were essentially those of one trader-for-profit with another, continued to be the rule; the nature of government income merely changed from direct tribute exacted by governors to arbitrary taxes collected by the Crown. From the colonial businessman’s point of view, this change was a net loss; now, instead of paying bribes for which he got value in return, he was forced to pay taxes for which he could expect, and usually got, nothing. Then as now, the fate of the extortioner who does not deliver on his bargain was usually violence, and so it was in this case. Looked at one way, the American Revolution was the punishment imposed on a welsher.

Nor did the domestic customs of the mother country in the decade of the Revolution provide useful ethical instruction. Many British voters of the time habitually sold their votes to the highest bidder. In October, 1774, Benjamin Franklin wrote home from England—with sardonic exaggeration, to be sure—“If America would save for 3 or 4 Years the Money she spends in Fashions & Fineries & Fopperies of this Country, she might buy the whole Parliament, Minister and all.” (A few years later, in the XYZ Affair, the newborn nation would get a sampling of political ethics in another foreign nation when three agents of Talleyrand, the French foreign minister, suggested to American representatives that the United States make amends for President Adams’ “insults” to the French government with a loan to France of $10 million and a bribe to Talleyrand of $240,000.)

The financing of the American Revolution was solidly based on conflicts of interest exuberantly welcomed by a penniless government. Robert Morris, generally considered the financier of the Revolution, profited so hugely from government contracts, many of them obtained while he himself was serving as Superintendent of Finances, that he emerged as the richest man in America; a cynical commentator has concluded that in fact the Revolution financed Morris. (Later, Morris’ speculations went sour and he landed in debtors’ prison.) Morris’ philosophical approach to matters of business ethics is suggested by a favorite language usage of his. In his correspondence he often referred to his “integrity.” Close examination of the context makes clear that what he meant by the word was his commercial credit.

Morris’ younger friend and protégé, Alexander Hamilton, the authentic financial genius among the Founding Fathers, showed repeatedly that he had no qualms about institutionalizing conflict of interest, so long as he personally trusted the people he was dealing with; for example, during the money panic of 1792, when Hamilton was Secretary of the Treasury, he wrote to his old friend the cashier of the Bank of New York, of which he had been cofounder and a charter director, “If you are pressed, whatever support may be in my power shall be afforded. I consider the public interest as materially involved in a valuable institution like yours.” He might, after all, have written “like mine.” The previous

year, according to Thomas Jefferson’s later recollection, Hamilton at a private meeting with Jefferson and John Adams had seemed to come out in favor of a little graft as grease for the wheels of government when he expressed the view that the British system, “in its present form, with corruption and inequality,” was “the most perfect that had ever existed.”

It is important to note that bribery of government by business was not a feature of Revolutionary days. With a government so desperate for money that it had no choice but to plead for the cooperation of wealthy citizens, there was no need for businessmen to seek favors from government. Bribery is a function of the separation of government and business. Hamilton, indeed, as Samuel Eliot Morison points out, “set standards of honesty … that were invaluable for a people with somewhat loose financial conceptions.” Still, Hamilton’s advice to Morris as a government official was clear enough: “Make it the immediate interest of the moneyed men to cooperate with the government.” That is, make it quickly profitable for them to do so. David Loth has written that Hamilton used graft “from a sense of duty.” It would be more temperate to say that he used conflict of interest, but the point is unmistakable.

The moment that government and free enterprise were formally placed at arm’s length by the Constitution, attempts at bribery began. It is hardly surprising that some of the attempts were successful. From the start, many congressmen regarded a measure of graft as their right and privilege. In the very first Congress in 1789, Delaware’s representative, John Vining, was widely reported to have accepted a large bribe to cast the deciding vote on Hamilton’s plan to fund the national debt. Senator William Maclay of Pennsylvania doubted the report, but the grounds on which he did so are hardly reassuring as to either Vining or the ethical climate in Congress. Vining’s vote, the senator thought, could have been bought for one tenth of the sum reported to have been paid; the money could not have been a bribe, because surely nobody would have been such a fool as to pay so much.

In the 1790’s, Jefferson was accused of gross and defamatory exaggeration when he said that most of the Senate and a large minority of the House were engaged in speculations in depreciated Continental scrip that Congress at its pleasure could cause the Treasury to redeem at par value; his figures were later confirmed by the Treasury itself. In the early years of the new century, aspiring bankers assumed that if they wanted charters, they had to buy them from the state legislature. The price for an individual vote sometimes ran as high as $5,000, the equivalent of more than five times that much now. At the federal level, the controversial Second Bank of the United States would probably not have flourished as long as it did (1816-36)

but for its complaisant and intelligent habit of making unsecured loans to members of Congress, among them Henry Clay and Daniel Webster. Nicholas Biddle, head of the bank, who claimed that his power rivaled that of the President, on one occasion handed Webster $ 10,000 immediately after he had made a speech in favor of the bank. Webster is known to have been otherwise on the take from business interests, but we must not think too badly of him; so were many of his congressional colleagues, and his shortcomings in that regard stand out only because of his unquestioned eminence as a statesman. He was following the custom of the country—a justification that echoes through the annals of American business bribery right down to the present.

In the middle 1840’s, persons wishing to have the United States take over Texas’ debt as part of the annexation process encouraged Congress to see the merit of such an action by distributing extensive amounts of Texas scrip and bonds to its members. The scrip and bonds would be virtually worthless unless Congress voted the U.S. takeover—which it did, to the extent of $ i o million. Alleged congressional corruption by lobbyists for business interests was the subject of a flurry of suggestive, though inconclusive, investigations during the i85o’s. First, the House looked into—but perhaps not far enough into—the attempted bribery of members by a lobbyist for Massachusetts manufacturers with $58,000 to dispense for a favorable tariff bill. Nothing came of this investigation. Not long afterward, in 1856, the New York Times Washington correspondent charged in print that “a corrupt organization of Congressmen and lobby-agents” was at large in the Capital. When the Times man refused to testify under oath on the matter, he was arrested and detained. Still later in the decade, the House investigated the lobbying activities of the Pacific Steamship Company, which had spent $800,000 to win a government subsidy. Nobody ever found out who got the money, but as a contemporary put the matter, “It will be a cold day in Washington when $800,000 is spent to influence legislation and some members of Congress do not get a large share of it.” The Times man’s “organization” was never identified, either; but doubtless one of its principal lights was Edward Pendleton, king of Washington lobbyists of the time, who owned an elegant gambling house on Pennsylvania Avenue. It was called formally “the Palace of Fortune,” and informally “the Hall of the Bleeding Heart” by congressmen whom Pendleton affably allowed to win or favored with loans when he needed their votes. This relatively subtle form of bribery persisted in Washington until as late as the Harding administration.

After the Civil War, in which the banker Jay Cooke played a role some- what analogous to that of Robert Morris in the Revolution, came the golden age of graft, or, conversely, the dark age of American business-andgovernment ethics. Business, led

by the railroads and subsequently the iron and steel industry, was becoming monstrously large, and its inclination to run roughshod over any obstacle in its way, government included, was supported by a newly conceived philosophy—Social Darwinism, the application to business affairs of Charles Darwin’s theory that man has evolved to his present state through the survival of the fittest.

This era in business-government relations was ushered in, and to some extent exemplified, by the Crédit Mobilier scandal, in which a few inner stockholders of the newly organized and government-backed Union Pacific Railroad took over a Pennsylvania holding company, Crédit Mobilier of America, and used it to make exorbitant contracts with themselves to build the railroad, and thereby pocketed profits running into many millions of dollars, much of it coming from the federal treasury. The process of forestalling investigation or interference by Congress or the executive branch involved some outright bribes of government officials by the conspirators, and many quasi bribes in the form of offerings of Crédit Mobilier stock to congressmen at half its market value. The affair derived a comic twist from the fact that Oakes Ames, a principal in Crédit Mobilier, was himself serving at the time as a congressman from Massachusetts. To offer his hush money he needed only speak in a congressional neighbor’s ear, or at most lean across the aisle.

Indeed, comedy became a hallmark of business-government dealings in this era. The “Erie war” of 1866-68, in which “Commodore” Cornelius Vanderbilt was pitted against the unholy trinity of Daniel Drew, Jay Gould, and James Fisk, was at one stage to all intents a contest to buy injunctions from judges kept in comfort by the competing forces; as for legislators, at one point in the war Gould went to Albany, the state capital, on a secret mission, carrying with him a valise containing $500,000 in cash, and subsequently left with an empty valise. It has even been alleged that on some occasions sessions of the New York State supreme court were held informally, and no doubt conveniently, in the rooms of Fisk’s mistress, Josie Mansfield. Over a period of many years the Vanderbilt interests openly maintained a captive legislator, Chauncey Depew, first in the Albany legislature and later in the U.S. Senate; the Commodore’s daughterin-law refused to sit at table with Depew on grounds that his status was equivalent to that of family butler.

General cynicism, combined with the shaky sanction of Social Darwinism, had reduced, or elevated, bribery and corruption to the role of low-brow public entertainment. It was the relished, and protected, pornography of the age. The business leader most forthright on the subject, in word as well as in deed, was the railroad man Collis P. Huntington. In 1877 he explained his philosophy of bribery in a letter to a colleague, as follows: “If you have to pay money to have the right thing done, it is only just and fair to do it. …

If a man has the power to do great evil and won’t do right unless he is bribed to do it… it is a man’s duty to go up and bribe the judge.” This man of duty reported on another occasion, “I keep on high ground , so that we cannot be hurt by any investigation.” He was also careful to insure, when possible, that the recipients of his bribes did not share the high ground; he always tried to get signed documentary evidence of the transaction, so that the bribed officials were “ever afterward my slaves.” At one point in the 1870'$, Huntington complained with bitter indignation that competitive bribers were causing such inflation in the corruption market as threatened to ruin him. “To fix things” now cost $200,000 to $500,000 per session of Congress: “I am fearful this damnation Congress will kill me.”

This parody marketplace, with government favors all but quoted by high, low, and closing prices in the newspapers, perhaps represents the epitome of business-government ethics in the age of the robber barons. But it should be noted that by no means all businessmen even in those times played such games, and that few played them with such a lofty sense of mission as Huntington seems to have done. As Richard Huber has perceptively pointed out, Social Darwinism was too strong for the stomachs of many piously reared men of affairs; in many cases, it seems to have been imposed on them by those sophisticated men of the establishment, their lawyers. Businessmen, Huber says, “claimed that the justification for wealth was not climbing over the fallen bodies of others, but struggling against the evil in oneself and then going on to some kind of moral triumph. They rested their case on the Bible … not on the Origin of Species .” Their roots in evangelical Christianity led to an intense ambivalence about success and the methods that brought it; this ambivalence is explicit in the writings of Andrew Carnegie, and again, interestingly enough, in the recent utterances of Bob R. Dorsey, who was deposed as chairman of Gulf Oil in 1976 for participation in corporate bribery.

It may be instructive, before leaving the post-Civil War period, to look briefly at an instance when attempted corruption failed, and to note why. In 1883 a group of Southern businessmen, political figures, and Confederate war heroes organized a company called Pan Electric, with the intention of overthrowing the Bell telephone patents and thus keeping the profits of Southern telephone service out of the hands of the Bell company Yankees. In 1885, Pan Electric had the good luck to have one of its insiders and large stockholders, Augustus H. Garland of Arkansas, named attorney general of the United States by the newly elected President, Grover Cleveland. Garland promptly used his office to further his and his colleagues’ interests by bringing federal suit to annul the Bell patents. But the

Marines arrived in the nick of time, in the person of William Hathaway Forbes, president of the Bell company in Boston, who talked to Cleveland and persuaded him to force Garland to drop his suit (though not to leave office). Government dishonesty in the interest of one business had been stopped in its tracks—by the force majeure of a larger business with a contrary interest.

The situation does not appear to have greatly improved as the twentieth century approached. In 1891 Andrew Carnegie’s man, that engaging scamp Charles M. Schwab, may have inaugurated the American business custom of sealing overseas deals with ad-hoc gifts when he pressed a $200,000 necklace on the mistress of Czar Alexander’s nephew—just before Bethlehem Steel got the rails contract for the huge Trans-Siberian Railroad. In 1899, toward the end of a five-year period during which were created more than five thousand business trusts covering practically every line of productive activity, the sugar baron Henry O. Havemeyer, king of one of the leading trusts, remarked, “Business is not a philanthropy. … I do not care two cents for your ethics. I don’t know enough of them to apply them.” The important point, perhaps, is that Havemeyer’s turn-of-the-century interlocutor did have a sense of business ethics, and cared enough to ask Havemeyer about his. Reform was in the air at last.

The new century, however one may rate businessmen’s ethical performance in it, brought a huge increase in public and government concern on the subject. Federal regulation and control of business had begun formally, though not at first effectively, with the Interstate Commerce Act of 1887 and the Sherman Antitrust Act of 1890. Now two great reform waves, the Progressive movement of roughly 1902-12 and the New Deal of 1933-40, brought to Washington hordes of reformers burning to set businessmen and legislators alike on the path of righteousness. It was encouraging news for them when Henry Clay Frick, after he had helped finance Theodore Roosevelt’s 1904 presidential campaign, complained with evident chagrin, “We got nothing for our money.” Still, there was plenty of reforming to be done. David Graham Phillips’ The Treason of the Senate , the appearance of which in 1907 in Hearst’s Cosmopolitan magazine gave rise to Roosevelt’s popularization of the term “muckraker,” depicted the Senate as little more than a paid department of the trusts, and named specific senators as “perjurers” and “thieves"—charges that gave rise to no libel suits and were never effectively refuted. In 1907 Congress at last passed a law making illegal all political contributions by corporations (as distinguished from individuals) to candidates for federal office.

Like so many other pieces of early reform legislation—including notably the Sherman Act—this one was for years honored chiefly in the breach. Nevertheless, the Progressive era certainly left business bribers and federal bribe-takers somewhat chastened. The people had shown that they cared; what had been conceived

as comedy became moral drama, and the concept of public office as a public trust subject to sanctions other than the trustees’ own consciences was at last formally written down. But both sides needed only wait for the next turn of the cycle. The Teapot Dome affair during the inept Harding administration after the First World War, in which Secretary of the Interior Albert B. Fall accepted bribes from oilmen in exchange for secretly granted leases to government oil reserves in Wyoming and California, gave rise to a great public outcry, and Fall went to jail. Essentially, it was Crédit Mobilier replayed. During the middle igao’s, business-government relations looked back even further. With Calvin Coolidge in the White House and the Pittsburgh multimillionaire Andrew W. Mellon as head of the Treasury, government’s attitude toward business was like that of a believer more Catholic than the Pope. Mellon represented the concept, later widely extended, of the public servant thought to be free of temptation because he was so rich. In fact, bribes were unnecessary anyhow; Mellon out of conviction not only met but tried to anticipate every need of business. The country was back to the prebribery alliance of business and government in the state-capitalism days of Hamilton.

The flood of reform legislation passed during the New Deal years was directed chiefly at establishing more fairness in business relations with labor and the consumer, rather than in fighting business-government corruption or collusion. Indeed, those years mark a major turning point in the financial relations between those two entities, and not necessarily a healthy one. For the first time in history, the federal government in peacetime became a financial giant with vast sums to dispense. Total federal government expenditures came to $4.66 billion in 1932; by 1940 they had climbed to $9 billion and by 1941 to $13 billion. During World War n, military production needs sent the figure soaring to about $100 billion per year; and in the postwar years, to the surprise of most economists, federal spending remained at previously unheard-of peacetime figures: in the first five postwar years it averaged $42 billion, almost ten times the 1932 figure. One result of the creation of this enormous pork barrel was that the direction of flow of corrupt money was largely reversed; the post World War n era was the first peacetime period when government had more financial favors to confer on business than vice versa. (Crédit Mobilier and Teapot Dome had both been made possible by government acts under war conditions.)

The logical new form of bribery was, of course, the kickback for a government contract award, rather than the direct bribe for a favorable legislative climate. It appears that the vast waste of government funds during the war years resulted more from inefficiency and ineptitude than from bribery. The government had spent $5.8 billion by the end of 1943 in the settlement of cancelled contracts alone. Blair Bolles tells us of one lucky contractor

who first valued his inventory at $1.068 million, then sold it to the government for $2.137 million, and shortly thereafter, the government having found the goods unsuitable for its purposes, bought it back for $339,000; yet no bribes had changed hands. The wartime atmosphere, with a few variations, carried over into the postwar years. The mink coats and deep freezers of Harry Truman’s time, and the Oriental rugs of Dwight Elsenhower’s, were penny-ante stuff; particularly in the years of Truman, the coin of influence on government was usually not cash but cronyism. In retrospect, the years 1945-60 appear as a silver, if not a golden, age in business-government ethics. Handing out public money to old pals for the sake of friendship, all moral and legal authorities agree, is less sinful than handing it out in exchange for bribes from strangers. The advantage to the citizenry is, however, less clear.

As we have recently learned, it was in the igoo’s that, with Uncle Sam’s role as angel to business sharply curtailed by other commitments, bribery by business to influence legislation got a new lease on life. Gulf Oil inaugurated its now-famous Bahamas slush fund in 1960; by that July the first $150,000 had been drawn on it and duly delivered to deserving legislators. Within a few years, if we may believe Gulf’s chief Washington lobbyist at the time, illegal payments had been made, either directly or via their staffs, to forty-five members of Congress, including various key men on key committees and a future President of the United States, Lyndon B.Johnson. Many other corporations have confessed that, particularly late in the decade, they indulged in similar activities. Meanwhile, as the overseas operations of large American corporations expanded at an unprecedented rate, bribery of foreign officials and their governments not only made a piker of Charles Schwab but seems to have become the rule rather than the exception. Two forces were behind this sinister second blooming of unethical business conduct at home and abroad : the fact that, beyond question, in many of the foreign countries where American corporations now operated for the first time on a large scale, bribes were the accepted if not the required custom; and on the domestic front, the accession to power in 1969 of an administration of such ruthlessness and political cynicism that even the best-intentioned business enterprises were often made to feel that it was a case of pay tribute or die. It would be cynicism of another sort to suggest that a third force behind the bribery revival was that of time-honored American tradition.

The attitude of leading businessmen toward ethical questions in the middle 1970’s—a time of reformism in Washington and, one might hope, penitence in corporate boardrooms—must give the righteous pause. In a report on a series of meetings held in 1974-75,tne members of the Conference Board, the most respected of national organizations of leading executives, expressed their views forthrightly, if in almost every

case anonymously. The executives’ prevailing attitude seemed to hold paranoia and smugness in delicate balance. “The harassment of the businessman by the government bureaucracy stamps out productivity,” said one. The press and television, many participants felt, are another source of harassment: “The media are destructive and misinformed.” “The press is forever at war with the creative minds of free men.” Certainly there was some truth in these strictures; but how easy is it to agree with the view of one participant, echoed by others, that “Deep down in their hearts most people trust us [corporations] more than they do any other institution”? Such a statement, in the present context, seems to suggest either a blindfolded eye or an underdeveloped brain. The bribery scandals per se were tactfully left all but unmentioned in the discussions, but nevertheless were a tacit presence; the implied attitude of the participants toward them was reflected in repeated identification of “poor communications” as the root cause of the public’s current low estimate of business. Corporations, the Conference Board consensus went, are already socially responsible, and need not be prodded to become more so; their shortcoming has been in too modestly mumbling the recital of their virtues. Yet the real communications problem, at least over the years since 1973, seems more likely to have been that the corporations have communicated all too well.

At the same time, the Conference Board report and other recent utterances of business leaders make clear that their sense of ethical responsibility has changed subtly over the years, and for the better. The very concept of the social responsibility of corporations dates only from the turn of the century, and perhaps it needs more than three quarters of a century to mature. Compare, for example, Collis P. Huntington a century ago (“It is a man’s duty to go up and bribe the judge”) or Havemeyer a generation later (“I do not care two cents for your ethics”) with William K. Whiteford, then chairman of Gulf Oil, writing in the early 1960’s to an officer of the Bahamas bank that was handling Gulf’s slush fund: ”… The next time I have to make a confidential arrangement to secure political funds, I can put the blame on the Bank should that great institution … fail to protect my anonymity.” Whiteford was presenting the precise truth as if it were a flight of fancy—that is, he was employing that great resource of the modern American businessman treading on thin ice, jocularity. A child, or a businessman, who uses uneasy jokes as a cover is thereby admitting to a sense of guilt; Huntington would never have dreamed of doing that. Or listen to Daniel J. Haughton, former chairman of the Lockheed Corporation, which had paid millions of dollars in bribes in a variety of foreign countries. Testifying before a Senate subcommittee in 1975, Haughton said of such bribery, “I am not arguing that it is a good practice. … I am saying unless everybody plays

by the same rules, if you are going to win it is necessary. … In doing business abroad, anyway up to now, you have to take into consideration the customs of the countries and the customers where you are doing business.” The reader will observe that this is almost saying, as Huntington said, that sometimes a person “won’t do right unless he is bribed”—almost, but not quite.

“Businessmen have a different set of delusions from politicians,” John Maynard Keynes advised President Roosevelt in 1937. ”… You could do anything you like with them, if you would treat them not as wolves or tigers, but as domestic animals. ” Or as Dr. Johnson put the matter, “There are few ways in which a man can be more innocently employed than making money.” On the whole, domestic animals innocently employed seems an inadequate metaphor for Robert Morris, Nicholas Biddle, Collis P. Huntington, or Daniel Haughton.

Present-day Americans have a widespread and often-noted tendency to idealize the national past. That such a view extends to the ethical conduct of businessmen and legislators is indicated by the shock and disbelief that have greeted the recent revelations of corporate misconduct. Why this tendency to nostalgia should exist is a subject for psychologists and anthropologists; surely it is related to the golden-age myths that are part of the folklore of many cultures, among them those of Greece, India, China, Persia, and Babylonia, and that have a Judeo-Christian counterpart in the story of the lost Eden. However, in the case at hand, myth it is. If we believe that American businessmen and legislators now are less ethical than they used to be, we are wrong; if anything, they are more so. To a quite limited extent, the United States has succeeded in legislating morality.

Are we to conclude, then, that the familiar and cherished American folk hero, the high-minded businessmangentleman of the past, never really existed and is himself a figure of myth? To do so would be rash. The evidence, impressive as it is, deals exclusively with the conduct of big businessmen operating in big cities. The factual annals of the small-scale, small-town businessman are scanty; he is chronicled chiefly in fiction, where he appeared regularly as a person of integrity until Sinclair Lewis with Babbitt made him a figure of fun and William Faulkner with the Snopes family made him a … Snopes. Still cherished even by some modern leftists as a sort of Dead Father, the small businessman as revered gentleman survives as a memory rather than a myth.

As for the big-business bribery revelations, the fact that they follow in a tradition is, I believe, no reason not to be horrified by them. It is, however, reason not to be shocked by them. It is also reason for us to adopt, if we can, a more mature attitude toward a national problem: to be less naively condoning of corruption in good

times and less naively condemning in bad; and, perhaps above all, to put in the context of past ethical standards at home the argument that American business bribes abroad are made necessary by low ethical standards among the backward natives.