A history of corruption in the United States

A s a young industrial power, the United States suffered from levels of political corruption commonly associated today with impoverished nations in the developing world. This is among the findings of a new working paper co-written by Harvard Law School Professor Matthew Stephenson ’03 and California State Supreme Court Justice and Stanford Professor Mariano-Florentino Cuellar tentatively titled “Taming Systemic Corruption: The American Experience and its Implications for Contemporary Debates,” which chronicles the history of corruption in the United States between 1865 and 1941.

Stephenson has explored corruption in other countries for many years. Six years ago, he launched “The Global Anticorruption Blog,” which is devoted to promoting analysis and discussion of the problem of corruption around the world. In 2017, he organized a conference at HLS on populist plutocrats to stimulate more systematic and rigorous research on this political phenomenon.

In an interview with Harvard Law Today, Stephenson explained why corruption flourished in the U.S. for so long, how it was largely vanquished by reformers, and why we should be worried about its return.

---

Harvard Law Today: You recently published a new working paper on anticorruption reform in U.S. history. What kinds of corruption was the United States facing during the late 19th and early 20th century, and how systemic was it?

Matthew Stephenson: Corruption was a serious problem in the United States in the late nineteenth and twentieth century. Indeed, one of the things that was so striking to me, as a non-historian who focuses mainly on corruption in the modern developing world, was how much the corruption problem in the U.S. a century and a half ago resembles the systemic corruption we see in modern developing countries. I don’t want to overstate the point. There are also a lot of important differences. But in the U.S. in the late nineteenth and early twentieth century, we find a number of forms of corruption that will be quite familiar to students of contemporary corruption.

First, there’s a lot of corruption associated with political machines, particularly though not exclusively in urban areas. The political machines provide jobs for supporters, who use their positions to generate illicit income for themselves and the party bosses, and mobilize voters to support the candidates backed by the machine. The machines also provide tangible benefits to voters to ensure their support.

Second, while the political machines tended to dominate local governments, the practice of buying and selling public offices, or using government appointments to purchase political support, was widespread at the national level as well. Third, wealthy business interests corrupted politicians to receive favorable treatment by the government, for example by offering legislators bribes, sometimes in the form of company shares or special privileges, to provide special benefits to companies, or to look the other way when private interests were siphoning off taxpayer funds. These sorts of corruption often involved government-supported infrastructure projects, especially railroads, and natural resource extraction.

HLT: In what ways were those challenges similar to or different from challenges facing modern day reformers?

Stephenson: Let me start with the differences, because I want to be sure not to overstate the parallels. First, although the United States in the nineteenth century was in many ways a developing country, it was still a quite wealthy country by the standards of the time. Many modern developing countries that are dealing with systemic corruption are also dealing with extreme poverty.

Second, in addition to its relative affluence, the United States in the late nineteenth and early twentieth century had a couple of other things going for it. For one thing, despite the fact that corruption was pervasive, the United States was never a kleptocracy—we don’t see presidents during this period pillaging the national treasury or personally taking bribes. Plenty of presidents looked the other way, or tolerated and to some degree protected a corrupt system, but we don’t see the kind of kleptocratic leadership that some modern developing countries are struggling to dislodge. For another thing, at least at the federal level, the institutions of justice—courts and prosecutors—seemed relatively clean and basically functional. I don’t want to overstate that; there were certainly problems. But many modern developing countries are trying to get endemic corruption under control in systems where the institutions of justice are themselves pervasively corrupted. That problem was not as severe in the U.S. Corruption of the justice system did sometimes occur at the state and local level, but the federal government was able to step in when that occurred, particularly in the latter half of the twentieth century.

Having highlighted those important differences, let me now emphasize some of the similarities with respect to the challenges. First, as I noted above, the U.S. in the late nineteenth and early twentieth century confronted the challenge of rooting out systemic corruption, where such corruption was not only widespread, but deeply enmeshed with the operation of the political system. Corruption wasn’t just a form of aberrational behavior; it was how business got done.

Second, in contrast to many of the other wealthy Western countries that have done a decent job getting corruption under control, the U.S. was a political democracy—a raucous and vibrant one—before the country embarked on significant good government reforms. So, it’s not like a single leader or a small ruling elite could push through a set of governance reforms, along the lines of what happened in Sweden or Denmark when those countries were both monarchies, or what Lee Kwan Yew’s government did in Singapore in the 1950s and 1960s. In that sense, the challenges facing anticorruption reformers in large modern democracies like India and Brazil and Nigeria may bear a closer resemblance to the United States 150 years go than to the situation facing some of the popular examples of modern anticorruption “success stories” like Singapore and Hong Kong.

HLT: What turned the tide? How did the process of anticorruption reform unfold over time in the U.S.? How did the U.S. become less corrupt?

Stephenson: Perhaps the biggest lesson that my coauthor and I drew from our examination of U.S. history is that there wasn’t a single turning point. The fight against corruption in the U.S. was a long slow slog, one that unfolded over generations—and of course it still isn’t over. That in itself is an important observation, because sometimes people can become cynical or fatalistic about the corruption problem, and think that there’s nothing that can be done, and can conclude too quickly that this or that reform has been ineffective. At the same time, some leading scholars have suggested that when corruption is deeply entrenched in a society, the only way to effect meaningful change is through a “big bang” approach—a massive, transformative set of reforms, generally driven by a visionary leader. But the U.S. doesn’t fit that model.

Take civil service reform, which was one of the most significant measures adopted during this period. A federal civil service reform bill was introduced shortly after the Civil War, and it went nowhere. It took close to two decades of lobbying before Congress finally passed the first significant civil service reform measure, the Pendleton Act, in 1883. The Pendleton Act created what we call the “merit system,” as opposed to the “spoils system,” for appointing and promoting civil servants. But the Pendleton Act covered only a fairly small percentage of the federal civil service, and didn’t cover the states at all. But the so-called merit system continued to expand, in fits and starts, over the next several decades, until by the start of World War II roughly 90% of federal civilian employees had civil service protections, and the states had adopted their own similar laws. We see the same sort of long, drawn out pattern when it comes to enacting and enforcing criminal laws against bribery and embezzlement. It’s not like there’s one massive crackdown or campaign that you can point to and say, “Aha, that was the turning point.” The laws get strengthened over time, prosecutors start bringing cases, and gradually the de facto impunity of senior officials starts to erode.

So, what explains the change? What political and social factors were at work? Anything I say on this is necessarily speculative, but our survey of the history suggests a few factors. First, the press played a significant role, especially the so-called muckrakers. And there’s some research suggesting that technological changes in the media industry—things like the declining price of newsprint—altered the economics of the media industry, leading to more competition for readers and more coverage of corruption scandals. Second, citizen activists—what we would today call “civil society”—played an important role.

Third, there appears to be an intriguing relationship between the move for cleaner government and a general growth in the size and power of the government, especially the federal government, during this period. Lots of people believe that larger governments tend to be more corrupt, and indeed in the early nineteenth century, it does seem that the expansion of the government’s role in the economy, through things like issuing corporate charters and supporting infrastructure improvements, fueled a surge in public corruption. But the period from the late nineteenth through the mid-twentieth century was a period of a substantial expansion of federal government size and power, and this was also the period when we see the most progress in reducing corruption. Now, if you look at modern cross-country comparisons, this is perhaps not that surprising. It turns out that larger governments—where government size is typically measured as government spending or revenue as a percentage of GDP—tend to be perceived as significantly less corrupt, all else equal.

The reasons aren’t totally clear, but we have some educated guesses. First, citizens tend to be more aggressive about monitoring the government when it’s bigger and more active, and when citizens are both taxed more heavily and rely more on government for various services. Second, the growth of government was due in significant part to the expansion of the public safety net, which may have undermined the functions of the traditional political machines. Larger governments may also be more bureaucratized and professionalized. Again, this is all speculation, but it does seem that the story of the U.S. government over the course of the late nineteenth and early twentieth century is a government becoming both larger and cleaner, more or less in tandem.

HLT: How corrupt is the U.S. today, and how does it compare with other nations and societies?

Stephenson: It’s hard to say, both because we lack objective measures and because of longstanding debates about the meaning of “corruption.” After all, certain practices related to lobbying and campaign finance that other countries would consider corrupt are, in the U.S., not only permitted but constitutionally protected. But let me try to answer your question on the assumption that we’re talking about what we might call “traditional” or “black” corruption: bribery, embezzlement, and the like. This sort of corruption still exists in the United States. The Department of Justice has an entire division focused on so-called public integrity offenses. But on the whole, if we’re focusing on those forms of corruption, the U.S. is much less corrupt than it used to be, and on the whole less corrupt than many other countries. I’ve never had a police officer ask me for a bribe, nor have I heard of this happening to anyone I know in the U.S. I was able to get my telephone service hooked up without having to pay a bribe. In many parts of the world, that sort of corruption is commonplace. And notwithstanding serious concerns about the Trump administration and its flagrant disregard for ethical norms, the U.S. hasn’t faced the sort of blatant kleptocracy found in places like Equatorial Guinea. Don’t get me wrong: The U.S. still has a corruption problem, and it’s one that we need to take seriously. We’re by no means the world leader in clean government. But the situation is not nearly as bad as it used to be, and not nearly as bad as it is elsewhere in the world.

HLT: What might modern-day reformers take away from the rise, fall, and rise again of corruption in the U.S.? Are there effective strategies for creating structural reform or countering systemic corruption? What doesn’t work?

Stephenson:  It’s always hazardous to draw facile “lessons” from historical examples, given all the differences in context. The most important lessons I’d emphasize for modern reformers from the U.S. experience are some of the broader themes I mentioned above: Reform takes time, it’s a long process, and we shouldn’t assume that countries beset with systemic corruption can never escape, or that corruption is somehow an immutable part of the national culture or psyche. If I were to try to get a bit more specific, I’d maybe highlight a few elements of the U.S. struggle against corruption in the late nineteenth and early twentieth century that appear to have been important; civil service reform and other anti-patronage measures, coupled with a more general professionalization of government; a strong and independent press; independent and effective institutions of justice, including courts and prosecutors; transparency, especially with respect to things like public budgets; a strong social safety net and other measures to displace the social functions that corrupt organizations often perform.

HLT: Since May 2017, the Global Anticorruption Blog has been tracking and cataloguing what it describes as credible allegations that the current administration and close associates have been corruptly, and possibly illegally, leveraging the power of the presidency to enrich themselves. What do you think the tracking has revealed? What patterns have you seen? What are some key takeaways?

Stephenson: Perhaps the biggest takeaway here is just how flagrantly the Trump administration, and President Trump and his family in particular, disregard traditional norms regarding the separation of public and private functions. Again, most of my scholarly work on corruption has focused on other countries, mainly developing or transition countries, and it’s really striking and troubling how much the Trump family, and Trump administration, resembles these corrupt leaders we’ve seen in places like Thailand and the Philippines and South Africa. Perhaps the biggest takeaway for me—and this is hardly an original insight—is the extent to which the U.S. system has traditionally relied on informal norms, rather than formal laws and regulations, to curb this kind of conduct. There has been, traditionally, a sense that certain things “just aren’t done,” but Trump does them. And even where there are laws designed to address some of these forms of corruption or conflict of interest, those laws have not proven terribly effective. Activists sued President Trump for his violations of the Constitution’s Emoluments Clause within a few weeks after Trump took office. Those cases are still wending their way through the courts. It’s not clear who will prevail on the merits, but the larger point is that it’s been nearly four years without a resolution, so it’s almost beside the point. I’m not sure what can be done about this; there are certainly drawbacks to imposing a lot of strict regulations on the President. But I certainly think that one of the troubling things we’ve learned from this administration is that we in the United States are not as immune to these sorts of corruption as we had perhaps thought. Yes, things are better than they were 150 years ago in most respects. But I’m not sure we’ve ever had a President who was as cavalier in his disregard of ethical boundaries, and as personally greedy and venal, as the current president. It’s not clear that our legal or political system is able to handle that sort of leader, and that worries me.

Related Video

Corruption and Anticorruption: A talk by Professor Matthew Stephenson

On October 30, 2019, in celebration of his appointment as the Eli Goldston Professor of Law, Matthew Stephenson ’03 gave a talk titled “Corruption and Anticorruption,” a primary focus of his research and scholarship at Harvard Law School.