If he's Republican Congressman Oakes Ames of Massachusetts, he breaks the law repeatedly, using his family's company to his own ends. Ames incorporated shell companies, hired these “outside contractors” (who were really Ames and his cronies) to do some of the construction, and overpaid these middlemen by ten times the going rate for materials and labor. In the end, he left the stockholders of the original company in the hole and on the hook for his failings; he and his “contractors,” on the other hand, were rich.
Since so many wheels needed to move at the same time, Ames used a predictable means to grease the cogs: money. He funneled contracts to Crédit Mobilier of America, a construction company that in turn purchased stock in the Union Pacific Railroad. He overspent on everything, and used the ongoing cycle of money to enrich those important to the project (along with most of their relatives).
Too much got spent too injudiciously for Ames's profligacy to go unnoted for long. By 1867 government officials were suspicious about the ridiculous amounts of money Crédit Mobilier was charging the Union Pacific for “essential services.”
WHAT'S IN A NICKNAME?
Ames was the son of a Massachusetts blacksmith who made a killing producing and selling shovels. Ames went into his father's business as a partner, took over for the old man, and made even more money selling shovels. By the time he entered Congress in 1863 Ames had picked up the nickname “King of Spades” as a result of his success. By the time of his death ten years later, he would be known by another nickname: “Hoax Ames.” Ames had his own brother made the Union Pacific Railroad's first president, and took on the transcontinental project at the request of President Lincoln himself in early 1865. And Ames had a reputation for getting things done.
With the project's success hanging in the balance, Ames acted swiftly and decisively: he bribed several influential congressmen (including future President James A. Garfield) with sweetheart deals on Crédit Mobilier stock. This forestalled a formal Congressional inquiry for years afterward, and allowed Ames and his crowd to finish the railroad in 1869. In 1872 the New York Sun finally broke the story about how the Union Pacific was nearly bankrupt despite record profits on its balance sheet.
The kicker: people were “shocked.” The House merely censured Ames. No one lost their jobs and no one went to jail when these bastards carried out this colossal fraud on the American people. After all, they might have been price gouging, but they did actually build a transcontinental railroad!
On the other hand Ames didn't live long enough to truly profit from his shenanigans. He died in 1873 at age sixty-nine.
“When the greatest railroad of the world binding together the continent and uniting the two great seas which wash our shores, was finished, I have seen our national triumph and exaltation turned to bitterness and shame by the unanimous reports of three committees of Congress — two of the House and one [of the Senate] — that every step of that mighty enterprise had been taken in fraud.”
— George F. Hoar
40
WILLIAM ADAMS RICHARDSON
Incompetent Like a Fox (1821–1896)
“An honest but hopelessly incapable Secretary of the Treasury.”
— Edward Atkinson about William Adams Richardson
Because the eight years of Ulysses S. Grant's presidency was one of the most scandal-ridden in American history, we are still talking about his administration in this chapter. In this case the bastard in question was an incompetent political hack put into a relatively powerless position where he could safely draw a salary without doing any real harm, only to find himself unexpectedly promoted, costing the government millions of dollars, and losing what reputation he had left.
Ladies and gentlemen, meet William Adams Richardson.
Richardson grew up in Massachusetts with the connections and credentials of a well educated, thoughtful man. He studied at Harvard and even served for several years as a professor at Georgetown's School of Law. Yet, if you believe the man's own words he was at best woefully naïve. And if you don't believe him, he was most likely an outright crook. If his association with one John Sanborn is any indication, he certainly was a terrible judge of character.
Richardson was originally named assistant secretary of the treasury in 1869, the same year that Grant took office as president. When Grant nominated Richardson's boss for a slot on the Supreme Court, Richardson became the treasury secretary. He quickly proved himself hopelessly inadequate for the post.
Richardson ordered the treasury to print more money just after Grant appointed him. In the years after the Civil War the economy expanded so quickly that banks began to grow skittish about having too much of their money out in loans. The more loans that were called in, the more the supply of cash money shrank. Richardson's answer was to get more money (in this case $26 million) into the economy in order to avert a crisis.
But he hadn't consulted anyone, let alone Congress, which technically controlled the federal purse strings. Although Congress eventually chose to overlook Richardson's presumption in this instance, his actions set him up for close scrutiny when the Sanborn Incident came to light.
The lesson to be taken from the so-called Sanborn Incident is that if you're going to sign a contract, you ought to read it first.
Signing any and all contracts drawn up between the treasury and its civilian contractors was one of Richardson's many duties as secretary. Intending to privatize the collection of tax revenue, Richardson expanded the roles of non-government employees hired by the treasury. He employed one such contractor, an out-and-out rogue named John D. Sanborn, to collect $417,000 in back taxes (mostly on liquor sales).
Most private collectors working under such a contract for the Treasury Department were awarded a ten percent commission on whatever they recovered. Sanford's contract called for him to receive fifty percent. Over the course of his contract Sanford raked in $213,000.
When confronted with this chicanery, Richardson claimed that he had thought the contracts pro forma, and had signed them unread. This lame excuse worked for a while. What only came out much later was that Sanford had in turn signed a personal services contract with an assistant, to whom he paid the majority ($156,000) of the money he'd kept.
What was that “assistant's” name? William Adams Richardson, the treasury secretary!
Of course it goes without saying that he resigned. It also goes without saying that President Grant, while personally blameless, provided his loyal friend another job: a slot on the federal bench with the U.S. Court of Claims. Before his death in 1896 Richardson went on to serve as chief justice of that body.
So Richardson went to court, but not as a defendant. Instead he went as a judge, and a wealthy one at that.
Bastard!
41
BENJAMIN H. BRISTOW
Breaking the “Whiskey Ring” (1832–1896)
“There has been much talk of late of the fraudulent whisky traffic in the west. If the Secretary wants to break up the powerful ring which exists here, I can give him the name of a man who, if he receives the necessary authority and is assured of absolute secrecy about the matter, will undertake to do it, and I will guarantee success.”
— S t. Louis Democrat owner George Fishback to then–U.S. Treasury Secretary Benjamin Bristow
After inept and corrupt Treasury Secretary William A. Richardson resigned his seat under fire in 1874, the public demanded change. The public outcry over Richardson's many misdeeds moved President Ulysses S. Grant to appoint a man with a spotless reputation in his place. Grant got just that man, and in the end far more than he bargained for, in Benjamin H. Bristow.
Bristow was a Kentucky-born lawyer and Union Army war hero with a solid reputation. As a federal attorney in Louisville, Kentucky, after the Civil War, he enforced the unpopular Federal Civil Rights Acts without letup. This strong commitment to reform helped shape his career.
From 1870 to 1872 Bristow served as the first solicitor general of the United States. In 1873 Congress cons
idered him as a possible successor for Attorney General George H. Williams, who was up for chief justice of the U.S. Supreme Court. But Williams did not become chief justice, and Bristow was out of a job. He went back to the practice of law until Grant tapped him to take over the treasury.
Bristow wasn't in office for long before he got wind the so-called “Whiskey Ring.” Several of Grant's appointees had created a complex and sweeping scheme to skim liquor tax profits and share them amongst a group of alcohol distributors and revenue agents. Bristow quickly realized that Grant's loyalty to his office holders threatened his integrity as president, so Bristow decided to act without telling either Grant or Attorney General Edwards Pierpont about his plan.
A BASTARD OF A MONEY-MAKER
Internal Revenue agent John McDonald first hatched the Whiskey Ring scheme. The Bureau of Internal Revenue (the predecessor of the IRS) had sent McDonald to St. Louis in 1870 to collect liquor taxes. McDonald soon realized that there was money to be made from skipping the part where he actually charged the standing seventy-cent federal tax on booze. Instead, he quickly went into business offering distillers and distributors the opportunity to pay less-per-barrel in bribes than they would in taxes. Both greed and politics motivated McDonald's scheme. McDonald was a Republican Party loyalist bent on seeing Grant reelected, and he and his cronies set up the Whiskey Ring in St. Louis and several surrounding cities to acquire off-the-books money for Grant's reelection campaign. As with the other scandals running rampant during his administration, Grant was not complicit in this.
Bristow hired outside investigators to break up the Whiskey Ring, sent over one hundred of the Ring's members to jail, and recovered over $3 million in stolen tax money.
Ironically, President Grant himself proved to be the biggest obstacle to Bristow's crackdown on the Ring. When Bristow indicted Grant's personal secretary Orville E. Babcock as a Ring conspirator, Grant began to interfere. He made sure that Babcock's lawyers had access to prosecution documents to which they had no legal right, giving them a competitive edge.
So Babcock got off. As soon as the Whiskey Ring had been wholly crushed, Bristow resigned in disgust at Grant's actions. He was an early favorite for the 1876 Republican presidential nomination, but lost out to the eventual election winner Rutherford B. Hayes. In 1878 Bristow moved to New York, founded a law firm, and never again served in public office. He died in 1896.
“Mr. Bristow I never would have supported [for the 1876 Republican Presidential Nomination for reasons that I may give at some other time in more formal manner than mere conversation.”
— Ulysses S. Grant
42
WILLIAM BELKNAP
How Your Dead Wife Can Get You Impeached (1829–1890)
“[This Congressional Committee has] found at the very threshold of their investigations uncontradicted evidence of the malfeasance in office by General William W. Belknap … Secretary of War.”
— Hiester Clymer
Had enough of the Sewer-Which-Was-the-Grant-administration yet? Well, here's its last entry in our list of bastards: Secretary of War William Belknap.
Belknap, a lawyer by trade, had known Grant since the early days of the Civil War. As a Union Army General, he served with distinction under the future president in such battles as Shiloh. Later in the war, he marched through Georgia to the sea with William Tecumseh Sherman in 1864.
But as distinguished as he'd been on the battlefield, Belknap turned out to be another of Grant's many “friends” who did his administration more harm than good.
Belknap's profiteering came to light by the end of Grant's second term. The secretary of war had taken well over $20,000 in bribes in exchange for awarding no-bid contracts for trading posts in all of the United States's Indian reservations and western frontier forts. Belknap resigned early in 1876, and any talk of a possible third term in the White House for the still-popular Grant went out the door with him. (As ludicrous as that possibility might seem today, there was no constitutional limit on how many times someone could be elected to the presidency until the late 1940s.)
However, if Belknap thought that quitting would end the scandal over his tenure as war secretary, he was mistaken. His conduct had so enraged the members of the House of Representatives that they took an unprecedented step: they voted unanimously to impeach an office-holder who had already resigned. Belknap was also tried in the Senate, where the required two-thirds majority to convict was not reached.
But the net result was the same, and Belknap was out.
BASTARD'S WIFE
Belknap's ill-fated bribery scheme wasn't actually his idea: he inherited it from his second wife Carrie. As secretary of war, Belknap oversaw contracts to place trading posts in Indian reservations and western frontier forts. When Belknap entered office in 1869, all of those contracts expired, including the one at Ft. Sill in the Oklahoma Territory. Carrie hinted to family friend Caleb P. Marsh of New York that if he applied for the concession contract, she would make sure that her husband approved that application — for a price. Marsh, in turn, contacted the previous owner, cut him in on the scheme, and offered to let him continue to run his own trading post on the reservation as a sort of “sub-contractor.” The fee was a yearly bribe of $12,000 that Marsh split right down the middle with Carrie Belknap. When she died later that same year, Marsh began sending her cut — in quarterly installments — to her widowed husband. Belknap let the deal play out, happy for the extra income. He eventually married a third time. During Belknap's Senate trial it came out that he also let his third wife in on the scheme, making no effort to hide these ill-gotten gains from her. Makes you wonder what conversations around the Belknap dinner table must have been like!
Of course, he did no jail time and didn't even lose his license to practice law. He moved to Philadelphia for a couple of years while his legal situation “cooled off.” Belknap eventually returned to Washington, D.C., and continued to practice law until his death in 1890.
Bastard.
43
CONGRESS, PART I
The Salary Grab Act (1775– )
“In my many years I have come to the conclusion that one useless man is a shame, two is a law firm, and three or more is a congress.”
— John Adams
No collection of American bastards would be complete without the inclusion of Congress. There are plenty of worthy individual congressmen and senators discussed in this book, but the actual institution deserves credit for its singular bastardry.
During its two-hundred-plus years in existence, Congress has been both witness and party to myriad acts of villainy. Roger Griswold started a fistfight on the House floor with Matthew Lyon and became the first (but hardly the last) member of Congress to face charges of ethics violations in 1798. Preston Brooks savagely beat Charles Sumner in his Senate chamber seat in 1856. The examples seem as endless as they are by turns fascinating and horrifying.
But rarely has Congress been as jointly and starkly self-serving as it turned out to be in 1873 when it passed the so-called “Salary Grab Act.” They drafted, voted on, and passed this piece of legislation, alternately known as the “Back-Pay Steal” in the middle of the scandal-plagued administration of President Ulysses S. Grant. In retrospect, it seems as if Congress might have thought that the public would be too distracted to notice a little bit of voting to give the senators and representatives some “well-earned back-pay.” After all, Grant's troubles were piling up one on top of the other: the stock market crash, the drying up of ready credit, the Sanborn Contracts, the Whiskey Ring, and a host of other ills. Turns out that Congress could not have been more wrong. Here's how it happened.
In March 1873, Congress entertained a bill calling for a pay raise for the president and all of the members of the U.S. Supreme Court. This in and of itself was unremarkable even in light of the generous raises included. The chief justice was given $10,500 per year, and each of the associate justices was offered $10,000 per year. The president's salary doubled
from $25,000 per year to $50,000 per year. Today those salaries would be worth ten times those dollar values when adjusted for inflation. And the public supported both of these portions of the measure in question.
Things hit a snag when the members of Congress tacked a little bonus onto this bill for themselves. They decided that each member of both the Senate and the House ought to also receive a raise from $5,000 to $7,500 per year. Imagine being able to establish your salary with a simple majority vote!
While this was somewhat unsavory, it wasn't illegal. Then Congress decided that its individual members deserved payment for their hard work during the previous two years. They voted themselves the difference ($5,000) between their previous salaries and what they would make after the new raise as a reward for all their “hard work” during the last Congressional session.
The public outcry was deafening. For nearly a year congressmen tried to justify their self-awarded big cash bonuses to their constituents.
By January 1874, though, many members of Congress had begun to fear for their seats in the coming elections. Members of both houses voted overwhelmingly to rescind the portion of the Salary Grab Act that paid them the bonus for the previous years' work. This time the bastards actually listened to the will of the people and lost!
44
ANDREW CARNEGIE
“Conscience Money” in Action (1835–1919)
“We accept and welcome, therefore, as conditions to which we must accommodate ourselves, great inequality of environment, the concentration of business, industrial and commercial, in the hands of the few, and the law of competition between these, as being not only beneficial, but essential for the future progress of the race.”
The Book of Bastards Page 10
