President Rutherford B. Hayes.

Rutherford B. Hayes, from the moment that he “won” the Election of 1876, had many opponents. And, because he believed that having opponents meant you must be doing something right, he relished the fight with his opposition. One issue that Hayes prioritized was reforming the fee-based governance system, the system that empowered government officials to use “fees, bounties, subsidies, and contracts with private individuals or corporations to enforce laws and implement public policy.”[i] With the federal government having significantly grown from the antebellum era, those officials had accrued and would continue to accrue power in novel ways. Reforming that system—if, in fact, Hayes sought to do that—would not be something he could have hoped to do during his time as President.

An American of the time could have seen that government had been growing. After the Civil War, the “General Land Office, the Office of Indian Affairs,” and the Treasury Department were born, and those were not departments and offices with bureaucrats sitting in Washington offices.[ii] Those were new extensions of the federal government that employed many agents “who lived on the fees they collected and the economic opportunities their jobs presented.”[iii] This fee-based system “assumed that officials would forgo self-interest and follow the rules and laws designed to control their fees, but the system was purposefully weighted to serve those seeking favors.”[iv] Whether it was the government itself or one of the individuals, churches, or companies with which the government contracted, the federal government’s spigot had opened and out came fees for government services, penalties for code violations, bounties for wanted criminals, or fees for “collecting taxes, arresting criminals, killing predators, seizing enemy vessels in times of war, and performing services.”[v] The most profitable were the political machines that required the men appointed to public offices to make political contributions to the party as those comprised the highest kickbacks.[vi]

The fees were ubiquitous, and the enterprising came up with ways to get their share. Local offices of land registers and receivers earned a fee per transaction, and a postmaster—which would become one of the most widespread fee-earning positions—earned a percentage of all stamps sold “at all but the largest post offices.”[vii] Prosecutors were receiving fees for convictions secured and, in some places, simply for bringing charges against a person with the effect of prosecutors having a more intrusive presence in their communities.[viii] Judges and clerks throughout the northern states received a fee for each immigrant applying for citizenship giving those judges and clerks in the big cities a handsome sum.[ix] Some fee arrangements defied logic: while the government showed its concern for its money by rewarding those who blew the whistle on tax cheats, the government also awarded contracts without any real oversight over the contracting party’s actions.[x]

When Hayes sought to change this system in New York, he was not in pursuit of developing a system that eliminated thinly-veiled bribery or reduced fraud with government money, but rather he seeking to install his allies in the positions his opponents had secured operating within the system.[xi] New York was not the most corrupt state—for some of the happenings in Illinois would have taught New Yorkers more creative fee arrangements—but it was a lucrative place to “reform.”[xii] Powerful as the office of the President of the United States is, it is a national office, not a state or local office. New York’s United States Senator Roscoe Conkling had his own sphere of influence in his state, and when Hayes went after Conkling’s political machine by attempting to remove Chester Arthur (future President) as Collector of the Port of New York and replace him with Theodore Roosevelt Sr. (father of the future President), Conkling blocked the move by bringing fellow Senators to his defense.[xiii] Although Hayes would later suspend Arthur and replace him in 1878, Hayes would not achieve any measurable widespread reform of the fee-based system of which he was a part.[xiv] That reform would take years, even decades, to change, and it would require the greater American public to become disenchanted with the fee-based system; for now, there were too many beneficiaries of the system and too little opportunity to see the system’s faults.

New York City in 1876.

[i] Richard White, The Republic for Which It Stands: The United States During Reconstruction and the Gilded Age, 1865-1896, 357.

[ii] See id.

[iii] See id.

[iv] Id.

[v] Id.

[vi] See id. at 357-58.

[vii] Id. at 359.

[viii] See id.

[ix] Id.

[x] Id. at 360.

[xi] Id.

[xii] See id.

[xiii] Id.

[xiv] See id.

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