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The Businessman And The Government
Corruption, Yesterday and Today
June 1977 | Volume 28, Issue 4
Morris’ younger friend and protégé, Alexander Hamilton, the authentic financial genius among the Founding Fathers, showed repeatedly that he had no qualms about institutionalizing conflict of interest, so long as he personally trusted the people he was dealing with; for example, during the money panic of 1792, when Hamilton was Secretary of the Treasury, he wrote to his old friend the cashier of the Bank of New York, of which he had been cofounder and a charter director, “If you are pressed, whatever support may be in my power shall be afforded. I consider the public interest as materially involved in a valuable institution like yours.” He might, after all, have written “like mine.” The previous year, according to Thomas Jefferson’s later recollection, Hamilton at a private meeting with Jefferson and John Adams had seemed to come out in favor of a little graft as grease for the wheels of government when he expressed the view that the British system, “in its present form, with corruption and inequality,” was “the most perfect that had ever existed.”
It is important to note that bribery of government by business was not a feature of Revolutionary days. With a government so desperate for money that it had no choice but to plead for the cooperation of wealthy citizens, there was no need for businessmen to seek favors from government. Bribery is a function of the separation of government and business. Hamilton, indeed, as Samuel Eliot Morison points out, “set standards of honesty … that were invaluable for a people with somewhat loose financial conceptions.” Still, Hamilton’s advice to Morris as a government official was clear enough: “Make it the immediate interest of the moneyed men to cooperate with the government.” That is, make it quickly profitable for them to do so. David Loth has written that Hamilton used graft “from a sense of duty.” It would be more temperate to say that he used conflict of interest, but the point is unmistakable.
The moment that government and free enterprise were formally placed at arm’s length by the Constitution, attempts at bribery began. It is hardly surprising that some of the attempts were successful. From the start, many congressmen regarded a measure of graft as their right and privilege. In the very first Congress in 1789, Delaware’s representative, John Vining, was widely reported to have accepted a large bribe to cast the deciding vote on Hamilton’s plan to fund the national debt. Senator William Maclay of Pennsylvania doubted the report, but the grounds on which he did so are hardly reassuring as to either Vining or the ethical climate in Congress. Vining’s vote, the senator thought, could have been bought for one tenth of the sum reported to have been paid; the money could not have been a bribe, because surely nobody would have been such a fool as to pay so much.
In the 1790’s, Jefferson was accused of gross and defamatory exaggeration when he said that most of the Senate and a large minority of the House were engaged in speculations in depreciated Continental scrip that Congress at its pleasure could cause the Treasury to redeem at par value; his figures were later confirmed by the Treasury itself. In the early years of the new century, aspiring bankers assumed that if they wanted charters, they had to buy them from the state legislature. The price for an individual vote sometimes ran as high as $5,000, the equivalent of more than five times that much now. At the federal level, the controversial Second Bank of the United States would probably not have flourished as long as it did (1816-36) but for its complaisant and intelligent habit of making unsecured loans to members of Congress, among them Henry Clay and Daniel Webster. Nicholas Biddle, head of the bank, who claimed that his power rivaled that of the President, on one occasion handed Webster $ 10,000 immediately after he had made a speech in favor of the bank. Webster is known to have been otherwise on the take from business interests, but we must not think too badly of him; so were many of his congressional colleagues, and his shortcomings in that regard stand out only because of his unquestioned eminence as a statesman. He was following the custom of the country—a justification that echoes through the annals of American business bribery right down to the present.