allow private companies to conduct logging operations in national forests.
- However, Fall focused on federal oil reserves.
Federal Oil Reserves for the U.S. Navy
The General Mining Act of 1872 allowed American citizens to prospect for minerals on public lands. After oil reserves were discovered, prospectors rushed westward, seeking to make their fortunes.
- George Otis Smith, the director of the U.S. Geological Survey, warned Richard Ballinger, Secretary of the Interior, that the Federal Government was in danger of losing all oil reserves.
- Ballinger notified President William Howard Taft, who created the first federal oil reserve.
- On September 27, 1909, Taft issued an executive order setting aside more than three million acres of public lands in California and Wyoming for the U.S. Navy.
- Congress codified Taft’s executive order through the Pickett Act (1910).
- The Supreme Court upheld the President’s authority over public lands with its ruling in United States v. Midwest Oil Co. (1915).
Opposition to the Mineral Leasing Act of 1920
In 1920, Congress enacted the Mineral Leasing Act, establishing a system for leasing and developing public lands controlled by the Federal Government. The act allowed the Secretary of the Navy to lease its oil reserves to private companies. However, leases were required to be open to competitive bidding.
- Fall used this act to open lands in Native American Indian reservations for oil drilling.
- He made 22 million acres of Indian lands available for exploration.
- Groups like the Indian Rights Association and the American Indian Defense Association opposed Fall’s actions.
- Public outcry led to the leasing plan being stopped.
The Teapot Dome Scheme
President Harding issued an Executive Order in 1921 ordering the control of several oil fields to be transferred from the Navy to the Department of the Interior. Then, Fall convinced Edwin Danby, the Secretary of the Navy, to carry out the order and transfer control of the Navy’s federal oil reserves to the Department of the Interior. This allowed Fall to implement his scheme.
- He secretly leased oil fields in Salt Creek, Wyoming (Teapot Dome) and Elk Hills, California, to oil businessmen Harry Sinclair and Edward Doheny.
- Fall bypassed Congress and the Harding Administration and granted the leases.
- He also granted the leases without going through the standard process of allowing other companies to bid publicly for the leases (competitive bidding).
- In return, Fall received nearly $500,000 in gifts, including a $100,000 “loan” for his ranch and $200,000 in bonds.
AHC Note — The loan of $100,000 was given to Fall by Edward Doheny in November 1921. Afterward, Doheny’s company, Pan American Petroleum & Transport Company, received a lease for 32,000 acres of federal oil reserves.
- Doheny’s company expected to extract 250 million barrels of oil from Elk Hills, which would earn an estimated $100 million in profits.
- Harry Sinclair’s Mammoth Oil Company looked for similar profits from Teapot Dome.
Fall’s Scheme Exposed
After Wyoming Governor Leslie Miller saw trucks from Sinclair’s company hauling equipment to Teapot Dome, he contacted Wyoming Senator John Kendrick. Scrutiny over the leases led Kendrick to introduce Senate Resolution 277 on April 15, 1922. In the Resolution, Kendrick requested information from Secretary Fall and Secretary Danby regarding the leases. This led the Senate to allow the Committee of Public Lands and Surveys to investigate the leases.
- Harding, Fall, and others insisted the leases were legal.
- Competitors of Doheny and Sinclair told Wisconsin Senator Robert La Follette they believed there was a scheme in place.
- Doheny admitted he “loaned” Fall $100,000.
- Fall resigned in 1923 and took a job with Sinclair’s company.
- In 1924, a Senate investigation exposed the corruption, leading to Fall’s conviction.
- He was sentenced to 1 year in prison and fined $100,000.
- Fall was the first U.S. cabinet officer to be convicted of a crime.
- He was the only member of the Harding Administration official fully punished for corruption.
AHC Note — According to the Colorado Sun, the scandal was also uncovered by Carl Magee, owner of the Albuquerque Journal. Magee was a Progressive working to expose corruption in New Mexico politics. This put him at odds with Albert B. Fall, one of the state’s U.S. Senators at the time. Magee also knew Harry Sinclair and became suspicious after Fall granted the Teapot Dome lease to him. Magee started looking into the deal, as did the staff at the Denver Post. The Post was given a letter from one of Fall’s secretaries that said he was giving leases away “like kisses.” Soon after, oil lobbyist John Leo Stack complained about the Teapot Dome lease. The Post sent reporter D.F. Stackelbeck to New Mexico, where he met with Magee and conducted an investigation into Fall’s activities. The Post failed to publish the report. Instead, editor Frederick Bonfils and Stack used the information to extort money from Fall and Sinclair. During the investigation into Fall’s activities, Magee testified, helping expose the scandal.
Corruption in a Pro-Business Administration
Fall’s plan to lease the oil reserves aligned with the policies of the Republican Party at the time. The leases were pro-business but anti-conservation.
- Fall’s attempt to open Indian lands for drilling reflected this pro-business stance.
- The scandal arose over his acceptance of secret loans and cash payments in exchange for leases.
- Fall also denied the public the opportunity to bid for the leases, favoring select businessmen.
- Critics accused him of graft and corruption for taking bribes.
- The Teapot Dome Scandal was one of the biggest political scandals of the 1920s.
Political Impact of Teapot Dome and Other Scandals
- Attorney General Harry Daugherty and Veterans Bureau Director Charles Forbes faced criticism but little legal consequence.
- The scandals had minimal impact on the Republican Party in later elections.
- Harding’s death in office may have reduced public outrage over corruption.
- No evidence linked Harding directly to the scandals, though he likely knew of Forbes’s and Daugherty’s misconduct.
- Montana Senator Burton K. Wheeler led investigations into the scandal, but his actions were criticized as politically motivated.
- Neither progressive Republicans nor Democrats gained significant political advantage from the Teapot Dome Scandal.
Veterans Bureau — A federal agency established in 1921 to provide services and benefits to U.S. military veterans, including medical care, rehabilitation, and pensions. The bureau was damaged due to corruption under Charles R. Forbes, who embezzled funds and engaged in fraud. Despite the scandal, it laid the foundation for modern veterans’ services and eventually became part of the Department of Veterans Affairs.
Charles R. Forbes (1877–1952) — Forbes was a politician and officer in the U.S. Army. He was appointed Director of the Veterans Bureau by President Harding in 1921 and served in that role until 1923. After serving in World War I, Forbes helped Harding’s campaign during the Election of 1920. In 1923, Forbes was accused of accepting bribes and embezzling roughly $2 million. Forbes resigned and eventually served time in Leavenworth Federal Penitentiary. After his release, Forbes wrote an article for the New York World that argued a group of Harding’s appointees, known as the “Ohio Gang,” were responsible for the scandals, not Harding.
Ohio Gang — A group of close friends and political supporters of President Harding, many of whom he appointed to high government positions. This group became infamous for corruption and scandals, including the Teapot Dome Scandal. Their actions tainted Harding’s presidency despite his popularity and symbolized the corruption of the 1920s. Harry M. Daugherty was a prominent member of this group.
Harding’s Death
The Teapot Dome Scandal fell out of the public eye after Harding died unexpectedly from a heart attack on August 2, 1923. Some historians have argued Harding would have been impeached over the scandal.
- Harding traveled to the West in the summer of 1923.
- He stopped in Wyoming, where he visited Yellowstone, and then went to Alaska.
- After Alaska, he went to San Francisco, where he died.
- Vice President Calvin Coolidge was sworn in as President on August 2, 1923, becoming the 30th President of the United States.
AP US History Alignment
The Teapot Dome Scandal is part of the following units, topics, and chapters in the AP US History curriculum:
Unit 7: 1890–1945
- 7.8 — 1920s: Cultural and Political Controversies
