Tag: American history

On this day where we seek to remember the legacy of the nine years that came before the one very shortly to conclude, I recall the beginning of another decade ninety years in the past.  The Presidential election of 1920 returned Republicans to control of the Executive Branch, and epitomized the weariness the American people had with foreign wars and towering idealism.  When, a year or so before, Woodrow Wilson proposed the League of Nations to a skeptical American public, itself an altruistic enterprise promising world peace, the proposal was transformed by smears and lies to imply that somehow the United States would sacrifice its autonomy and be governed by foreign powers.  By the time a new decade rolled around, isolationism was the word of the hour and with it came a reliance on business and a pursuit of big money.  So it was that the Republican nomination for President of the United States was sold to the highest bidder, and with it came the office itself.

Lanton McCarthy’s fascinating recent book, The Teapot Dome Scandal:  How Big Oil Bought the Harding White House and Tried to Steal the Country deflates the notion that the past promised some degree of ethical conduct in its elected representatives and stewards of the people’s trust.  It would be difficult to imagine a festering cesspool of corruption, dirty deals, and hushed up scandals in more copious quantity than in the form of the gang of thieves who effectively ran the country for three years.  Those who believe that the past promises some kind of respite from the sordid, the unethical, and the immoral would do well to think again.  One wonders as well if the passage of time will slaughter other sacred cows and lay bear the reality of the situation in question.    

A few years back, during the waning years of George W. Bush’s second term, many made a comparison of the gross incompetence present in that Administration to the Harding years, which though it had some parallels, was not a wholly satisfying one.  For starters, had there been no Woodrow Wilson and World War I, there would have been no established precedent to reverse, and with it no Warren G. Harding.  George W. Bush won in part by tapping into a public desire to return some degree of morality to the Oval Office after the embarrassment of the Clinton Impeachment.  Harding won by promising a return to good times and unregulated business wheeling and dealing.  Indeed, his very election owed itself to a multitude of deep pockets who provided their support with some serious strings attached, namely high ranking cabinet positions and control of then untapped oil reserves in the Southwest and West in return for high dollar contributions and the votes of the very convention delegates by which Harding was chosen as leader of the GOP.  Those who screamed “Drill, Baby, Drill!” in 2008 were merely echoing their predecessors of nearly a century before.    

In the spirit of full disclosure, I was prompted to study the Teapot Dome Scandal and the Harding White House due to the fact that I am related to one of the active participants.  My late Grandmother, as is true with so many, desperately wanted to prove a direct connection to someone either rich or powerful on a grand scale.  This is why she took an active interest in genealogy, and in so doing unearthed the name of a close relative.  The relative in question was named Jess Smith, who took the role of yes man, bribe collector, unofficial attorney general, and kick back accountant for Harding’s Ohio Gang.  The structure of the Harding Administration resembled an organized crime syndicate more than a government entity, and had Grandmother known this, I doubt she would have taken pride at having de facto mob ties.

Nor would she have found much to crow about had she discovered this,

According to some accounts, Smith’s primary role was to quiet women, including Carrie Fulton Phillips, who claimed that Harding had affairs with them.  Smith and Daugherty were members of the Ohio Gang, and they actually were both from Ohio. While Daugherty served as attorney general, Smith held no formal position in the federal government. He simply served as an unofficial assistant to Daugherty. Smith lived with Daugherty at the Wardman Park Hotel in Washington, DC, and it was rumored, at the time, that the two men were engaged in a homosexual relationship. Smith was single, while Daugherty was married.

As rumors spread about corrupt officials in Harding’s administration, eventually Attorney General Daugherty launched various investigations. Critics, especially in the United States Congress, claimed that Daugherty did not vigorously pursue the investigations. Eventually, it was suggested that Daugherty was also working with bootleggers. Bootlegging was a direct violation of the Eighteenth Amendment to the United States Constitution. This amendment established Prohibition in the United States. Smith also was supposedly involved in Daugherty’s illegal activities. Rather than face legal charges and a possible prison sentence, Smith committed suicide.

Smith’s actions, along with those of several other of Harding’s cabinet officials, caused a great deal of distrust of government officials among the American people and also solidified Harding’s reputation as a poor president.    

Source:  Ohio Historical Society, “Jess Smith”.

Harding’s incautious and highly impulsive womanizing make both Bill Clinton and John F. Kennedy seem tame by comparison.  What complicated matters further is that Harding was a bit of a bizarre romantic, who was not inclined merely to keep to one night stands.  Instead he heavily courted each of the numerous women with whom he had affairs and in so doing wrote scores of love letters to each of his paramours, providing undeniable documented proof and paper trails a mile long.  The RNC, by way of slight-of-hand and creative accounting managed to find untraceable ways to pay off most of these women in exchange for their silence, though two or three did come forward, sometimes goaded on by jealous husbands or boyfriends, threatening to tell all if they were not handsomely compensated for it.  This proved to be an additional headache for Harding’s handlers, as they had their hands full putting out fires all over the place.  The vast scope of Harding’s adulterous dalliances make Tiger Woods look like a mere novice by comparison and the David Letterman matter a relatively modest affair.

This was, of course, purely the tip of the iceberg.  Harding’s own failings were bad enough.  It would be difficult to imagine a more disturbing group of unapologetic slimeballs setting up shop in Washington, DC.  Their own marital infidelity often rivaled Harding’s, and they quite eagerly engaged in money laundering, bootlegging, obstruction of justice, solicitation of prostitution, covering up the death of at least one accidental homicide, and other crimes.  Smith ran a love nest for Harding and his inner circle on H Street that was mere blocks from the White House and could be accessed by way of an underground tunnel. He made sure it was well-stocked with alcohol recently confiscated from rum runners and bootleggers, scantily clad chorus girls shipped down from New York City, and any number of Harding cronies who were always in the mood to play a few hands of a never-ending poker game.  It was a $50,000 a year enterprise and came complete with a full time cook and full time butler.  Harding’s wife was well-aware of her husband’s behavior, but refused to besmirch the reputation of the office by allowing such conduct in the White House, necessitating the procurement of the secret residence.  This didn’t, however, prevent Harding from sneaking his favorite mistress into the official home of the President and having sex on the floor of the Oval Office, to boot, confirming at two the number of Chief Executives who have engaged in sexual conduct in that room.  I would not be surprised if the exact count was much higher than that.  

Much of this, of course, never became public knowledge until decades after the fact.  Harding died unexpectedly, towards the end of what would be his only term in office, at which point the entire organization began to unravel.  Criminal investigations followed, at which point the rats began to scurry from the ship, and a shocked public recognized just how indebted its federal government had been to the whims of big business, particularly the oil industry.  The American oil powers had recognized just how lucrative exporting crude could be and how it could be profitably marketed and sold to a Europe that was still rebuilding from World War I.  It is for that reason that they wanted complete control over land that was under the jurisdiction of the U.S. Government, in particular designated to the Department of the Navy.  Granted, this land had been wrested from Native Americans a few decades before, but these men were not particularly sympathetic to the plight of indigenous peoples or to the conservation movement, which is the immediate precursor to the  environmentalism of today.  That has not changed much in nearly a century.

A wealthy Oklahoma oilman named Jake Hamon contributed over a million dollars to Harding’s campaign immediately prior to the convention, buying off enough delegates in the process to win him the right to name the position he wanted within the presumptive Cabinet.  Hamon coveted the Secretary of the Interior slot, since it promised full control of government-owned oilfields, of which Teapot Dome was one.  Once formerly installed, Hamon reckoned he’d rake in enough revenue to make him the richest man in the country, if not the world, by directing the oil profits into his own pocket, rather than that of the government coffers where it rightly belonged.  He would have been richer than Rockefeller and openly bragged about it to anyone who would listen.

His plans were rather abruptly short-circuited, however, when his much younger and long-term mistress shot him, whereupon he died from his wounds five days later. It seems that Mrs. Harding would not stand for Hamon to bring his mistress to 1600 Pennsylvania Avenue–only his neglected wife and their children.  Hamon was then forced to inform the other woman, Clara Hamon (no relation, despite the same last name) that she could not come with him.  The mistress, however, had other ideas.  After mortally wounding Jake, she found a letter in his papers addressed to him from Harding, specifically spelling out the precise quid pro quo of the cabinet position.  The letter was signed in the President-Elect’s own hand, and Clara knew that as long as the letter was in her possession, she held a powerful trump card that would prevent her from being convicted for murder and put to death.

This kind of brazen, Wild West kind of attitude is what eventually led to the complete dissolution of the Ohio Gang.  The Bush Administration, by contrast, kept a code of silence and with it a very secretive attitude that deliberately locked out all but those with the President’s primary ear.  It was no less incompetent and no less arrogant, but it was ultimately undone not by a kind of unrestrained permissiveness but rather by its dogged determination to stifle dissent and label those who disagreed with its narrow interpretation of pressing concerns and ideological stances as anti-American and borderline traitorous.  The lessons, then, to be learned from Harding and the beginning of another decade are not so much in our rear-view mirror, but in the future that lies before us.

Another erudite, well-polished, academic Democratic President has promised major reforms based on idealistic notions of unity and cooperation.  This same President won the Nobel Peace Prize based not so much on actual achievement as by the expansive goals he has set forth, goals that may or may not find enactment on a broad scale.  Now, as then, he is far more popular in the rest of the world than he is at home. Now, as then, he was elected on the premise to, if not keep us out of war altogether, certainly minimize our commitment to it.  Later both men reversed course and Obama has since taken full ownership of a foreign entanglement.  Assuming he wins a second full term, the question on the glossy cover of soberly contemplative print magazines (assuming they exist then) will be, “Life after Obama?”

Indeed, it might not be such a bad thing for us to contemplate what the Democratic party, the American people, and the demands facing us will be when this soon-to-arrive decade is well over half-finished.  All we need do is look back ninety years to see what happens when a supposed return to normalcy produces little more than an Restoration of the Good Old Boy network.  One would hope that our role as bloggers and citizen journalist would continue to be that of the gatekeepers, since investigative journalism seems to have been utterly abandoned by the mainstream outlets.  Removing coats of whitewash and pursuing subjects too sensitive to find voice otherwise is how I envision my role.  Though some criticize the blogs for being too reactive, too amateurish, and too beholden to echo chamber, there are many worthy and substantial voices out there and these we must continue to lift up and to dig to discover.  Everyone must take a role if we are to ensure that someone is watching the store, because history provides a multitude of tragic examples which reveal what happens when it is not being closely monitored.  Though my own brush with the past is not an especially inspiring one, I can redeem the sins and the mistakes of prior generations by vowing to never forget and in so doing never neglect a greater purpose beyond myself and my own blood.

Flying under the radar to a large extent is Congress’ attempt to reform and regulate our country’s financial system.  The yeas and nays are quite predictably divided along party lines and several powerful entities who stand to lose from reform have, of course, loudly registered their complaints.  Thus far, the going has been slow, in part due to internal Democratic party squabbling and a failure to find consensus among high ranking committee members of different parties.  Despite this, it is far more likely that something soundly sweeping and resolute will arrive from fiduciary legislation than the hyper-politicized, emotionally overwrought, and contentious Health Care bill now currently dwelling in a state of hopeful limbo.  This is in part due to the fact that the struggle to reform monetary policy doesn’t hold nearly the same degree of attention in the eyes of the public.  Yet, as would be expected, allegations have surfaced claiming that certain crucial legislators actively involved in the process have deep pockets and a willingness to court conflict of interest-bearing accounts.          

We often refer to corruption as though it is some relatively recent development unique to our times.  This is part of our compulsion to assume that we live in the worst of all possible worlds and that the past promised a purity never to be regained in the modern age.  Not so, not so.  Looking behind us a few decades, if not a few centuries, will reveal a wealth of similarities between these days and others.  Though the scope of lobbyist influence and dubiously ethical campaign contributions are the latest bone of contention and face of evil, the basic concept has never changed.  In particular, the story of the Second Bank of the United States and its dissolution can prove to be instructive.  Established following the War of 1812 to shore up the value of the dollar, curb inflation, and to manage the nation’s massive debt incurred after the conclusion of a conflict with no clear winner or loser, the Bank of the United States achieved its stated purpose, but like so many financial fixes it also provided short term success and long term woe.  

After the war, despite the debt, the United States also experienced an economic boom, due to the devastation of the Napoleonic Wars. In particular, because of the damage to Europe’s agricultural sector, the U.S. agricultural sector underwent an expansion. The Bank aided this boom through its lending, which encouraged speculation in land. This lending allowed almost anyone to borrow money and speculate in land, sometimes doubling or even tripling the prices of land. The land sales for 1819, alone, totaled some 55 million acres (220,000 km²). With such a boom, hardly anyone noticed the widespread fraud occurring at the Bank as well as the economic bubble that had been created.[3]

–Source:  Wikipedia.

It should be noted that the Bank of the United States was not a national bank owned and managed by the United States of America.  It is fortunate that the term “socialism” was not coined until a few years later, else its opponents lob that charge in its direction.  It was, instead, a privately held banking corporation that happened to be the repository of the entirety of federal tax revenues.  As one might concede, the massive amount of control, influence, and capital it had over the federal government as a result sent Jacksonian Democrats into a tirade.  However, the bank’s National Republican supporters stood firm.  That genius public speaker, living legend, and intransigent Jackson opponent Senator Daniel Webster of Massachusetts was on retainer as the bank’s legal counsel and was also Director of its Boston branch probably made absolutely no impact upon the proceedings, nor did the fact likely influence his allegiance.  That several other Congressional leaders periodically received large loans from the bank in exchange for their votes, since extending the bank’s charter required periodic congressional resolution was also an inconsequential, trifling matter.    

Eventual Chief Justice and Dred Scott decision maker Roger Taney served as Attorney General and Secretary of the Treasury under Andrew Jackson before winning confirmation.  His own recollections of the workings of the Bank are as pertinent and revealing now as they were then.  In particular, Taney noted how a congressman sworn to oppose the institution one day cast a rather surprising vote in its favor the next.  As it turned out, the Bank granted him a loan of $20,000 on generous terms, no small sum for the 1830’s.  Instead of coming down harshly on the congressman, Taney takes a more philosophical stance, attempting to understand the power of rationalization and the inner workings of the mind rather than overt moralizing.    

Now I do not mean to say that he was directly bribed to give his vote.  From the character he sustained and from what I know of him I think he would have resented anything that he regarded as an attempt to corrupt him.  But he wanted the money, and felt grateful for the favor, and perhaps thought that an institution which was so useful to him, and had behaved with such kindness, could not be injurious or dangerous to the public, and that it would be as well to continue it.  Men when under the influence of interest or passion often delude themselves thoughtlessly, and do not always acknowledge even to themselves the motives upon which they really act…It was one of the dangerous arising from the mammoth money power, that its very duties as collecting and disbursing agent brought it constantly in contact with members of Congress and other public functionaries and made it acquainted with their wants and enabled it to place them under obligations and create a feeling of dependence and even gratitude without the direct and offensive offer of a bribe.  

 

-Source:  Dorman B. Eaton

The North American Review, Vol. 135, No. 310 (Sep., 1882), pp. 197-219

To backtrack a few decades, one needs to understand the mistakes of the First Bank of the United States and how its failure influenced the construction and formulation of the Second.  Then, as now, economists were split as to the ways to revive the economy and shore up the system to prevent future failures.  Recessions, as evidenced by our current one, have a multitude of causes and a combination of events in tandem are what dictate severity.  Predictably, economists are often split along ideological faults since political allegiance dictates where one assigns blame.  It is another instance of wishful thinking on our part to assume that some school of thought or occupation deeply rooted in politics and indebted to allegiance might either rise above or be utterly unaffected by partisanship.  What few can argue, however, are the facts.      

In the summer of 1818, the national bank managers realized the bank’s massive over-extension, and instituted a policy of contraction and the calling in of loans. This recalling of loans simultaneously curtailed land sales and slowed the U.S. production boom due to the recovery of Europe. The result was the Panic of 1819…[4]

-Source:  Wikipedia

Most economists agree that this was the first instance where a market based economy in this country began its inevitable cycle of boom and bust.  What transpired as a result of this Panic were that many people lost substantial sums of money, unemployment soared, and it took years for the country to dig its way out.  Returning to the present day, each time a recession or severe economic downturn hits, there is always a renewed push among some to favor specie (gold or precious metals) over paper currency.  Recently, Ron Paul and many Libertarians proposed a return to the Gold Standard and to a solid backing of debt rather than the speculative system now in place.  This same distrust of monetary policy led President Jackson and his followers to be initially suspicious of the Second Bank and when instance after instance of corruption and quid pro quo came to light, he vowed to kill it, and through force of will and stubbornness, he inevitably did.  

A sweeping example of uncompromising executive power, Jackson’s act also ushered in the pervasive and persistent notion of populism, whereby the desires of the monied elite were pitted against those of the exploited masses.  The President’s supporters initially cheered the decision to dissolve the Bank as a victory for the average citizen.  His opponents grumbled amongst themselves and made the first efforts to form their own party, one which would be known as the Whigs.  However, it needs noting that the only thing truly unifying them together was hatred of a common enemy in the form of Jackson.  The never-healed, nor resolved deep fissures within the Whigs proved to be their undoing, and the party had relatively modest success on a national stage, eventually dissolving and being absorbed into the new Republican party around the time of the Civil War.      

An unforeseen consequence of the demise of the Bank was a destabilization of the entire financial system which contributed to another Panic, this one beginning in 1837.  Some scholars assert that had the Bank been allowed to stay in existence, what became a five year recession would not have occurred in the first place.  Others believe that the decision had a minimal impact and that other trends and causes were to blame.  Still, the lesson to be learned from this is that, despite the undeniable scope of unethical conduct perpetrated by politicians, making a change too sweeping without a firm sense and understanding of how to skillfully and lastingly rebuild a house of cards on sounder ground is bound to have negative consequences.  Financial systems in our modern economy are beholden to trends, currents, cross-currents, and influences that are both complex and completely in flux at all times.  We have seen recently the destruction of unilateral decisions made impulsively and how their detrimental impact lasts well beyond the tenure of person who put them into place.    

Establishing sufficient regulation and sufficient safeguards have serious limitations because of the way the system is structured.  The value of almost every commodity is up for debate and one need only consult the exchange rate between foreign currencies to observe that.  At this moment, the value of the U.S. dollar is changing value slightly, but nonetheless notably from second to second, minute to minute, hour to hour.  Provided our markets and other world markets happen to be actively trading, this is to be expected.  No amount of well-meaning legislation will prevent another recession, unless it proposes a credible way to address human fallibility.  However, this does not excuse complicity with the very entities reformers and regulators seek to hold accountable for their actions, either.  What this does mean is that financial reform needs to start with an educated guess that will undeniably have to be revised over time.  Greed finds a way to reassert itself, but so do the flaws in a supremely complicated system beholden to influencing events no one can predict ahead of time.  Some will guess correctly and some will guess incorrectly, but the best strategy is to be adaptive rather than punitive.

Two days have passed since the 2009 election cycle ended and the second-guessing and arm-chair quarterbacking has quite predictably arrived.  Everyone has a theory or a unique explanation and each is in the camp of either imminent demise or nonchalant shrugs.  I suppose I lean much more to the latter than to the former.  I have no alarmist, chilling words of caution to impart to any Democratic candidate up for re-election or election in a year’s time.  When some are questioning whether we should let up on the gas pedal, I advocate strongly for pressing down firmly and keeping it there.  We have a right to push our agenda just as strongly as Republicans pushed theirs when they were the majority, and skittish popular opinion will always exist in times where discomfort reigns and its end is not clearly visible.  That’s how humans are, particularly when they have been led to believe that good times are a birthright.  

I was eleven in ’63…when they killed John Kennedy. That was the end of my innocence, and the end of America’s too. 

I shouted out,
“Who killed the Kennedys?”
When after all
It was you and me

Rolling Stones – Sympathy for the Devil