The Book of Bastards (11 page)

William Macy Tweed was not just any native New Yorker. He began his rise to power simply enough, serving as a volunteer fireman in 1848. But by the end of the Civil War, barely two decades later, this singular bastard and his henchmen (later known as the so-called “Tweed Ring”) virtually ran New York City through the Tammany Hall political machine.

George Washington Plunkitt was the very prototype of the “ward heeler,” someone right out of a Damon Runyon short story, and was involved in big city machine politics. The colorful quotes from
Plunkitt of Tammany Hall
preserve his world perfectly:

The ability of ward politicians — such as the men who ran the Democratic Party's Tammany Hall political machine in New York City — to give immediate attention to the problems of the poor in an era where social workers were unknown is arguable, but that sort of “attention” always came at a steep price. The dark underside of Tammany politics — the side that Plunkitt blithely dismissed as “dishonest graft” — still existed. And that less romantic style of political wheeling and dealing had an exemplar in Tweed, the man at the top of the Tammany power structure during much of its nineteenth century heyday.

Tweed knew how to work the urban poor: he gave them money, employed their relatives, and bought them drinks. He never had a problem purchasing their votes, and by 1870 it seemed his power was unassailable. Tweed skimmed a healthy bit of taxpayers' money off the top of city revenues (to the tune of approximately $30 million per year). He even managed to get himself named to the board of directors for the Erie Railroad (by doing political favors for such fellow bastards as financiers Jay Gould and “Diamond Jim” Fisk).

Tweed began to run into trouble when the
New York Times
ran a huge exposé on his activities in and outside of Tammany Hall. The political cartoons by muckraking journalist Thomas Nast, who made his reputation in part at the expense of Tweed's public image, especially galled the “Boss.”

Tweed was tried on graft charges on two separate occasions, the second time fleeing to Cuba, only to be extradited and returned to serve his sentence. He died in prison in 1878, having served only two years of a six-year-long sentence.

A fitting end for a greedy bastard of his caliber.

Jay Gould was a financier who rose from humble origins to command a vast fortune. Personally honest, a loving husband, and father devoted to his family, Gould was also a first-rate bastard whose efforts to corner the gold market helped trigger a devastating economic depression.

During the Civil War, the US government had issued paper money backed by no specie, just the government's assurances. Many people speculated in greenbacks, believing that the government would eventually pay the full face value in gold “double eagle” coins for these bank notes. And as always, some of the speculation was far less than legal.

Gould and his business partner “Diamond Jim” Fisk hatched a scheme that would allow them to use this situation to corner the gold market. In order to carry this out, the two men needed someone working within the Treasury Department to tip them off about imminent buy-backs. Gould and Fisk pulled political strings to get President Ulysses S. Grant's fellow Civil War general Dan Butterfield into the plot and got him appointed assistant treasurer of the United States. In that position Butterfield would have knowledge of when the government planned a large buy-back of greenbacks and could tip off Gould and Fisk so they could drive up the price right beforehand, thereby maximizing their profit potential.

The scheme also required access to Grant in social situations. That was where his brother-in-law Abel Corbin came in. Corbin provided that access at numerous dinner parties throughout much of early 1869. During these informal meetings, Gould and Fisk would urge the president to buy back all of the outstanding greenbacks, saying that it would make for a more sound post-war economy.

At first, Grant agreed and ordered government buy-backs to begin. But by the late summer of 1869 he began to grow suspicious of Gould, Fisk, and Butterfield. In September of that year Grant had the government sell $4 million worth of gold on the stock market (thereby causing a glut and driving prices down) without letting Butterfield in on the secret.

The gold market crashed as a result on September 24, 1869, the date known ever afterward as “Black Friday.” Gould and Fisk had been buying up gold and hoarding it in the weeks before the government's action, causing the price to rise dramatically. People who had bought gold at Gould and Fisk's engineered and inflated prices scrambled to dump their gold stock, and within minutes the premium paid on gold shares plummeted to a fraction of what it had been just twenty-four hours earlier. This turmoil dragged down the entire market and resulted in a devastating stock market crash.

Gould and Fisk lost relatively little in the crash because they got out early enough to stave off too much of a loss. Corbin was wiped out, as were countless other investors.

But this is not one of those stories wherein the bastards in question get off scotfree. Gould — who had already been pilloried in the press for his association with Boss Tweed of Tammany Hall — paid out millions in the lawsuits that resulted from the failure. He went on to die much poorer, merely the ninth richest man in America. Black Friday cost him, dearly.

Imagine that the government sets up a corporation to produce something important and risky to build. In order to make the project attractive to investors, the government sweetens the pot with mineral and water rights to already valuable land in return for the completion of this project. Is that how sly businessmen lose their shirts? No. That's how the first American transcontinental railroad got built.

It's easy to picture one of the ass-hats running this “sure thing” company deciding that he was not making enough money in return for the miniscule amount of risk he was taking. The question left to answer: how does the bastard further maximize his profits?

If he's Republican Congressman Oakes Ames of Massachusetts, he breaks the law repeatedly, using his family's company to his own ends. Ames incorporated shell companies, hired these “outside contractors” (who were really Ames and his cronies) to do some of the construction, and overpaid these middlemen by ten times the going rate for materials and labor. In the end, he left the stockholders of the original company in the hole and on the hook for his failings; he and his “contractors,” on the other hand, were rich.

Since so many wheels needed to move at the same time, Ames used a predictable means to grease the cogs: money. He funneled contracts to Crédit Mobilier of America, a construction company that in turn purchased stock in the Union Pacific Railroad. He overspent on everything, and used the ongoing cycle of money to enrich those important to the project (along with most of their relatives).

Too much got spent too injudiciously for Ames's profligacy to go unnoted for long. By 1867 government officials were suspicious about the ridiculous amounts of money Crédit Mobilier was charging the Union Pacific for “essential services.”

With the project's success hanging in the balance, Ames acted swiftly and decisively: he bribed several influential congressmen (including future President James A. Garfield) with sweetheart deals on Crédit Mobilier stock. This forestalled a formal Congressional inquiry for years afterward, and allowed Ames and his crowd to finish the railroad in 1869. In 1872 the
New York Sun
finally broke the story about how the Union Pacific was nearly bankrupt despite record profits on its balance sheet.

The kicker: people were “shocked.” The House merely censured Ames. No one lost their jobs and no one went to jail when these bastards carried out this colossal fraud on the American people. After all, they might have been price gouging, but they did actually
build
a transcontinental railroad!

On the other hand Ames didn't live long enough to truly profit from his shenanigans. He died in 1873 at age sixty-nine.

Because the eight years of Ulysses S. Grant's presidency was one of the most scandal-ridden in American history, we are
still
talking about his administration in this chapter. In this case the bastard in question was an incompetent political hack put into a relatively powerless position where he could safely draw a salary without doing any real harm, only to find himself unexpectedly promoted, costing the government millions of dollars, and losing what reputation he had left.

Ladies and gentlemen, meet William Adams Richardson.

Richardson grew up in Massachusetts with the connections and credentials of a well educated, thoughtful man. He studied at Harvard and even served for several years as a professor at Georgetown's School of Law. Yet, if you believe the man's own words he was at best woefully naïve. And if you don't believe him, he was most likely an outright crook. If his association with one John Sanborn is any indication, he certainly was a terrible judge of character.

Richardson was originally named assistant secretary of the treasury in 1869, the same year that Grant took office as president. When Grant nominated Richardson's boss for a slot on the Supreme Court, Richardson became the treasury secretary. He quickly proved himself hopelessly inadequate for the post.

Richardson ordered the treasury to print more money just after Grant appointed him. In the years after the Civil War the economy expanded so quickly that banks began to grow skittish about having too much of their money out in loans. The more loans that were called in, the more the supply of cash money shrank. Richardson's answer was to get more money (in this case $26 million) into the economy in order to avert a crisis.

But he hadn't consulted anyone, let alone Congress, which technically controlled the federal purse strings. Although Congress eventually chose to overlook Richardson's presumption in this instance, his actions set him up for close scrutiny when the Sanborn Incident came to light.

The lesson to be taken from the so-called Sanborn Incident is that if you're going to sign a contract, you ought to read it first.

Signing any and all contracts drawn up between the treasury and its civilian contractors was one of Richardson's many duties as secretary. Intending to privatize the collection of tax revenue, Richardson expanded the roles of non-government employees hired by the treasury. He employed one such contractor, an out-and-out rogue named John D. Sanborn, to collect $417,000 in back taxes (mostly on liquor sales).

Most private collectors working under such a contract for the Treasury Department were awarded a ten percent commission on whatever they recovered. Sanford's contract called for him to receive fifty percent. Over the course of his contract Sanford raked in $213,000.

When confronted with this chicanery, Richardson claimed that he had thought the contracts pro forma, and had signed them unread. This lame excuse worked for a while. What only came out much later was that Sanford had in turn signed a personal services contract with an assistant, to whom he paid the majority ($156,000) of the money he'd kept.

What was that “assistant's” name? William Adams Richardson, the treasury secretary!

Of course it goes without saying that he resigned. It also goes without saying that President Grant, while personally blameless, provided his loyal friend another job: a slot on the federal bench with the U.S. Court of Claims. Before his death in 1896 Richardson went on to serve as chief justice of that body.

So Richardson went to court, but not as a defendant. Instead he went as a judge, and a wealthy one at that.

Bastard!