Thursday, June 28, 2012

POLITICS: In 1868, a Wild Fraud to Dwarf Today’s Political Sleaze.

Photo from Library of Congress, Prints and Photographs Division.
Thanks again to our friends at the Bloomberg "Echoes" financial history blog for running this item first on June 14, 2012.  Check them out for a great daily history fix.

Do big corporations really control U.S. politicians through money and contributions? Is the system more corrupt today than ever before?



It often seems that way. U.S. corporations spent about $3.32 billion in 2011 to lobby officials in Washington, according to OpenSecrets.org. This, plus billions more in newly liberated campaign contributions and other practices have combined to create a system many describe as “legalized bribery.”


Still, lobbying is protected by the First Amendment and, if anything, decades of reforms designed to increase transparency have made today’s abuses mild by comparison.


How bad was it?


Probably the low point for corporate-influence peddling in the U.S. came in 1868, when the New York state legislature decided a contest over control of the Erie Railroad, then one of America’s premier corporations.


The battle pitted the venerable Cornelius Vanderbilt, the owner of the New York Central Railroad, against Daniel Drew of Erie and his two young proteges, Jay Gould and James Fisk Jr.


Vanderbilt’s goal was simple: With Erie in his pocket, he could control all rail links from New York City to the Great Lakes, an immensely profitable monopoly. But Drew, who had grown rich manipulating Erie stock prices as company treasurer (before insider-trading bans), had no intention to let go.


The so-called Erie War took place during one of the most corrupt periods in American history. Historians call it the “Era of Good Stealings,” the years just after the Civil War when William “Boss” Tweed ruled New York City, Ulysses S. Grant sat in the White House, and scandals -- from the Whiskey Ring to Credit Mobilier to postal frauds to Reconstruction to Indian agent frauds -- all bubbled just beneath the surface. The New York Stock Exchange was an unregulated frontier of booms, busts and manipulations.


The complex contest between Vanderbilt and Drew -- involving bribed judges, stock fraud, dueling injunctions and corporate piracy -- reached its climax in March 1868. Decades before the existence of rules governing tender offers, stock registration, disclosures or other such niceties, all Vanderbilt had to do was buy Erie stock as fast as he could until he owned enough to control the company -- what was known as a “raid.”


But Drew cheated. Tipped off to Vanderbilt’s plan, he secretly authorized and printed thousands of new Erie shares, turning the market into a quicksand pit.


Furious, Vanderbilt responded by finding a friendly New York judge to declare Drew, Gould, and the other Erie directors in contempt, forcing them all to flee across the Hudson River to New Jersey to avoid arrest.


Drew, in turn, responded by sending Gould to Albany to persuade the state Legislature to approve a bill legitimizing the large block of new stock issued to thwart Vanderbilt’s raid. Tweed, as a state senator (among other titles), personally represented Vanderbilt in the fight.


It’s difficult today to conceive the scale of the ensuing contest between Gould and Tweed for the hearts and minds of the state Legislature. Gould brought along a suitcase full of cash and set up shop in Parlor 57 of Albany’s Delavan House hotel, tending bar and doling out largess -- in thousand-dollar bills. Tweed was equally generous. Nobody knows the true totals, but the two men reportedly distributed close to $1 million apiece (worth about $50 million or more today) to Albany lawmakers as they debated the Erie legislation.


It wasn’t just a senator or two they were trying to buy, but the entire statehouse.


The lawmakers, in turn, played both sides for suckers. For years, a group of about 20 assemblymen calling themselves the Black Horse Cavalry had specialized in blackmailing businesses with what they called “strike bills” -- proposed laws designed to cripple businesses that refused to pay bribes. For them, the Erie War would be the richest payday ever. Instead of directly taking sides, most simply bid the two against each other.


One state senator, A.C. Matoon, reportedly took Erie’s side after receiving $15,000 from Gould, switched to Vanderbilt’s after taking $20,000 from Tweed, then supported Erie on the final vote.


“The wealth of Vanderbilt seemed pitted against the Erie treasury,” wrote Charles Francis Adams Jr. in his classic expose, “Chapters of Erie.” At one point, when a Vanderbilt agent arrived from New York with fresh cash, Gould reportedly paid him $70,000 to disappear.


Vanderbilt steamed at the spectacle. “It never pays to kick a skunk,” he said. He then ordered Tweed to cut off the bribes.


The legislators realized their fountain of easy money had run dry. Senators and assemblymen who had demanded a thousand dollars for their vote days earlier now offered their support for a mere hundred. To Adams, the mood among lawmakers was reminiscent “of the dark days of the war when tiding came of some great defeat.”


The legislators passed the Erie bill -- which made the secretly issued Erie stock legitimate and thus secured Drew’s hold on the company -- by a vote of 101 to 6. They had rejected it 83 to 32 when Vanderbilt money was being offered.


Vanderbilt and Drew ultimately settled their battle with a backroom deal that made them both much richer at the expense of Erie stockholders, in effect paying them both “golden parachutes” long before that term became common. At the same time, it left Gould and Fisk in charge of the company -- Gould’s first big step in building one of the great American fortunes.


How does this compare with today’s big corporations attempting to influence Congress on issues close to their pocketbooks? There’s still plenty of money in politics, and plenty of favoritism by politicians toward big donors and high- powered lobbyists. But today the system is far more public and regulated -- even with its flaws and gaps. And sunlight, as Justice Louis D. Brandeis famously told us, is the best disinfectant.


(Kenneth D. Ackerman is the author of four books, including “Boss Tweed: The Corrupt Pol Who Conceived the Soul of Modern New York.” The opinions expressed are his own.)





Thursday, June 21, 2012

NEW SUMMER BOOK: Abraham Lincoln's Convention: Chicago 1860




Scene in the Chicago convention hall at it prepared to nominate Abe Lincoln for president, from Harper's Weekly, May 1860.

Every president is shaped by his nominating convention. Lincoln’s in 1860 not only was one of the most important, but also the most exciting in America up to that point. In a three day, three-ballot carnival of music, fireworks, and politics drawing some 40,000 people, Lincoln and his friends outwitted the leading celebrities of their party, capturing the prize with nerve, ambition, and brass tacks. They played the kind of hardball politics that usually made reformers cringe. Still, it gave us one of the best presidents in American History.



Joe Howard Jr. of the New-York Times, who wrote the article below, was one of the most flomboyant newsmen of the era.  His dogged Civil War reporting sometimes crossed ethical lines even by Nineteenth Century standards.  Still, it was first rate, earning him a national following and a rare by-line.


From Abraham Lincoln's Convention: Chicago 1860:



1. Headline: They nominated who?



The New-York Times, Saturday, May 19, 1860.
By Joe Howard, Jr.


FROM CHICAGO.
-------
THE REPUBLICAN TICKET FOR 1860.
-------
Abram Lincoln, of Illinois, Nominated
For President.
_____
The Late Senatorial Contest in Illinois to be Re-
Fought on a Wider Field.
-------
Disappointment of the Friends of
Mr. Seward
-------
INTENSE EXCITEMENT AND ENTHUSIASM
-------
Special Dispatch to the New-York Times
Chicago, Friday, May 18




The work of the Convention is ended. The youngster who, with raged trousers, used barefoot to drive his father’s oxen and spend his days in splitting rails, has risen to high eminence, and ABRAM LINCOLN, of Illinois, is declared its candidate for President by the National Republican Party.


The result was effected by the change of votes in the Pennsylvania, New-Jersey, Vermont, and Massachusetts delegations.


Mr. SEWARD’s friends assert indignantly, and with a great deal of feeling, that they were grossly deceived and betrayed. The recusanis endeavored to mollify New-York by offering her the Vice-Presidency, and agreeing to support any man she might name, but they declined the position, though they remain firm in the ranks, having moved to make Lincoln’s nomination unanimous. Mr. Seward’s friends feel greatly chagrined and disappointed. [Recunasi is an old word referring to English Roman Catholics in the 1600s who refused allegiance to the Church of England, a crime back then.]
Abraham Lincoln in 1860.

Western pride is gratified by the nomination, which plainly indicated the departure of political supremacy from the Atlantic States. …


Immense enthusiasm exists, and everything here would seem to indicate a spirited and successful canvass. The city is alive with processions, meetings, music, and noisy demonstrations. One hundred guns were fired this evening.


The Convention was the most enthusiastic ever known in the country, and if one were to judge from appearances here, the ticket will sweep the country


Great inquiry has been made this afternoon into the history of Mr. Lincoln. The only evidence that he has a history as yet discovered, is that he had a stump canvass with Mr. Douglas, in which he was beaten. [U.S. Senator Stephen A. Douglas from Illinois was the likely Democratic nominee and Lincoln’s likely chief opponent for President. Lincoln actually had won the popular vote in his 1858 Senate contest against Douglas, but the Democratic Illinois legislature nevertheless awarded the seat to Douglas.] He is not very strong at the west, but is unassailable in his private character.


Many of the delegates went home this evening by the 9 o’clock train. Others leave in the morning…..


Massachusetts delegates, with their brass band, are parading the streets, calling at the various headquarters of the other delegations, serenading and bidding them farewell. “Hurrah for Lincoln and Hamlin – Illinois and Maine!!” is the universal shout, and the sympathy for the bottom dog is the all-pervading sentiment.


The “Wide-Awakes,” numbering about two thousand men, accompanied by thousands of citizens, have a grand torch-light procession. The German Republican Club has another. The office of the Press and Tribune [today’s Chicago Tribune] is brilliantly illuminated, and has a large transparency over the door saying “For President, Honest Old Abe.” A bonfire thirty feet in circumference burns in front of the Tremont House, where thirty-three guns were fired from the top, and illumines the city for miles around. The city is one blaze of illumination. Hotels, stores and private residences, shining with hundreds of patriotic dips. Enough.


--Howard


We hoped you enjoyed this excerpt from Abraham Lincoln's Convention: Chicago 1860.  If you enjoyed it, please consider downloading the full book through Amazon, Nook, or Apple iTunes.

In Abraham Lincoln's Convention: Chicago 1860, we tell the story of Lincoln’s convention primarily through the eyes of newspaper writers, giving it the immediacy of the moment, with annotations, background, and updated formatting.

Thursday, June 7, 2012

BOOKS: Publish Now! -- a June 23 workshop at The Writers Center

Publish Now:  From Manuscript to Book and eBook in the New World of Publishing


At this comprehensive day-long seminar, keynote speaker Justin Branch of Greenleaf Book Group, a nationally known publishing, marketing and distribution company, will share his expertise on the whole publishing landscape and "controlling your publishing experience" for e-books and digital publishing. Other presenters include authors, agents, book marketers and attorneys who will offer guidance on finishing your manuscript, preparing for publication, getting help, marketing your book, understanding copyright and more.



Publish Now! Take Your Writing from Manuscript to Book & ebook in the New World of Digital Publishing


At The Writers Center in Bethesda, Maryland.

Saturday, June 23,  9 a.m. – 5 p.m.


Cost includes networking lunch and closing reception

Topics:

Publishing

“The New World of Publishing” will be led by Justin Branch, a publisher with Greenleaf Book Group, a publishing, marketing and distribution company based in Austin, Texas, whose clients range from well-known brands such as John Gray and Kanye West to debut authors.

Ken Ackerman & Neal Gillen will present “The Non-Traditional Publishing Experience.” Ackerman has authored four published books and founded his own publishing company. Gillen is the author of eight self-published novels.

Writing

“The Story – The Manuscript is Finished – Or is It – What’s Next?”, led by C.M. Mayo, author of The Last Prince of the Mexican Empire, a Library Journal Best Book 2009; Miraculous Air and Sky Over El Nido, winner of the Flannery O'Connor Award for Short Fiction, among many other works. Her presentation will answer the question, How do I know when my manuscript is ready to be published, and whose help do I need to get it there; for example, a private editor, writing coach, or trusted reader?

Marketing

“Developing Your Marketing Plan,” led by Ally Peltier, chief editor, writer and editor of Ambitious Enterprises and Angela Render, owner of Thunderpaw Business Intelligence & Network Systems Management and author of “Marketing for Writers,” will break down what a successful manuscript is and how to design your own program for marketing it. Please call 301-654-8664 to receive student pricing.

Legal/Business

Attorneys Laura Strachan and Cynthia Blake Sanders will demystify copyright, fair use and commercial speech laws, which are changing rapidly in the new world of publishing and help you understand who owns your manuscript.

Click here to find out more.