4. Ulysses S. Grant’s Black Friday, Credit Mobilier and Whiskey Ring Scandals
As a staunch Republican, Ulysses S. Grant led the nation with a number presidential scandals that involved financial corruption and schemes to profit off of government power. No adultery for him! Instead, he reveled in the sort of government cronyism that has characterized the Federal government ever since the Civil War.
During Reconstruction, the US government issued fiat greenbacks not covered by gold, which people were required to accept in payment for Federal debt. It was generally believed at the time that eventually the government would redeem the fiat money by paying gold for it.
Black Friday 1869 was Grant’s first presidential scandal. Responding to businessmen James Fisk and Jay Gould’s attempts to corner the market on gold, thus raising its price, Grant flooded the market with government gold, causing many to lose considerable sums of money as the price of gold plummeted. Many people lost their savings, and it was seen at the time as scandalous that the president of the United States should act against the interests of the public as a direct market participant trying to influence the value of commodities, using Federally owned gold. Since then this scenario has been enacted countless times, as fiat currency has become the norm rather than the exception. Every time the price of gold rises, encouraging investors to buy gold, rather than leave their money in fiat currency, the US government floods the market with gold in order to make people rely on fiat money, instead. It’s good to remember the Republicans started this, whenever they claim theirs is the party of fiscal responsibility.
Other presidential scandals ensued. Credit Mobilier was a construction company in which Grant’s Vice President, Schuyler Colfax, and many members of Congress owned stock. When it was discovered that Credit Mobilier had been paying kickbacks to the Vice President, the Secretary of the Treasury and other politicians in order to charge the First Transcontinental Railroad unusually high rates, the scandal broke. The reason it was possible for business to be conducted in this way was that the United States government had financed the railroad under the Pacific Railroad Act. When people today talk about robber barons in the context of building the railroads across the US, they forget that this was not the free market at work, but a classic example of crony capitalism.
In the Whiskey Ring scandal, government officials were found to be pocketing Whiskey taxes. Grant moved swiftly against all those caught red-handed, except, of course, his personal secretary, Orville B. Babcock, whom he spared.
All in all the Grant presidential scandals fit well into the stereotype of the sorts of sins against the public that Republicans can be expected to commit. There is less sex but lots more financial chicanery.
