Wall Street and the Presidents, Part 2
Brian Trumbore
President/Editor, StocksandNews.com
Yes, it seems like eons ago that we began our series on the scandals during the presidency of Ulysses S. Grant. Other events overtook the continuation of it, but now we're prepared to plow forward.
You'll recall that for all his heroic efforts during the Civil War, Ulysses Grant was ill-prepared for the White House. In part one we discussed the Union Pacific / Credit Mobilier affair, which enmeshed 13 members of Congress. Continuing, we take a look at other scandals, which tarnished Grant's administration.
Part of the president's problem was that while he was aware of his shortcomings, he still fell prey to influence peddlers and remained awestruck by men of wealth, never having much himself. He was also very secretive and seldom took the counsel of others, particularly when it came to his cabinet appointments. He would pay for this many times over.
One of the more celebrated fiascoes of the Grant presidency was the case of the Dominican Republic. In 1870 the dictator Buenaventura Baez, surrounded by financial speculators from America, sought to sell his country to the United States. For its part the U.S. always had an interest in a Caribbean naval base and knew the Dominican government's finances were a mess. It was clear, though, that Baez was only after his own self-interest and stood to profit handsomely from any transaction.
Grant's Secretary of State was Hamilton Fish, who, basically, being a Fish, smelled one with this offer to sell the country. He told President Grant that the U.S. shouldn't pursue it, but Grant wanted to anyway, so Grant sent his trusted adviser General Orville Babcock to Santo Domingo to investigate and Babcock returned with a draft treaty of annexation. Grant, who greatly admired Babcock, then sent him back a second time with an actual treaty and, in case it was rejected by Baez, an agreement for the lease of Samana Bay as a naval station. Babcock returned with a signed document and Grant pledged his full support, sending warships down south to protect Baez against threats to his life. Thankfully, the U.S. Senate refused to ratify it, which led to many petty acts of reprisal by Grant against key members who turned the treaty down.
There were some smaller, yet thoroughly outrageous scandals, such as Congressman Benjamin Butler's salary grab. Butler spearheaded passage of an act, which doubled the salary of government officials. In the case of the president, Grant saw his compensation rise from $25,000 to $50,000. No one doubted the appropriateness of this move. But Butler also saw to it that the increase would be retroactive for two years for all congressmen, including those defeated in the last election.
And there was the case of New York's Customs House, where collector Thomas Murphy, a personal appointee and intimate friend of the president's, inherited and sustained a system of graft. A Colonel Leet used presidential influence to secure a monopoly on the storage of imports, after which he would charge a full month's rent for one day's storage in the Port of New York. Huge profits resulted in this illegal bookkeeping.
At the end of his second inaugural address (1873) historian Michael Beschloss records that Grant said, "I have been the subject of abuse and slander, scarcely ever equaled in political history, which today I feel that I can afford to disregard and in view of your verdict, which I can gratefully accept as my vindication."
Well, not quite. By 1875 one of the worst presidential scandals was uncovered, the "Whiskey Ring," whereby conspirators schemed to avoid taxes on liquor by bribing agents who should have collected them. General James McDonald, another Grant crony, was the supervisor of the Internal Revenue Bureau in St. Louis. A network of revenue officials and distillers worked with highly-placed friends in the federal Treasury department, the goal being to hide the amount of taxes that should have been paid on whiskey sales, while then diverting the unreported revenue to Republican campaign coffers.
Many knew of the scandal, but all attempts to investigate it were squashed. At one point Grant went to St. Louis himself and was a guest of McDonald's. Finally, Benjamin Bristow, who had just taken over as secretary of the Treasury, discovered that Grant's personal secretary, General Babcock of Santo Domingo fame, had received a direct bribe to keep quiet about the scheme and also to have the investigation called off. McDonald was later found guilty and jailed, but Babcock, while forced to resign, was declared not guilty (due largely to prosecutorial ineptness).
But perhaps the worst scandal occurred when Secretary of War General William Belknap was charged with receiving bribes from the sale of trading posts out in the West. Belknap received his funds from a man who, in turn, sold his interest to a third party who then actually conducted the business. President Grant once again staunchly defended his friend, but unlike the previous cases where there might have been a shred of potential innocence, this was a case with irrefutable evidence. [To compound matters, Belknap's payments went to his wife who died in 1874, at which point Belknap married his deceased wife's sister, and the payments then flowed to her.] Grant was defending a man guilty of massive corruption and the House was set to proceed with impeachment proceedings against the secretary.
But as was typical of the Grant administration, Belknap went running to the president when impeachment seemed likely and asked the president to accept his resignation. Grant immediately complied, as, literally, senators came rushing into the president, urging him not to do so. But it was too late. While the House proceeded to impeach Belknap, the fact that Grant had accepted the resignation beforehand led to his eventual acquittal. Afterward, President and Mrs. Grant continued to welcome the Belknaps into the White House.
But wait, there's more
next week.
Sources: Same as part one.
Brian Trumbore
|