The Sanborn incident or Sanborn contract was an American political scandal which occurred in 1874. William Adams Richardson, President Ulysses S. Grant's Secretary of the Treasury, hired a private citizen, John B. Sanborn, a former Union General, to collect $427,000 in unpaid taxes. Richardson agreed Sanborn could keep half of what he collected. After extorting money from companies to pay back taxes by falsely making claims of tax evasion, Sanborn kept $213,000, of which $156,000 went to his various assistants. After an investigation by the Treasury Department discovered corruption, President Grant signed legislation making the practice illegal.
In 1872 lawmakers allowed the Bureau of Internal Revenue (BIR) to hire private citizens to assist the Government to discover and collect any money belonging to the United States. BIR did not develop any plans for the private collectors. There were several influential Massachusetts politicians, most of them in key positions in Washington; such as Treasury Secretary George S. Boutwell; William A. Richardson (Boutwell's successor); and Benjamin Franklin Butler.
Sanborn began his efforts focusing on whiskey taxes. Treasury officials requested collection of unpaid taxes from 39 delinquent distillers and liquor retailers. Sanborn was widely successful in his efforts, and persuaded supervisors to extend his mandate. By late 1872, the department had added over 750 taxpayers to Sanborn's list of delinquents. In the early 1873, they appended another 2,000 delinquent names to his list. Finally, on July 1, 1873, 592 railroad companies were added to Sanborn's list.
Sanborn had an incredible incentive to add names to his contract: under the agreements with officials, he would receive 50% of any money collected from delinquent taxpayers named in his contract. By falsely accusing companies of tax evasion he was able to extort money from them. [1]
Sanborn expanded his operations, the Treasury accepted his list with little or no evaluations. Private collectors were required, by law, to furnish details about each collection, such as, nature of the debt and the evidence used to support accusations. Traditionally, the government would hire contractors to assist its officials in collecting taxes. Sanborn viciously turned the system, and assured full-time government employees would work for him.
BIR officials were required to give the contractor all the help and assistance necessary, BIR employees would assist Sanborn to analyze several railroad companies. About this time Congress had delivered the contractor another 150 delinquent accounts. In July 1873, Sanborn extended the contract by 150 companies. Meanwhile, he convinced Congress to allow him take over all of the railroad companies within the United States. Sanborn was trying to collect taxes that BIR employees were also pursuing, causing great disturbance among the employees. Also the commissioners had lodged a formal complaint with the Treasury, which was ignored by the same.
On January 10, 1874, Sanborn and two others were indicted for revenue fraud. Sanborn's defense was that he was under contract from the government due to a rider in an 1872 appropriations bill created by congressman William H. Kelsey. This bill allowed the Secretary of the Treasury to hire three persons to "discover and collect" unknown taxes to the United States government. If they collected they would receive 50% commission. [2] Previously, acting Treasury Secretary William Adams Richardson, hired Sanborn as an independent tax collector on a 50 percent commission basis, known as a moiety. [3] What Sanborn did instead was to take already existing tax cases, and put them on his contract, so when they came in, he would collect 50%. When the charges came, and congress investigated the documents. In the following testimony, Richardson said he didn't read the contracts, he resigned few months later. Sanborn was acquitted of the charges because he was under contract to collect those taxes, but the scandal still rocked the country from January to May 1874. [2] In June 1874, Grant signed the Anti-Moiety Acts, abolishing that system. [4]
Ulysses S. Grant was an American military officer and politician who served as the 18th president of the United States from 1869 to 1877. As commanding general, Grant led the Union Army to victory in the American Civil War in 1865 and briefly served as U.S. secretary of war. An effective civil rights executive, Grant signed a bill to create the Justice Department and worked with Radical Republicans to protect African Americans during Reconstruction.
The Black Friday is the term for a gold panic on September 24, 1869, which triggered a financial crisis in the United States. It was the result of a conspiracy between two investors, Jay Gould, later joined by his partner James Fisk, and Abel Corbin, a small time speculator who had married Virginia (Jennie) Grant, the younger sister of President Ulysses S. Grant. They formed the Gold Ring to corner the gold market and force up the price of the metal on the New York Gold Exchange. The scandal took place during the Grant Presidency. The Secretary of the Treasury, George S. Boutwell, had a policy to sell Treasury gold at biweekly intervals for a sinking fund to pay off the national debt. Along with other, non-routine gold sales, this acted to stabilize the dollar and boost the economy. The country had gone through tremendous upheaval during the Civil War and was not yet fully restored.
The Whiskey Ring took place from 1871 to 1876 centering in St. Louis during the presidency of Ulysses S. Grant. The ring was an American scandal, broken in May 1875, involving the diversion of tax revenues in a conspiracy among government agents, politicians, whiskey distillers, and distributors. Whiskey distillers bribed officials from the U. S. Department of the Treasury to increase profits and evade taxes. Grant's Justice Department prosecuted members of Grant's own Republican Party who were part of the Ring. The kingpin of the Whiskey Ring was the notorious General John McDonald, whom Grant had appointed Revenue Collector of Missouri District in 1869. Under the leadership of Grant's Secretary of Treasury, Benjamin Bristow, a reformer, the Ring was uncovered and broken up.
George Sewall Boutwell was an American politician, lawyer, and statesman from Massachusetts. He served as Secretary of the Treasury under U.S. President Ulysses S. Grant, the 20th Governor of Massachusetts, a Senator and Representative from Massachusetts and the first Commissioner of Internal Revenue under President Abraham Lincoln. He was a leader in the impeachment of U.S. President Andrew Johnson, and served as a House manager (prosecutor) in the impeachment trial.
Benjamin Helm Bristow was an American lawyer and politician who served as the 30th U.S. Treasury Secretary and the first Solicitor General.
Columbus Delano was an American lawyer, rancher, banker, statesman, and a member of the prominent Delano family. Forced to live on his own at an early age, Delano struggled to become a self-made man. Delano was elected U.S. Congressman from Ohio, serving two full terms and one partial one. Prior to the American Civil War, Delano was a National Republican and then a Whig; as a Whig, he was identified with the faction of the party that opposed the spread of slavery into the Western territories. He became a Republican when the party was founded as the major anti-slavery party after the demise of the Whigs in the 1850s. During Reconstruction Delano advocated federal protection of African-Americans' civil rights, and argued that the former Confederate states should be administered by the federal government, but not as part of the United States until they met the requirements for readmission to the Union.
William Adams Richardson was an American lawyer who served as the 29th United States secretary of the treasury from 1873 to 1874. During his tenure, the Panic of 1873 swept the nation and caused a depression that lasted five years. He controversially responded by issuing $26 million in greenbacks, which averted the crisis, although there was debate as to whether he had the authority to do so. His tenure was marred by the Sanborn incident in 1874, which involved favoritism and profiteering in the collection of unpaid taxes. He was later appointed a judge, and subsequently the chief justice, of the United States Court of Claims.
General Order No. 11 was a controversial Union Army order issued by Major-General Ulysses S. Grant on December 17, 1862 during the Vicksburg campaign of the American Civil War. The order expelled all Jews from Grant's military district, comprising areas of Tennessee, Mississippi, and Kentucky. Grant issued the order in an effort to reduce corruption among Union Army personnel and stop the illicit trade in Southern-produced cotton, which he perceived as being run "mostly by Jews and other unprincipled traders". During the war, the Lincoln administration had authorized licensed traders to do business with the Union Army, which created a market for unlicensed ones. Union Army commanders in the South were responsible for administering the trade licenses and trying to control the black market in Southern cotton, in addition to their regular military duties.
George Maxwell Robeson was an American politician and lawyer from New Jersey. A brigadier general in the New Jersey Militia during the American Civil War, he served as Secretary of the Navy, appointed by President Ulysses S. Grant, from 1869 to 1877. A member of the Republican Party, he also served two terms as a U.S. Representative for New Jersey from 1879 to 1883.
Orville Elias Babcock was an American engineer and general in the Union Army during the Civil War. An aide to General Ulysses S. Grant during and after the war, he was President Grant's military private secretary at the White House, Superintendent of Buildings and Grounds for Washington D.C., and a Florida-based federal inspector of lighthouses. Babcock continued to serve as lighthouse inspector under Grant's successors Rutherford B. Hayes, James A. Garfield, and Chester A. Arthur.
Grantism is a derisive term of United States origin referring to the political incompetence, corruption, and fraud, during the administration of President Ulysses S. Grant. His presidency, which lasted from 1869 to 1877, was marred by many scandals and fraudulent activities associated with persons within his administration, including his cabinet, which was in continual transition, divided by the forces of political corruption and reform. Among them were: Black Friday, corruption in the Department of the Interior, the Sanborn incident, and the Whiskey Ring.
Privatized tax collection occurs wherever the state passes on its obligation to collect taxes to private companies or firms in return for a fixed or ad valorem fee. This contrasts with tax farming where a private individual or organization pays off a predetermined tax debt, and subsequently recoups that payment by collecting money from the people within a certain area or business.
Ulysses S. Grant and his administration, including his cabinet, suffered many scandals, leading to a continuous reshuffling of officials. Grant, ever trusting of his chosen associates, had strong bonds of loyalty to those he considered friends. Grant was influenced by political forces of both reform and corruption. The standards in many of his appointments were low, and charges of corruption were widespread At times, however, Grant appointed various cabinet members who helped clean up the executive corruption. Starting with the Black Friday (1869) gold speculation ring, corruption would be discovered in seven federal departments. The Liberal Republicans, a political reform faction that bolted from the Republican Party in 1871, attempted to defeat Grant for a second term in office, but the effort failed. Taking over the House in 1875, the Democratic Party had more success in investigating, rooting out, and exposing corruption in the Grant Administration. Nepotism, although legally unrestricted at the time, was prevalent, with over 40 family members benefiting from government appointments and employment. In 1872, Senator Charles Sumner, labeled corruption in the Grant administration "Grantism."
The presidency of Ulysses S. Grant began on March 4, 1869, when Ulysses S. Grant was inaugurated as the 18th president of the United States, and ended on March 4, 1877. The Reconstruction era took place during Grant's two terms of office. The Ku Klux Klan caused widespread violence throughout the South against African Americans. By 1870, all former Confederate states had been readmitted into the United States and were represented in Congress; however, Democrats and former slave owners refused to accept that freedmen were citizens who were granted suffrage by the Fifteenth Amendment, which prompted Congress to pass three Force Acts to allow the federal government to intervene when states failed to protect former slaves' rights. Following an escalation of Klan violence in the late 1860s, Grant and his attorney general, Amos T. Akerman, head of the newly created Department of Justice, began a crackdown on Klan activity in the South, starting in South Carolina, where Grant sent federal troops to capture Klan members. This led the Klan to demobilize and helped ensure fair elections in 1872.
During Ulysses S. Grant's two terms as president of the United States (1869–1877) there were several executive branch investigations, prosecutions, and reforms carried-out by President Grant, Congress, and several members of his cabinet, in the wake of several revelations of fraudulent activities within the administration. Grant's cabinet fluctuated between talented individuals or reformers and those involved with political patronage or party corruption. Some notable reforming cabinet members were persons who had outstanding abilities and made many positive contributions to the administration. These reformers resisted the Republican Party's demands for patronage to select efficient civil servants. Although Grant traditionally is known for his administration scandals, more credit has been given to him for his appointment of reformers.
President Ulysses S. Grant signed a series of laws during his first and second terms that limited the number of special tax agents and prevented or reduced the collection of delinquent taxes under a commissions or moiety system. The public outcry over the Sanborn incident caused the Grant administration to abolish the practice of appointing special treasury agents to collect commissions or moieties on delinquent taxes.
Jesse Root Grant was an American farmer, tanner and successful leather merchant who owned tanneries and leather goods shops in several different states throughout his adult life. He is best known as the father of Ulysses S. Grant and the one who introduced Ulysses to military life at West Point. Jesse was born in Greensburg, Pennsylvania, and was one of seven children. He was a self-made man who rose from poverty to become a wealthy merchant.
Hannah Grant was the mother of Ulysses S. Grant, Commanding General of the Union Army during the American Civil War and the 18th president of the United States. She married Jesse Root Grant in Point Pleasant, Ohio, and was the mother of six children. Little is known about her private life, other than what can be discerned from general and public information. She rarely discussed her son with anyone while he was a general and a president, especially not the press. She was a devoutly religious woman, always reserved and unpretentious in her manner, and she is often considered by historians and others to have had a strong influence on her son Ulysses, who shared similar qualities in character.
William Sillman Hillyer was an American lawyer and Union officer who advanced through the ranks to Brevet Brigadier General during the American Civil War. Before the war he practiced law in Saint Louis where he met Ulysses S. Grant. During most of the Civil War he served under General Grant and was with him at the Battle of Fort Donelson, Battle of Shiloh and the Siege of Vicksburg. Hillyer was chosen by General Grant to be a member of his staff, and was one of its original members and the last surviving member of the original staff. After the war he served as a Treasury agent under presidents Johnson and Grant. He later pursued a political career in New York but was unsuccessful due to opposition from various political rivals.
William A. Simmons was an American political figure who served as Collector of Customs for the Port of Boston and chairman of the Boston water board.