In theory, what’s prohibited is clear: “using one’s official position to endorse any product or service,” as the director of the U.S. Office of Government Ethics put it in a letter on Thursday. The letter expressed his disappointment that the White House would not be disciplining Presidential adviser Kellyanne Conway over her having told FOX News viewers in February to “go buy” Ivanka Trump’s fashion line in what she described as a “free commercial.”
In practice, things can get a little murky.
The ongoing dispute over Conway’s statement is just one of the many ways in which President Donald Trump’s short time in office has already been marked by several conflicts between the business of governing and business in the more typical sense. Not only has he nominated an extraordinarily business-oriented cabinet — which has presented its own problems for the Office of Government Ethics — but some legal scholars and bipartisan ethics watchdogs still don’t think he has done enough to distance himself from his family’s business. Also on Thursday, the State Department confirmed that Secretary of State Rex Tillerson would recuse himself from working on issues related to the Keystone XL pipeline, due to his history as an oil-business executive.
At its core, the debate is about whether the President’s having a foot in the business world might sway his official decisions and, conversely, whether his political power and those of his associates might improperly help his business.
But, despite the trouble caused by business interests in the Trump administration, experts say that this debate is in many ways just more of the same. Since the early days of the Republic, the question of whether government officials can do well for the nation and themselves at the same time has simmered — occasionally boiling over.
That said, for a couple of reasons, the first decades of U.S. history were relatively scandal-free in terms of conflicts of interest and corruption.
“Between 1789 and 1820, there were hardly any records of ethics scandals or widespread corruption in the federal government,” says Robert Roberts, author of White House Ethics: The History of the Politics of Conflict of Interest Regulation and professor of political science at James Madison University. “That had a lot to do with who went into the federal government — primarily elites, recruited from very wealthy families, because they were the only ones who had the education to perform the functions of leading government.”
But it wasn’t just a matter of wealth insulating the Founding Fathers from the financial concerns that might lead to conflicts of interest. The founders were also adamant about establishing safeguards to make sure American leaders were not tempted to profit personally from their positions of political power. They had seen the bribery that was common in Europe at the time, and they knew they knew that their relatively weak, young nation would be a tempting target for the monarchies of France, Great Britain, and the Eastern European regions that now include Austria, Hungary and Russia. (Yes, concerns about foreign intervention and influence in U.S. politics are as old as America is.) That was why the founders ended up including ideas like the Emoluments Clause, which prevents officeholders from accepting payment from foreign states, in the Constitution.
Eventually, however, the founders’ fears — and their personal wealth — weren’t enough to prevent conflicts of interest and corruption from becoming a thing.
Mass Politics and Mass Corruption
In some ways, it starts with Alexander Hamilton. He was the one who decided to issue bonds to deal with America’s Revolutionary War debt, a system that — though risky — ended up making the wealthy wealthier. So it was that, when Thomas Jefferson and the Democratic-Republicans came to power in the election of 1800, explains Roberts, they did so on a wave of “populist anger” that had been simmering in the 1780s and 1790s. Many felt that the Federalist government had been too close to the rich merchants and other financial speculators who had benefited from Hamilton’s system.
So, by the 1820s, government service was no longer seen exclusively as the province of the elite. However, it took some adjusting to figure out what kind of pipeline to office would replace the old one. One early possibility, which was exemplified under the presidency of Andrew Jackson, was the “spoils system.” This system rewarded party loyalists with federal government jobs. Though some Americans were happy that Jackson was bringing new blood to Washington — in keeping with his campaign promises — the scramble for jobs and profit helped to spread a culture of corruption within government circles.
Eventually, it was simply seen as par for the course that government officials would try to make some money on the side. Customs officials cleaned up especially well, such as Samuel Swartwout, the chief customs officer for the Port of New York from 1829 to 1838, who stole $1,225,705.67 during his eight years of office, according to Roberts’ book. In another particularly flagrant example, when the Treaty of Guadalupe Hidalgo ended the Mexican-American War in 1848 and included a provision to compensate those whose property had been damaged by the war, Sen. Thomas Corwin of Ohio —who went on to become President Millard Fillmore’s Treasury Secretary — was paid to serve as an attorney representing a fraudulent claim before the Mexican War Commission.
Thus, a law enacted on Feb. 26, 1853, first prohibited members of Congress and federal employees from receiving anything of value for helping private citizens pursue claims against the government, and secondly, prohibited federal employees from assisting in the prosecution of a claim if they were paid for their efforts.
Civil War and Uncivil Service
The Civil War, however, was where these conflicts of interest really came into focus as something that was both prevalent and problematic.
After all, a financial conflict of interest was directly tied to the fight over slavery: elected officials and U.S. presidents who also managed large plantations clearly had a bias when it came to addressing slavery as lawmakers. “We didn’t deal with the issue that caused one of our worst constitutional crises, the Civil War, because of this financial conflict of interest,” Richard Painter, who was chief ethics lawyer for President George W. Bush and now teaches corporate law at the University of Minnesota Law School, argues.
Secondly, on a much narrower level, supplying the Union Army was big business, and the 1853 statute did nothing to stop the widespread corruption among contractors hired to do that.
“This was an opportunity for people to get rich quick by promising to sell the federal government horses, arms and uniforms, getting paid for those things and then supplying them with junk,” says Kathleen Clark, a professor of law at Washington University School of Law and a member of the D.C. Bar Rules of Professional Conduct Review Committee. And, she says, because many federal employees worked other jobs, too, that meant they were involved with such fraud too. For example, a federal employee who also owned a horse farm might profit by being able to influence a decision on a source of military horses. Or, a person might put in a claim for services rendered when no such services had been supplied, and a government official who helped see the claim through might get a cut of the profit. (One response to this widespread problem was the False Claims Act of 1863, considered the nation’s oldest whistle-blower law.)
After the war, under the Ulysses S. Grant administration, officials were said to have lined their pockets and traded favors with private-sector representatives. During the era of railroads — a time when government had the power to decide whose rail company got to do what — deals flowed between executives and officials. Despite the laws that had been passed, the spoils system and the culture of corruption persisted. In fact, President James Garfield was assassinated in 1881 by Charles Guiteau, a man who believed the Republican leader “owed him a patronage position in the diplomatic corps,” according to the National Museum of American History.
All of these problems led to the civil-service reform movement of the 1880s. For example, in 1883, a civil-service reform act — better known as the Pendleton Act — established a testing requirement for certain offices to ensure better-qualified officeholders. And eventually, says Painter, a perhaps more important step was taken: the federal government started paying legislators enough, in theory, to prevent them from needing to keep open any side businesses that could lead to potential conflicts of interest.
Holding The Revolving Door Open
And yet government officeholders continued to raise eyebrows — and more — with the ways they were seen to profit from their positions.
For example, Andrew Mellon of Mellon Bank and Gulf Oil was the Treasury Secretary for Republican Presidents Calvin Coolidge and Herbert Hoover. Some, like Texas’ Rep. Wright Patman, argued at the time that Mellon’s simultaneous roles in the cabinet and the business world violated a prohibition on Treasury officials being “directly or indirectly be concerned or interested in carrying on the business of trade or commerce, or be owner in whole or in part of any sea-vessel.” (Mellon became a particular target of public ire after the stock market crash of 1929, which his bank survived relatively well.)
Some presidents had profitable businesses themselves, which could cause problems. For example, Herbert Hoover, who cashed out on his mining business after World War I, claimed publicly throughout the years that his money was in what we would consider a blind trust — but his story shows how hard it is to separate the politician for his business life. Congress investigated whether his son Herbert Clark Hoover Jr. was using his White House connection to benefit his radio-technology business. Nothing came of the probe, but as Fortune put it in 1932, the president’s wealth and that of his family remained “naturally” and “logically” an “object of interest” to the citizenry. “Hoover made careful that he didn’t look like he had conflict of interest,” according to Spencer Howard, the archives technician at the Herbert Hoover Presidential Library and Museum. “He removed all appearances of impropriety as best he could, but there’s really strong circumstantial evidence that his financial advisor was more active than he was claiming. Even if you have divested yourself, you still know people.”
In the middle of the Cold War-era defense buildup after the second World War II, scandal racked the Truman administration, in which “influence peddlers” nicknamed “five percenters” by New York Herald Tribune secured government contracts for clients willing to pay them 5% of the value of the contract.
After Truman, President Dwight D. Eisenhower filled his cabinet with business leaders, Roberts points out, which progressives argued meant they would “use their power to favor interests of the industries they come from.” He says scandals “exploded” during the Eisenhower era. For example, in what TIME called the “highest-voltage power controversy of the Eisenhower era,” a utility combine’s claim for damages over a canceled contract was eventually tossed out by the Supreme Court because one banker served as both a vice-president of a bank and a financing expert for the Bureau of the Budget, which both selected the utility company for the project and chose that particular bank to finance it.
On Oct. 23, 1962, President John F. Kennedy signed into law the first major attempt to reorganize America’s criminal conflict-of-interest statutes, some of which were a century old. The revisions expanded the types of government matters in which potential conflicts of interest could arise and in which conflicts of interest are prohibited. It also designated a category of “special Government employees” to cover the growing number of people who may do part-time consulting work for the government on occasion, and it hammered out a way that the government could receive advice from these individuals while not unduly restricting what they could do in their day jobs.
The Ethics in Government Act of 1978 (signed into law after Watergate) created the Office of Government Ethics. Further changes in 1989 made it easier for business executives to work in government by letting them sell off their financial assets without facing a tax penalty.
Conflict-of-interest statutes continued to be revisited to this day — and yet it is clear that the question of propriety is far from settled. If American history is any indication, concerns about the role of money in government won’t go away any time soon.
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