Americans in the 21st century cite the relatively recent Watergate Scandal, and to a lesser degree the Enron Oil Scandal, as prime examples of modern governmental corruption. It is a widely held perception that these incidents, particularly the one bringing about the first resignation of an American president, caused the public to lose trust in federal institutions and political figures.

However, the prototype for the breakdown of governmental fidelity lies in the early 20th century, a time in which the recent territories of the United States struggled to evolve from a lawless, Wild West culture. The federal government viewed its western resources as both unlimited and outside the grasp of the government. The leading oil barons, born and raised in the 19th century, were accustomed to federally-blessed land-grabs and easily obtained mining and lumber interests, often doled out to the social and financial elite under the guise of exploration. Federal interference was minimal in contrast to later decades, and the government itself was eager to conquer the West through large-tract farming, river management, mineral and timber development, not to mention the procurement of oil for a growing society as coal gave way to new types of fuel.

The early 20th century was a time of sudden growth for the young American automobile industry, and of a military beginning to extend its reach around the world. In what would become largely a jurisdictional dispute over Western natural resources, the unbridled oil industry of the new century collided with the United States military and the Department of the Interior, set against the dominance of a corruption-riddled presidential administration. For the first time in American history, in a contest between entrepreneurism and government management, a high-ranking cabinet official was convicted of corruption and sent to prison in the aftermath, along with his co-conspirators.

In the ensuing Congressional investigation that sought to root out the widespread graft, bribery, and usurpation of government property over the following decade, the two-year affair became commonly known as the Teapot Dome Scandal. Although three major oil fields were actually involved, including Elk Hills and Buena Vista in the San Joaquin Valley of California, the symbol of the incident became a rock formation north of Casper, Wyoming, shaped in what most observers would describe as a teapot. Beneath this formation lay an enormous reservoir of crude oil, and all of it the property of the United States Navy.

On June 4, 1920, Congress at last declared that the Secretary of the Navy was to hold the power to "conserve, develop, use and operate", at its discretion, a tract of approximately 70,000 acres in California. The Wyoming fields fell under the same dictate, and although Teapot was the smaller reserve in terms of acreage, it contained a great deal more oil than its Californian counterparts.

Although never directly implicated in the row over Teapot Dome and its sister fields, the administration of Republican Warren G. Harding, elected in November of 1921, set the scandal in motion by transferring control of the Navy's oil fields to the Department of Interior, at the Secretary of the Interior's incessant urging. Albert Fall, the Secretary of the Interior at the time and a Harding appointee, was one of several poker-playing cronies in the president's cabinet. Once his department gained control over the Navy's oil fields, Fall subsequently took it upon himself to offer secret leases and contracts to independent oil companies.