On January 2, 1923, Albert Fall resigned as US Secretary of Interior after he was discovered to have leased the Teapot Dome oil rights to Harry Sinclair’s Mammoth Oil Company and the Elk Hills oil rights to the Pan-American Petroleum Company, owned by Edward Doheny, a longtime friend of Fall’s. Prior to serving as US Secretary of Interior, Albert Fall had been a long time poker buddy of Harding.
Before any conclusions can be made regarding this scandal one must look at Albert Fall. Before being appointed as US Secretary of Interior, Albert Fall was a lawyer in the New Mexico territories where he had represented mining and timber companies and had invested in mining himself. While he was a senator he had a lack of interest in the conservation movement, and similar to the Teapot Dome and Elk Hills oil reserves, he tried to open Alaska’s oil, coal, and timber to extensive private development. Fall had even tried to move the National Forests and federal Forestry Service under his control at the Department of the Interior, only to be blocked by the conservationists in the Senate. These actions are eerily similar to what plays out with the Teapot Dome and Elk Hills naval oil reserves; however, that time no conservationists were there to stop him. Fall’s goal as Secretary of the Interior was to acquire more access to western natural resources and then make them more easily available to developers; this is what motivated him to get the naval oil reserves transferred to the Interior Department. On his mission to access the oil reserves, Fall started by persuading Secretary of the Navy Edwin Denby and President Harding to transfer the naval oil reserves to the Interior Department. Once he had done this, he secretly leased, without competitive bidding, the Teapot Dome oil rights to Harry Sinclair’s Mammoth Oil Company and the Elk Hills oil rights to the Pan-American Petroleum Company, owned by Edward Doheny, a longtime friend of Fall’s.
Not long after, the news quickly hit the press resulting in an uproar from conservationists, specifically Robert LaFollete. LaFollete, the leader of the progressive wing of the Republican Party, called for a Senate Resolution; the Senate quickly got to work investigating the scandal. In the hearing he stated, “Well since the reserves were already being threatened by privately owned oil wells that were draining the Navy’s oil, my actions were perfectly reasonable and just. Granting a single lease to pump the reserved oil was the most efficient means of saving it.” He went on to explain that the leases required Sinclair and Doheny to calculate royalties for the oil they pumped from the naval reserves, and use the royalties to construct and fill fuel storage facilities for the Navy in California, Pearl Harbor (Hawaii), and elsewhere. It was also discovered that Sinclair was also to construct a pipeline from Wyoming to Kansas City, which would be available for other oil producers as well. Fall claimed that secrecy, and hence no competitive bidding, was necessary because the storage facilities could be targets in a war. While corrupt, is highly speculated that he received up to $400,000 from his friends in the oil industry. This scandal tainted the Presidency of Warren Harding, as he will now forever be connected with the actions of his appointee, whether he knew about it or not.
Sources:
https://www.britannica.com/event/Teapot-Dome-Scandal
http://study.com/academy/lesson/american-politics-in-the-1920s-transition-corruption-the-teapot-dome-scandal.html
http://www.wyohistory.org/encyclopedia/teapot-dome-scandal
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