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Tempest Over Teapot
When the wheeling and dealing of some of President Harding’s closest friends was revealed, the mud spattered Cabinet members, the heads of oil companies, the chairman of the Republican party, and eventually the President himself
August 1965 | Volume 16, Issue 5
Little by little over the late nineteen twenties other scandals of the Harding regime became known. One of the worst of them centered around Charles R. Forbes, whom the President had made head of the Veterans’ Bureau. The price of each new veterans’ hospital planned under his regime was to be padded by $150,000, of which Forbes took $50,000 while the contractors split the rest. Sites were bought at four or five times their actual value, and Forbes demanded and got his cut. He also bought staggering quantities of supplies at inflated prices, with the understanding that he receive a kickback. Finally brought to trial, Forbes got two years in prison and was fined $10,000. Will Irwin, who made a careful study of the episode, said he had cost the United States not less than 200 million dollars.
Another notorious figure was Harding’s brother-inlaw, Heber Votaw, an ex-missionary from Burma, whom the President made Director of Federal Prisons. In his regime there was a huge increase in the bootlegging of narcotics to prisoners; Votaw’s office tried to hamper efforts to investigate and remedy the situation. When the director of the Atlanta Penitentiary complained, he was fired. With the death of Harding, his protector, Votaw’s days in office were numbered. There was insufficient evidence against him to impress a jury, and he was presently allowed to slip back into obscurity.
Of all the Ohio Gang, Harry Daugherty was the most brazen. With scandals exploding all around his head, he refused after the death of Harding to resign his post. Coolidge, characteristically, sent somebody else—Chief Justice William Howard Taft—to suggest this; the idea was coldly rebuffed. Finally, the odor of scandal became too strong, and Daugherty was forced out. When he came to trial at last, he refused to take the stand and invoked the Fifth Amendment.
It developed that a year earlier, Harry had gone to Washington Court House and had burned many records, some of them going back as far as 1916. The theory he circulated was that he did this to protect the good name of the dead President, since the records would tell both of financial irregularities by Harding and of his clandestine love life. Senate investigators were able, however, to discover that $75,000, its source unexplained, had been deposited to Daugherty’s account at a time when he swore on his income-tax return that he had no property. Also on deposit in the bank was $63,000 for Jess Smith, $50,000 for Mal Daugherty, and smaller sums for other members of the Ohio Gang. This bank had been for them what the cave was for Ali Baba’s forty thieves.
When the Senate committee tried to subpoena brother Mal, he fought all the way to the United States Supreme Court to avoid testifying. When he was cited for contempt of the Senate, an obliging judge, sitting in Ohio, set him free. His bank later failed with a loss of 2.6 million dollars, ruining a large proportion of the people around Washington Court House. (This was of course before the days of the Federal Bank Deposit Insurance Corporation.)
Harry Daugherty had been indicted with Thomas W. Miller, Alien Property Custodian, for having accepted bribes to turn back to a dummy Swiss corporation a large part of the assets of the American Metals Company, a German-owned firm in the United States, and I covered the trial for The New Republic . Daugherty looked, as always, shifty, squirming, and oily. Miller was thin-faced and sober, with, as I remember, a pincenez like that of Woodrow Wilson; he sat bemused, as though wondering what in the world he was doing in the prisoner’s dock. Well he might: He was a Yale graduate, from a good Philadelphia family, with an impeccable record until he went to Washington and came under the evil spell of the Ohio Gang.
The dummy Swiss corporation had paid $441,000 in bribes, of which Miller got $49,000 and Daugherty at least $40,000; where the rest went was never made clear. Miller was sentenced to prison, served some time, and was pardoned. More than fifty million dollars in German assets illegally released by his office was eventually returned to the U.S. government. In Harry Daugherty’s case, two successive juries disagreed, and he was able to boast that he had never been convicted. In 1924, after being forced to resign from the Cabinet, he retired to a pleasant life in Ohio and Florida. He died, unrepentant, in 1944.
Two members of the Ohio Gang had committed suicide even before Harding’s death. Charles F. Cramer, legal adviser to the Veterans’ Bureau, wrote a letter to the President and then shot himself. (Harding refused even to look at the letter, and it later disappeared without any revelation of its contents.) Jesse Smith, Daugherty’s shadow, was found dead one day in 1923 with a revolver beside him. Though cynics argued that he had been murdered, there is no doubt that he had been deeply depressed because both Harding and Daugherty had cooled toward him, had in fact exiled him back to Ohio.
Could we have a repetition of the Harding or Grant scandals today? It seems to me unlikely. The Grant and Harding administrations had several elements in common, and I feel that all of them, in combination, are essential for wholesale corruption. First, you must have a period of moral relaxation such as is common after a big war. Second, you must have a President in the White House who is complacent, ill-informed, and a poor judge of the integrity of his close friends. Third, and perhaps most important, the country must be unaware, before electing him, of these aspects of a nominee’s character.