The Teapot Dome Scandal
In geological terms, a dome is a formation that traps oil underground between layers of rock, with the upper layer bent upward to form a dome. Teapot Dome is a dome north of Casper, Wyoming, which was named for a rock formation that looked like a teapot- complete with a spout and a handle. This rock was unsurprisingly called Teapot Rock. In the early 20th century, the oil deposits were designated by the federal government as Naval Oil Reserves.
President Theodore Roosevelt had dreams of a powerful American Navy that could sail around the world showing off our might. (For more on Theodore Roosevelt, please see this post http://www.historynaked.com/theodore-roosevelt-man-arena/ ) However, the coal fired ships that had served the United States up until that time were not cutting it. There had to be coaling stations everywhere and that was a logistical nightmare. By the time President Taft was in office, the Navy was shifting to oil powered ships. These oil fields were set aside so that in time of war, our Navy would have plenty of fuel to defend our interests. Oilmen throughout the west drooled a the thought of the untapped reserves. However, no drilling would be permitted unless there was a national emergency, such as war. Enter President Warren G. Harding.
Harding was elected in 1920, and was described as a dim but charming man. He appointed one of his card playing friends, Senator Albert Fall to be the secretary of Interior. Fall was a lawyer from New Mexico Territory, and had represented mining and timber companies. He attempted open up Alaska for private development as well as vast tracts of national forests, and was blocked by the conservationists in Congress. Well, what’s a corrupt senator to do to exploit natural resources for money? Honestly. Fall turned to the naval oil reserves. Cutting a deal with Edwin Denby, the Secretary of the Navy, and Harding, Fall had the naval oil reserves transferred to the Department of the Interior. Once the naval oil reserves of Teapot Dome and Elk Hills, CA were under his control, Fall secretly began shopping around drilling rights to the highest bidder. In exchange for a $100,000 interest free “loan” from the head of the Pan-American Petroleum and Transport Company, they were leased drilling rights to Elk Hills. The same rights were leased to Mammoth Oil for Teapot Dome for a $300,000 interest free “loan”. The owners of both of these companies were old friends of Fall’s.
People began getting suspicious when they saw trucks with the Mammoth Oil company logo hauling drilling equipment into Teapot Dome. Leslie Miller, who later became the governor of Wyoming, asked Wyoming Senator John Kendrick to look into it. Simultaneously, the Wall Street Journal broke the story of how Secretary Fall leased the naval oil reserves without competitive bidding. The next day, Senator Kendrick introduced a resolution to begin an investigation into Secretary Fall’s actions, and Wisconsin Senator Robert La Follette arranged to have the Committee on Public Lands investigate. Fall had crossed swords with La Follette before, as La Follette was a prominent conservationist who had thwarted his attempts at privatizing forests and land in Alaska. They must have thought it would be a nothing investigation, so they gave it to their least senior minority member to oversee- Senator Thomas Walsh from Montana. They misjudged that one.
What Walsh found was that Fall had gotten rich very quickly with no discernible source of income. That was quite fishy. The heat was turning up on Harding’s attorney-general, Harry Daugherty, because he had not investigated any of this possible corruption. In desperation, Daugherty got William J. Burns, the director of the FBI, to send an agent to ransack La Follette’s office for blackmail material. All that did was convinced La Follette that what he thought was a nothing investigation was a big deal. La Follette doubled down on the investigation. Fall tried to stall and delivered a mountain of paperwork for the committee to go through. He claimed what he was doing was beneficial to the Navy and he was saving the oil from syphoning from private wells. For anyone who has seen There Will Be Blood, this is the “I drink your milkshake” defence. Fall also claimed there was no competitive bidding because to make this public would make the oil fields a target for foreign enemies, and since Mammoth Oil was making a pipeline from Kansas to Wyoming anyway it all just made sense.
In the middle of all this, Warren G. Harding suffered a massive heart attack and died. His vice president, Calvin Coolidge, was sworn in and the investigation continued. Coolidge appointed two special prosecutors, one Democrat and one Republican, to continue. What they found was a scandal ridden cabinet made up of Harding’s card and drinking buddies who were taking bribes from anyone who would offer and embezzling anything they could get their hands on. Some joked that Harding escaped impeachment only because he died. Senator Walsh became a national hero as Fall was the first cabinet member ever to be sent to prison for crimes committed while in office. Henry Sinclair and Edward Dheny, the heads of Mammoth Oil and the Pan-American Petroleum and Transport Company respectively, were charged, but found not guilty. A reporter quipped on their acquittal, “You can’t convict a million dollars.” Sinclair was sentenced to nine months for contempt of Congress and jury tampering.
Several court cases came out of this episode which defined the Senate’s investigative powers. In 1927, McGrain v. Daugherty explicitly established Congress’ right to compel witnesses to testify before its committees. The government also sued to invalidate the leases to the oil fields Fall granted, but those leases were upheld and were not canceled until the Kennedy administration