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Business NOT as Usual

On May 26, 1877 President Hayes wrote the following to Treasury Secretary John Sherman:  “I have read the partial report of the commission appointed to examine the New York custom-house. I concur with the commission in their recommendations.”  This was in regard to the Jay Commission.

Hayes continued:  “It is my wish that the collection of the revenues should be free from partisan control, and organized on a strictly business basis, with the same guaranties for efficiency and fidelity in the selection of the chief and subordinate officers that would be required by a prudent merchant. Party leaders should have no more influence in appointments than other equally respectable citizens.”

Not only that, but federal employees would now be held to a new standard.  “No assessments for political purposes on officers or subordinates should be allowed. No useless officer or employee should be retained. No officer should be required or permitted to take part in the management of political organizations, caucuses, conventions, or election campaigns. Their right to vote and to express their views on public questions, either orally or through the press, is not denied, provided it does not interfere with the discharge of their official duties.”

Hayes referred to this letter when he issued an executive order on June 22, 1877.  This was a big change from the way the New York Customhouse had operated in the past.  Chester Arthur was still Collector, but his ability to operate under the direction of political boss Roscoe Conkling was now greatly hindered.

 

 

 

 

 

Able, Honest, and Thrifty

Chester Arthur was a loyal Yankee.  He had been born in Vermont and lived most of his early life there and in the state of New York.  During the Civil War he served with the New York State militia, receiving the rank of brigadier general a few months before Fort Sumter.  The following year he became inspector general and then quartermaster general.

Governor Edwin D. Morgan later said of Arthur: “During the first two years of the Rebellion he was my chief reliance in the duties of equipping and transporting troops and munitions of war.  In the position of Quarter Master General he displayed not only great executive ability and unbending integrity, but great knowledge of Army Regulations.”  The Governor added one more commendation: “He can say No (which is important) without giving offense.”

These remarks by Governor Morgan, sent to President Grant long after Arthur’s military service, probably gave Grant confidence that Arthur was the right man to be appointed Collector of the Port of New York.  Perhaps Grant even knew that Arthur had saved the government $43,174.13 by his wise management of taxpayer funds during the Civil War.  Surely here was a paragon of Yankee virtue.

But the Arthur who had been the able, honest, and thrifty quartermaster general during the 1860’s had in the 1870’s devolved into one of Senator Roscoe Conkling’s lieutenants.  Conkling was the leader of the Stalwart faction of the Republican Party, and neither Conkling nor Arthur wanted the kind of civil service reform that was coming.

 

 

 

 

The Teacher Who Survived the Pandemic

During the first half of the 19th century cholera pandemics spread across the world.  There had been a brief pandemic episode in the United States during the early 1830s.  Cholera reappeared in December 1848.  By midyear 1849 it had given former President James Knox Polk the shortest of all presidential retirements, at least that’s what some people believe. It most definitely killed the 18-month-old son of soon to be famous Harriet Beecher Stowe.  President Taylor proclaimed Friday August 3 a day of prayer and fasting.  The dreaded illness had hit St. Louis hard, but Cleveland, with only two or three victims per day during the month of August, was spared the worst.

In August 1849 James Garfield was a student in Chester, Ohio.  It would be only a matter of time before the people there would be affected by the pandemic.  When teacher John Beach and several students were suddenly taken ill in mid-September, Garfield wrote in his diary that there was “great excitement.”

John Beach had an important early influence on James Garfield.  Although Garfield always displayed respect for his teachers, he would sometimes criticize them to his diary.  As many of his teachers were also Bible preachers, their sermons afforded many occasions for Garfield to nitpick.  John Beach’s sermons not only received no criticism but also considerable praise from Garfield’s pen.

On one occasion there was a rowdy episode at school which prompted Beach to give a lecture regarding gentlemanly behavior.  Because of that lecture Garfield became convicted that he was not living up to his full potential.  If it had not been for John Beach, the teacher who survived the cholera pandemic of 1849, James Garfield might never have become President of the United States.

 

Hatchets and Bones

Although the 18th President, working with the 43rd Congress, tried to reform the New York Customhouse, the 19th President sought further reforms.  Whereas in 1874 President Grant signed legislation to end the moiety system, in 1877 President Hayes asked his Treasury Secretary to more thoroughly investigate the Customhouse.  This time they discovered a tremendous amount of inefficiency and downright corruption.

The Customhouse had many more employees than necessary.  Various witnesses testified that staff could easily be cut by 10 to 20 percent with no diminution of services.  One of the assistant collectors actually had nothing to do.

Many of the workers had been hired for political reasons.  One witness testified that “men are frequently sent to me without brains enough to do the work.”  Another reported gross mislabeling of invoice items.  There were many cases of laziness.  Some were even moonlighting as notaries public during business hours!

Among the corrupt activities was the practice of receiving “hatchets” and “bones.”  A “hatchet” was money received by inspectors from merchants who wanted special treatment for their imports.  “Bones” were bribes paid by passengers so their baggage wasn’t inspected.  By these devices many goods entered the country duty free.

Despite these and other irregularities President Hayes did not remove Chester Arthur from the Collectorship.  Instead, he imposed new standards that Arthur was to implement at the Customhouse.  On June 22, 1877, just 110 days into his Presidency, Hayes issued an Executive Order barring Federal employees from participating in political activities and preventing the termination of employees for political reasons.

By the end of summer this action by President Hayes would become a big problem for Chester Arthur.

 

 

 

 

 

Moiety

During most of the 19th century, when fines were assessed against those who tried to evade duties and customs, half would go to the Federal Treasury.  The other half would be split among the informant, who would get one-quarter of the total; and the collector, the naval officer, and the surveyor, who shared the remaining quarter.  Moiety, pronounced MOY-uh-tee, means “half,” and the bigger the whole, the bigger the half.  Until 1874 the fine could even equal the value of the entire shipment.

The moiety system was based on a 1789 law which was designed to increase revenues to the Treasury.  No one had anticipated the excesses which eventually resulted.  In 1872 Collector Chester Arthur notified the Phelps Dodge Corporation they were going to be fined $1,750,000.  The company negotiated the fine down to around $271,000 and paid this lesser amount.  Arthur received one-twelfth, which was equal to more than twenty times the annual income of the highest paid wage earners of that era.  As if this were not outrageous enough, it was later discovered that the total undervaluation amounted to $6,658.78, and the actual loss to the Treasury would have been only $1,664.68!

Congress did away with the moiety system in 1874.  Even Senator Conkling, the Republican boss of New York, voted for the bill which abolished it.  President Grant signed the bill into law.  Here was genuine reform that everyone supported.

Fast forward to 1877:  Rutherford Hayes is President, and Treasury Secretary John Sherman establishes the Jay Commission to further investigate the New York Customhouse.  What more were they expecting to discover?

 

The Jay Commission

In the 19th century the Collector of the Port of New York served at the pleasure of the U.S. President.  When Rutherford Hayes took office in 1877, Chester Arthur had been the Collector for several years, having been appointed by President Grant.  Arthur was also one of Senator Roscoe Conkling’s political operatives.

Less than six weeks after inauguration Hayes asked Treasury Secretary John Sherman to investigate the Baltimore, Boston, Philadelphia, New Orleans, New York, and San Francisco customhouses.  Because of the disputed 1876 election Hayes would not be a good candidate to succeed himself in 1880.  Sherman wanted to run for President and did not want to alienate the Conkling wing of the Party.  He tried to convince Hayes to go easy on the New York Customhouse, but Hayes was insistent.  Besides, Hayes was offended that Conkling referred to him as “Rutherfraud” B. Hayes.

Sherman devised a plan where Arthur would have some say in how the investigation proceeded.  The investigating commission would be comprised of two private citizens and one government official.  Arthur would participate in selecting one of the private citizens.

Arthur chose Lawrence Turnure.  Sherman chose John Jay, grandson and namesake of the first Chief Justice, with Arthur’s concurrence.  Finally, Sherman chose Assistant Solicitor of the Treasury J. H. Robinson.  Again Arthur seemed satisfied, even pleased with Sherman’s choice.

The Jay Commission also had political and social balance.  Jay and Turnure were wealthy businessmen with sterling reputations.  Robinson was very knowledgeable in customs management.  Jay was a Liberal Republican, Turnure a Democrat, and Robinson a member of the Hayes Administration.

As the Jay Commission began its work Arthur had no complaints about its makeup.  Unfortunately for him, the New York Customhouse was so corrupt that Arthur was bound to be displeased with the Commission’s reports.

 

 

The Hayes Cabinet

In 1877 there were only seven Cabinet level departments.  A prominent former Senator from Missouri, someone who had been a general in the Union Army, was named Secretary of the Interior.  President Hayes appointed a former Confederate colonel, someone who had supported his Democratic opponent, as Postmaster General.  His Navy Secretary was a Virginian.  His Attorney General was from Massachusetts, the Secretary of War was from Iowa, and the Treasury Secretary was from Ohio.  To ensure geographical balance Hayes needed a Secretary of State from New York.

Roscoe Conkling, the Republican boss of New York state, was only too happy to advise the President regarding his Cabinet selections, especially Secretary of State.  Conkling recommended former Congressman Tom Platt, but Hayes chose former Attorney General William Evarts, someone Conkling despised.

Conkling had been a U.S. Senator for ten years.  During the previous eight years President Grant had consulted with Conkling regarding Federal appointments of people from New York.  There was no law which directed Grant to do this, but there was a strong tradition of courtesy shown to the Senators of each state.  Conkling expected Hayes to follow the tradition, but Hayes viewed Senatorial courtesy as a hindrance to genuine government reform.

So Hayes chose Evarts.  It was not simply a choice made without consultation.  It was a poke in Conkling’s eye!  Evarts was not merely an intrastate rival, but someone, according to Conkling, “whose record as a Republican has been more than doubtful.”

Hayes owed Conkling no favors.  After the disputed election of 1876 Conkling did nothing to support Hayes.  Meanwhile, Hayes had an even bigger surprise in store for Conkling.