Profits are
transferred
to the owner direct or to the "shell" company, which cashes checks and turns money over to the true owner.
Lundberg - The-Rich-and-the-Super-Rich-by-Ferdinand-Lundberg
They will be so held until he no longer holds federal office.
Yet, he held high federal office before the creation of this trusteeship, which has the sole effect of placing the properties under the management of nominees.
It does not represent a divorce.
Knowing he is the beneficiary under this trusteeship, is the president's mind so free of property influence that he is likely to come out for, say, strict government regulation of television advertising or the end of tax-free oil? Is he likely to agree with Kennedy appointee Newton Minow that television is a "wasteland"?
Said the New York Times editorially on September 25, 1964, about this arrangement:
The property has been placed in trust while the President is in office, and Mr. Johnson will unquestionably take special pains to avoid any charge of improper influence over the F. C. C. But a conflict of interest remains as long as the nation's chief officeholder possesses a stake, direct or indirect, in a property he is charged with regulating.
This property was acquired when Mr. Johnson was in Congress. He was doing what many other Congressmen . . . have done. There is, unfortunately, no law against Congressmen owning television and radio facilities or having a financial interest in other franchises or businesses that are either regulated by Federal agencies or dependent on Government contracts. But the very fact that Mr. Johnson set up a trust when he assumed the Presidency indicates that ownership of Government-regulated business suggests a conflict--for members of Congress as well as for the occupant of the White House.
The Times suggested "divestiture" of the property as a way out, without suggesting the nature of such legerdemain. If it were sold the president would realize a handsome
profit. If it were given away for charity it would defeat the intended purpose from the beginning.
The insight given by the Johnson financial statement, as far as it went, into the affairs of a big Establishmentarian and career politician who thirty years before was as poor as the proverbial church mouse enabled reflective observers to see where rhetoric leaves off and substance begins in the thinking of the Establishment. The energy devoted to putting together from scratch and sheltering these properties should be some guide to personal motivation. What was disclosed bore none of the earmarks of a part-time hobby.
What is even more strange is that even as president Mr. Johnson has continued large- scale land and cattle purchases through agents, paralleling value-bringing state highway and bridge-building projects, according to the New York Times in an extensive report of December 26, 1966 (23:2-3). This report of total holdings more recently of 14,000 acres in five separate ranches led Washington wits to say that Mr. Johnson has been the biggest real estate operator as president of the United States since President Jefferson's "Louisiana Purchase. "
Despite his single-handed involvement of the United States in a big Asiatic land war, long held by the Chiefs of Staff as something to be avoided at all costs, Mr. Johnson is nevertheless hailed by many as the architect of "The Great Society," an apparition that is due to materialize no doubt at about the same time as grass-roots communism appears in Russia and the Soviet state "withers away. " just how much stock one should take in the Great Society fantasy was suggested at the annual get-together of the American Political Science Association in 1965, as reported by the New York Times:
Although a high proportion of them unquestionably voted for Mr. Johnson last fall, the comments of the political scientists indicated a shocking skepticism about Washington's earnest belief that this President has introduced--through his Great Society programs, his style of vigorous personal leadership and his invocation of the virtues of one "great big party"--a dramatic new element in American politics.
Nelson Polsby of Wesleyan University captured the prevailing view when he remarked:
"There's nothing new about all this. All you really have is a swollen Congressional majority, that Barry Goldwater handed the Democrats, passing programs that have been kicking around since New Deal and Fair Deal days. "
A colleague from Wesleyan, Clement E. Vose, compounded the heresy, saying that the Johnson record "is not one of innovation, but of ratification of ideas that have been germinating since the time of Henry Wallace. " 56
So much for "The Great Society. "
Other Political Horatio Algers
Before closing the books on the Horatio Algers in politics, some further nuggets from the valuable Herald Tribune series, Put together by ace reporter Dom Bonafede, should be exhibited:
"Civic participation" by applicants is one of the yardsticks used by the Federal Communications Commission in granting TV licenses, and being a congressman is interpreted as "civic participation" given weight in licensing--a doctrine that Democratic Senator William J. Proxmire of Wisconsin called "an amazing proposition. " 57
Representative William E. Miller, Republican candidate for vice president in 1964, was on the payroll of the Lockport Felt Company while in Congress, where he had
"openly promoted legislation favorable to the company on the floor. " He was made a vice president of the company two weeks after leaving Congress. 58
Senators Spessard Holland and George Smathers of Florida and B. Everett Jordan and Samuel J. Ervin, Jr. , of North Carolina were co-sponsors of a bill in which the Florida Power and Light Company was "the prime mover" to exempt from federal regulation private utilities not directly linked with outof-state transmission networks. 59
Until he recently sold the bulk of his holdings, Sen. Warren G. Magnuson, D. , Wash. , the Commerce Committee chairman, was part owner of a Seattle broadcasting station. One of the committee's functions is to oversee operations of the FCC.
Sen. John L. McClellan, D. , Ark. , the famed rackets-buster, is chairman of the subcommittee investigating the Federal banking system, even though he is a bank director in private life. Another subcommittee member, Sen. Sam J. Ervin, D. , N. C. , also holds a bank directorship.
Rep. William C. Cramer, R. , Fla. , spoke against the Administration's war [sic! ] on poverty almost from the program's inception. But his protests appear to have been muted ever since a laundry service he heads in St. Petersburg was awarded a contract with Women's job Corps. 60
Although the Corrupt Practices Act of 1925 requires congressmen to report campaign contributions and expenditures, limiting what can be spent to $5,000 for representatives and $25,000 for senators, large numbers of members of both Houses report "none" on the required forms after each election. 61
Yet carloads of money are nevertheless spent, or at least collected, in congressional campaigns. Only $18. 5 million was formally reported as collected for the 1962 "off year" campaigns, but an expertly estimated $100 million was collected. 62
Political money is really tossed about in a large way.
"Newly elected Rep. Richard L. Ottinger, D. , N. Y. , a multi-millionaire in private life, spent almost $200,000 through 34 committees to win his seat. Yet, his campaign report lists expenditures of $4,500 and no contributions. " 63
Although there are criminal penalties prescribed for negligent failure to file a report or to file a false report, there has never been a prosecution under the Act of 1925.
"Ingenious methods of raising campaign funds are developed. . . . Card games are held in which a portion of the pot from each hand is set aside for a campaign committee. For many years, Rep. Michael J. Kirwan, of Ohio, House Democratic Campaign Committee Chairman, staged a St. Patrick's Day party for the purpose of soliciting campaign funds. " 64
Cocktail parties are a standard fixture where lobbyists are panhandled for handouts to support democracy. One lobbyist told the Herald Tribune that it usually cost him $100 for a single drink "and a "cold shrimp on a toothpick," which was perhaps cheap.
A generally favored swindle is to run $100- to $1,000-a-plate testimonial dinners, production cost about $10 apiece, and to send twenty-five to a hundred tickets to various corporate people, who generally grab them like manna and distribute them to the office help. If the corporate boys fail to remit they suspect an undeserved demerit may be entered against their names in some little black book.
While a direct gift of money in excess of $3,000, except (as the courts have percipiently ruled) expensive presents to a lady friend, are subject to tax, a gift in recognition of "public service' is not so taxable. Although such gifts are not lavished on low-paid scientists, artists, military officers and profound cogitators, who may be
supposed to have rendered some public service, they are rife in the case of officials, especially congressmen. It is not necessary to pass them money in some back alley. What is done is to stage a glittering public affair, with hundreds of well-heeled customers present, and to present the modest recipient with a large certified check as the cameras flash the scene for posterity. What results are photographs reminiscent of Renaissance paintings titled "Adoration of the Infanta. " Diners leave with the vague semi-alcoholic feeling that they have participated in a religious ceremony, have at least paid homage to a glorious Republic once sadly betrayed by wicked, wicked, wicked Benedict Arnold.
Lest any strait-laced, dyspeptic methodologist charge that I am drawing my data from only two sources which, although highly orthodox, could be wrong or wrong-headed, let the future historian know that among many other sources on congressional skulduggery there are the nationally syndicated Washington columns of Drew Pearson, a practitioner of the journalistic craft for more than forty years.
Not only do we encounter many members of the cast we already are familiar with in the Pearson columns but a host of new names ooze into view week after week.
"Any pressure group that is rich and powerful enough can find a champion in Everett Dirksen," said Pearson. "It is his conviction that the special interests are entitled to a voice in the Senate. His office has been headquarters for almost every major group--the drug industry, gas and oil combine, food packagers, etc. --that has had a legislative problem.
"To no one's particular surprise, Dirksen's law firm in faraway Peoria, Ill. , has collected retainers from many a giant corporation whose interests the Senator has served in Washington. " 65
A few other nuggets from the Pearson columns--the nuggets alone would fill a book-- are as follows:
Representative William H. Harsha, Jr. , Republican of Ohio, has been a strong opponent of the Federal Mass Transportation Act, designed to develop rail and commuter services for clogged cities. His law firm represents the Greyhound Bus Lines. The congressman favors limiting imports of residual fuel oil. His firm represents Phillips Petroleum and Ashland Refining Company. 66
Representative Charles Chamberlain, Republican of Michigan, introduced a bill to repeal the manufacturers' excise tax on cars and trucks. His law firm represented the United Trucking Service and the Detroit Automobile Inter-Insurance Exchange as well as the Panhandle Eastern Pipeline Company of Texas, which like other companies appears to make use of many congressional law firms. 67
In the 1940's Representative Victor Wickersham, Democrat of Oklahoma, asserting "I am a poor man," advocated increased congressional salaries. Despite still moderate congressional salaries, he was more recently set on getting back into office. In an application filed with the Federal Communications Commission to buy radio station KREK in Sapulpa, he stated his current net worth at $1,579,789, placing him among some 90,000 millionaires. Pearson traced various typical flourishes in the financial efflorescence of Wickersham over the years. 68
Upon the impending retirement of Representative Oren Harris, chairman of the House Commerce Committee, to accept a presidential appointment as a United States judge, Pearson noted that Harris was a stockholder in Station KRBB of El Dorado, Arkansas, and as a close associate of Ham Moses of the Arkansas Power and Light Company "had introduced more special-interest legislation than any member of Congress. "
Because of the inability to find a suitable replacement for Harris, said Pearson, the lobbyists asked Senator McClellan to intervene and hold up at the White House Harris's appointment for the stated reason of a "ticklish" election in Arkansas. The president obliged.
"This will help Madison Avenue, but it puts the President in a bad light in regard to his family radio-TV property in Texas. He has claimed that he has kept aloof from influencing the Federal Communications Commission; but now he continues in power the congressional chairman who has slapped down the commission on behalf of the big networks.
"Note--It's significant that Mr. Johnson has been very chummy with the big networks, as witness the repeated White House dinner invitations to network executives. . . . " 69
How it may work out when anyone drives a high-placed official into a tight corner was shown in the case of Senator Thomas J. Dodd of Connecticut, as reported by Pearson. The FBI had been informed of documentary data in Pearson's hands and photographed and rephotographed it.
[Pearson's subaltern had] been working with half a dozen prospective witnesses, all former Dodd employees. . . . These were young people who had been shocked at what was happening in Dodd's office and departed. They felt under moral obligation to report what was happening.
The G-men called on the witnesses all right, but didn't ask a single question about Dodd, his conduct, whether he had diverted funds from testimonial dinners to his own pocket or whether he had acted on behalf of an agent for a foreign power, Gen. Julius Klein.
Instead, the FBI crossexamined these young people about the alleged theft of Dodd's documents. They also heckled them about other stories Jack Anderson and I had written.
As fast as the FBI discovered the identity of the witnesses, they were bullied and badgered, hounded and harassed. One lost his job on a House committee; the news of his dismissal came from Dodd's office. Another . . . since submitting his resignation . . . has been unable to find another job. Others have had their jobs threatened. One woman, seven months pregnant, was grilled by agents for three hours.
Agents hauled some witnesses right into Dodd's office for cross-examination and behaved as if they were working for the Senator. Other witnesses were alternatively soft-soaped and threatened with Federal prosecution.
I have been around Washington a long time, but have never seen such an example of police state operation.
Such investigations, of course, do not happen by accident. They usually go beyond the Attorney General, Mr. Katzenbach, an awfully nice guy but a bit wishy-washy when it comes to standing up to the White House or the Senate Judiciary Committee, of which Tom Dodd is a member.
Such investigations usually go right up to the President himself. Johnson has on his desk a direct private phone to J. Edgar Hoover. They are very old friends, dating back to the days when I used to visit in Johnson's home when he was a gawky young Congressman from Texas living just across the street from Hoover's well-appointed bachelor abode.
Johnson is not only a friend of Hoover's but he is a friend of Dodd's. It takes a real friend to make the two trips he made to Connecticut to speak at testimonial dinners which raised $100,000 for Tom's personal bank account.
Johnson did all right for Tom. He hoisted him to a choice position on the Senate Foreign Relations Committee, ahead of other Senators, a vantage point from which he was able to work more effectively for Gen. Klein. And he almost picked Tom to run with him for Vice President. 70
While much more along the same line could be cited it is time to close the books on this phase of our quest for enlightenment. Suffice it to say that a majority of members in both Houses are tainted with what is euphemistically known as a "conflict of interest. " There is, however, as readily seen, really no conflict of interest involved. The line of interest is clearcut and unambiguously pointed in one direction--to personal nest- feathering at public expense. Nor are only overt Establishment people involved. Democratic Senator Thomas Dodd was never a recognized Establishment man, perhaps one reason he was made an object of gingerly inquiry by the Senate for actions little different from those of others except that he involved himself with a registered agent of unholy foreign interests and stepped into delicate areas subject to foreign policy and the jurisdiction of the Foreign Relations Committee under vigilant Chairman J. William Fulbright.
But where is the line to be drawn on congressional self-dealing? What difference does it make whether the havoc caused is international or domestic?
Some fairly feeble solutions have been proposed for this parasitism at the heart of the political system. One is that congressmen be required to disclose their personal financial holdings so that the public may evaluate their votes, thus determining whether they are cast on the merits of a case or for personal Profit. This proposal has been supported by Senators Clark, Wayne Morse, Paul Douglas, Clifford Case, Jacob Javits, Kenneth Keating, Maurine Neuberger and others--all non-Establishmentarians In the House it was supported by Edith Green, Ogden Reid and John V. Lindsay. Senators Clark, Hugh Scott of Pennsylvania, Stephen Young of Ohio, William Proxmire of Wisconsin, Morse of Oregon and Mike Mansfield of Montana have voluntarily disclosed their personal financial holdings and Paul Douglas rendered an annual public account of his income and expenditures. They have had few emulators.
Senator Dirksen predictably objected to the proposed law on the clownish ground that it would be "an invasion of privacy" and would make him a "second-class citizen" into whose private affairs every vagrant Peeping Tom could penetrate.
Apart from the fact that the Establishment, as a sovereign force effectively unchecked by any knowledgeable electorate, will never enact such a measure, if it did who would enforce it?
Hidden Holdings
Again, if congressmen disclosed their holdings, such disclosure would not portend much even if it was made annually. For the source of the poor-boy congressman's original stake consists in most cases obviously of under-the-counter gifts, ambiguous campaign contributions, legal retainers, public testimonial awards and benevolent bank loans. And all such, if subject to disclosure, could be kept in the names of wives, parents, daughters, sons, cousins and the like.
Actually, any man may have vast holdings with nothing set down anywhere in his name. A man can own a million shares in a big corporation without his name ever appearing on the books. The stock can be held by obscure paid nominees who have signed, in blank, stock transfer certificates allocating these shares to whoever holds and fills in the certificates.
Any person interested in concealing assets can do even better than this, as we are reminded by that old reliable, the Wall Street Journal, of recent decades a most
informative newspaper. Money can be transferred to one's own neutrally named holding company, a "shell" company, in any one of a number of places--Lichtenstein, Luxembourg, Panama, the Bahamas--and deposited in a numbered Swiss bank account, the owner of which the bankers are forbidden by strict Swiss law to disclose. The Swiss bank, conducting all operations in its own name, can buy or sell securities, realty or other titles in any market without anyone knowing for whom it acts.
Profits are transferred to the owner direct or to the "shell" company, which cashes checks and turns money over to the true owner. The "shell" is in charge of low-paid employees, glad to perform this less than onerous occasional service. The money, if wanted in the United States, is simply carried home in one's wallet or is brought back by couriers.
This method, as a device for evading American income, capital gains and inheritance taxes, is already used by many American business and professional men, Las Vegas gamblers, racketeers, some millionaires and owners of at least 10 per cent of some corporations' shares among executives, according to the Wall Street Journal. It estimates that hundreds of millions of dollars are so involved, perhaps billions . 71
The stacking away of tax-shy assets abroad is not confined to marginal elements. As the New York Times informs in a special dispatch from Luxembourg: 72
Along the Grande Rue and the Boulevard Royal, companies like du Pont Europa Holdings and Amoco Oil Holdings have nestled their "sie`ges sociales" (head offices) in filing cabinets next to 2,000 other Luxembourg holding companies.
With a few exceptions, the head office is the street address of a bank or a law firm. The lawyer or the banker may be a director of more corporations than are most captains of industry anywhere.
Some Luxembourg holding companies date back to 1929, when Parliament passed a law making it easy and inexpensive for them to be established and kept here. Not a few were or are facades for family businesses in nearby countries, shells to make possible the investment of income hidden from the tax collector.
Since this is not such an easy contrivance anymore, the reasons for setting up Luxembourg holding companies nowadays are likely to stem primarily from difficulties in carrying on essential business operations elsewhere.
This indeed has been the basis for the recent stir of holding-company activity by American corporate giants in this quiet, 999-square-mile Grand Duchy. With direct dollar sources of capital restricted by the American balance-of-payments restraints, Luxembourg has become a strategic base for raising needed investment capital in Europe.
Apart from basic tax advantages, the Duchy also provides a singular freedom from business regulation.
A holding company can be formed within weeks--days, says one American lawyer. The company is exempt from income and capital-gains taxes. Most important, Luxembourg requires no tax withheld [on payments to foreigners].
Actually, the only chance for a significant change in Congress and the stripe of elected officials generally is to get an altogether different type of person into active politics, perhaps men of the type of the non-Establishmentarians. Considering all factors, including the fuzzy mentality of the electorate, this will be very hard if not impossible to accomplish. The fundamental difficulty is institutional: the universal equal franchise that gives the vote-to clods.
It is not for lack of precept that congressmen conduct themselves as they do while bringing a laudably strict set of standards to bear against appointees in the executive and
judicial branches. Thomas Jefferson laid down the rule in 1801 when he was vice president and Senate presiding officer that "Where the private interests of a member are concerned in a bill of question he is to withdraw. " This is just what a competent judge does if there is any question of his personal involvement in a case sub judice.
Such a rule assumes that the relevant body consists of gentlemen and, perhaps, scholars. The electorate, it is observable, does not usually support such when they appear.
For the latter-day comers up from bayous, swamps, gutters and sties the rule was broadened by House Speaker James G. Blaine of Maine, who in 1874 asserted astonishingly that a member might vote for his private interests if the measure was not for his exclusive benefit but for the benefit of a group. (Blaine was exposed in 1884 as a bribe taker in connection with the securing of land grants for the Little Rock and Fort Smith Railroad. )
Said the Herald Tribune significantly in concluding its valuable series:
"Frequently a Senator or Representative's outside income results directly from the fact
that he is a member of Congress. " 73
Political Sources of New Fortunes
That the transfer of moneys to congressmen is a long-term, standard affair is attested by the Wall Street Journal of May 11, 1966, which says that "dozens" of congressmen "allow wealthy supporters to set up office funds or let lobbyists for business and labor sponsor testimonials, anniversary celebrations, birthday parties and other occasions or excuses for fund-raising not necessarily related to campaign needs--namely, office, entertainment and travel expenses. "
Few legislators, the Journal noted, reject such helpful emoluments, which come under the heading of perquisites of office. "But a majority of legislators," continued the Wall Street Pravda, "regard contributions made outside regular campaign fund-raising channels as perfectly proper, always assuming that the recipient doesn't mortgage his independence to the givers. "
These statements come under the heading of "laying it on the line" by Wall Street for those multitudes who are under some illusion about how, and why, the government is operated.
It is always well to remember that existing laws, passed by Congress and Congress alone, do not prohibit these activities. In fact, in many ways it would be tedious to probe, they encourage them. Congress no more navigates under any canon of ethics than does the Politburo. In this respect both bodies are on all fours. As in the case of any true sovereign, Congress is richly privileged. So, indeed, is the president.
Whatever Congress and the president are not specifically, in detail and under penalty, prohibited from doing they may do. So they do it, whatever it is.
The simple enumeration of powers of Congress in Article I, Section 8, of the Constitution should show any doubter that, collectively, this is an awesomely powerful assembly. Any small group such as the Establishment leaders that can by intrigue (the supreme method of practical politics) manipulate this divided collectivity internally, obviously has in its hands a formidable engine, with a wealth of modern technology at its service. The only restraints upon Congress, largely theoretical as far as immediate or individual actions are concerned, are the Supreme Court and the president. The latter, if he wants cooperation from it, must cooperate with it.
Difficult though it is to build a fortune by engaging in new business ventures among the established corporate giants, there is a wide open road to wealth if one knows how
to worm one's way into politics. By all present indications, really big new fortunes in the future will be more and more politically based, and we are already, perhaps, in the era of big emerging political fortunes. Should this become so, it will be evident that the United States is reenacting parts of Roman and later European history when fortune- building was the perquisite of men associated with sovereign powers rather than of men more directly related to the market place. Much of such political fortune-building, it is notable, was in the past related to the systems of taxation and government contracting.
Ex-Senator Paul Douglas, a careful student of congressional ethics, does not believe it would do any good to raise congressional pay but, looking at the fat rewards given high executives by corporations to keep their wonder boys in line, one pauses to reflect. If congressmen were each paid $200,000 per year plus $50,000 expenses, all tax-free, they would at least know whence their good fortune came. They would know for whom they were working. And such pay, by visibly exalting the office, might attract many others who under the present system do not wish to engage in the shabby dodges, the money grubbing, necessary to achieve substantial emoluments--that is, so-called financial security. The total public cost would be relatively slight, only $133,750,000 annually, a bagatelle compared with sums now voted for all manner of dubious projects, far less than the cost of elections.
Opposition to such a pay boost might be counted upon to come from two quarters--the frugal-minded rank-and-file citizens to whom the present $30,000 annually plus expenses is in itself an astronomic sum, and the very rich. The latter--or at least their advisers and lobbyists--would in many cases probably oppose the idea because such pay would make congressmen truly independent of the patronage of the rich. A senator who had served only six years could easily accumulate $1 million of his own and could thereafter safely afford to stick his tongue out at ubiquitous paymasters. True, such compensation would still not be enough for some, who would be up to the old tricks, perhaps even more flamboyantly. But threatened loss of the cushy job, as in the corporations, would be a big deterrent to skulduggery. Corporate officers, it can be shown, are personally far more straitlaced than most congressmen.
The Basic Deal
We are now in a position to understand the basic deal, arrived at by unconscious but instinctively sure stages, among finpols, corp-pols and pubpols in the welfare-warfare economy.
In return for substantial camouflaged tax (and other) concessions ranging up to complete exemption for very large incomes (these being constantly sought by the spokesmen for big wealth who appear before congressional committees) and for thoughtfully saddling most of the tax burden onto the politically illiterate lower labor force, the pubpols have been heavily financed on their road to financial independence by "campaign" contributions, testimonial gifts, law firm retainers and simple donations. Without such financing the poor-boys-who-made-good in politics would never have acquired the stake necessary to set themselves up as entrepreneurs under federal allocation of licenses (which they indirectly control), in building-and-loan operations, television-radio broadcasting, consumer loan sharking, local banking and insurance underwriting and subsidized speculation in oil and mineral lands. And without retainers from grateful corporate clients many lawyer-congressmen would be hard put to divert lucrative business from some of the less directly political law firms.
Just as the more impetuous racketeers when in difficult straits with the law turn to skillful high-fee pleaders like Edward Bennett Williams or Percy Foreman (in an earlier day they turned to the Max Steuers and Clarence Darrows), so the big corporations when they find themselves in a tight spot, legalistically speaking, turn to the big-league
law firms of Wall Street, State Street and La Salle Street. While for routine matters the bush league of congressional law firms will do, when the action gets really serious it is necessary to bring the big guns of the big-name firms to bear. Before such luminaries, entranced judges sit properly spellbound at seeing it uncontrovertibly proved once again by law, logic and philosophy that wealth is virtue, poverty is crime. The lesser firms, however, are indispensable for routinely guiding legislation or softening the touch of regulatory commissions to a delicate pianissimo that would arouse the artistic envy of a Horowitz.
Naturally, with the big property owners given a large degree of accommodation up to complete exemption, with loopholes liberally carved in the imposing tax wall, it is necessary to saddle the rising costs of the welfare-warfare economy onto the shoulders of the rank-and-file in the labor force. Hence the lopsided tax structure, Wilbur Mills's "House of Horrors," that we have scrutinized in only slight detail.
The signal contribution of the democratic politician here (and this is well understood in such places as Wall Street) is that he is gifted with the ability to flimflam this large collection of taxpayers with stupefying rhetorical pyrotechnics and appeals to free- floating sentiment; he puts these gifts to work so that, even if not cheered, the public cannot grope its way out of the verbal barrage in which appear all the gems of stale oratory. In addition, to show he is friendly he kisses babies, smiles, shakes hands endlessly and gobbles strange foods thrust upon him by the local constituency.
His brain in something of a fog, grasping desperately at some notion of a lesser evil, the common man feels that the vote he is about to cast is the best thing, everything considered, that he can manage in the hairy circumstances. So, perhaps not too happy about the whole thing, he stoutly votes for Horace "Bugsy" Latrine, "The People's Friend," and against John "The Louse" Outhouse, who slipped and allowed himself to be photographed giving candy to a Negro baby, thus fomenting the sinister rumor that he keeps a harem of lascivious Negresses contrary to the laws of God and men.
Karl Marx, in an often quoted apothegm, thundered that "The State is the executive committee of the ruling class. " Although this is merely redundantly truistic it is often disputed by bargain-counter sages. Yet the utterance has misled many self-styled Marxists to believe that the finpols or big capitalists issue direct whiplash orders to their docile minions in government, sometimes by picking up a phone in Wall Street and barking harsh instructions over the wire. Nothing could be further from the truth, even though direct wires from Wall Street to the White House have been known to exist during Republican Administrations up to the time at least of Herbert Clark Hoover.
The process through which the finpols induce the pubpols to march in lock-step with them is much subtler than this but not so Marxianly subtle as merely being common participants in a cultural climate; nor does it consist of winning them over by powerful logical arguments in favor of the free enterprise or capitalist system. The finpols insure that the pubpols will be like-minded by making it possible for the latter to become free-- that is, government-licensed entrepreneurs themselves. The fusion of thoughtways is achieved this simply. That the process is not more subtle anyone may observe by noticing how quickly a politician can change his outlook if the quid pro quo is not forthcoming. In such circumstances self-styled conservatives can be led to stand for quite radical measures, let the cultural climate be what it may.
It is noticeable that congressmen and spokesmen for the rich in general are much more impassioned in defense of the free enterprise system of government economic support than the prime beneficiaries. One seldom hears of a Rockefeller, Du Pont, Mellon, Ford or lesser luminary of great wealth bawling wildly to the countryside about the
impeccable virtues of free and easy enterprise. This task is discreetly left to recent converts.
And while I believe there is much to be said for capitalism in some of the modified variegated forms it takes, particularly in Europe, and while I also believe there is little, humanistically speaking, to be said for the Leninist version of the vaguely outlined Marxist substitute, capitalism at its best can arouse in the sensitive observer at most a cool and moderate sort of admiration. It did not, contrary to the sly suggestion of its political friends, invent science and machine technology (industrialism), launch the Age of Discovery or put in their places the natural resources of the earth. Rather did it impress these into its service. Nor did it foster the population boom, which is greatest outside its confines. Even tried-and-true capitalist economists of any stature do not trace to capitalism all novel boons, whatever they may be, although anti-capitalists madly trace to it all evil.
It is left to recent off-the-street converts, beneficiaries of the big quick deal, the windfall, to discover overwhelming virtues in a system that, whatever its merits, is subject to evaluative analysis that brings to light not a few dubious aspects into which it is not edifying to delve.
Appreciations of capitalism by economists, it is always evident, are far more muted than those of its public political celebrants. For those who wonder at the emotional fervor of the politicos, the explanation is as simple as it is vulgar. Would not almost anyone except the rarely cultivated man be inclined to see, as in a Pauline revelation, vast merits in a system that suddenly, without any forewarning, showers down upon him personally, apparently from nowhere, vast rewards? Would not such a man--a Dirksen, perhaps--be dramatically and sincerely struck by the suddenly revealed beauties of the system? Would he not feel strongly impelled when the occasion presented itself to draw upon whatever eloquence he commanded to defend and extol that system? He was nothing, and he knows this; the system made him into something, perhaps a television pundit, perhaps a senator, even president. Here is ground for true belief.
There is a more immediate reason, too, for the pubpols to see extravagant merits in the system, which plays the role of the goose that repeatedly lays the golden eggs--for them. Many economists, some in dismay, have observed how Congress is inclined to starve the public sector of the economy (as government nonmilitary operations are somewhat ornately styled) and to favor the private or corporate sector. Congressmen in general show little enthusiasm for schools, parks, hospitals, sanatoria, low-income housing, libraries and the like but immoderate enthusiasm for, say, armaments entrepreneurs and bowling alley proprietors. While structures and programs in the public sector can be "milked" to a certain extent at their inception, as in the letting of contracts and buying land, the process cannot be repeated indefinitely as with going concerns in the private sector.
With a going concern, such as a bowling alley, it is different. It can, first, be taxed continuously--a great advantage; schools and the like pay no taxes but eat them up. Furthermore, the proprietor can be shaken down regularly for campaign contributions and off-the-cuff gifts in return for regulatory legerdemain. The proprietor is to a certain extent, at least as far as the courts will permit, at the mercy of the "democratic" politician and his little tin box.
And if the "democratic" politician has been thoughtful enough to intersect two new superhighways at the door of the bowling alley, with mandatory long-cycle traffic lights installed, he is obviously deserving of a testimonial donation for public service from the bowling alley proprietor.
Hasn't the business generated boosted gross national product? A politician who can do this and at the same time gain public plaudits for his sagacity is obviously a statesman who should be concretely recognized.
Cooperation, it is evident, is necessary between finpols and pubpols if the system is to work as it does. Nor are showdowns between the two ever necessary because all that is usually required to bring most of the latter into line (if they stray) is money, the big grease of American politics. In saying this, one is not saying that all pubpols are susceptible to the monetary touch. It is not necessary to have all of them on the side of the big money. The entire operation, indeed, looks better if there are some honest dissenters, even vociferous dissenters. Such dissent appears to imply that positions have been taken, each way, on the merits of an argument. There are, perhaps, mysterious reasons on the side of the majority, which consists of sound down-to-earth men like Everett Dirksen and Lyndon Baines Johnson.
All that the big money needs is a "democratic" majority-of a subcommittee of 3 to a legislative committee, of a legislative committee of 15 to 25, of a caucus of 50 to 100, of a legislative body of 100 or 435. This is not much to achieve in a nation of some 200 million immortal souls. And even if there is not a majority on the side of the money interest, all is not lost because any suddenly flaring opposition can be blocked and stalemated by a minority under the rules. If the money interest cannot have its way, neither can anyone else unless there has been a rare political upheaval induced by nontypical circumstances.
So much has been written about the veritable misdeeds of the corporations, not without ample grounds, that there is a tendency among critics to overlook the indubitable fact that business enterprises sometimes, even often, like black sheep of a family, act quite legally, properly and even meritoriously and are nevertheless clipped below the belt by the pubpols. It would take hundreds of pages to detail all the harrowing cases in this vastly neglected area, so I cite a single recent major instance simply to remind the reader of what goes on.
L. Judson Morhouse, fifty-two, an authentic Anglo-Saxon and chairman of the Republican Party in New York State, was convicted and sentenced in June, 1966, to two to three years of penal servitude on two counts of bribery, a very serious offense. The judge could have imposed a sentence of twenty years and a fine of $9,000 but, as he explained, the defendant until his conviction had an "unblemished" reputation and "has many good friends in most high places who have willingly come forward to urge leniency. " The judge also noted that Morhouse "was a man who wielded tremendous governmental power and influence" which, as the judge himself volunteered, he had "perverted" for "personal and private gain. " According to the prosecutor, Morhouse was an "influence peddler"--not uncommon in politics.
The specific charge against Morhouse was that he induced former State Liquor Authority Chairman Epstein to accept an illegal $50,000 for granting the Playboy Club of Chicago a New York liquor license and that he, initiator of the deal, assisted the Playboy group in bribing Epstein. The Playboy Club was a legitimate taxpaying enterprise--not even a sweatshop--that sought to do legitimate taxpaying business in New York City. Yet it was required to pay toll to do legitimate business--a common occurrence as between small and moderate-sized businesses and politicians. This is one reason (rather than labor costs) many enterprises move from one part of the country to another, especially out of big cities, although after they get well settled in a new location they often have the "bite" again put on them by local politicos. Sometimes, though, the "bite" is smaller in one place than another so moving may be advantageous.
One can refuse to pay and instead fight for one's rights in the courts, but experience has shown that this process can be so costly as to be ruinous.
Morhouse took his sentence stoically, although his lawyer said he had been punished enough by merely being put on trial (a strange doctrine) . Against this contention, the prosecutor cited a long list of other instances in which Morhouse had received "fees" ranging up to $100,000 from enterprises engaged in legitimate endeavors, enough to give him success or what sociologists coyly refer to as "upward social mobility. "
So it is not, very evidently, necessary for a company to be delinquent in some way in order to experience the exactions of politicians, although the big corporations are seldom bustled about in the way the Playboy Club was. Morhouse would never have acted as he did in this case if the Standard Oil Company of New Jersey had wished to put up a gas station or refinery in some unseemly place. When the big corporation wants anything out of the routine--and the Playboy Club did not even ask that--it simply states its case "on the merits" in high places and gets all or most of what it wants. As a matter of tactics it asks for a great deal more than it really wants in order to be roundly rejected in some way, thus making the regulatory commission, public executive or legislature look properly vigilant in the eyes of the public--a simple instance of finpolitics. The reason the big enterprises no longer resort to crude bribery, except perhaps through remote agents in minor situations where a local ordinance bars the road, is that they have the ways already thoroughly greased all along the line through "campaign" contributions, donations-for-public-merit, testimonials, law business, foundation grants to savants and other forms of patronage involving legal tender. The request, whatever it is, in substance slips through easily all the way up to and including Congress. But if some random individual made an analogous request, he would be hailed before the nearest psychiatrist or, perhaps, jailed for jarring the dust on some moth-eaten statute.
Morhouse, it should be made clear, did not suddenly suffer any loss of esteem among those "in the know. " He had simply been caught working on a highly competitive street- New York City is Democratic and upstate New York Republican and hostile to the city; Morhouse in the city was somewhat out of the jurisdiction under his surveillance and up against rivalrous politicos. According to the well-understood rules of the game, he had to serve as a scapegoat, thereby helping to reassure the public. My own opinion of Morhouse did not change in the slightest when he was convicted because I always assumed, on the basis of a long line of similar cases, that as a state party chairman he was doing something of the sort--if not this then something else of a gamey order. What he did was hardly more than par for the course.
Just as the businessman is not in business for his health, the typical American politician is not in politics for his health, the pay of office or because he is enamored of the public. So to suppose would, in the light of much evidence, strain credulity beyond the breaking point.
Money in Politics
That a great deal of money is bandied about in politics is well known. On this topic many extensive studies have been written that need not be summarized here. All, fragmentary though they are, show a steady avalanche of money. 74
What is now, today, causing concern about this telltale phase of American political life is the rising cost.
It was estimated, for example, by Dr. Herbert E. Alexander, an authority on election costs, director of the Citizens Research Foundation and Kennedy-appointed executive director of the President's Commission on Campaign Costs, that the 1964 national campaigns cost at least a whopping $200 million, not counting efforts by volunteers,
unpaid efforts by public officials or amateurs and sideline commentary by telecasters, newspapers and other publications. 75 And campaign costs, as we have observed, are not the only items of political expenditure. The bill, it is evident, is running very high.
An incisive, brief updating of the situation was written by Victor Bernstein for The Nation, June 27, 1966, under the title of "Private Wealth and Public Office: The High Cost of Campaigning. " As it was shown, political money is not put up by the rank and file of citizens. In all its forms it invariably Comes from property owners and people of assured position-the upper 1 per cent of income receivers--apart from such money as has in recent decades filtered into the pot from labor leaders, themselves in the upper- income strata.
As Bernstein made clear, the electoral system, as distinct from the extra-legal politicians' system within government (another item of big expense), is extremely costly to operate. In the 1966 off-year, for example, $175 million were scheduled to be spent solely at the state levels. Again, a Senate seat, as Bernstein testifies, can cost a million or more, and $2 million were spent to make John Lindsay the able mayor of New York. This last leaves out of account what was spent to defeat him.
Noting that in order to be in politics one must be rich or have rich friends, some of the currently rich ones cited being the Kennedys, Harriman, the Rockefellers, Romney, Pell, Ottinger and Johnson (there are others), Bernstein raised the rather marginal question of whether democracy (by which he meant the rundown U. S. political system) is "better served by relatively penurious politicians who owe office to support by the rich" or by the rich in person. He did not note the fact, significant in my view, that Johnson like many others not mentioned grew rich while in, of, by and for politics.
Congressional Origins
Most congressmen, all now in the upper 1 per cent of income receivers, were at least originally impecunious. This is made crystal clear in Donald R. Matthews's thorough study, U. S. Senators and Their World. According to Matthews, all except a handful of senators were the sons of men in middle-class occupations. 76
On the basis of the mainly blurry class indices he cites--professional, proprietor and official, farmers, low-salaried workers and industrial wage earners--I should rather say most came from lower-middle-class and middle-class occupational backgrounds. This is made evident, first by the fact that among 180 senators in the decade 1947-57 no fewer than 52 per cent were rural born 77 and at the time of their birth none of the criteria of upper-middle-class status such as relatively high income and prolonged schooling were ordinarily found in rural areas. "Places like Centerville, South Dakota; Isabel, Illinois; Ten Mile, Pennsylvania; Rising Sun, Delaware; and Honea Path, South Carolina, nurtured more senators [in the group studied] than all the cities of the United States combined. " 78 Most of the remaining senators came from small towns, with the most overrepresented small-towners from places of 2,500 to 5,000 population. 79 The Senate, in brief, consisted largely of pure hicks, ruling an urbanized, mechanized society.
As to class origins, "The children of low-salaried workers, wage earners, servants, and farm laborers, which together comprised 66 per cent of the gainfully employed in 1900, contributed only 7 per cent of postwar senators. [Owing to the disparity of birth rates between the upper and lower classes, the disparity in political life-chances, as Matthews notes, was "actually greater than these figures indicate. "--F. L. ] Only two of the 180 men, Senators Wagner and O'Daniel, were the sons of unskilled, urban wage earners. Wagner's father was a janitor in a New York City tenement; O'Daniel's father was a construction worker. Senator Purtell was the son of a cigarmaker; McNamara, of a shipfitter; Daniel (S. C. ), of a millwright; Welker, of a carpenter; Pastore, of a tailor; Cordon and Dirksen, of painters; Payne and Dworshak, of printers; Anderson, of a
salesman; Myers, of a bookkeeper; Lennon, of a clerk; Margaret Chase Smith was the daughter of a barber. " 80 There were no Negroes, although Negroes constituted 10 per cent of the population.
"Among the sons of farmers, some were born in relative poverty, yet it is virtually impossible to ascertain this in specific cases. It is still possible to conclude that very few senators were born in working-class and lower-class families. " 81
Yet 33 per cent of Democrats and 31 per cent of Republicans had fathers who were farmers. 82 Farmers have never been considered upper middle class. And 16 per cent of Democrats and 7 per cent of Republicans had fathers who were lawyers, not invariably an upper-middle-class index in the United States.
That most of these men are generically middle class, and as such likely to be upward strivers and admirers of entrepreneurial as distinct from rentier plutocracy, is also shown by the fact that just prior to their debut in the Senate 102 were job-holding political officials, 88 having started out as lawyers and 97 regarding the law as their principal nonpolitical occupation. 83 By percentages, 26 per cent of these pre-senatorial officeholders were in law-enforcement offices (prosecutors), 23 per cent in administrative offices, 17 per cent in state legislatures, 11 per cent in the House of Representatives, 9 per cent in the governor's chair, 9 per cent in local elective offices, 3 per cent in some statewide elective office and 2 per cent on the congressional staff. 84
For those hoping for a better day in politics with new upcoming men, it should be noticed that the pipelines feeding high office are now filled with similar types. Anyone looking to the state legislatures for zeal in better government can get a glimpse of the future in Congress that will induce sober second thoughts.
Knowing he is the beneficiary under this trusteeship, is the president's mind so free of property influence that he is likely to come out for, say, strict government regulation of television advertising or the end of tax-free oil? Is he likely to agree with Kennedy appointee Newton Minow that television is a "wasteland"?
Said the New York Times editorially on September 25, 1964, about this arrangement:
The property has been placed in trust while the President is in office, and Mr. Johnson will unquestionably take special pains to avoid any charge of improper influence over the F. C. C. But a conflict of interest remains as long as the nation's chief officeholder possesses a stake, direct or indirect, in a property he is charged with regulating.
This property was acquired when Mr. Johnson was in Congress. He was doing what many other Congressmen . . . have done. There is, unfortunately, no law against Congressmen owning television and radio facilities or having a financial interest in other franchises or businesses that are either regulated by Federal agencies or dependent on Government contracts. But the very fact that Mr. Johnson set up a trust when he assumed the Presidency indicates that ownership of Government-regulated business suggests a conflict--for members of Congress as well as for the occupant of the White House.
The Times suggested "divestiture" of the property as a way out, without suggesting the nature of such legerdemain. If it were sold the president would realize a handsome
profit. If it were given away for charity it would defeat the intended purpose from the beginning.
The insight given by the Johnson financial statement, as far as it went, into the affairs of a big Establishmentarian and career politician who thirty years before was as poor as the proverbial church mouse enabled reflective observers to see where rhetoric leaves off and substance begins in the thinking of the Establishment. The energy devoted to putting together from scratch and sheltering these properties should be some guide to personal motivation. What was disclosed bore none of the earmarks of a part-time hobby.
What is even more strange is that even as president Mr. Johnson has continued large- scale land and cattle purchases through agents, paralleling value-bringing state highway and bridge-building projects, according to the New York Times in an extensive report of December 26, 1966 (23:2-3). This report of total holdings more recently of 14,000 acres in five separate ranches led Washington wits to say that Mr. Johnson has been the biggest real estate operator as president of the United States since President Jefferson's "Louisiana Purchase. "
Despite his single-handed involvement of the United States in a big Asiatic land war, long held by the Chiefs of Staff as something to be avoided at all costs, Mr. Johnson is nevertheless hailed by many as the architect of "The Great Society," an apparition that is due to materialize no doubt at about the same time as grass-roots communism appears in Russia and the Soviet state "withers away. " just how much stock one should take in the Great Society fantasy was suggested at the annual get-together of the American Political Science Association in 1965, as reported by the New York Times:
Although a high proportion of them unquestionably voted for Mr. Johnson last fall, the comments of the political scientists indicated a shocking skepticism about Washington's earnest belief that this President has introduced--through his Great Society programs, his style of vigorous personal leadership and his invocation of the virtues of one "great big party"--a dramatic new element in American politics.
Nelson Polsby of Wesleyan University captured the prevailing view when he remarked:
"There's nothing new about all this. All you really have is a swollen Congressional majority, that Barry Goldwater handed the Democrats, passing programs that have been kicking around since New Deal and Fair Deal days. "
A colleague from Wesleyan, Clement E. Vose, compounded the heresy, saying that the Johnson record "is not one of innovation, but of ratification of ideas that have been germinating since the time of Henry Wallace. " 56
So much for "The Great Society. "
Other Political Horatio Algers
Before closing the books on the Horatio Algers in politics, some further nuggets from the valuable Herald Tribune series, Put together by ace reporter Dom Bonafede, should be exhibited:
"Civic participation" by applicants is one of the yardsticks used by the Federal Communications Commission in granting TV licenses, and being a congressman is interpreted as "civic participation" given weight in licensing--a doctrine that Democratic Senator William J. Proxmire of Wisconsin called "an amazing proposition. " 57
Representative William E. Miller, Republican candidate for vice president in 1964, was on the payroll of the Lockport Felt Company while in Congress, where he had
"openly promoted legislation favorable to the company on the floor. " He was made a vice president of the company two weeks after leaving Congress. 58
Senators Spessard Holland and George Smathers of Florida and B. Everett Jordan and Samuel J. Ervin, Jr. , of North Carolina were co-sponsors of a bill in which the Florida Power and Light Company was "the prime mover" to exempt from federal regulation private utilities not directly linked with outof-state transmission networks. 59
Until he recently sold the bulk of his holdings, Sen. Warren G. Magnuson, D. , Wash. , the Commerce Committee chairman, was part owner of a Seattle broadcasting station. One of the committee's functions is to oversee operations of the FCC.
Sen. John L. McClellan, D. , Ark. , the famed rackets-buster, is chairman of the subcommittee investigating the Federal banking system, even though he is a bank director in private life. Another subcommittee member, Sen. Sam J. Ervin, D. , N. C. , also holds a bank directorship.
Rep. William C. Cramer, R. , Fla. , spoke against the Administration's war [sic! ] on poverty almost from the program's inception. But his protests appear to have been muted ever since a laundry service he heads in St. Petersburg was awarded a contract with Women's job Corps. 60
Although the Corrupt Practices Act of 1925 requires congressmen to report campaign contributions and expenditures, limiting what can be spent to $5,000 for representatives and $25,000 for senators, large numbers of members of both Houses report "none" on the required forms after each election. 61
Yet carloads of money are nevertheless spent, or at least collected, in congressional campaigns. Only $18. 5 million was formally reported as collected for the 1962 "off year" campaigns, but an expertly estimated $100 million was collected. 62
Political money is really tossed about in a large way.
"Newly elected Rep. Richard L. Ottinger, D. , N. Y. , a multi-millionaire in private life, spent almost $200,000 through 34 committees to win his seat. Yet, his campaign report lists expenditures of $4,500 and no contributions. " 63
Although there are criminal penalties prescribed for negligent failure to file a report or to file a false report, there has never been a prosecution under the Act of 1925.
"Ingenious methods of raising campaign funds are developed. . . . Card games are held in which a portion of the pot from each hand is set aside for a campaign committee. For many years, Rep. Michael J. Kirwan, of Ohio, House Democratic Campaign Committee Chairman, staged a St. Patrick's Day party for the purpose of soliciting campaign funds. " 64
Cocktail parties are a standard fixture where lobbyists are panhandled for handouts to support democracy. One lobbyist told the Herald Tribune that it usually cost him $100 for a single drink "and a "cold shrimp on a toothpick," which was perhaps cheap.
A generally favored swindle is to run $100- to $1,000-a-plate testimonial dinners, production cost about $10 apiece, and to send twenty-five to a hundred tickets to various corporate people, who generally grab them like manna and distribute them to the office help. If the corporate boys fail to remit they suspect an undeserved demerit may be entered against their names in some little black book.
While a direct gift of money in excess of $3,000, except (as the courts have percipiently ruled) expensive presents to a lady friend, are subject to tax, a gift in recognition of "public service' is not so taxable. Although such gifts are not lavished on low-paid scientists, artists, military officers and profound cogitators, who may be
supposed to have rendered some public service, they are rife in the case of officials, especially congressmen. It is not necessary to pass them money in some back alley. What is done is to stage a glittering public affair, with hundreds of well-heeled customers present, and to present the modest recipient with a large certified check as the cameras flash the scene for posterity. What results are photographs reminiscent of Renaissance paintings titled "Adoration of the Infanta. " Diners leave with the vague semi-alcoholic feeling that they have participated in a religious ceremony, have at least paid homage to a glorious Republic once sadly betrayed by wicked, wicked, wicked Benedict Arnold.
Lest any strait-laced, dyspeptic methodologist charge that I am drawing my data from only two sources which, although highly orthodox, could be wrong or wrong-headed, let the future historian know that among many other sources on congressional skulduggery there are the nationally syndicated Washington columns of Drew Pearson, a practitioner of the journalistic craft for more than forty years.
Not only do we encounter many members of the cast we already are familiar with in the Pearson columns but a host of new names ooze into view week after week.
"Any pressure group that is rich and powerful enough can find a champion in Everett Dirksen," said Pearson. "It is his conviction that the special interests are entitled to a voice in the Senate. His office has been headquarters for almost every major group--the drug industry, gas and oil combine, food packagers, etc. --that has had a legislative problem.
"To no one's particular surprise, Dirksen's law firm in faraway Peoria, Ill. , has collected retainers from many a giant corporation whose interests the Senator has served in Washington. " 65
A few other nuggets from the Pearson columns--the nuggets alone would fill a book-- are as follows:
Representative William H. Harsha, Jr. , Republican of Ohio, has been a strong opponent of the Federal Mass Transportation Act, designed to develop rail and commuter services for clogged cities. His law firm represents the Greyhound Bus Lines. The congressman favors limiting imports of residual fuel oil. His firm represents Phillips Petroleum and Ashland Refining Company. 66
Representative Charles Chamberlain, Republican of Michigan, introduced a bill to repeal the manufacturers' excise tax on cars and trucks. His law firm represented the United Trucking Service and the Detroit Automobile Inter-Insurance Exchange as well as the Panhandle Eastern Pipeline Company of Texas, which like other companies appears to make use of many congressional law firms. 67
In the 1940's Representative Victor Wickersham, Democrat of Oklahoma, asserting "I am a poor man," advocated increased congressional salaries. Despite still moderate congressional salaries, he was more recently set on getting back into office. In an application filed with the Federal Communications Commission to buy radio station KREK in Sapulpa, he stated his current net worth at $1,579,789, placing him among some 90,000 millionaires. Pearson traced various typical flourishes in the financial efflorescence of Wickersham over the years. 68
Upon the impending retirement of Representative Oren Harris, chairman of the House Commerce Committee, to accept a presidential appointment as a United States judge, Pearson noted that Harris was a stockholder in Station KRBB of El Dorado, Arkansas, and as a close associate of Ham Moses of the Arkansas Power and Light Company "had introduced more special-interest legislation than any member of Congress. "
Because of the inability to find a suitable replacement for Harris, said Pearson, the lobbyists asked Senator McClellan to intervene and hold up at the White House Harris's appointment for the stated reason of a "ticklish" election in Arkansas. The president obliged.
"This will help Madison Avenue, but it puts the President in a bad light in regard to his family radio-TV property in Texas. He has claimed that he has kept aloof from influencing the Federal Communications Commission; but now he continues in power the congressional chairman who has slapped down the commission on behalf of the big networks.
"Note--It's significant that Mr. Johnson has been very chummy with the big networks, as witness the repeated White House dinner invitations to network executives. . . . " 69
How it may work out when anyone drives a high-placed official into a tight corner was shown in the case of Senator Thomas J. Dodd of Connecticut, as reported by Pearson. The FBI had been informed of documentary data in Pearson's hands and photographed and rephotographed it.
[Pearson's subaltern had] been working with half a dozen prospective witnesses, all former Dodd employees. . . . These were young people who had been shocked at what was happening in Dodd's office and departed. They felt under moral obligation to report what was happening.
The G-men called on the witnesses all right, but didn't ask a single question about Dodd, his conduct, whether he had diverted funds from testimonial dinners to his own pocket or whether he had acted on behalf of an agent for a foreign power, Gen. Julius Klein.
Instead, the FBI crossexamined these young people about the alleged theft of Dodd's documents. They also heckled them about other stories Jack Anderson and I had written.
As fast as the FBI discovered the identity of the witnesses, they were bullied and badgered, hounded and harassed. One lost his job on a House committee; the news of his dismissal came from Dodd's office. Another . . . since submitting his resignation . . . has been unable to find another job. Others have had their jobs threatened. One woman, seven months pregnant, was grilled by agents for three hours.
Agents hauled some witnesses right into Dodd's office for cross-examination and behaved as if they were working for the Senator. Other witnesses were alternatively soft-soaped and threatened with Federal prosecution.
I have been around Washington a long time, but have never seen such an example of police state operation.
Such investigations, of course, do not happen by accident. They usually go beyond the Attorney General, Mr. Katzenbach, an awfully nice guy but a bit wishy-washy when it comes to standing up to the White House or the Senate Judiciary Committee, of which Tom Dodd is a member.
Such investigations usually go right up to the President himself. Johnson has on his desk a direct private phone to J. Edgar Hoover. They are very old friends, dating back to the days when I used to visit in Johnson's home when he was a gawky young Congressman from Texas living just across the street from Hoover's well-appointed bachelor abode.
Johnson is not only a friend of Hoover's but he is a friend of Dodd's. It takes a real friend to make the two trips he made to Connecticut to speak at testimonial dinners which raised $100,000 for Tom's personal bank account.
Johnson did all right for Tom. He hoisted him to a choice position on the Senate Foreign Relations Committee, ahead of other Senators, a vantage point from which he was able to work more effectively for Gen. Klein. And he almost picked Tom to run with him for Vice President. 70
While much more along the same line could be cited it is time to close the books on this phase of our quest for enlightenment. Suffice it to say that a majority of members in both Houses are tainted with what is euphemistically known as a "conflict of interest. " There is, however, as readily seen, really no conflict of interest involved. The line of interest is clearcut and unambiguously pointed in one direction--to personal nest- feathering at public expense. Nor are only overt Establishment people involved. Democratic Senator Thomas Dodd was never a recognized Establishment man, perhaps one reason he was made an object of gingerly inquiry by the Senate for actions little different from those of others except that he involved himself with a registered agent of unholy foreign interests and stepped into delicate areas subject to foreign policy and the jurisdiction of the Foreign Relations Committee under vigilant Chairman J. William Fulbright.
But where is the line to be drawn on congressional self-dealing? What difference does it make whether the havoc caused is international or domestic?
Some fairly feeble solutions have been proposed for this parasitism at the heart of the political system. One is that congressmen be required to disclose their personal financial holdings so that the public may evaluate their votes, thus determining whether they are cast on the merits of a case or for personal Profit. This proposal has been supported by Senators Clark, Wayne Morse, Paul Douglas, Clifford Case, Jacob Javits, Kenneth Keating, Maurine Neuberger and others--all non-Establishmentarians In the House it was supported by Edith Green, Ogden Reid and John V. Lindsay. Senators Clark, Hugh Scott of Pennsylvania, Stephen Young of Ohio, William Proxmire of Wisconsin, Morse of Oregon and Mike Mansfield of Montana have voluntarily disclosed their personal financial holdings and Paul Douglas rendered an annual public account of his income and expenditures. They have had few emulators.
Senator Dirksen predictably objected to the proposed law on the clownish ground that it would be "an invasion of privacy" and would make him a "second-class citizen" into whose private affairs every vagrant Peeping Tom could penetrate.
Apart from the fact that the Establishment, as a sovereign force effectively unchecked by any knowledgeable electorate, will never enact such a measure, if it did who would enforce it?
Hidden Holdings
Again, if congressmen disclosed their holdings, such disclosure would not portend much even if it was made annually. For the source of the poor-boy congressman's original stake consists in most cases obviously of under-the-counter gifts, ambiguous campaign contributions, legal retainers, public testimonial awards and benevolent bank loans. And all such, if subject to disclosure, could be kept in the names of wives, parents, daughters, sons, cousins and the like.
Actually, any man may have vast holdings with nothing set down anywhere in his name. A man can own a million shares in a big corporation without his name ever appearing on the books. The stock can be held by obscure paid nominees who have signed, in blank, stock transfer certificates allocating these shares to whoever holds and fills in the certificates.
Any person interested in concealing assets can do even better than this, as we are reminded by that old reliable, the Wall Street Journal, of recent decades a most
informative newspaper. Money can be transferred to one's own neutrally named holding company, a "shell" company, in any one of a number of places--Lichtenstein, Luxembourg, Panama, the Bahamas--and deposited in a numbered Swiss bank account, the owner of which the bankers are forbidden by strict Swiss law to disclose. The Swiss bank, conducting all operations in its own name, can buy or sell securities, realty or other titles in any market without anyone knowing for whom it acts.
Profits are transferred to the owner direct or to the "shell" company, which cashes checks and turns money over to the true owner. The "shell" is in charge of low-paid employees, glad to perform this less than onerous occasional service. The money, if wanted in the United States, is simply carried home in one's wallet or is brought back by couriers.
This method, as a device for evading American income, capital gains and inheritance taxes, is already used by many American business and professional men, Las Vegas gamblers, racketeers, some millionaires and owners of at least 10 per cent of some corporations' shares among executives, according to the Wall Street Journal. It estimates that hundreds of millions of dollars are so involved, perhaps billions . 71
The stacking away of tax-shy assets abroad is not confined to marginal elements. As the New York Times informs in a special dispatch from Luxembourg: 72
Along the Grande Rue and the Boulevard Royal, companies like du Pont Europa Holdings and Amoco Oil Holdings have nestled their "sie`ges sociales" (head offices) in filing cabinets next to 2,000 other Luxembourg holding companies.
With a few exceptions, the head office is the street address of a bank or a law firm. The lawyer or the banker may be a director of more corporations than are most captains of industry anywhere.
Some Luxembourg holding companies date back to 1929, when Parliament passed a law making it easy and inexpensive for them to be established and kept here. Not a few were or are facades for family businesses in nearby countries, shells to make possible the investment of income hidden from the tax collector.
Since this is not such an easy contrivance anymore, the reasons for setting up Luxembourg holding companies nowadays are likely to stem primarily from difficulties in carrying on essential business operations elsewhere.
This indeed has been the basis for the recent stir of holding-company activity by American corporate giants in this quiet, 999-square-mile Grand Duchy. With direct dollar sources of capital restricted by the American balance-of-payments restraints, Luxembourg has become a strategic base for raising needed investment capital in Europe.
Apart from basic tax advantages, the Duchy also provides a singular freedom from business regulation.
A holding company can be formed within weeks--days, says one American lawyer. The company is exempt from income and capital-gains taxes. Most important, Luxembourg requires no tax withheld [on payments to foreigners].
Actually, the only chance for a significant change in Congress and the stripe of elected officials generally is to get an altogether different type of person into active politics, perhaps men of the type of the non-Establishmentarians. Considering all factors, including the fuzzy mentality of the electorate, this will be very hard if not impossible to accomplish. The fundamental difficulty is institutional: the universal equal franchise that gives the vote-to clods.
It is not for lack of precept that congressmen conduct themselves as they do while bringing a laudably strict set of standards to bear against appointees in the executive and
judicial branches. Thomas Jefferson laid down the rule in 1801 when he was vice president and Senate presiding officer that "Where the private interests of a member are concerned in a bill of question he is to withdraw. " This is just what a competent judge does if there is any question of his personal involvement in a case sub judice.
Such a rule assumes that the relevant body consists of gentlemen and, perhaps, scholars. The electorate, it is observable, does not usually support such when they appear.
For the latter-day comers up from bayous, swamps, gutters and sties the rule was broadened by House Speaker James G. Blaine of Maine, who in 1874 asserted astonishingly that a member might vote for his private interests if the measure was not for his exclusive benefit but for the benefit of a group. (Blaine was exposed in 1884 as a bribe taker in connection with the securing of land grants for the Little Rock and Fort Smith Railroad. )
Said the Herald Tribune significantly in concluding its valuable series:
"Frequently a Senator or Representative's outside income results directly from the fact
that he is a member of Congress. " 73
Political Sources of New Fortunes
That the transfer of moneys to congressmen is a long-term, standard affair is attested by the Wall Street Journal of May 11, 1966, which says that "dozens" of congressmen "allow wealthy supporters to set up office funds or let lobbyists for business and labor sponsor testimonials, anniversary celebrations, birthday parties and other occasions or excuses for fund-raising not necessarily related to campaign needs--namely, office, entertainment and travel expenses. "
Few legislators, the Journal noted, reject such helpful emoluments, which come under the heading of perquisites of office. "But a majority of legislators," continued the Wall Street Pravda, "regard contributions made outside regular campaign fund-raising channels as perfectly proper, always assuming that the recipient doesn't mortgage his independence to the givers. "
These statements come under the heading of "laying it on the line" by Wall Street for those multitudes who are under some illusion about how, and why, the government is operated.
It is always well to remember that existing laws, passed by Congress and Congress alone, do not prohibit these activities. In fact, in many ways it would be tedious to probe, they encourage them. Congress no more navigates under any canon of ethics than does the Politburo. In this respect both bodies are on all fours. As in the case of any true sovereign, Congress is richly privileged. So, indeed, is the president.
Whatever Congress and the president are not specifically, in detail and under penalty, prohibited from doing they may do. So they do it, whatever it is.
The simple enumeration of powers of Congress in Article I, Section 8, of the Constitution should show any doubter that, collectively, this is an awesomely powerful assembly. Any small group such as the Establishment leaders that can by intrigue (the supreme method of practical politics) manipulate this divided collectivity internally, obviously has in its hands a formidable engine, with a wealth of modern technology at its service. The only restraints upon Congress, largely theoretical as far as immediate or individual actions are concerned, are the Supreme Court and the president. The latter, if he wants cooperation from it, must cooperate with it.
Difficult though it is to build a fortune by engaging in new business ventures among the established corporate giants, there is a wide open road to wealth if one knows how
to worm one's way into politics. By all present indications, really big new fortunes in the future will be more and more politically based, and we are already, perhaps, in the era of big emerging political fortunes. Should this become so, it will be evident that the United States is reenacting parts of Roman and later European history when fortune- building was the perquisite of men associated with sovereign powers rather than of men more directly related to the market place. Much of such political fortune-building, it is notable, was in the past related to the systems of taxation and government contracting.
Ex-Senator Paul Douglas, a careful student of congressional ethics, does not believe it would do any good to raise congressional pay but, looking at the fat rewards given high executives by corporations to keep their wonder boys in line, one pauses to reflect. If congressmen were each paid $200,000 per year plus $50,000 expenses, all tax-free, they would at least know whence their good fortune came. They would know for whom they were working. And such pay, by visibly exalting the office, might attract many others who under the present system do not wish to engage in the shabby dodges, the money grubbing, necessary to achieve substantial emoluments--that is, so-called financial security. The total public cost would be relatively slight, only $133,750,000 annually, a bagatelle compared with sums now voted for all manner of dubious projects, far less than the cost of elections.
Opposition to such a pay boost might be counted upon to come from two quarters--the frugal-minded rank-and-file citizens to whom the present $30,000 annually plus expenses is in itself an astronomic sum, and the very rich. The latter--or at least their advisers and lobbyists--would in many cases probably oppose the idea because such pay would make congressmen truly independent of the patronage of the rich. A senator who had served only six years could easily accumulate $1 million of his own and could thereafter safely afford to stick his tongue out at ubiquitous paymasters. True, such compensation would still not be enough for some, who would be up to the old tricks, perhaps even more flamboyantly. But threatened loss of the cushy job, as in the corporations, would be a big deterrent to skulduggery. Corporate officers, it can be shown, are personally far more straitlaced than most congressmen.
The Basic Deal
We are now in a position to understand the basic deal, arrived at by unconscious but instinctively sure stages, among finpols, corp-pols and pubpols in the welfare-warfare economy.
In return for substantial camouflaged tax (and other) concessions ranging up to complete exemption for very large incomes (these being constantly sought by the spokesmen for big wealth who appear before congressional committees) and for thoughtfully saddling most of the tax burden onto the politically illiterate lower labor force, the pubpols have been heavily financed on their road to financial independence by "campaign" contributions, testimonial gifts, law firm retainers and simple donations. Without such financing the poor-boys-who-made-good in politics would never have acquired the stake necessary to set themselves up as entrepreneurs under federal allocation of licenses (which they indirectly control), in building-and-loan operations, television-radio broadcasting, consumer loan sharking, local banking and insurance underwriting and subsidized speculation in oil and mineral lands. And without retainers from grateful corporate clients many lawyer-congressmen would be hard put to divert lucrative business from some of the less directly political law firms.
Just as the more impetuous racketeers when in difficult straits with the law turn to skillful high-fee pleaders like Edward Bennett Williams or Percy Foreman (in an earlier day they turned to the Max Steuers and Clarence Darrows), so the big corporations when they find themselves in a tight spot, legalistically speaking, turn to the big-league
law firms of Wall Street, State Street and La Salle Street. While for routine matters the bush league of congressional law firms will do, when the action gets really serious it is necessary to bring the big guns of the big-name firms to bear. Before such luminaries, entranced judges sit properly spellbound at seeing it uncontrovertibly proved once again by law, logic and philosophy that wealth is virtue, poverty is crime. The lesser firms, however, are indispensable for routinely guiding legislation or softening the touch of regulatory commissions to a delicate pianissimo that would arouse the artistic envy of a Horowitz.
Naturally, with the big property owners given a large degree of accommodation up to complete exemption, with loopholes liberally carved in the imposing tax wall, it is necessary to saddle the rising costs of the welfare-warfare economy onto the shoulders of the rank-and-file in the labor force. Hence the lopsided tax structure, Wilbur Mills's "House of Horrors," that we have scrutinized in only slight detail.
The signal contribution of the democratic politician here (and this is well understood in such places as Wall Street) is that he is gifted with the ability to flimflam this large collection of taxpayers with stupefying rhetorical pyrotechnics and appeals to free- floating sentiment; he puts these gifts to work so that, even if not cheered, the public cannot grope its way out of the verbal barrage in which appear all the gems of stale oratory. In addition, to show he is friendly he kisses babies, smiles, shakes hands endlessly and gobbles strange foods thrust upon him by the local constituency.
His brain in something of a fog, grasping desperately at some notion of a lesser evil, the common man feels that the vote he is about to cast is the best thing, everything considered, that he can manage in the hairy circumstances. So, perhaps not too happy about the whole thing, he stoutly votes for Horace "Bugsy" Latrine, "The People's Friend," and against John "The Louse" Outhouse, who slipped and allowed himself to be photographed giving candy to a Negro baby, thus fomenting the sinister rumor that he keeps a harem of lascivious Negresses contrary to the laws of God and men.
Karl Marx, in an often quoted apothegm, thundered that "The State is the executive committee of the ruling class. " Although this is merely redundantly truistic it is often disputed by bargain-counter sages. Yet the utterance has misled many self-styled Marxists to believe that the finpols or big capitalists issue direct whiplash orders to their docile minions in government, sometimes by picking up a phone in Wall Street and barking harsh instructions over the wire. Nothing could be further from the truth, even though direct wires from Wall Street to the White House have been known to exist during Republican Administrations up to the time at least of Herbert Clark Hoover.
The process through which the finpols induce the pubpols to march in lock-step with them is much subtler than this but not so Marxianly subtle as merely being common participants in a cultural climate; nor does it consist of winning them over by powerful logical arguments in favor of the free enterprise or capitalist system. The finpols insure that the pubpols will be like-minded by making it possible for the latter to become free-- that is, government-licensed entrepreneurs themselves. The fusion of thoughtways is achieved this simply. That the process is not more subtle anyone may observe by noticing how quickly a politician can change his outlook if the quid pro quo is not forthcoming. In such circumstances self-styled conservatives can be led to stand for quite radical measures, let the cultural climate be what it may.
It is noticeable that congressmen and spokesmen for the rich in general are much more impassioned in defense of the free enterprise system of government economic support than the prime beneficiaries. One seldom hears of a Rockefeller, Du Pont, Mellon, Ford or lesser luminary of great wealth bawling wildly to the countryside about the
impeccable virtues of free and easy enterprise. This task is discreetly left to recent converts.
And while I believe there is much to be said for capitalism in some of the modified variegated forms it takes, particularly in Europe, and while I also believe there is little, humanistically speaking, to be said for the Leninist version of the vaguely outlined Marxist substitute, capitalism at its best can arouse in the sensitive observer at most a cool and moderate sort of admiration. It did not, contrary to the sly suggestion of its political friends, invent science and machine technology (industrialism), launch the Age of Discovery or put in their places the natural resources of the earth. Rather did it impress these into its service. Nor did it foster the population boom, which is greatest outside its confines. Even tried-and-true capitalist economists of any stature do not trace to capitalism all novel boons, whatever they may be, although anti-capitalists madly trace to it all evil.
It is left to recent off-the-street converts, beneficiaries of the big quick deal, the windfall, to discover overwhelming virtues in a system that, whatever its merits, is subject to evaluative analysis that brings to light not a few dubious aspects into which it is not edifying to delve.
Appreciations of capitalism by economists, it is always evident, are far more muted than those of its public political celebrants. For those who wonder at the emotional fervor of the politicos, the explanation is as simple as it is vulgar. Would not almost anyone except the rarely cultivated man be inclined to see, as in a Pauline revelation, vast merits in a system that suddenly, without any forewarning, showers down upon him personally, apparently from nowhere, vast rewards? Would not such a man--a Dirksen, perhaps--be dramatically and sincerely struck by the suddenly revealed beauties of the system? Would he not feel strongly impelled when the occasion presented itself to draw upon whatever eloquence he commanded to defend and extol that system? He was nothing, and he knows this; the system made him into something, perhaps a television pundit, perhaps a senator, even president. Here is ground for true belief.
There is a more immediate reason, too, for the pubpols to see extravagant merits in the system, which plays the role of the goose that repeatedly lays the golden eggs--for them. Many economists, some in dismay, have observed how Congress is inclined to starve the public sector of the economy (as government nonmilitary operations are somewhat ornately styled) and to favor the private or corporate sector. Congressmen in general show little enthusiasm for schools, parks, hospitals, sanatoria, low-income housing, libraries and the like but immoderate enthusiasm for, say, armaments entrepreneurs and bowling alley proprietors. While structures and programs in the public sector can be "milked" to a certain extent at their inception, as in the letting of contracts and buying land, the process cannot be repeated indefinitely as with going concerns in the private sector.
With a going concern, such as a bowling alley, it is different. It can, first, be taxed continuously--a great advantage; schools and the like pay no taxes but eat them up. Furthermore, the proprietor can be shaken down regularly for campaign contributions and off-the-cuff gifts in return for regulatory legerdemain. The proprietor is to a certain extent, at least as far as the courts will permit, at the mercy of the "democratic" politician and his little tin box.
And if the "democratic" politician has been thoughtful enough to intersect two new superhighways at the door of the bowling alley, with mandatory long-cycle traffic lights installed, he is obviously deserving of a testimonial donation for public service from the bowling alley proprietor.
Hasn't the business generated boosted gross national product? A politician who can do this and at the same time gain public plaudits for his sagacity is obviously a statesman who should be concretely recognized.
Cooperation, it is evident, is necessary between finpols and pubpols if the system is to work as it does. Nor are showdowns between the two ever necessary because all that is usually required to bring most of the latter into line (if they stray) is money, the big grease of American politics. In saying this, one is not saying that all pubpols are susceptible to the monetary touch. It is not necessary to have all of them on the side of the big money. The entire operation, indeed, looks better if there are some honest dissenters, even vociferous dissenters. Such dissent appears to imply that positions have been taken, each way, on the merits of an argument. There are, perhaps, mysterious reasons on the side of the majority, which consists of sound down-to-earth men like Everett Dirksen and Lyndon Baines Johnson.
All that the big money needs is a "democratic" majority-of a subcommittee of 3 to a legislative committee, of a legislative committee of 15 to 25, of a caucus of 50 to 100, of a legislative body of 100 or 435. This is not much to achieve in a nation of some 200 million immortal souls. And even if there is not a majority on the side of the money interest, all is not lost because any suddenly flaring opposition can be blocked and stalemated by a minority under the rules. If the money interest cannot have its way, neither can anyone else unless there has been a rare political upheaval induced by nontypical circumstances.
So much has been written about the veritable misdeeds of the corporations, not without ample grounds, that there is a tendency among critics to overlook the indubitable fact that business enterprises sometimes, even often, like black sheep of a family, act quite legally, properly and even meritoriously and are nevertheless clipped below the belt by the pubpols. It would take hundreds of pages to detail all the harrowing cases in this vastly neglected area, so I cite a single recent major instance simply to remind the reader of what goes on.
L. Judson Morhouse, fifty-two, an authentic Anglo-Saxon and chairman of the Republican Party in New York State, was convicted and sentenced in June, 1966, to two to three years of penal servitude on two counts of bribery, a very serious offense. The judge could have imposed a sentence of twenty years and a fine of $9,000 but, as he explained, the defendant until his conviction had an "unblemished" reputation and "has many good friends in most high places who have willingly come forward to urge leniency. " The judge also noted that Morhouse "was a man who wielded tremendous governmental power and influence" which, as the judge himself volunteered, he had "perverted" for "personal and private gain. " According to the prosecutor, Morhouse was an "influence peddler"--not uncommon in politics.
The specific charge against Morhouse was that he induced former State Liquor Authority Chairman Epstein to accept an illegal $50,000 for granting the Playboy Club of Chicago a New York liquor license and that he, initiator of the deal, assisted the Playboy group in bribing Epstein. The Playboy Club was a legitimate taxpaying enterprise--not even a sweatshop--that sought to do legitimate taxpaying business in New York City. Yet it was required to pay toll to do legitimate business--a common occurrence as between small and moderate-sized businesses and politicians. This is one reason (rather than labor costs) many enterprises move from one part of the country to another, especially out of big cities, although after they get well settled in a new location they often have the "bite" again put on them by local politicos. Sometimes, though, the "bite" is smaller in one place than another so moving may be advantageous.
One can refuse to pay and instead fight for one's rights in the courts, but experience has shown that this process can be so costly as to be ruinous.
Morhouse took his sentence stoically, although his lawyer said he had been punished enough by merely being put on trial (a strange doctrine) . Against this contention, the prosecutor cited a long list of other instances in which Morhouse had received "fees" ranging up to $100,000 from enterprises engaged in legitimate endeavors, enough to give him success or what sociologists coyly refer to as "upward social mobility. "
So it is not, very evidently, necessary for a company to be delinquent in some way in order to experience the exactions of politicians, although the big corporations are seldom bustled about in the way the Playboy Club was. Morhouse would never have acted as he did in this case if the Standard Oil Company of New Jersey had wished to put up a gas station or refinery in some unseemly place. When the big corporation wants anything out of the routine--and the Playboy Club did not even ask that--it simply states its case "on the merits" in high places and gets all or most of what it wants. As a matter of tactics it asks for a great deal more than it really wants in order to be roundly rejected in some way, thus making the regulatory commission, public executive or legislature look properly vigilant in the eyes of the public--a simple instance of finpolitics. The reason the big enterprises no longer resort to crude bribery, except perhaps through remote agents in minor situations where a local ordinance bars the road, is that they have the ways already thoroughly greased all along the line through "campaign" contributions, donations-for-public-merit, testimonials, law business, foundation grants to savants and other forms of patronage involving legal tender. The request, whatever it is, in substance slips through easily all the way up to and including Congress. But if some random individual made an analogous request, he would be hailed before the nearest psychiatrist or, perhaps, jailed for jarring the dust on some moth-eaten statute.
Morhouse, it should be made clear, did not suddenly suffer any loss of esteem among those "in the know. " He had simply been caught working on a highly competitive street- New York City is Democratic and upstate New York Republican and hostile to the city; Morhouse in the city was somewhat out of the jurisdiction under his surveillance and up against rivalrous politicos. According to the well-understood rules of the game, he had to serve as a scapegoat, thereby helping to reassure the public. My own opinion of Morhouse did not change in the slightest when he was convicted because I always assumed, on the basis of a long line of similar cases, that as a state party chairman he was doing something of the sort--if not this then something else of a gamey order. What he did was hardly more than par for the course.
Just as the businessman is not in business for his health, the typical American politician is not in politics for his health, the pay of office or because he is enamored of the public. So to suppose would, in the light of much evidence, strain credulity beyond the breaking point.
Money in Politics
That a great deal of money is bandied about in politics is well known. On this topic many extensive studies have been written that need not be summarized here. All, fragmentary though they are, show a steady avalanche of money. 74
What is now, today, causing concern about this telltale phase of American political life is the rising cost.
It was estimated, for example, by Dr. Herbert E. Alexander, an authority on election costs, director of the Citizens Research Foundation and Kennedy-appointed executive director of the President's Commission on Campaign Costs, that the 1964 national campaigns cost at least a whopping $200 million, not counting efforts by volunteers,
unpaid efforts by public officials or amateurs and sideline commentary by telecasters, newspapers and other publications. 75 And campaign costs, as we have observed, are not the only items of political expenditure. The bill, it is evident, is running very high.
An incisive, brief updating of the situation was written by Victor Bernstein for The Nation, June 27, 1966, under the title of "Private Wealth and Public Office: The High Cost of Campaigning. " As it was shown, political money is not put up by the rank and file of citizens. In all its forms it invariably Comes from property owners and people of assured position-the upper 1 per cent of income receivers--apart from such money as has in recent decades filtered into the pot from labor leaders, themselves in the upper- income strata.
As Bernstein made clear, the electoral system, as distinct from the extra-legal politicians' system within government (another item of big expense), is extremely costly to operate. In the 1966 off-year, for example, $175 million were scheduled to be spent solely at the state levels. Again, a Senate seat, as Bernstein testifies, can cost a million or more, and $2 million were spent to make John Lindsay the able mayor of New York. This last leaves out of account what was spent to defeat him.
Noting that in order to be in politics one must be rich or have rich friends, some of the currently rich ones cited being the Kennedys, Harriman, the Rockefellers, Romney, Pell, Ottinger and Johnson (there are others), Bernstein raised the rather marginal question of whether democracy (by which he meant the rundown U. S. political system) is "better served by relatively penurious politicians who owe office to support by the rich" or by the rich in person. He did not note the fact, significant in my view, that Johnson like many others not mentioned grew rich while in, of, by and for politics.
Congressional Origins
Most congressmen, all now in the upper 1 per cent of income receivers, were at least originally impecunious. This is made crystal clear in Donald R. Matthews's thorough study, U. S. Senators and Their World. According to Matthews, all except a handful of senators were the sons of men in middle-class occupations. 76
On the basis of the mainly blurry class indices he cites--professional, proprietor and official, farmers, low-salaried workers and industrial wage earners--I should rather say most came from lower-middle-class and middle-class occupational backgrounds. This is made evident, first by the fact that among 180 senators in the decade 1947-57 no fewer than 52 per cent were rural born 77 and at the time of their birth none of the criteria of upper-middle-class status such as relatively high income and prolonged schooling were ordinarily found in rural areas. "Places like Centerville, South Dakota; Isabel, Illinois; Ten Mile, Pennsylvania; Rising Sun, Delaware; and Honea Path, South Carolina, nurtured more senators [in the group studied] than all the cities of the United States combined. " 78 Most of the remaining senators came from small towns, with the most overrepresented small-towners from places of 2,500 to 5,000 population. 79 The Senate, in brief, consisted largely of pure hicks, ruling an urbanized, mechanized society.
As to class origins, "The children of low-salaried workers, wage earners, servants, and farm laborers, which together comprised 66 per cent of the gainfully employed in 1900, contributed only 7 per cent of postwar senators. [Owing to the disparity of birth rates between the upper and lower classes, the disparity in political life-chances, as Matthews notes, was "actually greater than these figures indicate. "--F. L. ] Only two of the 180 men, Senators Wagner and O'Daniel, were the sons of unskilled, urban wage earners. Wagner's father was a janitor in a New York City tenement; O'Daniel's father was a construction worker. Senator Purtell was the son of a cigarmaker; McNamara, of a shipfitter; Daniel (S. C. ), of a millwright; Welker, of a carpenter; Pastore, of a tailor; Cordon and Dirksen, of painters; Payne and Dworshak, of printers; Anderson, of a
salesman; Myers, of a bookkeeper; Lennon, of a clerk; Margaret Chase Smith was the daughter of a barber. " 80 There were no Negroes, although Negroes constituted 10 per cent of the population.
"Among the sons of farmers, some were born in relative poverty, yet it is virtually impossible to ascertain this in specific cases. It is still possible to conclude that very few senators were born in working-class and lower-class families. " 81
Yet 33 per cent of Democrats and 31 per cent of Republicans had fathers who were farmers. 82 Farmers have never been considered upper middle class. And 16 per cent of Democrats and 7 per cent of Republicans had fathers who were lawyers, not invariably an upper-middle-class index in the United States.
That most of these men are generically middle class, and as such likely to be upward strivers and admirers of entrepreneurial as distinct from rentier plutocracy, is also shown by the fact that just prior to their debut in the Senate 102 were job-holding political officials, 88 having started out as lawyers and 97 regarding the law as their principal nonpolitical occupation. 83 By percentages, 26 per cent of these pre-senatorial officeholders were in law-enforcement offices (prosecutors), 23 per cent in administrative offices, 17 per cent in state legislatures, 11 per cent in the House of Representatives, 9 per cent in the governor's chair, 9 per cent in local elective offices, 3 per cent in some statewide elective office and 2 per cent on the congressional staff. 84
For those hoping for a better day in politics with new upcoming men, it should be noticed that the pipelines feeding high office are now filled with similar types. Anyone looking to the state legislatures for zeal in better government can get a glimpse of the future in Congress that will induce sober second thoughts.
