On January 2, 1923, Albert Fall, U.S. Secretary of the Interior, announced his resignation from the Cabinet amidst news of his involvement in the Teapot Dome scandal, often considered the biggest American political scandal until Watergate.
Prior to World War I, the government had set aside two oil reserves in California and one in Wyoming to provide oil for the Navy in case there was ever a shortage. The one in Wyoming was referred to as Teapot Dome because of its proximity to a formation called Teapot Rock.
After President Warren G. Harding was elected in 1920, he appointed Albert Fall, a friend from Harding’s days in Congress, as Secretary of the Interior. While in this role, Fall oversaw the transfer of the Navy oil reserves in California and Wyoming from the oversight of the Secretary of the Navy to his own purview in May 1921.
In late 1921 and 1922, after accepting bribes, Fall secretly leased the federal oil reserves for development and drilling to two oil men, Edward Doheny and Harry Sinclair, without accepting competitive bids, shortchanging the government in favor of making millions for the oil men.
The Wall Street Journal broke the story of the lease on April 14, 1922, and almost immediately, the Senate began looking into the matter, quickly creating a committee, headed by Senator Thomas Walsh, to investigate. Hearings began in October the following year (1923), in which the Congressional committee called witnesses to testify, including Fall (who had by then resigned from the cabinet).
In early 1924, two special prosecutors were appointed to handle the investigation, and later that year they filed several lawsuits that aimed to cancel the leases on the oil fields and convict Fall, Doheny, and Sinclair for their wrongdoing. Following various court battles, the leases were eventually overturned and Doheny and Sinclair had to pay hefty fines (Sinclair was also sentenced to six months in jail for contempt of Congress). Fall was eventually (in 1929) found guilty of accepting a bribe, fined, and sentenced to a year in prison—the first former Cabinet member to serve jail time for misconduct while in office.
The extent of President Harding’s possible involvement in the scandal remains unknown, as he died unexpectedly in August 1923 while still in office.