Government Corruption in the Second Half of the 19 th Century Objective 5.04

Events During Grant’s Presidency Robber BaronsRobber Barons –Wealthy from big business –Accused of Swindling investorsSwindling investors Bribing government officialsBribing government officials Cheating on contracts and debtsCheating on contracts and debts

Jay Gould Worst reputation of allWorst reputation of all Practiced insider tradingPracticed insider trading Other robber barons include Morgan, Rockefeller, etc.Other robber barons include Morgan, Rockefeller, etc.

Scandals of Grant’s Administration Credit Mobilier Scandal (1872)Credit Mobilier Scandal (1872) –Construction company –Owned by Union Pacific stockholders –RR complete, investors made millions, RR was almost bankrupt

–RRs often built with the help of government grants –Congressmen were given shares at low prices in return for more grants –Leaked to the press –Caused investigation –Slap on the wrist

Whiskey Ring Scandal (1875)Whiskey Ring Scandal (1875) –Began in St. Louis –Conspiracy that diverted tax money to people instead of government –Millions of dollars for those involved before it was put down

Urban Corruption Political Machines and Party BossesPolitical Machines and Party Bosses –Informal political groups; prospered due to cities growing faster than gov’ts –Run by party bosses –Provided jobs, food, housing, police and fire protection in exchange for votes

Pyramid Scheme City Boss Ward bosses Local precinct workers/captains

–Bosses controlled finances and grew rich through graft—getting money by illegal means –Tammany Hall NYCNYC Corrupt leader 1860s/1870s— William “Boss” TweedCorrupt leader 1860s/1870s— William “Boss” Tweed Arrested for stealing millions through graftingArrested for stealing millions through grafting

Thomas Nast Famous political cartoonistFamous political cartoonist Exposed corruption of Tweed and other urban politiciansExposed corruption of Tweed and other urban politicians

Response to Corruption Republicans splitRepublicans split –Stalwarts: supported patronage (spoils system) –Halfbreeds: supported government reform

Election of 1880Election of 1880 –Rutherford Hayes declines to run again –Mixed ticket for Republicans Halfbreed—James Garfield for PresidentHalfbreed—James Garfield for President Stalwart—Chester Arthur for Vice PresidentStalwart—Chester Arthur for Vice President –Republicans win –Garfield assassinated by a Stalwart in a few months

Pendleton Act (1883)Pendleton Act (1883) –Assassination creates more public opinion against patronage –Created Civil Service Commission— president chose federal jobs to filled according to rules

–Candidate now compete for jobs through exams –Government moves away from spoils system

Election of 1884Election of 1884 –With Republicans split, –Dem. nominate NY Governor Grover Cleveland Opponent of Tammany HallOpponent of Tammany Hall –“Mugwumps”—Rep. reformers who backed Cleveland

Other items to know… Secret Ballot: Australian Ballot- Initiative- specified number of voters may propose a statute, constitutional amendment and compel a popular vote on its adoption. Referendum: the vote on the initiative. Recall: hold election for elected official before term is up to elect a different person to serve out the term.

U.S. v. E.C. Knight, Co. (1895) Sugar Trust First to challenge Sherman Anti-Trust Act Court decided that Congress could not break this trust- was within state limits- not an interstate issue. Reason why Sherman Anti-Trust act was not effective in the early years.

Review questions- answer at the end of your notes -Describe some of the corrupt practices of elected officials/industrial leaders that called for a change in the relationship between gov’t and industry. -Explain any significant legal action that was implemented to challenge the power of industry over gov’t. -Describe public reaction to the various political scandals that involved both politicians and big business leaders. -Assess the further need for change in the gov’t as it related to industry at the turn of the century (1900).