The Enron Scandal Explained
How Enron went from Fortune’s most innovative company to bankruptcy in 2001: the accounting tricks, the hidden debt, the collapse and the trials that followed.
The Teapot Dome Scandal
How secret oil leases and hidden payments in the Harding administration became the Teapot Dome scandal, and how a cabinet secretary ended up in prison.
Key takeaways
- Interior Secretary Albert Fall leased federal naval oil reserves to two oilmen without competitive bidding.
- Fall secretly received large payments from both men, and a Senate investigation exposed them.
- Fall became the first US cabinet member imprisoned for crimes committed in office.
On this page
Before Watergate, the byword for government corruption in the United States was Teapot Dome. Named after an oil field in Wyoming, where a rock formation looks like a teapot, the scandal exposed bribery at the top of President Warren G. Harding’s administration in the early 1920s.
The oil reserves
In the early 20th century, the US Navy was switching its ships from coal to oil. To guarantee fuel in a national emergency, the government set aside oil-rich public land as naval petroleum reserves, including Teapot Dome in Wyoming and Elk Hills in California.
The secret leases
In 1921, soon after Harding took office, control of the reserves was transferred from the Navy to the Department of the Interior, led by Albert B. Fall, a former senator from New Mexico. In 1922, Fall leased drilling rights without competitive bidding:
- Teapot Dome to Harry F. Sinclair’s Mammoth Oil Company
- Elk Hills to Edward L. Doheny’s Pan American Petroleum
Fall argued the leases were in the Navy’s interest. But around the same time, his own finances visibly improved, and neighbors noticed expensive upgrades to his New Mexico ranch.
The investigation
| Date | Event |
|---|---|
| 1921 | The naval oil reserves are transferred to the Interior Department |
| 1922 | Fall leases Teapot Dome and Elk Hills without competitive bidding |
| 1923 | Fall resigns; Harding dies in August, before the scandal fully breaks |
| 1923–1924 | A Senate committee, driven by Senator Thomas Walsh, uncovers payments to Fall |
| 1927 | The Supreme Court invalidates the leases |
| 1929 | Fall is convicted of accepting a bribe |
The Senate investigation revealed that Doheny had sent Fall $100,000 in cash, delivered in a small bag, which Doheny described as a loan to an old friend. Sinclair had given Fall cash, bonds and livestock. Together, the payments were worth hundreds of thousands of dollars.
The trials
The outcomes were strikingly uneven:
- Fall was convicted in 1929 of accepting a bribe, and served about a year in prison, the first US cabinet member jailed for crimes committed in office.
- Doheny was acquitted of bribing Fall, even though Fall was convicted of accepting the bribe.
- Sinclair was acquitted of conspiracy, but served time for contempt of Congress and for hiring detectives to shadow jurors.
Why it mattered
Teapot Dome strengthened Congress’s investigative powers: a related Supreme Court case in 1927 confirmed that Congress could compel witnesses to testify. It also left a lasting stain on the Harding administration, already troubled by other scandals among the president’s associates.
The era produced more than one scandal: the fixing of the 1919 World Series came to light in the same years. And Teapot Dome was America’s benchmark for political scandal until Watergate.
Frequently asked questions
Why is it called Teapot Dome?
The Wyoming oil field was named after a nearby rock formation that resembled a teapot.
Was President Harding involved?
There’s no evidence Harding took bribes. He died in 1923, before the full scandal emerged, but it badly damaged his reputation.
What happened to the oil reserves?
The Supreme Court canceled the leases in 1927, and the reserves were returned to government control.
Sources
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