Forget the collusion, if Watergate taught us anything it was: Follow the Money.
It is sad to say but America is due for a big-time governmental/economic scandal of tsunami proportions. And whatever happens in the next couple of years can very well be one of seismic proportion. Like most scandals, the next one could push the political process until it is flooded with ethical questions on government and making money. Of course, this is not new to America. It’s what Americans do. Push the boundaries until they snap.
Political scandals seem to roll around every 50 years or so. What may start out as easy money in a get-rich scheme usually turns into a Hansel and Gretel investigation of greed, which becomes a follow-the-money trail; but to those being followed it may seem like a “witch hunt.”
For instance, the United States was experiencing great growth after the Gold Rush in 1849. Shortly thereafter, the term “Go West, young man, go West” was coined. Early pioneers went west on the Oregon Trail, a slow and a fatal trip for some. In the 1860s Horace Greeley would add to the phrase “and grow with the nation.” But spreading Manifest Destiny via oxen driven wagons was a slow go–west. The need for speed was apparent and wagon trails just did not meet the need.
Despite the country splitting apart fighting a Civil War, Congress in 1862 passed the Homestead Act. This act encouraged people to do just that: go west. It allowed any citizen to carve out 160 acres of public domain land and own it if they toughed it out for five years. The ultimate and probably the first no money down and zero interest deal (without a balloon payment). But farmers were not the only ones competing for these lands. So were the newly growing corporate giants: Railroads. But their deal was a whole lot sweeter.
Land grants to railroads started in the 1850s with the government paying railroads tens of thousands of dollars per mile to build roads, which was as good as gold to some. The Civil War did nothing to slow this down. In fact, with the South out of the Union, Southern opposition to northern routes was gone. It could be said that the need for speed increased as quickly as Southern states left the Union.
There is some room to argue that railroads had played an indirect role in the start of the Civil War. Slave owners would have corporate competition for federally owned Western land and some serious “Yankee ingenuity” to contend with developing the lands. It is believed that Sectional interest on what a transcontinental railroad route should take: a southerly route out of New Orleans and through Texas and on out to San Diego; or a more northerly one leaving out of Chicago to Sacramento. All of this just added to the fuel of the free-state slave-state balance-of-power that played into just about every government decree made; starting with the approval of the Constitution, which when simply put, was how to ensure slavery as a viable economic system well into the future.
Once the South decided to seceed from the Union, with the belief that cotton was king, and that an enslaved workforce would generate the needed money to fight a war against a growing industrial giant, they simply forfeited any opportunity to profit in the upcoming land grab and industrialization the Gilded Age would have to offer. During this time, and into the post Civil War era, the government would give away more than 155 million acres of land, or almost a one-third of the Louisianan Purchase. And just as important as the land in all of this were government bonds issued to various railroads and construction companies as well as corporate stocks and bonds issued by the railroads to link the Atlantic and Pacific Coasts. These stocks and bonds could be offered to willing speculators and officials at “very attractive” prices to get the trains rolling. However, not a penny of it went to enrich or perpetuate slave owning.
When Congress passed the Pacific Railway Act in 1862, it created a race between the Union Pacific heading west from Chicago and the Central Pacific building east out of Sacramento in an effort to connect the country on a string of metal, in a 19th Century equivalent of the Space Race that would take place 100 years later on who would get to the moon first.
To solve the problem The Union Pacific created the Credit Mobilier of America, a conduit to show a profit. The company was basically the Union Pacific’s private construction company that could show a construction profit despite the fact that the Union Pacific losing money. By separating the Union Pacific from the construction it still owned and controlled the construction company, Credit Mobilier. A viable company the Union Pacific could use to attract investors. The Union Pacific could sell its and Credit Mobilier’s stocks and bonds, set up towns and sell the lots as well as sell the land granted to it from the federal government. Nothing illegal at the time. However, Credit Mobilier also allowed the Union Pacific to divert funds from its construction company to pay dividends, sell stocks and bonds below par as a way of lining the pockets of Union Pacific’s directors and stockholders–who also owned Credit Mobilier and its stock.
To keep the rolling stock wheels greased it was important to keep Congress greased of the possible profits to be made as well with Union Pacific stocks. In an effort to keep the construction contracts coming close to a dozen members of the House of Representatives, including the Speaker of the House, and future president James Garfield along with the sitting Vice President were buying Union Pacific’s stocks and bonds below par. As Massachusetts Congressman Oakes Ames, who was heavily invested in building the railroad, and one of its chief financial wheeler and dealers said, he wanted the stocks “to go where it will do us the most good”: Congress.
Soon, journalist soon began asking questions about the financial comings and goings of the era. The Union Pacific’s business practices came into questions. In the end, the Union Pacific and Credit Mobilier fraudulently overcharged the government close to $50 million dollars, which in the Gilded Age was good business and not a crime. It may have been hard to tell where the Union Pacific ended and Congress began. No laws were “really” broken and only two Congressmen were censured for their profit takings.
It was during this era that the Grant Administration was hit with another scandal, The Whiskey Ring. This one actually lead to indictments and convictions for manipulating whiskey taxes. But it was the Teapot Dome Scandal 50 years later that saw the first Cabinet member jailed: Secretary of the Interior Albert Fall.
Here again, the country was making a shift in technology. It was moving away from coal to oil. In 1910 the US Navy was converting its warships to oil. Congress passed the Pickett Act that allowed the President to set aside land so that the Navy would have a reserve source of oil. The scandal gets its name from the Teapot Dome Rock in Wyoming near where the oil deposits were located.
One of the problems that plagued President Warren G. Harding was those he surrounded himself with. His campaign manager was twice investigated for federal corruption and the head of the Veterans Bureau was once found guilty of bribery and corruption. These “loyal” but shady characters may have had private monetary agendas in pursuing their public service.
Maybe a storm warning flag should have been hoisted up the Navy Department’s mast when Secretary Fall convinced President Harding to transfer Navy oil reserve lands in Wyoming and the Elk Hills in California to the Interior Department. Once under Fall’s control, he leased the The Teapot Dome oil reserves out to Harry F. Sinclair’s Mammoth Oil Company, which was a subsidiary of Sinclair Oil Corporation. He also leased the Elk Hills oil reserve to Edward L. Doheny’s Pan American Petroleum and Transport Company, both in non competitive bidding.
Oddly, leasing the lands was not illegal under the Mining Act of 1920. The real problem with these sorts of scandals is creative art of accounting and somewhere somebody is left out of the deal. It only takes one disgruntled individual, in this case a left out oilman to start following a money trail of illegal interest free loans and bribes that Fall received as compensation for his generosity to Sinclair’s Mammoth Oil Company and Doheny’s Pan American Petroleum and Transport Company. Complaints ended up on the desk of Senator Robert LaFollet who was chairman of the Senate Committee on Public Lands. What set the investigation off was the ransacking of LaFollet’s office. A sort of reverse follow the money investigation.
A Senate investigation revealed that Fall’s sudden increased standard of living was a bit too much. Fall, in the short time as Secretary of Interior, received more than $400,000, which is about $5 million in today’s bucks in interest free loans, cash and bonds. Something he may have gotten away with in the Gilded Age but not so much even in the Roaring Twenties.
Fall was eventually convicted of accepting bribes and paid a $100,000 fine and served nine months of a one-year sentence. Oddly his benefactors, Sinclair and Doheny were acquitted of such charges of criminal conspiracy and bribery. However, Sinclair did spend more than six months in jail for contempt of court and contempt of the Senate.
Moving on from the Roaring Twenties to the turbulent times of Peace and Love brings us to the whopper of all scandals: Watergate. Unlike the previous scandals that enriched those in power, Watergate was more about enriching the political power of those already in power with overwhelming amounts of cash to remain in power. As journalist and Watergate investigators started following President Nixon’s campaign money trail a simple mantra was echoed: follow the money.
Much like the ransacking of LaFollett’s office, this scandal started as a bungled campaign-financed burglary of the Democratic Headquarters in the Watergate Building. It was an attempt to sabotage the Democrats. Of course anyone who has followed politics for any length of time knows the Democrats do not need any help in sabotaging their efforts. They do very well on their own.
But not to be deterred, and flush with cash CREEP, the Committee to Reelect the President, moved forward with other nefarious efforts like bugging phones and breaking into anti-war activists’ psychiatrist’s offices. After various court battles over secret tape recordings, executive privilege, a number of Nixon’s inner circle of officials and close advisers were indicted and convicted of felonies, Nixon found himself isolated in the Oval Office like a besieged Medieval king.
.jpg "Thomas J. O'Halloran [Public domain], via Wikimedia Commons")
It could be said that both Credit Mobilier and Teapot Dome were associated with technical advance as the country moved west or shifted its economy to a petroleum based one. A lot of the controversy surrounding the 2016 election revolves around the technical advances of the digital information age: hacking and posting fake news items on social media. The collecting and analyzing of data and using it on a social network platforms to push sales or ideas can be done almost instantaneous.
Past scandals rubbed up against the creative art of accounting. Unlike Nixon’s reelection bid the 2016 presidential election swirls around First Amendment rights. In the era that money is free speech social media has a lot of latitude to disseminate fake, fraudulent and downright erroneous stories without concern of any jail time or fines–and pull a profit at the same time.
Likewise the argument that there is no collusion might be easily defended in court. There is no federal crime for collusion. According to USLegal, Inc. collusion “occurs when two persons or representatives of an entity or organization make an agreement to deceive or mislead another. Such agreements are usually secretive, and involve fraud or gaining an unfair advantage over a third party.” The third party in this case is the American voter.
Even in the digital age of information it will come down to old school money crimes of bribery and who is getting the money. It will come down to legal crimes of obstruction, conspiracy and perjury and not who let the trolls out from under the bridge.
The first possible waves of the next scandal could be the netting of six former Trump advisers that include his former campaign manager and personal lawyer. Both pleaded guilty to old fashioned money charges: bank fraud, tax fraud, illegal campaign contributions and making flat out false statements. Politics and money create some nasty campaign tactics that go beyond simple mud slinging. Testifying before a grand jury in 1975 President Nixon said, “It is time for us to recognize that in politics in America…some pretty rough tactics are used not that our campaign was pure…but what I am saying is that having been in politics for the last 25 years, that politics is a rough game.”
Prior to his resignation Nixon was asked if he was involved in the Watergate break in Nixon said, “The American people have got to know whether or not their President is a crook. Well, I’m not a crook. I’ve earned everything I’ve got.” Albert Fall may have agreed. He went to his grave proclaiming his innocence, saying: “My version of the matter is simply that I was not guilty.” History says otherwise to both men.
A good book to read on the transcontinental railroad is Stephen Ambrose’s “Nothing Like it in the World.”
https://www.britannica.com/list/9-american-political-scandals#googDisableSync
https://millercenter.org/issues-policy/us-domestic-policy/making-teapot-dome-scandal-relevant-again
https://www.wyohistory.org/encyclopedia/teapot-dome-scandal
https://www.americanheritage.com/node/132684
http://www.washingtonpost.com/wp-srv/politics/special/watergate/part1.html
https://www.cnn.com/2014/01/23/us/watergate-fast-facts/index.html
https://omegaworldnews.com/?p=7814
https://www.u-s-history.com/pages/h234.html
Nixon to grand jury: $100,000 cash contributions and rewarding donors with ambassadorships
https://www.vox.com/policy-and-politics/2018/2/20/17031772/mueller-indictments-grand-jury
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