Teapot Dome Scandal

America was becoming an increasingly oil powered nation after the first World War. From oil powered naval ships for defense, to an automobile industry set to bloom, demand for oil was only going up. The Teapot Dome Scandal was where high-level corruption entered the supply and demand equation for American oil. Secretive deals made a few wealthy off of oil belonging to the American people, but there would be a price to pay.

Teapot Dome Scandal: Definition

The Teapot Dome scandal was an episode that occurred over the leasing of government-owned oil reserves to oil barons with ties to the Secretary of the Interior. Money changed hands within President Warren Harding’s administration, as secret deals were arranged between oil companies and the government. The scandal resulted in mass outrage and an investigation into the corruption by the United States Senate.

Teapot Dome Scandal: Summary

Fig.1 - Harry Sinclair

The Teapot Dome scandal was an instance of major United States governmental corruption in the early 1920s. The scandal involved a secret deal to lease government-owned naval oil reserves to two oil barons, Edward Doheny and Harry Sinclair. One of the reserves was the Teapot Dome oil reserve in Wyoming, for which the scandal was named.

The previous presidential administration, headed by Woodrow Wilson, had declined all requests for leases of these reserves. In 1921, after the oil industry lobbied to elect a Republican president, Warren G Harding, who would be sympathetic to their cause, Doheny and Sinclair worked with the new Secretary of the Interior, Albert Fall, to make the deal.

Fig.2 - Albert Fall

One of the first things Fall did was encourage President Warren G Harding to transfer authority over the oil reserves from the US Navy to the Department of the Interior. Fall had been hoping that he would eventually be given a lucrative job in the oil industry. This transfer of oversight allowed Fall to help Doheny and Sinclair secure leases to the naval oil reserves.

Fall had hoped to keep the deal from becoming public knowledge, but The Wall Street Journal published a front-page story in 1922, containing leaked information about Teapot Dome. There was immediate backlash as other oil companies expressed outrage over the lack of competitive bidding.

There was also anger among Congress, but President Harding insisted that he had seen Fall’s plan and supported it completely. The Senate opened an investigation into the scandal in 1922. Fall was fined and sentenced to a year in prison.

Sinclair refused to answer the Senate's questions, which resulted in the Supreme Court case of Sinclair vs the United States, to determine whether or not the Senate had the authority to conduct a full investigation. The Supreme Court found against Sinclair, and he spent over half a year in prison for contempt of court. Doheny was acquitted of bribery charges. President Harding died of a heart attack or stroke in 1923 before he could see the outcome of the investigation.

Teapot Dome Scandal: Dates

Teapot Dome Scandal: Following the Money

Harding had received funding from oil companies to fuel his presidential campaign. Sinclair had donated $1,000,000 to that campaign. Upon his election, Doheny offered Hardy his luxury yacht to take on a personal cruise.

While it may raise questions of corporate influence, Harding’s cozy relationship with the oil barons wasn’t the focus of the Senate’s investigation. This is a trail of the bribes directly tied to the Teapot Dome scandal:

Fig.3 - President Warren G. Harding

• Warren G. Harding was President of the United States from 1921 until his death in 1923
• Harding was a Republican, born in Ohio in 1865
• Harding campaigned for the President on the slogan: “Less government in business and more business in government”
• Harding had little success in college and attempted several vocations before buying a local paper in 1884
• He eventually married Florence Kling De Wolfe, who played a major role in transforming the paper into a successful business

• This allowed him to enter Republican politics, and he was able to rise through the ranks

• He is not considered to have been particularly intelligent, but his “presidential” good looks helped to make up for what he lacked

Teapot Dome Scandal: Significance

The oil reserves were ultimately returned to the US Navy, and the government recovered millions of dollars from both Doheny and Sinclair. Nonetheless, the scandal caused lasting distrust in the government. Citizens had concerns about the influence of corporations on government action and policy, and corporations had concerns about bribery and the preferential treatment of certain companies over others.

Corporate influence on democratic government remains a matter of public discourse today. Until it was largely eclipsed in the public memory by the Watergate scandal, the Teapot Dome Scandal was shorthand for government corruption and served as a demonstration of the need for government transparency.

Teapot Dome Scandal: Historiography

Teapot Dome was one of the largest corruption scandals in US history. Although it was the first, for instance the Grant administration was known for scandal, it became a benchmark for decades. Later events such as Watergate were compared to it. It's greatest similarity though may be to the Enron ordeal of the early 2000s.

Both situations involved the nexus of money, oil, and big government. The suicide of Enron executive Cliff Baxter was similar to that of Jess Smith, who was seen as a figure of corruption. He was in cahoots with the Attorney General in Harding's administration but was not an official government employee. This discrepancy gave rise to a multitude of conspiracy theories, as did the suicide of Baxter.