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The Businessman And The Government
Corruption, Yesterday and Today
June 1977 | Volume 28, Issue 4
General cynicism, combined with the shaky sanction of Social Darwinism, had reduced, or elevated, bribery and corruption to the role of low-brow public entertainment. It was the relished, and protected, pornography of the age. The business leader most forthright on the subject, in word as well as in deed, was the railroad man Collis P. Huntington. In 1877 he explained his philosophy of bribery in a letter to a colleague, as follows: “If you have to pay money to have the right thing done, it is only just and fair to do it. … If a man has the power to do great evil and won’t do right unless he is bribed to do it… it is a man’s duty to go up and bribe the judge.” This man of duty reported on another occasion, “I keep on high ground , so that we cannot be hurt by any investigation.” He was also careful to insure, when possible, that the recipients of his bribes did not share the high ground; he always tried to get signed documentary evidence of the transaction, so that the bribed officials were “ever afterward my slaves.” At one point in the 1870'$, Huntington complained with bitter indignation that competitive bribers were causing such inflation in the corruption market as threatened to ruin him. “To fix things” now cost $200,000 to $500,000 per session of Congress: “I am fearful this damnation Congress will kill me.”
This parody marketplace, with government favors all but quoted by high, low, and closing prices in the newspapers, perhaps represents the epitome of business-government ethics in the age of the robber barons. But it should be noted that by no means all businessmen even in those times played such games, and that few played them with such a lofty sense of mission as Huntington seems to have done. As Richard Huber has perceptively pointed out, Social Darwinism was too strong for the stomachs of many piously reared men of affairs; in many cases, it seems to have been imposed on them by those sophisticated men of the establishment, their lawyers. Businessmen, Huber says, “claimed that the justification for wealth was not climbing over the fallen bodies of others, but struggling against the evil in oneself and then going on to some kind of moral triumph. They rested their case on the Bible … not on the Origin of Species .” Their roots in evangelical Christianity led to an intense ambivalence about success and the methods that brought it; this ambivalence is explicit in the writings of Andrew Carnegie, and again, interestingly enough, in the recent utterances of Bob R. Dorsey, who was deposed as chairman of Gulf Oil in 1976 for participation in corporate bribery.
It may be instructive, before leaving the post-Civil War period, to look briefly at an instance when attempted corruption failed, and to note why. In 1883 a group of Southern businessmen, political figures, and Confederate war heroes organized a company called Pan Electric, with the intention of overthrowing the Bell telephone patents and thus keeping the profits of Southern telephone service out of the hands of the Bell company Yankees. In 1885, Pan Electric had the good luck to have one of its insiders and large stockholders, Augustus H. Garland of Arkansas, named attorney general of the United States by the newly elected President, Grover Cleveland. Garland promptly used his office to further his and his colleagues’ interests by bringing federal suit to annul the Bell patents. But the Marines arrived in the nick of time, in the person of William Hathaway Forbes, president of the Bell company in Boston, who talked to Cleveland and persuaded him to force Garland to drop his suit (though not to leave office). Government dishonesty in the interest of one business had been stopped in its tracks—by the force majeure of a larger business with a contrary interest.
The situation does not appear to have greatly improved as the twentieth century approached. In 1891 Andrew Carnegie’s man, that engaging scamp Charles M. Schwab, may have inaugurated the American business custom of sealing overseas deals with ad-hoc gifts when he pressed a $200,000 necklace on the mistress of Czar Alexander’s nephew—just before Bethlehem Steel got the rails contract for the huge Trans-Siberian Railroad. In 1899, toward the end of a five-year period during which were created more than five thousand business trusts covering practically every line of productive activity, the sugar baron Henry O. Havemeyer, king of one of the leading trusts, remarked, “Business is not a philanthropy. … I do not care two cents for your ethics. I don’t know enough of them to apply them.” The important point, perhaps, is that Havemeyer’s turn-of-the-century interlocutor did have a sense of business ethics, and cared enough to ask Havemeyer about his. Reform was in the air at last.