One of the constants of political life is scandal, especially political scandal, and in the United States one of the standard marks used to describe a political scandal is to add the term “-gate” to a word to link the scandal to the famous Watergate scandal under President Richard Nixon. Watergate was a huge scandal but in using it as a bellwether to try to show future scandals have the potential to equal it in impact modern commentators are missing the wonderful world of corrupt fiscal scandals that occurred under President Warren G. Harding.
In some ways Harding is comparable to Ronald Reagan, both men relied on a “hands off” approach to their subordinates and believed in a broad management style that allowed both individual initiative and individual corruption to flourish in their administrations. For Harding the Teapot Dome scandal has the distinction of being one of the more infamous of his scandals but probably the most juicy scandal in terms of impact to the federal government was the Veterans Affairs Bureau scandal. Post World War I the United States Congress voted $500 million (in today’s funds $5.5 billion) to fund the constructi0n of new hospitals and vocational training programs to assist World War I veterans with their injuries and return to civilian administration.
Harding appointed his good friend and trusted supporter Charles R. Forbes to oversee this massive effort and Forbes went nuts using that position as a means of graft and corruption. Harding, in an effort to avoid corruption, had ordered all hospital construction bids were to be handled through a public bidding process with sealed bids. Forbes simply fed information on the bids to his preferred contractors, in exchange for healthy bribes and favors, and then ensured they won the necessary bids. Forbes also, through the power of accounting fun, boosted the cost per bed for hospital construction from $3000 on average to $4000 in payments, shifting huge amounts of government funds to his supporters. Forbes also began to liquidate government stockpiles of medical supplies at huge discounts, again in exchange for an array of personal bribes. (It is estimated he sold a total of $7 million on government hospital supplies for roughly $600,000 on the private market.)
Forbes also used his position to engage in many personal non-monetary benefits including “joy ride” train trips around the country to visit hospital construction sites, attending regular parties with booze, feasting, and gambling, and at least one affairs with a contractors wife. (This contractor was a regular beneficiary of inside information on upcoming contracts.) The party lasted for a little over a year before Forbes was discovered and fled the country in 1923, resigning his position while in Europe.
Eventually he returned to the United States and was tried and sentenced to two years in prison. Overall he potentially cost the United States government tens to hundreds of millions in graft.