Washington cover-up

by Clark R. Mollenhoff

A Democratic Congress, elected in 1874, initiated a series of investigations into the War and Treasury Departments to eradicate the corruption and to set the stage for the next presidential campaign in 1876. The frauds were so raw that the feeble efforts to hide them were useless. The inquiries disclosed how the government was defrauded by a “Whisky Ring” that evaded millions of dollars in taxes on distilled whisky. The “ring” operated with co-operation from some Treasury officials as well as from President Grant’s private secretary, General Orville E. Babcock.

Another congressional investigation of the Grant administration implicated Secretary of War W. W. Belknap in widespread graft in the assignment of trading posts in the Indian territory. He resigned from office in the face of a threat of impeachment, carrying with him a presidential letter expressing “regret” that he was leaving government. President Grant’s letter of “regret” to a man who had betrayed a trust set a pattern for Presidents for a long time to come. The whole ritual, indeed, has remained the same. First come the accusations, followed by denials of any improprieties. Then comes the effort to hide the records. This is followed by the tardy admission of facts but a denial of illegality, and finally the letter from the President lauding the dishonest public official for his fine service coupled with “regretful” acceptance of his resignation.

The corruption of the Grant administration is considered by many to be the worst blot on the nation’s escutcheon. Republican political figures organized a construction firm, the Crédit Mobilier of America, which was used to divert lavish profits from the building of the Union Pacific Railway. An American diplomatic figure lent his name to a huge mine swindle, Navy contracts were for sale, and there were wholesale frauds in the custom houses.

The widespread scandals of the Grant administration presented no basic problem for Congress in obtaining government records because the key evidence in these cases could be obtained from sources outside the executive branch.

However, a problem did develop in 1876 when the Democratic House sought to obtain testimony and records of financial transactions of Jay Cooke & Company. Jay Cooke & Company was one of the largest financial institutions of the time, and Jay Cooke was close to the Grant administration and Republican party politics. When the House of Representatives discovered that the Secretary of the Treasury had deposited large sums of money with a London branch of Jay Cooke & Company, it sought to determine whether there was some impropriety involved in the decision to make the deposit.

In the course of its investigation, the House issued a subpoena for Hallet Kilbourn, who managed some real estate operations for Jay Cooke & Company. Kilbourn refused to produce the documents sought and argued that the House had no right to investigate private affairs. The House ordered him arrested for contempt.

Kilbourn was imprisoned by House Sergeant at Arms John Thompson. Kilbourn immediately obtained a court order for his release and then sued Thompson for false imprisonment. The U. S. Supreme Court held that Thompson was liable for damages, and in the decision threw a doubt over the right of Congress to punish witnesses for refusing to answer questions or produce records.

The decision upset the long-standing view that the power of Congress to investigate was as broad as the almost limitless power of inquiry of the British Parliament. The U. S. Supreme Court stated:

“We are sure no person can be punished for contumacy as a witness of either House, unless his testimony is required in a matter into which that House has jurisdiction to inquire, and we feel equally sure that neither of these bodies possess the general power of making inquiry into private affairs of the citizen.”

It was not until 1927, when the U. S. Supreme Court decided the case of McGrain v. Daugherty, that the right of Congress to compel testimony was firmly reaffirmed. In the intervening thirty-five years two Presidents successfully resisted the Congress!