Teapot Dome and What a Party Owes Its Voters When Its Own People Fail

Every family has a story it tells in a lower voice. The uncle who lost the farm, the cousin who did a stretch, the one who is never mentioned at Thanksgiving. A healthy family can say the name out loud and still love one another. A sick family pretends the story did not happen and then wonders why the children are cynical.

Political parties are the same. The Republican Party has a story it would rather skip, and it has a name that sounds almost comical today: Teapot Dome. A Republican cabinet secretary took money from oilmen and handed them public oil reserves, and he went to prison for it, the first cabinet officer in American history to do so for something he did in office. If you are a conservative who cares about honest government, and I hope you are, you should be able to tell that story without flinching. And you should know that the part of the story that matters most is not the crime. It is what the party did afterward.

The oil under the Navy's feet

Some background. In the 1910s, when the Navy was converting its ships from coal to oil, Presidents Taft and Wilson set aside several tracts of public land with known oil deposits as emergency fuel for the fleet. The ones that matter here were the Elk Hills reserve in California, called Naval Petroleum Reserve No. 1, and the Teapot Dome reserve in Wyoming, called No. 3. The idea was to keep the oil in the ground until the Navy needed it.

When Warren Harding took office in 1921, he named as Secretary of the Interior a former senator from New Mexico, Albert Fall, a rancher and lawyer with a reputation for being tough. Fall wanted control of the reserves. The Secretary of the Navy, Edwin Denby, went along, and in May 1921 Harding signed an executive order transferring the reserves from the Navy to the Interior Department. That was legal, and it was the first step.

In 1922 Fall leased the Teapot Dome field to Harry Sinclair's Mammoth Oil Company, and the Elk Hills field to Edward Doheny's Pan American Petroleum Company. Both deals were made in secret, without competitive bidding, which the law normally required when the government sold or leased its property. Fall's explanation was that national defense required discretion. The oilmen, in exchange for the leases, promised to build storage tanks for the Navy and to pay royalties. A reasonable person might have suspected that this was an unusually generous arrangement for the private parties. A reasonable person would have been right.

Give Fall's defense its due, because it was not frivolous on its face. His argument was that oil under public land can be drained by wells on neighboring private land, so a reserve that sits untouched may lose its oil to the people next door. He argued that it was better to lease the field and take payment in a form the Navy needed, including fuel storage and tanks in places like Pearl Harbor, than to leave the oil to be sucked away. There was a real technical question there, and honest people debated it. But notice what the defense does not explain. It does not explain why the leases were made in secret, why other bidders were shut out, or why the official who made the decision was suddenly flush with cash. A good policy can be defended in daylight. A policy that had to be hidden from competing oilmen and from the Senate deserved the suspicion it got.

How it came out

Small oil producers in Wyoming, who had been shut out of the deal, complained loudly. In April 1922 Senator Robert La Follette of Wisconsin, a Republican and a maverick, introduced a resolution demanding that the administration disclose what had happened to the reserves. The Senate Public Lands Committee took up the matter. The man who did the digging was a Democrat from Montana, Senator Thomas Walsh, a veteran trial lawyer who followed the paper trail with patience.

Walsh noticed what any good investigator would. Fall, who had been a man of modest means, had suddenly begun making improvements on his New Mexico ranch and buying neighboring land. Where did the money come from? In hearings that began in the fall of 1923 and ran into 1924, the answers came out. Doheny testified that he had lent Fall $100,000 in cash in 1921, delivered, as the story went, in a little black bag by his son. Sinclair had provided Fall with livestock and other benefits. These were not the kinds of loans a banker would recognize. The "loan" was, as the courts later found, a bribe.

Fall had left the Interior Department in March 1923. Harding died on August 2, 1923, in San Francisco, months before the hearings began. As far as the historical record shows, there is no evidence that Harding profited from the oil deals himself, and the question of what he knew is still debated. His death spared him the testimony. It also meant that his successor, a quiet Vermonter named Calvin Coolidge, inherited a scandal he had not made.

What Coolidge did

Here is where the story becomes instructive. Coolidge did not have to make the Teapot Dome case a priority. His party controlled the White House and both chambers of Congress. He was the heir to an administration whose reputation was going down by the week. He could have stonewalled, defended his friends, called it a Democratic smear. Some of his party's leaders wanted him to.

Instead, in January 1924, the Senate passed a resolution urging the President to appoint special counsel to prosecute any civil and criminal cases arising from the leases. Coolidge responded, and he chose well. He appointed two lawyers, one from each party: Atlee Pomerene, a Democrat and former senator from Ohio, and Owen Roberts, a Republican lawyer from Philadelphia who would later sit on the Supreme Court. He made clear that if there was wrongdoing, the guilty would be prosecuted, whatever their position. Meanwhile Denby resigned from the Navy in February 1924 under pressure, and Attorney General Harry Daugherty left in March after refusing to open the Justice Department's records to the Senate.

The special counsel went to court. The leases were challenged in the civil courts, and in 1927 the Supreme Court ruled against the oil companies in the Teapot Dome and Elk Hills cases, finding that the leases had been obtained by fraud and corruption. The oil went back to the Navy. In another 1927 case, McGrain v. Daugherty, the Court held that Congress has the implied power to compel witnesses to testify as part of its legitimate investigations. That ruling grew out of the Teapot Dome investigations, and it remains the foundation of Congress's oversight authority to this day.

The criminal cases were slower and messier. Fall was convicted in October 1929 of accepting a bribe from Doheny and sentenced to a year in prison and a $100,000 fine. He went to prison in 1931. Doheny, the man who paid the bribe, was acquitted in 1930 of bribing Fall, which strikes most people as an odd result and was. Sinclair was acquitted of conspiracy but served about six months in jail for contempt of the Senate and for having his jury followed. Justice was not tidy.

And in November 1924, with the scandal fresh, the voters rewarded Coolidge. He won the presidential election with 382 electoral votes against 136 for the Democrat John W. Davis and 13 for La Follette, who ran as a Progressive. (Check it: 382 plus 136 plus 13 equals 531.) He got a little over half the popular vote.

Fair is fair. Democrats were not spotless. Doheny was a prominent Democrat, and William McAdoo, Woodrow Wilson's son-in-law and one of the leading contenders for the Democratic nomination in 1924, had been a lawyer on retainer for Doheny's company. The revelation damaged his candidacy badly, and the Democratic convention that summer took 103 ballots before settling on Davis. Scandal does not belong to one party. But the party in power has the first responsibility.

What a party owes its voters: the argument

Let me lay this out the way I would on a stage.

The question. When members of your own party betray the public trust, what does the party owe the voters who put it in power?

My thesis. A party earns trust by how it responds, not by never having a scandal. No party can promise that, because no party is made of angels. The measure is what it does in the first year after the crime is exposed.

The argument, in five premises.

1. Let the investigation run. The party must not obstruct the inquiry, shield its own, or turn the probe into a partisan fight. In this case, a Republican senator, La Follette, started the formal inquiry, a Democrat, Walsh, drove it, and the Republican President ultimately cooperated.
2. Put someone from the other side in the room. Coolidge's special counsel was a Democrat and a Republican. A result delivered by only one party's lawyers can always be dismissed. A result delivered by both cannot.
3. Remove people fast, even friends. Denby and Daugherty both left within months. They were not Coolidge's close friends, but they were his party's officials, and he let them go.
4. Let the courts finish. The oil leases were cancelled and the guilty man was convicted. The party did not interfere.
5. Say plainly what happened. A party that cannot say "our man took a bribe" cannot ask for trust on anything else.

The conclusion. The voters who gave the Republicans a landslide in 1924 were not saying "we forgive the bribe." They were saying "you handled it like adults."

The strongest objection

Here is the best case against my thesis, and it has teeth. It goes like this: "Coolidge did none of this by choice. He was pushed by Walsh, by La Follette, by the press and by the Senate. The party moved only when it had no alternative. The convictions took five years, and the man who paid the bribe walked. That is not accountability. That is a delayed whitewash."

There is something to that. The pressure was real, and it came from outside the administration. Without Walsh's patience and La Follette's stubbornness, the leases might have stood for years. Anyone who tells you the system worked by itself is selling something.

But look at what the objection actually proves. It proves that oversight depends on members of Congress, including minority-party members and mavericks within the majority, who are willing to ask hard questions. That is not a failure of the system, it is the system. The Framers built a Congress with its own power to investigate so that no administration could be the only judge of itself. And it proves that when the pressure came, the President of the party in power did not fight it. He could have. Plenty of people in plenty of administrations have. That is the difference between a bad actor and a bad party.

The conservative lesson hidden in the crime

There is one more thing to take from Teapot Dome, and it is a conservative idea, not an apology.

Fall's crime depended on a single official having discretion over a valuable public resource and being allowed to hand it out in secret. The remedy is not to give him better character. The remedy is to reduce the opportunity. Competitive bidding, public records and limits on what any one official can decide alone are all conservative principles, because they reflect a realistic view of human nature. The Founders expected men to be tempted. They built checks accordingly. If you want a principled reason to oppose large, discretionary programs run by officials with wide latitude and little oversight, you do not need to argue that officials are wicked. You need only point at Teapot Dome.

That is also why oversight matters when your own party is in power. Look at how Republicans handled later tests, from Watergate, told in Watergate Day by Day and the Republicans Who Told Nixon It Was Over, to the censure of Joseph McCarthy, in McCarthy, the 1954 Censure and the Republicans Who Said Enough. In each case the party had to decide whether loyalty to a man outranked loyalty to the voters. The record is mixed, and it is worth knowing in detail. For how Congress's power to check the executive is supposed to work, see How Impeachment Works, Step by Step, From the House Floor to the Senate Trial and What the Minority Party in Congress Can Still Do When It Doesn't Run the Floor.

This same era brought us the tax cuts covered in The Mellon Tax Cuts of the 1920s and What Happened to Revenue. It is worth remembering that the same Republican administrations that delivered those cuts also produced Teapot Dome. Neither fact cancels the other.

The bottom line

• The Teapot Dome scandal was real. Secretary of the Interior Albert Fall took money from oilmen while leasing them public oil reserves without competitive bidding, and he was convicted of bribery in 1929, the first cabinet officer to go to prison for conduct in office.
• A party earns trust by how it responds. Coolidge let the investigation run, named a Democrat and a Republican as special counsel, accepted resignations, and let the courts finish. The voters rewarded him in 1924.
• Do not trust anyone, left or right, who tells you their side has never had a scandal. Trust people who tell you what their side did about it.
• Support the principle that no official should be able to give away public resources in secret. Ask your own state and local officials where the records are, who bids and who decides.
• When your own party's people are accused, read the evidence before you read the defense. Your loyalty is to the voters first.