Early in the Harding administration, Secretary of the Navy Edwin Denby persuaded the president to transfer responsibility of some of the Navy Department’s oil reserves to the Department of the Interior. Oil fields at Elk Hills, California, and Teapot Dome near Casper, Wyoming, were involved.
Secretary of the Interior Albert B. Fall, a former senator from New Mexico, secretly leased the Wyoming reserve to oilman Harry F. Sinclair in April 1922; a few months later the California lands were similarly leased to Edward L. Doheny. Neither of these transactions was opened to competitive bidding.
In 1923, a Senate investigation was opened by Thomas J. Walsh of Montana. It was found that Secretary Fall had received more than $400,000 in "loans" for assisting Sinclair and Doheny.
The leases associated with the Teapot Dome Scandal were canceled in 1927, a move that was challenged by the oil companies. The Federal District Court of Wyoming held the lease valid, but the decision was reversed by the Circuit COurt and the reversal was upheld by the Supreme Court later that year on October 27.
In 1929, Fall was convicted of taking a bribe, fined $100,000 and sentenced to a year in prison. His fall from grace earned him the distinction of becoming the first cabinet officer to be jailed for crimes committed in office.
Doheny and Sinclair used their wealth to hire expert counsel and were acquitted in their own trials. However, Sinclair was later convicted on a lesser charge of contempt for refusing to provide testimony to a Senate committee.
There was no reasonable suggestion that Harding either knew about this affair or profited from it. His failure was not greed, but rather making some poor choices for cabinet positions and failing to monitor them. The Teapot Dome Scandal was lasting blot on the record of his administration.
See other domestic events during the Harding administration.
---- Selected Quotes ----
Quotes regarding Teapot Dome Scandal.
By Warren Harding
I have no trouble with my enemies. I can take care of my enemies all right. But my damn friends, my god-damned friends, White, they're the ones who keep me walking the floor nights!
Remark to William Alan White