The Businessman And The Government

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The recent spate of revelations of bribery by American corporations of government officials, domestic and foreign, has left many with a sense that the business ethics of the nation are going to hell in a handbasket. And, to be sure, the scandal—involving as it does up to now more than two hundred corporations, including many of the largest and most respected—is alarmingly and unprecedentedly pervasive; in the past, with only a few exceptions, public scandals concerning improper business influence on government have tended to focus on a single corporation and a few government officials. Sweeping moral judgments on the new state of affairs have been made of late by congressmen, journalists, and business executives not accused, and these have served the purpose that such judgments always serve—to gratify the moral sense of everyone except the judged. Now that almost everyone is feeling better, it may be well to seek the more complicated truth of the matter.

Attitudes toward business ethics in the United States move in self-generating cycles; there exists no moral equivalent of the Federal Reserve Board to smooth the cycles out, and until a way is found to fine-tune morality through legislation, no such equivalent can be created. In boom times (most recently, the late I goo’s) we tend to take our profits, and avert our eyes from the possibly dismaying spectacle of how they were obtained. Come leaner years, we or our government seek scapegoats; the ethical horrors of the boom years are unveiled and paraded before us, the parade being made less frightening and more delicious by the constantly emphasized fact that it all took place in the past. Reform legislation is passed, locking the door against the fled thieves; prosperity gradually returns; new thieves with new techniques begin to operate unnoticed; and so on. And, in spite of what we may think, this cycle from public apathy to public indignation and back again takes place within a business-government climate that has been remarkably tolerant of a degree of corruption right from the start.

The first British company to colonize America, the Virginia Company, created in 1606 by royal charter, was a for-profit corporation; thus the association of government with profit in the New World stems from the first Anglo-Saxon settlement. It is little wonder that one of the early deputy governors, Samuel Argall—coming as he did from the England of James i, where government officials routinely reckoned their positions as worth so much a year in gifts and fees—exacted tribute for his personal benefit from tobacco and sassafras traders during his brief term of office, was able to maintain a sumptuous estate outside Jamestown forthrightly named “Argall’s Guifte,” and departed in 1619 several thousand pounds richer than when he had come two years earlier.

Graft was common in the American colonies over the succeeding century and a half. Well it might have been. British government for profit, and the colonial businessman’s concomitant conclusion that his dealings with government were essentially those of one trader-for-profit with another, continued to be the rule; the nature of government income merely changed from direct tribute exacted by governors to arbitrary taxes collected by the Crown. From the colonial businessman’s point of view, this change was a net loss; now, instead of paying bribes for which he got value in return, he was forced to pay taxes for which he could expect, and usually got, nothing. Then as now, the fate of the extortioner who does not deliver on his bargain was usually violence, and so it was in this case. Looked at one way, the American Revolution was the punishment imposed on a welsher.

Nor did the domestic customs of the mother country in the decade of the Revolution provide useful ethical instruction. Many British voters of the time habitually sold their votes to the highest bidder. In October, 1774, Benjamin Franklin wrote home from England—with sardonic exaggeration, to be sure—“If America would save for 3 or 4 Years the Money she spends in Fashions & Fineries & Fopperies of this Country, she might buy the whole Parliament, Minister and all.” (A few years later, in the XYZ Affair, the newborn nation would get a sampling of political ethics in another foreign nation when three agents of Talleyrand, the French foreign minister, suggested to American representatives that the United States make amends for President Adams’ “insults” to the French government with a loan to France of $10 million and a bribe to Talleyrand of $240,000.)

The financing of the American Revolution was solidly based on conflicts of interest exuberantly welcomed by a penniless government. Robert Morris, generally considered the financier of the Revolution, profited so hugely from government contracts, many of them obtained while he himself was serving as Superintendent of Finances, that he emerged as the richest man in America; a cynical commentator has concluded that in fact the Revolution financed Morris. (Later, Morris’ speculations went sour and he landed in debtors’ prison.) Morris’ philosophical approach to matters of business ethics is suggested by a favorite language usage of his. In his correspondence he often referred to his “integrity.” Close examination of the context makes clear that what he meant by the word was his commercial credit.