Saturday, January 9, 2010

James Brooks: out of stock

Image from

With the half of the country still missing at the time of the 1864 elections, the question of how to proceed with the ongoing Civil War raised the passions of the candidates and voters. The Democratic Party had split between "Peace" faction, which favored a truce with the Confederacy, and the "War" faction, who supported the effort to reunify the nation. James Brooks, a New York City candidate for re-election to the House of Representatives, fell into the former camp. During his time in Congress, he had become a proponent of peace negotiations with the seceded states. This position did not necessarily translate into support of slavery. Brooks had asked his wife to emancipate her slaves before their marriage, and he later publicly declared slavery a dead or dying institution that could not be defended.

Old-fashioned politicking played a role in the New York election as well. Tammany Hall, the Democratic machine, had nominated former congressman Thomas J. Barr to contest Brooks in the general election. The Brooks campaign offered him $5,000 if he would withdraw from the race. Barr, a War Democrat, in turn sought to get the Republican candidate, William E. Dodge, to drop out. When he was not successful, he asked for $5,000 from the Dodge campaign to stay in the race and split the Democratic vote and received $2,000. It almost worked. When the ballots were counted, Barr came in a distant third with 4,544 votes; Dodge earned 8,435, and Brooks squeaked past with 8,583. One month after his election, Brooks and his brother, Erastus, were arrested after Peter Sweeney of Tammany Hall accused them of libel in printing accusations of about Tammany interference in the election through payouts and having inspectors ignore Brooks' votes.

Brooks' new term began in March of 1865, but the election was close enough that Dodge contested it to the House Committee on Elections. His appeal charged widespread ineptitude or corruption on the part of the election inspectors. Dodge said thousands of votes from people who weren't residents of the district had been counted, soldiers' votes had been forged, Dodge's votes had been improperly rejected, public notice had not been given of registration areas or voting places, and bribery and coercion had been used throughout. Brooks said Dodge was simply using his personal wealth to try to sway the election and the district to his side. The question dragged on into 1866, when the majority report of the committee declared that Brooks was not entitled to his seat and Dodge was. In April, the matter went to the House. After unsuccessful attempts to declare the seat vacant and refer the issue back to the people or send the question back to committee, the members agreed that Brooks should no longer be seated in an 84-45 vote, with 54 abstaining; soon after, they voted 72-52, with 59 abstaining, to put Dodge in his place. Brooks' absence was short-lived, however. Dodge, a reluctant nominee, did not seek re-election after his truncated term and Brooks won the seat back in the November election.

The hiccup in his political career and almost immediate recovery give an example of the relative success Brooks enjoyed in his life. Born in Portland, Maine in November of 1810, he earned money to attend college by working as a store clerk in Lewiston. After graduating from Waterville College in 1831, he briefly studied law and taught school while frequently writing letters to the Portland Advertiser. This last activity led to his career in editing the newspaper and serving as a political correspondent in Washington, D.C. Brooks served one term in the Maine house of representatives in 1835, and, after an unsuccessful attempt at re-election, traveled through Europe and the South, continually writing back to the Advertiser to document his adventures.

Upon his return to the United States, Brooks moved to New York City and established the New York Daily Express. He served in the New York state assembly in 1847, and in the next year was elected as a Whig to the House of Representatives, winning one more term there before he was turned out in the 1852 election. During the gaps in his political career, Brooks continued with his editorial duties, and continued working on the Express for the rest of his life.

When the war was concluded, one of the most important projects in the United States was the construction of a transcontinental railroad. Unfortunately, this undertaking was fraught with corruption and greed. The Union Pacific and Central Pacific railroads, swollen with land grants, federal bonds, and state and local purchases of their stock, soon became the largest corporations in the country. In part, the project got off the ground because Thomas Durant and seven other directors of the Union Pacific bought up a defunct Philadelphia holding company and dubbed it Credit Mobilier after a prestigious French credit company. By having Credit Mobilier buy Union Pacific stock and sell it below face value, the railroad raised enough money to begin construction.

Of course, this meant Credit Mobilier was essentially a dummy organization through which Union Pacific could pay itself to collect rich dividends. The directors were well aware of this fact, and eagerly sought to increase their profits in any way possible. By being both part of the railroad and Credit Mobilier, they could not only overcharge for services but approve the faulty figure as well. The railroad further cut corners by using shoddy building materials, not paying subcontractors for work, and, most notoriously, paying laborers paltry wages for the often dangerous work. Credit Mobilier held the valuable bonds resulting from the project, while the Union Pacific's debt increased. When the two spurs linked up in Promontory Point in Utah in 1869, the railroad was $74 million in the hole while Credit Mobilier had produced some $16 million to $23 million for stockholders. The impressive accomplishment of the transcontinental route was undermined by the sub-par quality of the railroad and the unjust enrichment of Credit Mobilier. Mired in debt, Union Pacific went bankrupt in 1893.

Congress, overseeing several of the financial and other issues required to move the construction forward, was not immune from the corrupt practices. Several members had been appointed government directors of the Union Pacific, including Brooks in October of 1867. Though they were forbidden from holding the lucrative stock in companies related to the project, the temptation was overwhelming. "The members of it are in Congress; they are trustees for the bondholder, they are directors, they are stockholders, they are contractors; in Washington, they vote the subsidies, in New York they receive them, upon the Plains they expend them, and in the Credit Mobilier they divide them," journalist Charles Francis Adams wrote of Credit Mobilier in 1869. "As stockholders they own the road, as mortgagees they they have a lien upon it, as directors they contract for its construction, and as members of the Credit Mobilier they build it."

Though Adams' charge essentially outlined the Credit Mobilier problem, the issue did not explode into a full scandal until September of 1872. The New York Sun, a prominent enemy of Republican President Ulysses S. Grant's administration, published an article charging that Credit Mobilier had given 2,000 to 3,000 shares of stock to the chairmen of congressional committees related to the transcontinental railroad. The scandal broke in part because of bad blood among the Credit Mobilier group, with trustee and stockholder Henry S. McComb suing the corporation and its officers, including Republican Representative Oakes Ames of Massachusetts and former Republican congressman John B. Alley of Massachusetts, in an attempt to retrieve a signficant amount of stock he felt he had earned. The article concluded that Ames had written McComb three letters in late 1867 and early 1868, revealing that Credit Mobilier stock had been sold at a steep discount to congressmen and mostly kept in trust to hide their names. The letters also hinted that the sales aimed to influence legislation and that the stock should be put "where it will produce most good for us." The Sun implicated 12 Republican officials in the affair, including former Vice President Schuyler Colfax; Henry Wilson, a Massachusetts Senator chosen to replace him on the 1872 ticket for Grant's re-election; and Representatives James G. Blaine of Maine and James Garfield of Ohio. Brooks, who had won re-election in 1868 and 1870, was not among the names.

Coming as it did on the eve of the major election year of 1872, pro-Grant newspapers such as the New York Times accused the Sun's account of amounting to mudslinging. The Sun had indeed been highly critical of corruption during the Grant administration, and expressed its support for newspaper editor and renowned antebellum abolitionist Horace Greeley as the Presidential candidate of the Democrats and a splinter group of liberal Republicans. Though Brooks' involvement in the Credit Mobilier affair was still unknown, the Times nevertheless had harsh words for him and urged support of Republican candidate Adolphe G. Dunn. The newspaper said Brooks had been disloyal during the Civil War, shown more loyalty to Tammany Hall than the district, and that his career was "chiefly distinguished by the accumulation of a large fortune for himself." Within the year, it would be determined that this last charge had hit the nail on the head.

The Sun's accusations had little effect on the elections, which saw the re-election of Grant as well as Brooks. In December, Blaine called for an investigation into the Credit Mobilier affair, saying he wanted the "slanders" to be addressed. The House approved the formation of a committee of five attorneys led by Judge Luke Poland of Vermont. The committee called on the targeted politicians as well as representatives from Credit Mobilier, the Union Pacific, and the Central Pacific. The initial hearings were conducted behind closed doors, but certain tidbits leaked out. One involved McComb saying that Brooks had received 50 shares of Credit Mobilier stock to influence his own decisions and those of the Democrats regarding legislation about the Union Pacific railroad. Permitted to speak to the charge on the floor of the House, Brooks angrily denied the accusation. "If this charge is true, I am unfit to be a member of the House and ought to be expelled--and not only from the House, but from all association with decent men," he said. Brooks explained that his son-in-law, Charles Neilson, was the person who owned the shares and that he could produce the receipt to prove it; moreover, he said, McComb had become complicit in the crimes he was accusing Brooks of by bribing members of the Louisiana legislature to support railroad interests McComb had a stake in. "Mr. Brooks weakened the force of his explanation greatly by bringing in a great deal that seemed unnecessary, and by his bitterness toward McComb," the New York Times judged, "but his denial was very broad and very emphatic, and he left McComb a very badly impeached witness."

After the closed hearings were criticized, the proceedings were made public in January of 1873, along with transcripts from the private activities of the Poland Committee. In the same month, the House formed a second select committee to conduct their own investigation.

When the Poland Committee completed their work, they determined that Brooks had only been telling half the story in his assertion that the Credit Mobilier stock belonged to Neilson. The committee said that Brooks had spoken with Durant about acquiring $15,000 to $20,000 in stock, but no formal agreement was made. When the value of the stock increased substantially in December of 1867, Brooks again wanted a piece of the profits and sought a transfer of 200 shares. He had been made a government director of the Union Pacific railroad two months before, however, and such ownership was forbidden. To circumvent this prohibition, Brooks arranged for 100 shares of Credit Mobilier stock, $5,000 in Union Pacific bonds, and $20,000 in Union Pacific stock to be transferred to Neilson. The committee found that Neilson was not complicit in the activity, since Brooks had purchased the shares for him and Neilson immediately turned over the dividends to his father-in-law. When the Credit Mobilier stock increased by 50 percent, Brooks made the dodgy claim that it entitled him to an additional 50 shares via the agreement he had made. Even the Credit Mobilier parties were skeptical of the assertion, but Brooks ended up receiving the bonus.

Neilson admitted receiving an additional 50 shares, but denied that Brooks had ever received dividends on the stock. The committee did not believe there was sufficient evidence showing that Brooks was merely a third party, however. It discovered that Neilson had given Brooks $9,000 in dividends in June of 1868, ostensibly to repay Brooks for $10,000 that had been advanced for the purchase of the 100 shares of Credit Mobilier stock. This left only $1,000 left on the loan, yet Brooks continued to hold $16,000 worth of Union Pacific bonds given to him by Neilson as a security. The committee concluded that Brooks had been the proprietor of his son-in-law's funds, and had received the 50 shares of Credit Mobilier stock worth $15,000 to $20,000 worth of Credit Mobilier at a price of only $5,000.

While the Poland Committee determined that most of the people accused in the scandal had merely been indiscreet, it had different conclusions for Brooks and Ames. Brooks, they said, had knowingly defrauded the government and rather foolishly tried to hide the benefits of the stock while still managing the investment and dividends. They confirmed that Ames had used discounted Credit Mobilier stock to try to bribe congressmen. In February, the committee recommended that both congressmen be expelled. Two days later, the congressional committee led by Republican Representative Jeremiah Wilson of Indiana concluded that Credit Mobilier had bilked the U.S. taxpayers and Union Pacific out of millions of dollars to enrich their directors. It recommended suing to recover the lost funds.

The matter went before the House later in the month. The congressmen proved reluctant to go forward with the Poland Committee's recommendation. The chamber voted 164 to 59 against tabling the whole matter, and agreed in a 115-110 vote to accept Republican Representative Aaron Sargent's suggestion that Brooks and Ames be censured instead. The House voted 174 to 32 to censure Brooks, and 181 to 36 to censure Ames. Some Republican members immediately apologized to Ames, saying they had voted for his censure only because they felt it was what their constituents would approve. The votes also set off a barrage of abortive resolutions to retain the Poland Committee to further investigate other members charged in the scandal, since there was some grumbling that Ames and Brooks had simply been chosen to mete out symbolic punishment to both parties. These efforts eventually burned out, and the Poland Committee was discharged.

Brooks had continued to travel throughout his life, and at the time of his censure he was extremely ill after picking up a fever in Asia. The proceedings may well have further drained the vitality from him, but he retained a bit of kick in the final months of his life. He thanked the black members of the House who had voted against his punishment, and issued a statement in March reiterating his innocence. He said the Poland Committee had ignored other testimony and exploited his illness, and once again claimed that Neilson had owned the 150 shares of Credit Mobilier stock rather than him. He died in April, and Ames followed him to the grave eight days later.

Sources: The Biographical Directory of the United States Congress, "Criminal Prosecution Of The Editors Of The Express For Libel" in the New York Times on Dec. 13 1864, "Arrest Of Hon. James Brooks" in the New York Times on Dec. 28 1864, "Washington News" in the New York Times on Mar. 27 1866, "Washington News" in the New York Times on Apr. 7 1866, "New-York Contested Election" in the New York Times on Apr. 11 1866, "James Brooks" in the Lewiston Evening Journal on Apr. 17 1872, "Dunn vs. Brooks" in the New York Times on Nov. 1 1872, "The National Capital" in the New York Times on Dec. 18 1872, "Credit Mobililer" in the New York Times on Jan. 14 1873, "Telegrams Condensed" in the Reading Eagle on Feb. 27 1873, "Ames And Brooks" in the New York Times on Feb. 28 1873, "Credit Mobilier: Mr. James Brooks Again Explains His Connection With It And Loses His Temper" in the New York Times on Mar. 8 1873, "Obituary: Hon. James Brooks" in the New York Times on May 1 1873, Nothing Like it in the World: the Men Who Built the Transcontinental Railroad by Stephen E. Ambrose, Empire Express: Building the First Transcontinental Railroad by David Haward Bain, The Reconstruction Era: Primary Documents on Events from 1865 to 1877 by Donna Lee Dickerson, Final Freedom: the Civil War, the Abolition of Slavery, and the Thirteenth Amendment by Michael Vorenberg, William E. Dodge: the Christian Merchant by William Carlos Martyn, The American Ballot Box in the Mid-Nineteenth Century by Richard Franklin Bensel, The Election Frauds of New York City and Their Prevention by John I. Davenport, The Credit Mobilier of America by J.B. Crawford, Campaign of '84 by Thomas V. Cooper, The House: The History of the House of Representatives by Robert Vincent Remini