SCANDAL AND REFORM IN FEDERAL VETERANS’ WELFARE AGENCIES:
BUILDING THE VETERANS’ ADMINISTRATION, 1920-1932
by
JESSE T. TARBERT
Submitted in partial fulfillment of the requirements
For the degree of Master of Arts
Department of History
CASE WESTERN RESERVE UNIVERSITY
January, 2011
CASE WESTERN RESERVE UNIVERSITY
SCHOOL OF GRADUATE STUDIES
We hereby approve the thesis/dissertation of
Jesse T. Tarbert
_____________________________________________________
Master of Arts
candidate for the ______________________degree
*.
David C. Hammack
(signed)_______________________________________________
(chair of the committee)
Daniel A. Cohen
________________________________________________
Peter A. Shulman
________________________________________________
________________________________________________
________________________________________________
________________________________________________
November 2, 2010
(date) _______________________
*We also certify that written approval has been obtained for any
proprietary material contained therein.
2
Table of Contents
List of figures .................................................................................................................... 3
Abstract ............................................................................................................................. 4
Introduction ..................................................................................................................…. 5
The Formation of the Veterans’ Bureau .......................................................................... 17
Corruption in the Veterans’ Bureau ................................................................................ 22
General Hines Takes Charge of the Bureau .................................................................... 27
The Contrasting Reputations of Hines and Forbes ......................................................... 37
The Formation of the Veterans’ Administration ............................................................. 43
Conclusion ...................................................................................................................... 48
Bibliography ................................................................................................................... 55
3
List of Figures
Figure 1. Expenditures of the Government Chargeable
Against Ordinary Receipts, 1932 ...................……………...….......………. 7
Figure 2. Employees in the Federal Executive Civil Service, 1932. ……………... 7
4
Scandal and Reform in Federal Veterans’ Welfare Agencies:
Building the Veterans’ Administration, 1920-1932
Abstract
By
JESSE T. TARBERT
This essay examines the development of U.S. federal veterans’ agencies between the First
World War and the New Deal, focusing on the contrasting bureaucratic careers of the
directors of the Veterans’ Bureau: Charles R. Forbes, and his replacement, Frank T.
Hines. During his directorship, Hines built alliances with key players in the policy
debates of the 1920s, and forged a reputation as an efficient administrator—a reputation
that stood in marked contrast to that of Forbes, whose tenure was marked by scandal.
Hines’s reputation and alliances served as a warrant for policymakers to grant him
increasing discretion and power, ultimately placing him in charge of one of the largest
administrative domains in the federal government. In 1932, on the eve of the New Deal,
the Veterans’ Administration was the largest agency in the federal government. This
episode contradicts traditional generalizations about this period as a time of antistatist
retrenchment.
5
Introduction
A 1923 Senate investigation exposed the recently formed United States Veterans’
Bureau as a center of scandal and corruption. The director of the bureau, Colonel Charles
R. Forbes, was convicted of bribery by a grand jury, and a steady stream of sensational
news stories—detailing fraud, spoils, gambling, intemperance, adultery, and suicide—
continued until 1926, when Forbes began a two-year sentence in federal prison.1 The
young bureau was not permanently discredited by the scandal, however. In fact, less than
five years later, the fortunes of the bureau had been entirely transformed. In 1930,
policymakers merged the bureau with two other agencies to form a new, larger, more
centralized agency—the Veterans’ Administration—which a Brookings Institution report
called “the largest single spending agency in the federal government.”2 At the helm of the
VA was Brigadier General Frank T. Hines, the man who had replaced Forbes as director
of the scandal-ridden Veterans’ Bureau in 1923.
How did Hines manage to turn the bureau’s reputation around? This essay attempts
to answer this question by tracing the institutional development of federal veterans’
welfare agencies between the First World War and the New Deal. Relying on the records
of the Veterans’ Administration, published Congressional records, contemporary news
accounts, and secondary literature, I examine interactions during this period between
1
Among dozens of stories, see, for instance: “Says He Will Prove Forbes a Grafter,” New
York Times, Nov. 16, 1923, p. 1; “Veterans’ Scandal Approaching Climax,” New York
Times, Mar. 9, 1924, p. xx4; “Col. Forbes Begins His Term in Prison; Promises Warden
to ‘Make the Best of It’,” New York Times, Mar. 21, 1926.
2
This report is part of the Brookings “Service Monographs of the United States
Government” series, which is an invaluable resource for studies of early twentieth
century federal policy. Gustavus A. Weber and Laurence F. Schmeckebier, The Veterans’
Administration: Its History, Activities and Organization (Washington, 1934), v.
6
administrators, reformers, policy experts, Congressmen, Presidents, and the public. These
sources show how Frank T. Hines was able to use the opportunity presented by the
scandal to forge a reputation as an efficient administrator—a reputation that stood in
marked contrast to that of his predecessor—and how he was able to build alliances with
key players in the policy debates of the 1920s. Hines’s reputation and alliances, in turn,
provided the Veterans’ Bureau with some measure of bureaucratic legitimacy and served
as a warrant for policymakers to grant Hines increasing discretion and power, ultimately
placing him in charge of what was perhaps the largest administrative domain in the
federal government. 3 In 1932, the Veterans’ Administration budget exceeded $800
million (see fig. 1), boasted more than 34,000 employees (see fig. 2), and provided
benefits to more than one and a half million veterans or their dependants.4
Previous studies do little to explain these developments. Histories that mention pre1932 veterans’ policy tend to treat the development of veterans’ welfare institutions
simply as a prelude to later, better-known developments such as the Bonus
3
For the purposes of this essay, I have focused my attention on the key bureaucratic
actors in this episode. As such, I believe the sources described here—Veterans’
Administration records, published Congressional records, contemporary news accounts,
and secondary sources—provide sufficient evidence to support my central claim about
the importance of reputation and alliances to the career of Frank T. Hines and, by
extension, to the development of federal veterans’ policy. However, my argument would
no doubt be strengthened by a more comprehensive analysis of Congressional records
and also by an examination of personal papers for the key characters in this episode—
bureaucrats, administration officials, Congressmen, interest-group leaders, and media
figures. Such an effort would also provide a richer and more nuanced picture of the
political maneuvering that lay behind the policy process. In the conclusion to this essay, I
outline directions for future research, and identify some tentative corollary claims that are
suggested by this pilot study.
4
U.S. Department of Commerce, Statistical Abstract of the United States (Washington,
1933), 162-63; U.S. Department of Commerce, Statistical Abstract of the United States
(Washington, 1933), 153; Weber and Schmeckebier, The Veterans’ Administration, 445.
7
Figure 1. Expenditures of the Government Chargeable Against Ordinary Receipts,
1932. Source: U.S. Department of Commerce, Statistical Abstract of the United
States (Washington, 1933), 162-63.
Figure 2. Employees in the Federal Executive Civil Service, 1932.
Source: U.S. Department of Commerce, Statistical Abstract of the United States
(Washington, 1933), 153.
8
March of 1932, or the passage of the G.I. Bill in 1944.5 Also, although a number of
policy historians in recent years have produced excellent studies tracing the development
of the modern American administrative state during this period, none of these studies has
examined veterans’ policy.6
Why has this episode been neglected by historians and social scientists? One
possible reason is that, in some ways, the expansion of federal welfare provision for
veterans after the world war doesn’t seem all that mysterious: The Veterans’ Bureau,
Veterans’ Administration, and the other veterans’ welfare agencies might be easily
5
The most important and influential veterans’ policy study is Theda Skocpol’s
monumental Protecting Soldiers and Mothers (Cambridge, Mass., 1992) which details
the scandal-ridden Civil War pension system, but which does not follow the development
of federal veterans’ policy beyond 1920; the most recent veterans’ policy study is
Stephen R. Ortiz’s analysis of the political debates about the veterans’ bonus in the 1920s
and 1930s, which takes particular notice of role played by the Veterans of Foreign Wars,
and explains the creation of the G.I. Bill in Beyond the Bonus March and GI Bill: How
Veteran Politics Shaped the New Deal Era (New York, 2010); Rosemary Stevens
provides an incisive look at the formation of the post-World War veterans’ hospital
system in “Can the Government Govern? Lessons from the Formation of the Veterans
Administration,” Journal of Health Politics, Policy and Law, Vol. 16, No. 2 (Summer
1991), pp. 281-305; also valuable is an examination of veterans’ welfare provision in the
first years after the war in K. Walter Hickel, “War, Region, and Social Welfare: Federal
Aid to Servicemen’s Dependents in the South, 1917-1921,” Journal of American History,
Vol. 87, No. 4 (Mar., 2001), pp. 1362-1391, and K. Walter Hickel, “Entitling Citizens:
World War I, Progressivism, and the American Welfare State, 1917-1928” (Ph.D. Diss.,
Columbia University, 1999); see also an examination of the “policy feedback” effects
created by the G.I. Bill in Suzanne Mettler, Soldiers to Citizens: The G.I. Bill and the
Making of the Greatest Generation (New York, 2005); for a recent study that applies the
case of the G.I. Bill to state building, see Kathleen J. Frydl, The GI Bill (New York,
2009).
6
A full accounting of the institutional policy history literature is beyond the scope of this
essay; for comprehensive historiographies, see Karen Orren and Stephen Skowronek, The
Search for American Political Development (New York, 2004), 78-119; Meg Jacobs and
Julian E. Zelizer, “The Democratic Experiment: New Directions in American Political
History,” in Jacobs, William J. Novak, and Zelizer, eds., The Democratic Experiment:
New Directions in American Political History (Princeton: 2003), 8; and Julian E. Zelizer,
“Introduction: New Directions in Policy History,” Journal of Policy History, Vol. 17, No.
1 (2005), 1-11.
9
explained as extensions of the massive war effort of 1917-18. Of course, it is true in a
broad sense that, without the war, there would have been no veterans, and no need to
provide veterans’ benefits. It is also true that the creation of a unified national Army
before World War I gave some logic to the notion of a unified national veterans policy.7
Although policymakers often framed their veterans’ policy proposals with patriotic
rhetoric, this was not the only reason they pursued centralization, consolidation, and
expansion of veterans’ agencies. While a sense of patriotic duty toward veterans might
explain the initial array of post-war programs, it doesn’t explain subsequent policy
decisions or why institutional development followed the path that it did.8
The neglect of this episode also reflects a larger problem in the existing
historiography of federal policy before the New Deal. The traditional view of the 1920s
as a reactionary interlude between the watershed reform periods of the Progressive Era
and New Deal reached its fullest expression in the work of Arthur M. Schlesinger, Jr. and
William Leuchtenburg.9 The perceived discontinuities between the Progressive Era of
Roosevelt and Wilson, the New Era of Harding, Coolidge, and Hoover, and the New Deal
of Franklin Delano Roosevelt, for instance, were cornerstones of Schlesinger’s cyclical
7
The best study of the unification of the Army is still Stephen Skowronek, Building a
New American State: The Expansion of National Administrative Capacities, 1877-1920
(Cambridge, 1982).
8
There has been a movement of historians and social scientists to examine how war has
structured the development of the state; see, for instance, Ira Katznelson and Martin
Shefter, eds, Shaped by War and Trade: International Influences on American Political
Development (Princeton, 2002). Also, as Theda Skocpol has shown, the experience of the
scandals created by Civil War pensions had left many policymakers wary of being too
generous toward veterans; see Skocpol, Protecting Soldiers and Mothers.
9
Arthur M. Schlesinger, Jr., The Age of Roosevelt: The Crisis of the Old Order, 19191933 (Cambridge, Mass., 1957). William E. Leuchtenburg, The Perils of Prosperity,
1914-32 (Chicago, 1958).
10
model of American political history.10 This view had its roots in the political rhetoric of
the time, as well as in the work of earlier Progressive Historians.11 It also accords quite
closely with F.D.R.’s own interpretation of early twentieth-century American history.12
Revisions to this traditional view began to appear even before Schlesinger’s and
Leuchtenburg’s formulations, but they gathered momentum after the appearance in 1959
of an essay entitled “What Happened to the Progressive Movement in the 1920s?” in
which Arthur S. Link suggested that historians “begin to clear away the accumulated
heap of mistaken and half-mistaken hypotheses” about the period between the First
World War and the New Deal.13 This advice was taken up by a number of historians,
particularly during the 1960s and 1970s. The most significant of these revisions were
made by Ellis W. Hawley and Robert Himmelberg, both of whom found an active
government during the period before the New Deal; but the government activism they
found worked through intermediary, voluntary organizations, such as trade associations.14
10
An example of these perceived discontinuities can be found, for instance, in
Schlesinger’s assessment of the impact of the 1920 election: “the politics of public
purpose gave way to the politics of private interest; virtue surrendered to commerce.”
Arthur M. Schlesinger, Jr., The Cycles of American History (Boston, 1986), 32.
11
Leuchtenburg counts Charles A. Beard among the “tired radicals”—Walter Weyl’s
term for the progressive intellectuals who became disillusioned by what they perceived as
a conservative turn in American politics after the war and who henceforth avoided
making “concrete political proposals.” Leuchtenburg, The Perils of Prosperity, 124-25.
12
There is an oft-repeated anecdote about a meeting with Woodrow Wilson early in
Wilson’s administration. In Roosevelt’s account, the scholar-President Wilson told the
young Assistant Secretary of the Navy that “It is only once in a generation that a people
can be lifted about material things. That is why conservative government is in the saddle
two thirds of the time.” Roosevelt’s quotation of Wilson—apparently from a November
9, 1920, letter—originally appeared in Schlesinger, The Age of Roosevelt: The Crisis of
the Old Order, 366.
13
Arthur S. Link, “What Happened to the Progressive Movement in the 1920s?”
American Historical Review, Vol. 64, No. 4 (Jul., 1959), 833-51.
14
The clearest expression of the “Associative State” thesis can be found in Ellis W.
Hawley, “Herbert Hoover, the Commerce Secretariat, and the Vision of an ‘Associative
11
This “associative state” interpretation has since been incorporated into standard accounts
of the period.15
Over the course of the past half century, scores of revisionists have built upon the
work of Link, Hawley, Himmelburg, and others, adding complexity to our understanding
of the development of the American state between the First World War and the New
Deal. Despite these efforts, however, remnants of the traditional interpretation persist in
many otherwise excellent studies. For example, Meg Jacobs and Julian E. Zelizer claim
that “suspicion of a powerful state has been the overriding theme of American political
culture” and that “antistatism has operated as a powerful force in the history of American
democracy.”16 “An anti-statist ideology” is said by Elizabeth Sanders to have
“characterized Republican administrations in particular since the early twentieth
century.”17 Theda Skocpol and Kenneth Finegold suppose that this ideology determined
Republican attitudes toward federal government action. “During their unbroken national
ascendancy in the 1920s,” write Skocpol and Finegold, “Republican administrations
State,’ 1921-1928,” The Journal of American History 61.1 (Jun., 1974), pp. 116-140; also
see the Fordham University Press editions—each with excellent historiographical
essays—of Ellis Hawley, The New Deal and the Problem of Monopoly: A Study in
Economic Ambivalence (New York, 1995); and Robert F. Himmelberg, The Origins of
the National Recovery Administration Business, Government, and the Trade Association
Issue, 1921-1933 (New York, 1993).
15
See, for instance, Alan Brinkley, “Prosperity, Depression, and War, 1920-1945,” in
Eric Foner, ed., The New American History: Revised and Expanded Edition
(Philadelphia, 1997), 141-43.
16
Meg Jacobs and Julian E. Zelizer, “The Democratic Experiment: New Directions in
American Political History,” chapter 1 in Meg Jacobs, William J. Novak, and Julian E.
Zelizer, eds., The Democratic Experiment: New Directions in American Political History
(Princeton, 2003), 1.
17
Elizabeth Sanders, “Presidents and Social Movements,” in Stephen Skowronek and
Matthew Glassman eds., Formative Acts: American Politics in the Making (Philadelphia,
2007), 237.
12
showed little inclination to extend the reach of bureaucratic state power.”18 These
scholars are not simply recapitulating the Progressive Historians’ interpretation of the
1920s, but their revisions largely retain the structure of traditional assumptions. For
example, in Regulating a New Society: Public Policy and Social Change in America,
1900-1933, Morton Keller writes: “as our historical perspective lengthens, we can see
more clearly that the notion that the First World War sharply split the early twentieth
century into two periods is a strained and artificial one.” But later on the same page,
Keller argues that, after the war, and in contrast to trends during the Progressive Era,
“American government in general moved not in the direction of growing power and
control—the prevalent tendency elsewhere—but in quite the opposite direction. Old
individualism and a new pluralism conjoined to check the outward reach of the state.”19
One reason these generalizations persist is that historians of state building—
whatever revisionist school they happen to be allied with—have inherited a particular
Eurocentric way of looking at the state. Historians of the American state have tended to
measure the reach of the federal government based on the relative presence or absence of
national industrial planning or universal welfare provision. This dynamic has, in part,
enabled the survival of what legal historian William J. Novak has called the “myth of the
weak American state,” which Novak argues “is the product of a larger tendency to read
American history as exceptional—as the history of the making of a ‘new world’ specially
18
Theda Skocpol and Kenneth Finegold, State and Party in America's New Deal
(Madison, 1995), 55.
19
Morton Keller, Regulating a New Society: Public Policy and Social Change in
America, 1900-1933 (Cambridge, Mass., 1994), 5-6. In his most recent book, Keller
writes: “Before the 1930s the American polity’s primary concern was with the degree to
which government power in general, and the power of the federal government in
particular, could be constrained” (Emphasis in original), see Morton Keller, America’s
Three Regimes: A New Political History (New York, 2007), 202.
13
outside the historical currents and corruptions of ‘old’ Europe.”20 This focus has led to a
number of excellent studies of certain federal agencies, such as the National Recovery
Administration, the Department of Commerce, and the Interstate Commerce
Commission.21 But while these studies have greatly improved our understanding of the
development of the modern American state, this preoccupation with ideal types of state
power has led historians and social scientists to overlook historical state activity that does
not meet this ideal-typical criteria. The post-World War federal veterans’ policy
institutions are a prime example of this oversight.
In my effort to trace the expanding reach of federal administrative power in the
realm of veterans’ policy during the 1920s, this essay follows a number of historians who
have drawn on the insights of the political science subfield of American Political
Development.22 My approach owes an obvious debt to Theda Skocpol’s “structured
20
William J. Novak, “The Myth of the ‘Weak’ American State,” American Historical
Review, vol. (June 2008), 754; see also, William J. Novak, “The Not-So-Strange Birth of
the Modern American State: A Comment on James A. Henretta’s ‘Charles Evans Hughes
and the Strange Death of Liberal America,’” Law and History Review, Vol. 24, No. 1
(Spring 2006), 197.
21
For the NRA, see Theda Skocpol and Kenneth Finegold, State and Party in America's
New Deal (Madison, 1995); Robert F. Himmelberg, The Origins of the National
Recovery Administration: Business, Government, and the Trade Association Issue, 19211933 (New York, 1976); Ellis W. Hawley, The New Deal and the Problem of Monopoly:
A Study in Economic Ambivalence (New York, 1995). For Commerce, see Ellis W.
Hawley, “Herbert Hoover, the Commerce Secretariat, and the Vision of an ‘Associative
State,’ 1921-1928,” Journal of American History 61 (June 1974), 116-140; and Hawley,
The New Deal and the Problem of Monopoly. For the ICC, see Skowronek, Building a
New American State.
22
See, in particular, the following two books, which trace the expansion of federal power
in their studies of nineteenth-century America: Richard R. John, Spreading the News: The
American Postal System from Franklin to Morse (Cambridge, Mass., 1995); and Brian
Balogh, A Government Out of Sight: The Mystery of National Authority in Nineteenth
Century America (New York, 2009). For a historiography of APD-inspired policy
history, see the previously cited essay by Meg Jacobs and Julian Zelizer, “The
14
polity” perspective, which, she explains, “holds that politicians and administrators must
be taken seriously,” that they are “actors in their own right,” who “make independent
contributions to the development of a nation’s social policies.” Skocpol notes that
“appointed and elected officials have ideas and organizational career interests of their
own, and they devise and work for policies that will further those ideas and interests, or at
least not harm them.”23 My approach is also informed by the work of the political
scientist Daniel P. Carpenter, who builds on Skocpol’s formulation by showing how the
developmental path of institutions and the outcome of policy debates is often determined
by the reputations of administrators and agencies, their alliances within social and
political networks, and popular perceptions of their legitimacy.24
It is evident that Veterans’ Bureau director Frank T. Hines was intent on building
his reputation and solidifying alliances with policymakers and interest groups. Although
the case of the veterans’ welfare agencies confirms Carpenter’s thesis in a general way,
the case in its details contrasts in many important ways with those studied by Carpenter.
While the good reputation and support of multiple networks enjoyed by Hines did,
indeed, lead to administrative autonomy, it did not lead to policy innovation, as it did for
the agencies in Carpenter’s study. In fact, throughout most of the later twentieth century,
the VA was known for policy paralysis. By studying the bureaucratic development of
veterans’ policy agencies, we can—as Julian Zelizer suggests in his review of
Carpenter’s book, Forging Bureaucratic Autonomy—examine “the roots of well-known
Democratic Experiment: New Directions in American Political History,” and Zelizer
“Introduction: New Directions in Policy History.”
23
Skocpol, Protecting Soldiers and Mothers, 41-42.
24
Daniel P. Carpenter, The Forging of Bureaucratic Autonomy: Reputations, Networks,
and Policy Innovation in Executive Agencies, 1862-1928 (Princeton, 2001).
15
organizational pathologies that would eventually hamper many … arms of
government.”25
The development of federal veterans’ agencies between the First World War and
the New Deal is a previously neglected chapter in the formation of the modern American
administrative state. The case of federal veterans’ policy complicates many still-common
generalizations about the period between the First World War and the New Deal. The
dramatic expansion of federal expenditures for veterans policy and the consolidation of
administrative authority in an active, visible federal agency contradicts the traditional
view of the period between the First World War and the New Deal as one of fiscal and
administrative retrenchment. This contradiction is further accentuated by noting what
happened in 1933: As one of his first actions as President, Franklin Delano Roosevelt
signed the “Economy Act,” which cut VA expenditures by more than a third. A historical
analysis of federal veterans’ policy is also warranted because of the central place of the
VA in the modern American administrative state. On the eve of the New Deal, the VA
was—in terms of annual expenditures—the largest unit in the federal government. For
most of the twentieth century, the VA was popularly considered to be a prototypical
25
See Julian E. Zelizer, “Entrepreneurial Bureaucrats,” Reviews in American History
31.1 (2003), 60-65. While I draw heavily on Carpenter’s approach, I depart in several
ways from his model. As Carpenter acknowledges, he chose his cases carefully to control
for external factors. For instance, he purposefully avoided agencies that had been merged
or split during his period of analysis. Also, Hines’s unique position as a “bureau chief”
who reported directly to the President rather than to a cabinet head does not correspond
precisely to the role Carpenter ascribes to bureau chiefs in the organizations featured in
his study. Federal veterans’ policy presents a messier case than those chosen by
Carpenter, but I believe a loose application of Carpenter’s general insight retains
significant analytical value. In her study of the GI Bill, Kathleen Frydl also notes the
amenability of Carpenter’s model to the case of veterans’ policy and, particularly, to the
career of Frank T. Hines. See Frydl, The GI Bill, 50n.
16
federal bureaucracy. It was also one of the first important federal agencies to have the
word “Administration” in its title.26
26
In a 1983 survey of the history of public administration, the administrative historian
Paul P. van Riper calls the Veterans Administration “the first important permanent
agency to be so named”; see Paul P. van Riper, “The American Administrative State:
Wilson and the Founders—An Unorthodox View,” Public Administration Review, vol. 43
no. 6 (Nov.-Dec., 1983), 481.
17
The Formation of the Veterans’ Bureau
The First World War was a short one for America. Barely a year and a half passed
between the declaration of war, on April 6, 1917, and the Armistice, on November 11,
1918. James Harvey Robinson recalled that the end of the fighting was “sudden and
somewhat unexpected.”27 One consequence of the quick war was that plans for post-war
care of veterans had been made quite hastily. Through a series of acts, Congress had
created an ad hoc system to provide assistance to disabled veterans and their dependents.
In a deliberate effort to avoid the “infamy” of the Civil War-era pension system, the chief
component of the new system was a social insurance program, administered by the newly
created War Risk Insurance Bureau.28 Providing vocational training for disabled
veterans, and prosthetics for amputees, was the responsibility of the Rehabilitation
Division of the Federal Board for Vocational Rehabilitation. Hospitalization for veterans
was the domain of the U.S. Public Health Service. As a Brookings Institution report
noted: “The administration of these services” by the three agencies “constituted one of
the most complicated and difficult tasks ever undertaken by the Federal Government.”29
Disabled veterans waiting for services presented a significant public health problem
in the first few years after the war. Many observers considered the disjointed institutional
arrangement to be the main source of the problem, especially for those veterans who
required services from two, or all three, agencies. Determined to force policymakers into
27
James Harvey Robinson, The Mind in the Making: The Relation of Intelligence to
Social Reform (New York, 1921), 182.
28
For a description of the Civil War pension system and its accompanying scandal, see
Skocpol, Protecting Soldiers and Mothers. The best treatment of war risk insurance is in
Hickel, “War, Region, and Social Welfare,” and “Entitling Citizens.”
29
Gustavus A. Weber and Laurence F. Schmeckebier, The Veterans’ Administration: Its
History, Activities and Organization, (Washington, 1934), 154-55.
18
action, the American Legion proved to be one of the leading sources of criticism,
deploying many experts in the public debate. One of the most prominent of these was the
psychiatrist Thomas W. Salmon, who was the medical director of the Rockefeller
Foundation’s National Committee for Mental Hygiene and a member of the American
Legion's Commission for Mental Hygiene. During the war, Salmon had been the
Director of Psychiatry for the U.S. Army in France, where he developed methods of
treating psychological casualties in the war zone that were the basis for methods used by
the U.S. military in the late twentieth and early twenty-first centuries.30 After the
Armistice, Salmon served on committees advising the Public Health Service and the
Bureau of War Risk Insurance, and advocated improved care for veterans suffering from
combat-related mental illness. As part of his work for the Army, Salmon also drafted a
public-health plan to ensure that veterans received the care they needed, especially those
for whom the onset of symptoms might be delayed.31 Contrary to popular conceptions
about “shell shock” as a manifestation of weakness, or as a permanent, physical
30
The lone biographical treatment of Salmon is Earl D. Bond (with the collaboration of
Paul O. Komora), Thomas W. Salmon: Psychiatrist, (New York, 1950); for a discussion
of the methods developed by Salmon and their relation to methods adopted by the Army
in the 1990s, see Franklin D. Jones, “The Psychiatric Lessons of War,” in Office of The
Surgeon General, US Army, War Psychiatry: Textbook of Military Medicine, Vol. 4.
(Falls Church, Va., 1995), 9-10; Salmon outlined his theories and methods in Office of
The Surgeon General, US Army, Neuropsychiatry: The Medical Department of the
United States Army in the World War, Vol. 10 (Washington, DC, 1929).
31
In a column in the New York World, Salmon warned about delayed-onset mental illness
in terms that seem to anticipate the current clinical understanding of delayed-onset PostTraumatic Stress Disorder. He wrote: “There are, however, to be taken into account many
other insane soldiers who were discharged from the camps in this country, and also a new
source, the importance of which can not yet be accurately estimated—men discharged
with other injuries or diseases or mustered out sane and sound but who for several years
to come will contribute their quota of mental cases.” See Thomas W. Salmon, “Vital
Hospital Problem When the US Public Health Service Takes Over the Soldiers 'wounded
in mind,’” New York World, Aug. 31, 1919.
19
condition, Salmon believed that many “insane” veterans could be cured if they received
proper, up-to-date treatment. He worried, however, that their chances of recovery
diminished the longer care was delayed. The resistance that met Salmon’s reform
proposals led him to see the fragmented institutional structure as the major impediment to
prompt treatment. In the winter of 1920-1921, Salmon began criticizing the Public
Health Service for showing “a lack of vision and a rejection of all advice from
experienced outside sources.”32 Testifying before Congress on January 7, 1921, Salmon
warned, “Unless something is done within the present year to improve conditions under
which insane ex-service men are receiving treatment, hundreds, who now stand a fair
chance of being cured, will be doomed to permanent insanity.”33 Three weeks later,
Salmon published an article in the American Legion Weekly that detailed a dire situation:
On December 16, 1920, there were over 5,500 neuro-psychiatric patients among the
ex-service men in all the hospitals in the United States cared for as beneficiaries of
the Bureau of War Risk Insurance. It is the opinion of those who have studied this
problem most closely both in civil life and in the Army, that at least as many men
with mental disorders remain in their homes, losing time of the utmost value to
them, because the Government has not yet provided a single neuro-psychiatric
hospital which surpasses in standards of scientific work some of the Army neuropsychiatric hospitals a few miles behind the firing line in France.34
Meanwhile, according to Salmon, the government operated only four hospitals
capable of serving psychiatric patients: a converted juvenile home in West Roxbury,
Massachusetts; an old naval hospital in Philadelphia; a State institution for inebriates in
Iowa; and a renovated hotel in Augusta, Georgia. Salmon wrote: “No blacker reproach to
32
Bond, Thomas W. Salmon: Psychiatrist, 175-76.
Ibid., 77.
34
Thomas W. Salmon, “The Insane Veteran and a Nation's Honor: The Better Way Out
of the Present Deplorable Situation Involves a Lapse of Time; the Worse Way Out Is
Merely Barefaced Shirking of Public Duty,” The American Legion Weekly, Vol. 3, No. 4
(Jan. 28, 1921), 5-6, 18.
33
20
the honor and humanity of this country exists today than the practical abandonment by
the richest nation on earth of more than half its ex-service men who are afflicted with
insanity.” Based on Salmon’s report, the American Legion made two requests of
Congress: “Coordination of the bureaus responsible for the care of the disabled” and
“Money for the building of adequate hospitals.”35
In March 1921, President Harding convened a committee to investigate the problem
of veterans’ services. The committee, headed by future Vice President Charles G. Dawes,
recommended creating a unified, independent veterans’ service agency. In its report,
issued only a week-and-a-half after its members were appointed, the committee described
the problem in stark terms: “It cannot be too strongly emphasized that the present
deplorable failure on the part of the government to properly care for the disabled veterans
is due in large part to an imperfect organization of governmental effort. There is no one
in control of the whole situation.” While the committee acknowledged that there had been
some level of cooperation between agencies, “in such efforts the joint action is too often
modified by minor considerations, and there is always lacking that complete cooperation
which is incident to a powerful superimposed authority.”36
In response, Congress passed the Sweet Act (named for its sponsor, Republican
Representative Burton E. Sweet of Iowa) on August 9, 1921. The act, which passed
unanimously in the House and cleared the Senate “in record time,” created a new agency,
35
The Weekly editor introduced Salmon as “the man who can discuss with the most
unimpeachable authority the situation of the neuro-psychiatric veteran of the World
War”; Salmon, “The Insane Veteran and a Nation's Honor,” 5-6, 18.
36
The report is quoted in Weber and Schmeckebier, The Veterans’ Administration, 218.
21
the Veteran’s Bureau, whose director would report directly to the President.37 The new
agency merged the War Risk Insurance Bureau with the Rehabilitation Division of the
Federal Board for Vocational Rehabilitation and the hospitals of the U.S. Public Health
Service. Harding appointed his friend, Charles R. Forbes, who had been director of the
War Risk Insurance Bureau, to be director of the Veterans’ Bureau. The sub-headline of a
Washington Post feature story captures the optimism with which many observers greeted
the new bureau: “Recently Organized Veterans’ Bureau, Under Direction of Col. Forbes,
Doing Excellent Work in Inspiring Disabled Soldiers—Bodily and Mental Comforts
Provided for Heroes of Late War.”38
37
“Veterans’ Bureau Plan in Congress,” New York Times, May 26, 1921, p. 14; “Passes
Bill Merging Veteran Relief Boards,” New York Times, Jun. 11, 1921, p. 3; “For Soldier
Relief Unity,” New York Times, Jul. 21, 1921, p. 4; Weber and Schmeckebier, The
Veterans’ Administration, 218-19.
38
“Half Hours with the Government,” Washington Post, Aug. 28, 1921, p. 41.
22
Corruption in the Veterans’ Bureau
Forbes had a very brief honeymoon in the first months of his tenure as director of
the Veterans’ Bureau. Two and a half weeks after the bureau’s formation, the Washington
Post observed: “Col. Forbes has the real human touch with the men.” The article cast
Forbes in the mold of an up-to-date, pragmatic administrator. “In his desire to have
justice carried to the last degree for the men,” the article explained, “Col. Forbes often
leaves his busy office on the tenth floor and mingles with the boys, holds conferences
with them, getting their stories. Sometimes they do not realize for a while that the sturdy
business-like man who goes up to them and asks them their troubles and tells them that
his name is Forbes, is the man who will have the final say on their claims.” The article
was unequivocal in its assessment of Forbes’s character: “Col. Forbes impresses one with
his sincerity, his clear, logical mind, his executive force and directness of thought and
action.”39
But the problems started early for Forbes. In their critiques, reformers such as
Thomas Salmon contrasted what they saw as inept administration by the Veterans’
Bureau’s director with the efficient administration of his predecessor at the Bureau of
War Risk Insurance, Col. Richard G. Cholmeley-Jones, who had worked in the insurance
industry before the war. Cholmeley-Jones had been widely admired as an administrator,
much as Hines would be later. Salmon said that he considered Cholmeley-Jones a
“kindred spirit.” 40 After Cholmeley-Jones died—in February 1922 at age 38, less than a
year after leaving the Bureau—an obituary in the Boston insurance industry weekly, The
39
40
“Half Hours with the Government,” Washington Post, Aug. 28, 1921, p. 41.
Bond, Thomas W. Salmon, 175.
23
Standard, related that Cholmeley-Jones “was twice rejected for military service during
the war, but the government, recognizing his ability as an organizer, gave him a captain’s
commission.” 41 In 1923, an American Legion Weekly reporter described CholmeleyJones as “the ablest man who has yet tried his hand at the almost insuperable problem of
veteran rehabilitation.”42
In April 1922, Dr. Haven Emerson wrote an article in The Outlook that alleged a
pattern of “politics,” “corruption,” and “waste,” in the Veterans’ Bureau. Emerson, a
grand-nephew of Ralph Waldo Emerson, was an expert on tuberculosis, and had served,
starting in December 1920, as Medical Advisor, first to the Bureau of War Risk Insurance
and then to the Veterans’ Bureau. On September 13, 1921, after making a speech critical
of the bureau’s administration, Emerson either quit in protest (by his own account) or was
fired for managerial incompetence (according to Forbes).43 Two weeks after the article’s
appearance, an Outlook editorial amplified Emerson’s critique and supported his side of
the story. “As the Veterans’ Bureau is now run,” the editors wrote, “it has proved
impossible for such men as Dr. Haven Emerson to render the services which they are
willing to give their country. What we want and must have is a Veterans’ Bureau in
which the policies outlined by experts will not be jeopardized by political expediency.”44
In his article, Emerson charged that, in the period since Forbes had taken charge, the
41
“Col. Cholmeley-Jones Dies in New York,” The Standard, Vol. 90 (February 25,
1922), 289.
42
Marquis James, “What’s Wrong in Washington?: The Latest Muddle in the United
States Veterans Bureau,” The American Legion Weekly, Vol. 5, No. 10 (March 9, 1923),
11.
43
Haven Emerson, “Taking Stock of Veterans’ Service,” The Outlook (5 April 1922),
542-46; “Obituary: Haven Emerson, M.D.,” The British Medical Journal, Vol. 1, No.
5030 (Jun. 1, 1957), 1308-1309; “Dr. Emerson Named,” New York Times, Dec. 27, 1920,
p. 3; “Veterans’ Bureau Doctor is Ousted,” Washington Post, Sept. 14, 1921, p. 1.
44
“Symptoms of a Governmental Disease,” The Outlook (19 April 1922), 630.
24
bureau had suffered from “incompetence of direction, subserviency to political
opportunism, and lack of any expert knowledge in any of the three main fields of service
or in administration of large affairs.”45
By all accounts, including his own, Forbes’s hiring was the result of his personal
acquaintance with President Harding. Forbes had relevant experience as an engineer,
served as Commissioner of Public Works in Hawaii Territory during the Wilson
administration, and won a Distinguished Service Medal in the war. But he was viewed
with distrust by many Washington observers, who—based on his lack of connections in
established circles—dismissed him as an incompetent member of President Harding’s
“Ohio Gang” even though Forbes was reared in Massachusetts and had spent most of his
adult life in the Pacific Northwest. Since he wasn’t actually part of the “gang,” however,
Forbes was also viewed with suspicion by administration insiders, partly due to his
previous service in the Wilson administration. The result was that Forbes’s only friend in
Washington seems to have been the president himself.
On March 9, 1923, the American Legion Weekly published an exposé alleging
widespread corruption in the bureau. In this initial story, no claims of wrongdoing were
aimed at Forbes, who was instead depicted as a man who had been placed in “one of the
most trying and difficult situations in the government service” and who had been “kept in
ignorance of many evils.” The story attributed the bulk of the fraud in the bureau to a
“triumvirate” consisting of “Dr. Hugh Scott, executive officer, Charles F. Cramer, chief
counsel, and Colonel Robert U. Patterson, head of the Medical Division. They were the
45
Emerson, “Taking Stock of Veterans’ Service,” 545.
25
Big Three. They were reputed to be the powers behind the throne.”46 A few days later,
Cramer resigned and, on March 14, 1923, committed suicide. The New York Times
reported that a newspaper clipping about the American Legion’s allegations had been
found near Cramer’s body.47 Amid this controversy, and with a Senate Investigative
Committee forming, Forbes resigned. There are conflicting accounts about whether his
resignation was voluntary or forced.48
Much changed over the course of the summer, however, while the Senate
committee was conducting its investigation. On August 2, 1923, Harding died of a heart
attack in San Francisco. By the time the Senate hearings began in November 1923,
suspicion had centered squarely on Forbes, who was now apparently without any friends
in the government. Forbes was accused of masterminding a conspiracy to defraud
veterans and the government, in cooperation with Cramer, who was dead, and a man
named Elias H. Mortimer, the prosecution’s star witness. Mortimer’s testimony before
the Senate committee in November and December 1923 and before a grand jury in
Chicago in early 1924 provided lurid copy for the newspapers. He claimed to have given
a $5,000 bribe to Forbes in the bathroom of a suite at the Drake Hotel in Chicago in
exchange for an assurance that Forbes would accept the bid of a man named John W.
46
Marquis James, “What’s Wrong in Washington?,” 18-19.
“Worried by Critics, Cramer Takes Life,” New York Times, March 15, 1923, p. 1.
48
There is an oft-repeated story of Harding confronting Forbes in the White House,
yelling “You yellow rat!” It is unclear where this story originated. See, for instance,
Stevens, “Can the Government Govern?” 300-301, which notes that the story is “perhaps
apocryphal” and cites Samuel Hopkins Adams, Incredible Era: The Life and Times of
Warren Gamaliel Harding (Boston, 1939). I examine the case against Forbes more
critically later in this essay.
47
26
Thompson on a contract for a hospital in Northampton, Massachusetts.49 Mortimer also
claimed that Forbes had seduced Mrs. Mortimer, and that this was why he was willing to
produce so much self-incriminating testimony. Forbes and Mrs. Mortimer both denied the
charges.50
Forbes was convicted on January 31, 1925. After a year of failed appeals, he began
his two-year sentence at Leavenworth on March 20, 1926.51 He seems to have made
remarkably productive use of his time there. Four months after he entered Leavenworth,
the Associated Press reported that Forbes had been “placed in charge of the prison’s
construction work.” Forbes was “supervising the erection of new buildings, including a
structure to house the administrative offices.”52 Forbes also wrote for the prison
newspaper, the Leavenworth New Era. One of his stories, entitled “Validity of the Polar
Claims: An Unbiased Review of the Facts,” attempted to rehabilitate the reputation of his
cellmate—who also served as the editor of the New Era—the infamous explorer
Frederick A. Cook.53
49
“Mortimer Swears Forbes Was Bribed,” New York Times, December 2, 1924, p. 14;
Associated Press, “Payment of $5,000 Bribe Charged,” New York Times, January 31,
1925, p. 5.
50
Associated Press, “Mortimer Admits More Whisky Deals,” New York Times,
December 9, 1924, p. 2. Associated Press, “Testify Mortimer Sought Revenge,” New
York Times, December 20, 1924, p. 9.
51
“Forbes is Convicted With J. W. Thompson in Veteran Frauds,” New York Times,
January 31, 1925, p. 1; “Col. Forbes Begins His Term in Prison; Promises Warden to
‘Make the Best of It,’” New York Times, March 21, 1926, p. 1.
52
“Forbes a Prison Builder,” New York Times, July 31, 1926, p. 21.
53
Forbes’s newspapering in prison is discussed in S.T. Williamson, “‘Flying Flapper’—
and Some Others,” New York Times, Mar 16, 1930, p. XX2; Cook was widely believed to
be a fraud after his competitor, Robert E. Peary, challenged Cook’s claim of discovering
the North Pole.
27
General Hines Takes Charge of the Bureau
Soon after the first wave of the Veterans’ Bureau scandal hit the newspapers in
March 1923, Harding appointed retired Brigadier General Frank T. Hines to replace
Forbes. In the war, Hines had been chief of the Army Transportation Service, where he
was in charge of the movement of troops between Europe and America. Later, he was
Chief of the Inland and Coastwise Waterways Service of the War Department. After
retiring from the Army in 1920, he became general manager of the Baltic Steamship
Company.54
Upon taking charge of the Veterans’ Bureau, Hines immediately began cooperating
with the Senate investigation, which had begun shortly before his appointment. In his
public testimony, Hines outlined the abuses of Forbes’s administration with apparent
enthusiasm. Hines told the committee about “evidence of fraud” in the dental
departments of veterans’ hospitals, where “much gold bought has not been used.” He told
of abuse of railroad passes. “They were issued in blank,” Hines said, “and I found plenty
of people who were traveling but doing very little work.” And he complained about a
man who was on the payroll for $4,800 a year but “had only done two hours’ work.”55 In
his private communications with investigators, Hines conveyed an unflinching
commitment to administrative efficiency. “Wherever inefficiency is found, it will be
eliminated immediately,” Hines vowed to Senator Reed in a personal letter. “Wherever
54
“General Hines Resigns,” New York Times, July 29, 1920, p. 7; “Personal Mention,”
Marine Engineering (September 1920), 779-80; “Ask Bolling to Testify in Shipping
Inquiry Today,” New York Times, November 30, 1920, p. 3.
55
“Gen. Hines Charges Fraud and Waste in Veterans’ Relief,” New York Times, Oct. 23,
1923, p. 1.
28
dishonesty, either in methods or procedure, is found, those guilty will be promptly
dismissed, and if their methods involved criminal intent, promptly acted upon.”56
Hines’s efforts to ingratiate himself with Reed and other lawmakers bore fruit in the
Senate investigative committee’s report, which was published in three parts between
January and June 1924.57 In contrast to Forbes, who, the report asserts, “was neither able
nor honorable in the conduct of his office,” Hines is repeatedly described in glowing
terms: “The present director has shown by his past record and by his conduct of his
present office that he possesses integrity, experience, and industry, which are qualities
essential in the successful administration of this important office.”58 Hines’s extensive
cooperation with the committee is also made clear:
An important and unusual feature of this investigation was the arrangement made
with the committee’s approval between Director Hines and counsel for the
committee whereby all matters developed by the investigation which indicated the
need of reform were at once made known to the director in order that he might
move for their correction. In this way throughout the period since March last there
has been a constant exchange of memoranda and studies affecting almost every
phase of the bureau’s activities. Long before the public hearings were begun many
abuses had been eliminated, policies changed, economies effected, and injustices
righted. Through this assistance and its whole-hearted acceptance by the new
56
Hines to Reed, February 11, 1924, box 170, Director’s File, Veterans Administration
Records, National Archives, Washington, D.C. (hereafter cited as Director’s File).
57
Hines’s alliance with Senator David Aiken Reed, of Pennsylvania, likely, by extension,
provided Hines with another powerful ally in Treasury Secretary Andrew Mellon. The
nature of Mellon’s role in this episode is not clear from published sources. In his 1931
exposé of Mellon, “The Man Who Stayed Too Long,” investigative reporter Drew
Pearson characterized Reed as Mellon’s “old friend and senatorial office boy” and
alleged that Reed’s “law firm protects Mr. Mellon in Pittsburgh.” Also, before joining the
Senate, Reed—a prominent Pittsburgh lawyer—had served on the board of the Mellon
National Bank & Trust. See Robert Sharon Allen and Drew Pearson, Washington MerryGo-Round (New York, 1931), 173; and Kenneth J. Heineman, A Catholic New Deal:
Religion and Reform in Depression Pittsburgh (University Park PA, 1999), 38.
58
Report of the Select Committee on Investigation of the United States Veterans’ Bureau,
68th Cong., 1st sess., 1924, S. Rept. 103, Part 2, 5-6.
29
director there was, in effect, placed at his disposal in a new and most difficult
position the reports … covering the work of the bureau throughout the country.59
Another important result of this cooperation was that most of the investigative
committee’s report was devoted to detailing “inefficiencies” discovered in Forbes’s
administration and also to outlining proposed reforms that would grant increased
administrative discretion and autonomy to Hines. For example, in a list of 22 reforms
proposed by the chairmen of the committee, the first was a call to ensure that “full
authority is given to the director to put in force a complete administrative
reorganization.”60 Also, when discussing these reforms, the committee’s lead counsel,
John F. O’Ryan, suggests that any such changes should “be limited to structural
provisions, leaving reasonable latitude to the director to modify the details of the
organization as experience and necessity from time to time may indicate to be desirable.”
Later, O’Ryan continues, making clear his assessment of Hines’s merit as an
administrator: “The existing law is liberal in vesting great authority and power in the
director of the bureau. I do not believe this power should be curtailed because it has been
abused in the past. The remedy is not to handicap an efficient director but to insure
efficiency in the directorate.”61
In his communications with reform-minded colleagues in the Coolidge
administration, Hines invariably emphasized his interest in reform and efficiency.
Acknowledging receipt of a letter from then-Secretary of Commerce Herbert Hoover,
59
Report of the Select Committee on Investigation of the United States Veterans’ Bureau,
68th Cong., 1st sess., 1924, S. Rept. 103, Part 2, 4-5.
60
Report of the Select Committee on Investigation of the United States Veterans’ Bureau,
68th Cong., 1st sess., 1924, S. Rept. 103, 1.
61
Report of the Select Committee on Investigation of the United States Veterans’ Bureau,
68th Cong., 1st sess., 1924, S. Rept. 103, Part 2, 7.
30
requesting that the Veterans’ Bureau “accept the Simplified Practice Recommendations”
published in a Commerce pamphlet, Hines wrote: “I am personally very much interested
in this matter, and can assure you of the fullest cooperation possible by this Bureau in this
or any other plan which is in the interest of economy.”62
The VA archives are filled with examples of Hines’s efforts to bring the bureau upto-date with the latest advances in clerical organization, demonstrating his personal
interest and involvement in the smallest details of office life. One memo from Hines
announced an elaborate system for scheduling employees’ annual leave that would ensure
“that not more than 12 per cent of the personnel in any office or station will be on annual
leave of absence during any one month.”63 In another, Hines writes: “It has been called
to my attention that in certain offices throughout the Bureau, trays for receiving mail are
not properly labeled ‘Incoming,’ ‘Outgoing,’ etc., and therefore the messengers
delivering the mail deposit it in the most convenient basket, which frequently results in
delay in handling correspondence.”64 He devised a detailed procedure—to “be strictly
adhered to”—for communications sent to the Director’s office; mail was to be enclosed
in “distinctive folders” and was not to be sent after 2:30 p.m. on full days or 11 a.m. on
half days.65
Hines also cultivated a relationship with the independent National Civil Service
Reform League. This alliance was particularly important to the construction of Hines’s
reputation. Between 1927 and 1929, the League saw “helping to bring about the clean-up
62
Hines to Hoover, December 11, 1925, box 195, Director’s File.
Hines to Patton, March 6, 1924, box 200, Director’s File.
64
Hines to Arnold, May 21, 1924, box 220, Director’s File.
65
Hines to Assistant Director, Control Services, March 24, 1925, box 220, Director’s
File.
63
31
in the Veterans’ Bureau” as one of the chief components of its mission.66 On May 16,
1927, Hines wrote to the League’s president, George McAneny, to inquire about “certain
remarks” McAneny had made at the League’s annual meeting that were reported in the
New York Tribune. In reply, McAneny attempted to reassure Hines. “In referring to the
Veterans Bureau as an illustration of the ill effects following subversion of the principles
of the Civil Service Law,” McAneny explained, “I had in mind the administration of your
predecessor in the Directorship, and I think, made that fairly clear.” Explicitly
acknowledging the contrast between Hines and Forbes, McAneny explained: “The
League, however, well appreciates the fact that under your direction the administration of
the Bureau has been vastly improved, that it has been generally through your own
instrumentality that the evils complained of in the past were cut out of the Bureau.”67
Hines’s reputation as a responsible administrator also appears to have been
bolstered by his opposition to the various proposals to grant additional compensation to
veterans, collectively referred to as the “Bonus Issue.” As the economic historian Barry
Eichengreen has shown, maintaining a balanced budget was an overriding concern for
policymakers during this period and a key component of the dominant economic ideology
of the time. The necessity of balancing the budget was an unquestioned assumption for
policymakers who believed in the sanctity of the gold standard and who were thus
constrained in their policy choices. In this regard, Hines’s opposition to the Bonus put
66
The NCSRL’s mission statement appears in National Civil Service Reform League,
Proceedings at the Forty-Sixth Annual Meeting (New York, 1927), 3; National Civil
Service Reform League, Proceedings at the Forty-Seventh Annual Meeting (New York,
1928), 3; National Civil Service Reform League, Proceedings at the Forty-Eighth Annual
Meeting (New York, 1929), 1.
67
McAneny to Hines, May 27, 1927, box 216, Director’s File.
32
him in the company of other Coolidge administration officials, the National Civil Service
Reform League, and the American Legion.68
Despite this opposition, majorities in Congress continually supported the Bonus
throughout the 1920s. In the Veterans’ Bureau’s eight years of existence, its budget grew
from about $375 million in 1922 to about $450 million in 1930—a difference of about
$75 million. To put this amount in perspective, consider that, in 1930, the annual
expenditures of the Department of Commerce stood at only about $55 million.69 This
increase is even more remarkable considering that one of the bureau’s major activities—
vocational training for disabled veterans—came to an end in 1928. The bulk of this
increase was the result of a series of Bonus-related bills passed in Congress that
liberalized benefits and increased the bureau’s pool of beneficiaries. 70 Gustavus Weber
and Laurence Schmeckebier, in their 1934 report for the Brookings Institution, called this
increase in benefits “the greatest expansion and liberalization in legislation relating to
veterans ever known in this country or probably in any other country.”71 The best-known
68
Balanced budgets were a preoccupation not only of the Republican administrations of
Harding, Coolidge, and Hoover, but also of Wilson and (at least until the United States
abandoned the gold standard) Franklin Delano Roosevelt, who was the first President to
actually cut veterans’ benefits. See Barry J. Eichengreen, Golden Fetters: The Gold
Standard and the Great Depression, 1919-1939. NBER series on long-term factors in
economic development. (New York, 1995); for discussion of Roosevelt’s budget cuts, see
Ortiz, Beyond the Bonus March and GI Bill, 90-93.
69
Statistics are from “Expenditures of the Government Chargeable Against Ordinary
Receipts,” in U.S. Department of Commerce, Statistical Abstract of the United States,
(Washington, 1933), 162-163.
70
From its inception, vocational training for disabled veterans was scheduled to be
phased out by 1927; Frank T. Hines, Annual Report of the Director, United States
Veterans’ Bureau, for the Fiscal Year Ended June 30, 1927. 70th Cong., 1st sess., 1927.
H. Doc. 20, 4; Frank T. Hines, Annual Report of the Director, United States Veterans’
Bureau, for the Fiscal Year Ended June 30, 1928. 70th Cong., 2nd sess., 1928, H. Doc.
359, 30; Weber and Schmeckebier, The Veterans’ Administration, 228.
71
Weber and Schmeckebier, The Veterans’ Administration, 227.
33
of these bills was the Adjusted Compensation Act of 1924 which was vetoed by President
Coolidge. The Republican-led Congress overturned Coolidge’s veto, however, and
veterans (or their survivors) could look forward to redeeming their Adjusted
Compensation Certificates in 1945. Veterans could receive up to $625, depending upon
the length of their service—in the meantime, veterans could take out loans based on their
expected bonus.72 Also in 1924, Congress passed the World War Veterans Act (without a
veto in this case), which attempted to simplify the ad hoc array of laws passed since the
war. One of the provisions in the World War Veterans Act extended the deadline for
service-connected disability claims, allowing service-connected payments for cases of
tuberculosis or combat mental disorders reported before 1925.73
Partly in response to agitation from veterans, lawmakers (many of whom were
veterans themselves) began introducing bonus bills soon after the Armistice, and they
continued to introduce benefit-expansion bills even after the 1924 bonus, but the bills
were continually opposed by Presidents Wilson, Harding, Coolidge, and Hoover.
Administration officials in the 1920s typically cited two reasons for opposing the bonus
bills. One reason was that they viewed the bonus as an illegitimate policy on its own
terms. The problem wasn’t that it would be a federal expenditure; the problem was the
72
Veterans who served more than 60 days were entitled to a payment of $1 per day for
domestic service, and $1.25 per day for overseas service. Payments to veterans who saw
no service overseas were limited to $500. For a full explanation of the rules, see Weber
and Schmeckebier, The Veterans’ Administration, 186.
73
A detailed play-by-play of the bonus battles is beyond the scope of this essay, and
would have little chance of improving upon several excellent treatments of this episode.
The most recent treatment of this early phase of the bonus issue can be found in Ortiz,
Beyond the Bonus March and GI Bill, 22-28. In addition to Weber and Schmeckebier,
any account of the bonus must rely heavily on William Pencak, For God and Country:
The American Legion, 1919-1941 (Boston, 1989) and William Pyrle Dillingham, Federal
Aid to Veterans, 1917-1941 (Gainesville, Fla.).
34
particular policy. They viewed the notion of a bonus payment for healthy veterans as
antithetical to American morality. In his 1924 veto message, Coolidge appealed to ideals
of civic virtue and fairness:
Our country has maintained the principle that our Government is established for
something higher and finer than to permit those who are charged with the
responsibility of office, or any class whose favor they might seek, to get what they
can out of it. Service to our country in time of war means sacrifice. It is for that
reason alone that we honor and revere it. To attempt to make a money payment out
of the earnings of the people to those who are physically well and financially able is
to abandon one of our most cherished American ideals.74
Of course, even though the measure was opposed by administration officials and
the leadership of the American Legion, many veterans and many Republican lawmakers
did view the bonus as a legitimate and moral policy goal. The other reason for opposing
the bonus bills, and the one most often invoked in public statements, was a concern for
maintaining a balanced budget. When the first bonus bill passed the House in 1921,
Harding gave an address to the Senate in a successful attempt to convince the lawmakers
to delay its enactment. Harding, noting that the economy was in the midst of an
“industrial depression,” explained that the bill would mean “disaster to the nation’s
finances.” The next year, when the bonus bill was again introduced, Harding at least went
through the motions of considering whether to support the bill. A New York Times report
on a March 1922 conference between Harding, Forbes, Dawes, and Treasury secretary
Andrew W. Mellon, attempts to explain Harding’s deliberation process:
The conference, scheduled some days ago, was interpreted to mean that the
President wanted to be fully advised on this work before discussing with the House
leaders the dispute over the pending bonus bill. Some friends of the Administration
expressed the opinion that the President might offer objections to any bonus bill at
74
Calvin Coolidge, Soldiers’ Adjusted Compensation: Message from the President of the
United States, 68th Cong., 1st sess., 1924, H. doc. 281, p. 4.
35
this time if he found that the Government had not done as much as appeared
necessary for the wounded and sick soldiers.75
After a bonus bill passed both houses later that year, Harding, in his veto message,
complained that “When the bill was under consideration in the House I expressed the
conviction that any grant of bonus ought to provide the means of paying it, and I was
unable to suggest any plan other than that of a general sales tax. Such a plan was
unacceptable to the Congress, and the bill has been enacted without even a suggested
means of meeting the cost.” He continued: “It is sometimes thoughtlessly urged that it is
a simple thing for the rich Republic to add four billions to its indebtedness.” And
concluded: “I confess a regret that I must sound a note of disappointment to the many exservice men who have the impression that it is as simple a matter for the Government to
bestow billions in peace as it was to expend billions in war.” The House voted to override
Harding’s veto, but the Senate vote fell short of the required two-thirds majority.76
In 1924, the Adjusted Compensation Bill again passed both houses and was again
vetoed by the President. This time, however, both houses managed to override the veto.
This change in outcome is usually attributed to election-year campaign concerns, but it is
also important to note that the 1924 bill was slightly different from previous versions.
Where previous versions called for an immediate cash payment, the 1924 bill was altered
75
“Harding May Seek to Drop Bonus Bill and Help Disabled,” New York Times, Mar. 20,
1922, p. 1.
76
The 1921 Harding quotes are from “Defer Bonus Action, Speed Tax Revision, the
President Urges,” New York Times, July 13, 1921, p. 1. The 1922 Harding veto message
is in “Soldiers’ Adjusted Compensation: Message of the President of the United States,”
Congressional Serial Set, 67 Cong. H. doc. 396, pp. 2-3, 5. The vote counts and other
details of the events in this paragraph are outlined in Weber and Schmeckebier, The
Veterans’ Administration, 185-193; also see Ortiz, Beyond the Bonus March and GI Bill,
25-27.
36
so that the bonus would be paid as a deferred interest-bearing certificate, which would
mature in 1945. This change, which spread the costs of the bill over time, was apparently
made as part of a compromise with administration officials and Congressmen concerned
about balancing the budget. It seems that, although Coolidge and his Treasury Secretary
Andrew Mellon still opposed the bill, this compromise provided a warrant for the 30
Republican lawmakers who voted with 27 Democrats and two Farmer Labor party
members to override the veto. Also, there is some evidence that Coolidge and Mellon did
not engage in the same level of behind-the-scenes arm-twisting to sustain the veto as they
had in previous years. Another factor that may have convinced fiscal conservatives was
the unexpected federal budget surpluses of $313 million in 1922 and $310 million in
1923.77
77
The deferred bonus as a compromise that enabled the bill’s enactment is covered in
Ortiz, Beyond the Bonus March and GI Bill, 27; the surpluses are noted by Pencak, For
God and Country, 199; vote totals are reported in Weber and Schmeckebier, The
Veterans’ Administration, 233.
37
The Contrasting Reputations of Hines and Forbes
By joining the opposition to these measures in defiance of popular opinion, Hines
seems to have further solidified his credentials as a responsible, disinterested
administrator. Ironically, the eventual passage of measures that he had opposed only
provided Hines with a further opportunity to prove his administrative virtue. By
administering these new benefits effectively, and avoiding further scandal, Hines seems
to have bolstered his reputation as an efficient and effective bureaucrat. Each year, during
this period, in his annual report to Congress, Hines gave special emphasis to detailing the
effective administration of the new benefits enacted by lawmakers in the previous year.
For instance, Hines devotes the first paragraph of his 1927 report to a description of his
administrative response to a new activity created by Congress:
… one new activity was added during this year, namely, that created by the act of
March 3, 1927, whereby the director was authorized to make loans to veterans upon
the security of their adjusted service certificates. Before the enactment of this
amendatory legislation loans could only be made by banks or trust companies, and,
although the majority of these agencies cooperated to the fullest extent, it was early
apparent that some necessity existed for permitting veterans to procure loans from
that Government agency to which they look for all other forms of veterans' relief. A
separate division was established in the finance service of central office to
administer the loan provisions of the World War adjusted compensation act, as
amended, and to formulate policies and procedures to cover the functions of the
bureau under the provisions of the act bearing upon loans on adjusted service
certificates.78
As we have seen, one of the primary bases for Hines’s good reputation was the poor
reputation of his predecessor, Charles R. Forbes. However, there is evidence that
78
This example is also an example of how Hines used the discretion granted him by
Congress to expand his own administrative domain. Frank T. Hines, Annual Report of the
Director, United States Veterans’ Bureau, for the Fiscal Year Ended June 30, 1927. 70th
Cong., 1st sess., 1927. H. Doc. 20, 1.
38
contradicts the standard accounts of Forbes’s guilt.79 While he was in prison, in addition
to his duties supervising construction projects and writing for the prison newspaper,
Forbes also apparently spent some time drafting an account of his time in government.
Just over a week after his release, his highly polished attempt at self-vindication appeared
in the New York World. Asserting his innocence—as he had all along—Forbes wrote, “I
propose to show how Harding was betrayed by some of those in whom he had reposed
implicit faith.” Amid tales of liquor and gambling at the White House, Forbes identified
Harding’s chief betrayers as Attorney General Harry M. Daugherty and Charles E.
Sawyer, the president’s personal physician. Forbes claimed that these two men had
orchestrated a conspiracy against him.80 Forbes’s story in his post-prison narrative was
essentially the same as the one he told the Senate investigative committee in 1923, when
he asserted “that an attempt has been made to mislead this committee, and that a
conspiracy has been on foot, the purpose of which is to encompass my destruction by
means of perjury, attempted subornation of perjury, and the suppression of material facts
and documents bearing not only upon my personal conduct as Director of the Veterans
Bureau, but also upon the official conduct of the affairs of the bureau by myself and my
subordinates.”81
79
Most historians have uncritically recapitulated the story of Forbes as the prototypical
self-dealing administrator and have used the Veterans’ Bureau scandal as a synecdoche
for the apparently scandal-ridden Harding administration. For typical references to
Forbes, see Pencak, For God and Country, 182-84; Frydl, The GI Bill, 49; Ortiz, Beyond
the Bonus March and GI Bill, 22-23.
80
Charles R. Forbes, “Inside the Harding Administration,” New York World, December
4, 1927, 1, excerpted in John L. Shover, ed., Politics in the Nineteen Twenties (Waltham,
Mass., 1970), 27-43.
81
Senate Select Committee on Investigation of the United States Veterans’ Bureau.
Hearings Pursuant to S.R. 466, 67th Cong., 4th sess., 1923, 912.
39
By all accounts, Forbes was convicted primarily on the evidence provided by Elias
H. Mortimer, whose unreliability as a witness seems clear. Leuchtenburg calls Mortimer
“Harding’s bootlegger.”82 It seems that Mortimer testified as part of a plea bargain in
exchange for lenient treatment by the Department of Justice on federal bootlegging
charges. During the trial, Forbes’s attorneys asserted that Mortimer was a habitual liar.
This assertion seems to be supported by an incident that occurred several months after
Forbes’s conviction: Mortimer was arrested for passing a bad $50 check at a
Washington, D.C., hotel. According to the hotel manager, Mortimer had posed as “a
relative of President Harding.”83 The Justice Department’s reliance upon Mortimer’s
questionable testimony seems to support Forbes’s allegations against Daugherty, who, as
Attorney General, likely had a role in supervising Forbes’s grand jury prosecution.
Daugherty himself narrowly escaped prison a few years later on unrelated charges of
corruption.84
The allegations against Forbes that didn’t originate with Mortimer seem to have
been supplied by Sawyer. There are indications that Forbes’s suspicions about Sawyer
were well founded, and that investigators did not pursue evidence against Sawyer. In
addition to his duties as Harding’s personal physician, Sawyer (a homeopathic physician
from Harding’s hometown of Marion, Ohio) was placed in charge of the Federal
Hospitalization Board, which advised the bureau on hospital construction. It is notable
82
Leuchtenburg, The Perils of Prosperity, 92.
“Mortimer Held for Trial,” New York Times, October 31, 1925, p. 3.
84
Daugherty, who was forced to resign by Coolidge soon after Forbes’s trial, clearly had
a hand in the other well-known Harding-era scandal: Teapot Dome. He wrote a selfserving account of his time as Attorney General, in which he denied Forbes’s allegations;
Harry M. Daugherty and Thomas Dixon, The Inside Story of the Harding Tragedy (New
York, 1932).
83
40
that, in the early months of the Veteran’s Bureau’s existence, before suspicion centered
on Forbes, Sawyer was seen by many as the main source of trouble in the bureau. The
1922 American Legion Convention adopted a resolution to remove Sawyer from the
Federal Hospitalization Board. As the New York Times reported, “Colonel Forbes,
Director of the Veterans Bureau, who has been the object of persistent attacks in
published statements, was practically exonerated of all blame, and was commended for
his efforts to get the hospitals completed.”85 Thomas W. Salmon also blamed Sawyer for
obstructing hospital reforms in the bureau.86
There is evidence in the Veterans’ Bureau archives that some aspects of Forbes’s
alleged conspiracy were in fact directed by Sawyer. For instance, a file from April 1923
details the investigation of a man who was caught forging signatures to obtain copies of
blueprints. The suspicion was that information from building plans was being supplied to
contractors in order to rig the bidding process. The investigator reported that the suspect
“told me that if I had any business to transact with him that he would meet … in General
Sawyer’s Office.”87 After being stonewalled for several days by the suspect, and also by
Sawyer, the investigator recommended to Hines that the suspect be arrested, concluding:
“there is no question of his guilt in my opinion.”88 This seems to indicate that much of the
corruption that had been attributed to Forbes was in fact continuing months after Forbes’s
removal, at the direction of Sawyer. However, despite the investigator’s clear
recommendation, the file was closed on May 26, 1923, without explanation. William
85
“Legion Demands Ousting of Sawyer,” New York Times, October 20, 1922, p. 16.
Bond, Thomas W. Salmon, Psychiatrist, 178-79.
87
McInerny to Hines, April 18, 1923, box 220, Director’s File.
88
McInerny to Hines, April 20, 1923, box 220, Director’s File.
86
41
Wolff Smith, who had replaced Cramer as General Counsel of the Bureau, had
recommended to Hines that the matter to be dropped, and Hines agreed.89
Perhaps Smith had found no wrongdoing in his investigation. It is suggestive,
however, that Smith himself was later a target of accusations. In 1926, Representative
Thomas L. Blanton of Texas accused Smith of lying in an insurance case involving a
constituent, and noted Smith’s earlier career as a “press agent who could be hired on
either side of a controversy.”90 Later, in April 1931, Blanton accused Smith of being part
of a “clique that has been robbing the government for a number of years.” Smith had
been caught drawing an Army officer’s retirement pay ($2,500 a year) while he was still
an employee of the government (earning $9,000 a year). Smith agreed to return the
retirement pay to the Treasury and then collapsed while being questioned by the
committee; “weeping and much agitated,” he was taken to a hospital.91 This episode
raises questions about Hines’s later promise to Reed that “Wherever dishonesty, either in
methods or procedure, is found, those guilty will be promptly dismissed, and if their
methods involved criminal intent, promptly acted upon.”92
But nobody took Forbes’s claims of innocence seriously, and nobody questioned
Hines’s reputation. Even Representative Blanton, when accusing the chief counsel of the
Veterans’ Bureau of fraud, carefully avoided questioning Hines, insisting that the director
was a “splendid gentleman, thoroughly competent, ably efficient, absolutely honest,
89
Smith to Hines, May 26, 1923, box 220, Director’s File.
“Blanton Insists Smith Quit Veterans’ Bureau,” Washington Post, March 4, 1926, p. 1.
91
“Veterans’ Official Sued,” New York Times, April 8, 1931, p. 11. “Veterans’ Bureau
Counsel Agrees to Return Retired Pay, Then Collapses at House Inquiry,” New York
Times, April 17, 1932, p. 2. “Veteran Bureau Graft Charged by Blanton,” New York
Times, April 21, 1932, p. 2.
92
Cited previously, Hines to Reed, February 11, 1924, box 170, Director’s File.
90
42
worthy and properly sympathetic.”93 Hines also had the support of the President. In
September 1925, in a news article discussing President Coolidge’s support of a proposal
to create a federal department of education, a White House spokesman cited Hines as just
the sort of man to administer the agency, explaining: “If a new cabinet position is to be
created it must have at its head [the President] will insist, a man broad enough and of
enough diversified qualities to allow him to manage all of the bureaus now scattered
through the various departments and which deal with the subjects of education and
relief.”94
93
“Blanton Insists Smith Quit Veterans’ Bureau,” Washington Post, March 4, 1926, p. 1.
John Edwin Nevin, “Coolidge to Insist on Creation of New U.S. Department,”
Washington Post, Sep. 5, 1925, p. 1.
94
43
The Formation of the Veterans’ Administration
With Hines’s reputation firmly intact, and while the bonus bills were being debated
in Congress in the late 1920s, a different type of veterans’ policy proposal began to
gather momentum. The plan to merge the Veterans’ Bureau with two Civil War-era
veterans’ service agencies—the Pension Bureau of the Department of the Interior and the
independent National Home for Disabled Volunteer Soldiers—was being seriously
considered as early as February 1927, when a joint conference of the heads of the
independent veterans’ organizations released a statement calling for “placing under one
head the veterans’ bureau, the pension bureau and soldiers’ homes.” 95 Hines outlined his
own support for such a plan in his 1928 annual report:
The director of the bureau has given considerable study to the subject of veterans’
relief, and has publicly proposed that there be established a separate department to
handle all matters affecting the extension of direct benefits to veterans and to the
dependents of veterans; and will vigorously support any legislation that has for its
object this unified plan of control. In the opinion of the director, the main
advantage of such a consolidation would be in bringing together in one definite
agency under the President matters which are so closely related at this time as to
make it essential for those charged with the administrative duties to be familiar with
all phases of the problem.96
In contrast to the bonus proposals, the consolidation plan enjoyed almost universal
support. The proposal was favored by majorities in congress, administration officials,
American Legion leadership, and independent good-government reform groups such as
95
“Heads of 5 Great Veterans’ Groups Ask Preparedness,” Washington Post, Feb. 19,
1927; for more about the Pension Bureau, see Gustavus A. Weber, The Bureau of
Pensions: its History, Activities and Organization (Washington, D.C., 1942); for a useful
account of the National Soldiers’ Home, see Judith Gladys Cetina, “A History of
Veterans’ Homes in the United States, 1811-1930,” PhD dissertation (Case Western
Reserve University, 1977).
96
Frank T. Hines, Annual Report of the Director, United States Veterans’ Bureau, for the
Fiscal Year Ended June 30, 1928 (Washington, 1928), 2.
44
the National Civil Service Reform League—by everyone except the heads of the agencies
that would be subsumed by the VA, who stood to lose administrative power, and by the
American Medical Association, the members of which, theoretically, stood to gain
economically in the absence of a government-run veterans’ hospital system.97
Hines’s contest with his bureaucratic rivals reached a climax in early 1930 during a
series of hearings before the House Committee on Expenditures in the Executive
Departments. The committee’s chairman, William Williamson, a Republican from South
Dakota, had proposed a bill calling for consolidation of the Pension Bureau and Soldiers’
Homes under the Veterans’ Bureau. Hines was the first witness to testify, on January 8.98
Three days later, the Secretary of the Interior, Ray Lyman Wilbur, argued in his
testimony for “coordination” of the three agencies rather than “consolidation.”99 Wilbur
insisted that the bill was “bound to invite some very severe opposition” and that
consolidation would be “going too far—going too fast.”100 The next week, Col. Earl D.
Church, Commissioner of Pensions in the Department of the Interior, protested to the
committee that the consolidation bill was “an intensified form of bureaucracy and not in
accord with the fundamental principles of the Government which have obtained from its
very inception.”101 He complained that consolidation would “simply mean absorption in
the Veterans’ Bureau.”102 Church proposed an alternative bill that would “coordinate” the
97
For more on the AMA’s opposition to the Veterans’ Administration, see Rosemary
Stevens, “Can the Government Govern?”
98
House Committee on Expenditures in the Executive Departments, Consolidation of
Veterans’ Activities: Hearings on H.R. 6141, 71st Cong., 1st sess., 1930, 1.
99
Ibid., 42-62.
100
Ibid., 46.
101
Ibid., 75.
102
Ibid., 77.
45
three agencies under the Department of the Interior.103 On January 23, Gen. George H.
Wood, president of the board of managers of the National Home for Disabled Volunteer
Soldiers, also argued in favor of coordination rather than consolidation, saying he
preferred “placing the three eggs under one hen” rather than “scrambling them.”104 Wood
argued that transferring the soldiers’ homes to the Veterans’ Bureau would result in
inefficiency, pointing out that the cost per day, per patient in the Veterans’ Bureau was
$4, while the cost in the soldiers’ homes was only $2.39. Transfer of soldiers’ home
patient to the Veterans’ Bureau would, Wood argued, cost the government more than $3
million per year.105
In response to these arguments, committee chairman Williamson reiterated that
consolidation made “good common sense,” and invited Hines to testify a second time to
rebut his rivals’ testimony.106 Hines was the only witness given this opportunity.
Recapping his earlier testimony, Hines told the committee: “I come before you simply as
a manager of one of your subsidiary companies would come before a board of directors,
and I look upon the Members of Congress as the board of directors of this great business
of the United States Government. I gave to you solely my own views. I did not quote the
President, although I had discussed the problem with him.” Hines was careful to present
himself as a disinterested public servant. “As I have previously indicated,” he said, “there
is nothing personal in this; that I have no desire to be a Cabinet member or to take on
103
House Committee on Expenditures in the Executive Departments, Consolidation of
Veterans’ Activities: Hearings on H.R. 6141, 71st Cong., 1st sess., 1930, 81.
104
Ibid., 114.
105
Ibid., 117.
106
Ibid., 123.
46
more work, or to take on more trouble, I might say, because I have all I can do.”107
Rebutting Wood’s claims about the Veterans’ Bureau’s inefficiency, Hines told the
committee: “It is exceedingly difficult to compare, for there is a considerable difference
in the type of service rendered in the bureau hospitals and in the soldiers’ homes
hospitals.” He compared the cost of care in Veterans’ Bureau hospitals with care
provided in Army, Navy, and private hospitals, before dismissing the soldiers’ homes as
“old institutions that were established many years ago and have been in operation for a
considerable length of time. The administration of these institutions has therefore been
stabilized. This, to an extent, tends to more economical administration.” Finally, he
pointed out that “the administration of the national soldiers’ homes is not under United
States civil service regulations, nor is it under the supervision of the classification
law.”108
Despite opposition by a cabinet official, the committee was swayed by Hines’s
argument. Hines had the support of President Hoover, and of veterans’ interest groups
such as the American Legion. The historian Donald J. Lisio notes that Interior secretary
Wilbur, “as a trusted cabinet member and old friend of the President … apparently felt
confident of convincing Hoover to reorganize veterans’ affairs within the Interior
Department. To his surprise, however, Hines had expertly usurped his favored
position.”109 The success of the consolidation proposal seems to have rested on the
107
House Committee on Expenditures in the Executive Departments, Consolidation of
Veterans’ Activities: Hearings on H.R. 6141, 71st Cong., 1st sess., 1930, 178.
108
Ibid., 190.
109
Lisio gives a well-sourced account of this episode as a prelude to the bonus march,
noting that some veterans’ groups interpreted the contest between Hines and Wilbur as
evidence of Hoover’s ambivalence about veterans’ issues. Lisio describes Hines as “a
master bureaucrat” who “enjoyed overwhelming his listeners with his vast knowledge of
47
reputation of the Veterans’ Bureau as an effective agency and Hines’s reputation as an
effective administrator. The agencies that were subsumed by the VA did not have the
reputation or alliances to match the Veterans’ Bureau.110
After the final version of the consolidation bill passed Congress, President Hoover
signed the executive order enacting the VA on July 8, 1930. He noted: “The consolidated
budget of these services for the present fiscal year amounts to approximately
$800,000,000, so that the new establishment becomes one of the most important
functions in the government.”111 In their 1930 survey of the federal government, Charles
A. and William Beard, sounded a hopeful note about the likely effects of the
consolidation:
Although formerly scattered among various agencies of the Federal Government,
the management of this complicated system of pensions, compensation, and relief
has now been concentrated by executive order under an act of 1930 in a single
Veterans’ Administration, headed by a chief appointed by the President and the
Senate. Thus the Pension Bureau formerly in the Department of the Interior, the
soldiers’ homes previously attached to the War Department, and the Veterans’
Bureau, an independent establishment, are united under one head to eliminate
overlapping and duplication. As President Hoover stated in giving effect to the new
law, this was “one of the most important steps taken in the reorganization of the
Federal Government,” and should contribute materially to the efficiency of
administration.112
the intricate laws governing veterans’ benefits”; see Donald J. Lisio, The President and
Protest: Hoover, MacArthur, and the Bonus Riot, 2nd ed. (New York, 1994), 9-13.
110
For a discussion of the origins and consequences of the Interior Department’s poor
reputation, see Carpenter, The Forging of Bureaucratic Autonomy, 326-52.
111
“Veterans’ Bureaus United by Hoover,” New York Times, July 9, 1930, p. 11.
112
Charles A. and William Beard, The American Leviathan: The Republic in the Machine
Age (New York, 1930), 779.
48
Conclusion
Hines’s reputation seems to have been based on three factors: first, his alliances
with well-placed reformers and lawmakers; second, his conspicuous pursuit of a series of
reforms as part of his effort to “clean up” the Veterans’ Bureau after the embarrassment
of the scandal; and, third, the poor reputation of his predecessor at the bureau, Charles R.
Forbes. Before the scandal, Forbes was unable to build a reputation as a competent
administrator. When corruption was uncovered, Forbes, lacking alliances, was vulnerable
to attack by well-connected reformers, critics, and bureaucratic rivals. In contrast, Hines
was able to quickly build a stable reputation as a strong administrator by cultivating
alliances across multiple networks. He could count on the support of efficiency-minded
administration officials such as Herbert Hoover, lawmakers such as David Aiken Reed,
interest groups such as the American Legion, and reform groups such as the National
Civil Service Reform League. By the late 1920s, Hines’s position was so strong that
policymakers had few qualms about placing him in charge of an ever-expanding
administrative domain.113
Looked at more broadly, the creation of the VA seems best considered as part of the
wider Republican effort to reorganize government by combining existing agencies and
creating new ones in order to increase administrative efficiency. The impetus for the
creation of the VA was purely administrative. There was no pressing need to consolidate
the three agencies. No one argued that the existing institutional structure was
113
Again, this focus on Hines’s reputation and alliances—and their impact on policy and
the development of veterans’ welfare institutions—owes an obvious debt to Daniel
Carpenter’s model. Though the case of Hines and the VA presents some complicating
details, it confirms Carpenter’s general argument about the sources of bureaucratic
autonomy.
49
exacerbating a public health crisis—in contrast to the debate that led to the creation of the
Veterans’ Bureau in 1921. While veterans’ organizations such as the American Legion
and the Veterans of Foreign Wars supported the consolidation, it was not as much of a
priority as the Bonus had been. The rationale for consolidation in 1930 was to increase
administrative efficiency by merging units of the government that were responsible for
similar activities, in order to take advantage of economies that were expected to develop
as a result of administrative streamlining. This same rationale was, in fact, applied to
several other areas of federal policy.114 This effort led to a shift in responsibility from
state and local agencies to the federal Prohibition Enforcement Bureau, which was then
transferred from the Treasury Department to the Department of Justice in 1930.115 This
effort also seems to have contributed to the development of the Federal Bureau of
Investigation. Most other proposals associated with this broad effort failed, however.
During the 1920s, Republicans proposed creating a department of defense, a department
of education, and a federal public works administration.116 They also proposed an illfated federal anti-lynching law.117
114
For a near-contemporary account of this effort, see Lewis Meriam and Laurence F.
Schmeckebier, Reorganization of the Government: What Does it Involve? (Washington,
D.C., 1939); the administrative historian Ronald C. Moe places this effort in the context
of earlier reorganization efforts begun during the Roosevelt and Taft administrations, see
Ronald C. Moe, Administrative Renewal: Reorganization Commissions in the 20th
Century (Lanham, Md., 2003), 37-44.
115
Laurence F. Schmeckebier, The Bureau of Prohibition: its History, Activities and
Organization (Washington, D.C., 1929).
116
For a treatment of the failed attempt to create a federal department of education in the
1920s, see Lynn Dumenil, “‘The Insatiable Maw of Bureaucracy’: Antistatism and
Education Reform in the 1920s,” Journal of American History (September 1990).
117
For more about the Republican attempts to pass an anti-lynching law, see Jeffery A.
Jenkins, Justin Peck, and Vesla M. Weaver, “Between Reconstructions: Congressional
Action on Civil Rights, 1891-1940,” Studies in American Political Development, 24
(April 2010), 66-77.
50
This effort began with the Harding administration, which, in 1923, announced a
plan to create a “Department of Defense,” by consolidating the War and Navy
Departments, and a “Department of Education and Public Welfare,” which would have, a
New York Times report explained, “supervision over all educational activities of the
Government and over all hospitalization facilities, including those of the Public Health
Service, army, navy, and Interior Department institutions, and possibly the Veterans’
Bureau.”118 The consolidation proposal that created the VA was explicitly framed as the
culmination of this effort. An Associated Press report about the veterans’ agency
consolidation proposal begins: “President Hoover is ready to translate into action ten
years’ talk about reorganizing the Federal Government.”119 In December 1931, Hoover
described his broader program for consolidating agencies, using the model of the
Veterans’ agency merger. The New York Times reported that “the first consolidation to be
asked for will involve all construction activities of the government, with the exception of
such as are of a purely military or naval nature.” Also on the agenda was a plan to
consolidate “all building and construction activities in the government” into a new
“Public Works Administration,” as well as “the consolidation and transfer to the
Department of Commerce, as a unit of that department, of all bureaus and commissions
charged with the administration of shipping and allied interests.” When making these
proposals, Hoover emphasized the notion that, through “the elimination of many
expensive agencies and overlap,” the government would eliminate “many millions” of
dollars in expenditures. Hoover added that “further great economies would be brought
about by the curtailment of the self-expanding capacity of scattered bureaus, which could
118
119
“Harding Backs Plans for New Departments,” New York Times, Feb. 14, 1923, p. 8.
“Hoover Plans to Unite All Veteran Agencies,” New York Times, Nov. 21, 1929, p. 20.
51
be much better controlled if they were grouped together.” Hoover told reporters: “The
most constructive direction for economy in Federal expenditure beyond a rigid reduction
of appropriations and the resolute opposition to new appropriations lies in the
consolidation of government bureaus and general reorganization of the Federal
Government.”120
While it seems clear that, in the case of federal veterans’ policy, majorities of
policymakers during the 1920s were quite willing to use federal administrative power to
solve policy problems, further study is required to confirm whether this conclusion can be
extended to other policy debates of the 1920s. While this impression is supported by
secondary sources and news accounts, further archival research is necessary, especially if
we are interested in answering questions about policymakers’ attitudes and motivations.
It would be particularly interesting to examine the policy debates about education,
welfare for women and children, anti-lynching, prohibition, general federal law
enforcement, and the armed forces—and then compare these issues with the case of
veterans’ policy. Why, for instance, did the AMA succeed in scuttling the SheppardTowner Act in 1929, when it failed to impede the formation of the VA? Previous studies
of these other policy debates have studied them in isolation, and have not viewed them as
part of a wider, unitary effort.
Placing the case of veterans’ policy in context with consolidation proposals in other
policy realms would suggest an inversion of the significance of our understanding of the
120
“Hoover Maps New Drive to Consolidate Bureaus and Save ‘Many Millions,’” New
York Times, Dec. 30, 1931, p. 1; from published accounts, it’s hard to know the extent to
which Hoover supported consolidation because of the projected savings, or whether he
supported these measures mainly for reasons of administrative rationality, and that the
predicted budgetary side effects were simply a handy warrant to have to hand during a
time when concern for a balanced budget was dominant.
52
“Associative State” thesis. Historians have viewed the “associative” efforts as an
exception to antistatism. That is, policymakers were reluctant to use federal agencies to
solve policy problems, except in the case of national industrial planning, when they
preferred to engage voluntary institutions as intermediaries. However, if it can be shown
that policymakers actively sought consolidation in multiple policy realms, and that they
were not ideologically opposed to expanding federal administrative authority, this would
suggest that the “associative” policies noted by Hawley and Himmelberg were, in fact,
exceptional in the opposite sense: policymakers were willing to use federal agencies to
solve policy problems, except in the case of national industrial planning, where they
preferred to engage voluntary institutions as intermediaries.121
While Frank T. Hines’s focus on administrative efficiency helped bolster his
reputation for a time and enabled him to enlarge his personal bureaucratic domain, it is
ironic that, near the end of his 22-year reign, he was widely derided as an inept
administrator. For all the talk of a clean-up at the Veterans’ Bureau during the 1920s,
there is little evidence that Hines did much more than introduce some by-then-standard
office-organization practices. He never enacted the sort of substantive reforms that had
been advocated by medical experts such as Thomas Salmon or Haven Emerson. This
would become clear by 1940s, when it was discovered that VA patients had been
receiving substandard care for some time. The report of a Senate investigation—which
was sparked by “serious charges made by Members of Congress, newspapers, magazine
articles and others of inefficiency, administrative break-down and brutality in some
121
To be clear, I am not suggesting that the Associative State thesis is wrong, but that
traditional assumptions have led historians to misjudge its significance.
53
hospitals”—listed findings that directly contradicted the image that Hines had cultivated
for himself and his agency. The Senate committee found that construction of hospitals
had “not progressed fast enough … notwithstanding the fact that there has been sufficient
money authorized.” It also found that the agency “as set up was not equipped to provide
the best quality of modern medicine to veterans” and that “many inexperienced people
were employed in neuropsychiatric hospitals.” Some neuropsychiatric and tuberculosis
facilities were “lacking in modern therapeutic equipment and methods.” Doctors and
nurses were spending to much time on “reports and paper work, taking them away from
bedside practice”—the result of an organization that was “too cumbersome and outdated
to meet the challenge of 15,000,000 veterans of World War II, to say nothing of World
War I.”122
These revelations caused a stir because they seemed so at odds with the earlier,
widespread view of Hines as a model administrator. The path of economy and efficiency
may have served Hines and his agencies in the short term, but in the long term, this path
actually constrained policy innovation. The agency, once considered a model of
administrative virtue, had become an example of a bloated, impersonal bureaucracy.
When President Truman decided to modernize the VA to prepare for veterans of the
Second World War, he replaced Hines with General Omar Bradley and named Hines as
122
House Committee on World War Veterans’ Legislation, Investigation of the Veterans’
Administration, 79th Cong., 2nd sess., 1946, H. Rep. 1795, 3-4.
54
U.S. Ambassador to Panama.123 The VA’s poor reputation, developed by the end of
Hines’s administration, would haunt the agency until the close of the twentieth century.124
123
“Gen. Hines Quits Panama Position,” Washington Post, February 12, 1948, p. 16.
For evidence of a turnaround at the VA during the 1990s, see Phillip Longman, “The
Best Care Anywhere,” The Washington Monthly, Vol. 27 (January/February 2005), 3848.
124
55
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