Many who leave Main Street, U.S.A., to do good in Washington, D.C., remain on to do well for themselves. Since the beginnings of the American Republic, thousands of former congressmen, staff assistants, and senior officials in the executive branch have trod that familiar career path. The bright and ambitious, as well as the foolish and indolent, discover gold along the banks of the Potomac River and succumb to “Potomac fever.” In the process, these incipient power-brokers and mercenaries shed local attachments and forget the common people who first selected them to serve. Over the last 20 years, however, this pattern has changed in one significant respect. Previously, officials departed government to extract gold from domestic employers—banks, oil companies, railroads, manufacturers, and even some labor unions. Now former bigwigs pimp and pluck for alien interests.
The extent of foreign influence-peddling in government would not surprise Alexander Hamilton and the authors of the Constitution, hi the Federalist Papers, Hamilton warned that republics “afford too easy an inlet to foreign corruption.” Acknowledging that the world had seen few instances of “royal prostitution,” he cautioned that history offered “many mortifying examples of the prevalency of foreign corruption in republican governments.”
“In republics,” Hamilton said, “persons elevated from the mass of the community, by the suffrages of their fellowcitizens, to stations of great preeminence and power, may find compensations for betraying their trust.” In particular, Hamilton expressed concern about the President and the executive branch:
A man raised from the station of a private citizen to the rank of chief magistrate, possessed of but a moderate or slender fortune, and looking forward to a period not very remote, when he may probably be obliged to return to the station from which he was taken, might sometimes be under temptations to sacrifice his duty to his interest. . . . An avaricious man might be tempted to betray the interests of the state to the acquisition of wealth.
Hamilton and other participants in the Constitutional Convention of 1787 well understood the dark side of human nature, and so they wisely inserted several key cheeks and balances in the nation’s fundamental document. The Constitutional Convention separated legislative and executive powers and stipulated that treaties negotiated with foreign governments gain the approval of two-thirds of the Senate.
Experience during the Confederation period had shaped these decisions. In 1785, the Founders had witnessed a flagrant foreign effort to corrupt American public officials and subvert long-term national interests. Eager to close off westward expansion across the Appalachians into the Mississippi Valley, Spain attempted to lure John Jay, Secretary for Foreign Affairs, with personal favors to accept a commercial treaty and forbear claims to navigation of the Mississippi River. According to diplomatic historians, the Spanish envoy Don Diego de Gardoqui even loaned money to members of Congress and gave breeding mules to General George Washington. But frontier opposition finally prevailed, and Congress narrowly rejected the shortsighted treaty.
To Hamilton and other Founders the episode demonstrated the need for legal checks and balances to restrain human greed and protect the nation from foreign machinations. They anticipated the most blatant form of public prostitution—the use of bribes and favors to influence the public activities of an official. But the founding generation never envisioned the revolving-door situation prominent today—in which public officials gain knowledge and experience at public expense and then seek to convert that knowledge for private gain in post-government employment serving the nation’s adversaries.
One of the first prominent government officials to leave public service and work for foreign interests was General James Wilkinson, an unscrupulous adventurer who took an oath of allegiance to the King of Spain. During the Revolution he served as an aide to the most renowned traitor in American history—Benedict Arnold. Afterward Wilkinson moved to the Kentucky frontier in search of fortune and fame. When Spain closed the Mississippi River, he approached Spanish authorities seeking an exclusive trading monopoly. To advance this petition, he swore allegiance to the Spanish crown in 1787 and agreed to foment secession in Kentucky. For his efforts Wilkinson gained a Spanish pension, which he retained when he reentered the United States Army as an officer in 1791. Although on the Spanish payroll, Wilkinson rose to become the Army’s ranking officer.
Money and personal advancement drove Wilkinson, as they did other entrepreneurs on the frontier. But foreign money also influenced public officials in Washington. Secretary of State Daniel Webster apparently permitted foreign money to sway his public performance. According to Philip Ziegler in his book The Sixth Great Power, a history of the House of Baring, Webster, who was constantly in need of money, received gifts and payments from the Barings. As Secretary of State in the Tyler administration, he repaid this largess with interest. Webster shifted federal bank accounts from the French Rothschilds to the Barings, a banking house with close ties to the British government. He also negotiated a generous settlement of the ticklish Maine boundary dispute with an old friend, Lord Ashburton (Alexander Baring). In and out of government Webster served the Barings well and proved himself a true Anglophile. He was “by far the greatest man we have,” wrote the Barings’ agent in America.
During the 19th century domestic, not foreign, money fueled the lobbies in Washington. Both the greedy and the needy among former government officials could make big money representing a variety of homegrown special interests. In his famous study The American Commonwealth, published in 1888, Lord James Bryce listed some of these powerbrokers. There were pension lobbyists, railway lobbyists, tariff lobbyists, Indian lobbyists, back-pay lobbyists. Isthmian canal lobbyists, and many others. Bryce even found French spoliation lobbyists and British trade and shipping lobbyists.
One celebrated scandal concerned the purchase of Alaska from Imperial Russia. Having decided to dispense with this piece of Arctic real estate after the American Civil War, the Russian government retained Washington lobbyists—including former Treasury Secretary Robert Walker—to persuade Congress to pay the agreed price of $7.2 million.
Historians have discovered that the Russian Minister Baron Eduard de Stoeckl also bought favorable press and support on Capitol Hill. The editor of one Washington newspaper received $30,000 to propagandize the purchase, and other payments went to influential congressmen, including the chairman of the House Foreign Affairs Committee. A congressional investigation also revealed that Washington reporters for more than a dozen major papers received at least $2,500 each for their support.
As late as 1950, when Congress devoted 18 long months to writing the Smoot-Hawley Tariff Act, foreign lobbyists still had only sporadic impact on the Washington process. Foreign interests relied on the State Department to communicate their concerns to the appropriate congressional committees. Meanwhile, many former government officials—including employees of the Customs Service and the Tariff Commission—appeared before Congress to testify and lobby for domestic interests. In 1929 and 1930 domestic interests benefiting from high tariffs paid handsome sums to Washington power-brokers to safeguard those privileges.
This pattern changed during the New Deal. President Franklin Roosevelt turned the State Department over to an enthusiastic trade deregulator, Cordell Hull, who proceeded to open the domestic market to import competition. In transferring tariff-making from Congress to the State Department, the reciprocal-trade-agreements program created opportunities for trade specialists and lawyers familiar with the bureaucratic landscape.
One beneficiary was William Smith Culbertson, a Kansas progressive and the first vice-chairman of the federal Tariff Commission. After President Hoover’s defeat in 1932, Culbertson returned to Washington from his diplomatic post in Chile to start another career as a Washington lawyer. Lacking clients, he found some work representing Japanese textile interests before the Tariff Commission and Congress. He therefore was one of the first former trade officials ever to serve Japanese clients, like Mitsui and Mitsubishi. Yet, in fairness, Culbertson did not rush through the revolving door. A long interval—some eight years—elapsed between his departure from the Tariff Commission and his subsequent appearances representing textile importers.
The success of Cordell Hull’s tariff-reduction program gradually altered the balance of lobbying power in Washington after World War II. As domestic tariffs declined, protectionist lobbies weakened and lost their capacity to retain large numbers of lobbyists. Conversely, as foreign producers and importers gained access and market share, they acquired valuable privileges worth protecting. Increasingly importers needed large numbers of professionals familiar with the ways of government to protect their interests.
During the Marshall Plan era the State Department emerged as a principal training school for future foreign agents. In the rarefied air of Foggy Bottom, young lawyers and diplomats from this country’s best universities learned to think correctly about international economics. Protectionism and Smoot-Hawley, they heard, were evils that produced trade wars and complicated bilateral relationships. Free trade, they learned, nurtured friendly political and military tics, even when trading partners chose not to reciprocate fully. These diplomats and lawyers also heard about America’s duty and responsibility as a great power to open its market wide to the exports of poor countries facing an international communist threat.
Uneasy about long-term career opportunities in the competitive foreign service, State Department recruits learned to cultivate foreign contacts and build personal escape routes from bureaucratic caprice. A strong network of foreign associations might some day offer a remunerative postgovernment career. One such State Department official was Noel Hemmendinger, a lawyer destined to become one of Japan’s top foreign agents in Washington. A graduate of Princeton and Harvard Law School, where he edited the law review, Hemmendinger served in World War II and then entered the State Department in 1946. He specialized in Japanese commercial matters at a time when the Truman and Eisenhower administrations sought to promote markets for Japanese exports and thus undercut the appeal of communism. Sensitive to Japanese interests from his years of service in the department, Hemmendinger helped write the 1955 bilateral trade agreement. That pact opened the American market wide to most Japanese products, but left the Japanese market relatively closed to American exports.
Having done his public best to rehabilitate the Japanese economy and promote a strong bilateral relationship, Hemmendinger left the State Department to open a trade law practice. His client base consisted of Japanese. Over time Hemmendinger became an unofficial trade ambassador for the Japanese government and maintained a close association with the Japanese Embassy in Washington and the Foreign Ministry in Tokyo. Repeatedly, he registered with the Justice Department as a foreign agent.
Only a few hundred miles separated Washington, D.C., from Bernardsville, New Jersey, population 6,700, where Noel Hemmendinger began. But after punching his ticket at the State Department and befriending Japanese export interests, Hemmendinger found his pot of Potomac gold. The smart boy from Bernardsville became an advance agent for Japan’s export offensive. In Washington he would extol the virtues of free trade while deflecting criticisms of Japanese home-market restrictions, and he would vigorously defend Japanese business while laboring to discourage vigorous enforcement of American trade-remedy laws.
Over the succeeding years Japan would hire many Hemmendingers, former officials with the State Department or other trade agencies who knew the corridors of power. Soon, too, other competitors imitated the Japanese example. Canada, Taiwan, Korea, Brazil, Mexico, and many other countries hired former federal government officials to advance their commercial interests.
During the 1970’s and 1980’s, as the import assault intensified, the Washington revolving door began to spin faster and faster. Washington, D.C., had discovered Say’s famous law of economics—supply creates its own demand. With more baby boomers attending law school and scrambling for high-paying professional careers, many turned to government for a career boost. In government, far faster than in a large law firm, they could gain substantive experience, a network of contacts, and potential clients. Government offered the fast track to a high-paying partnership.
Other circumstances benefited trade lawyers. After steep Kennedy-Round tariff concessions exposed American manufacturers and workers to intense competition in the early 1970’s, American public opinion turned against unrestricted trade. For lawyers and lobbyists, the threat of protectionism in Congress presented bountiful opportunities—more foreign clients and more billable hours.
Responding to the negative public mood, legislators and lawyers on Capitol Hill fashioned a classic inside-the-Beltway response. They constructed a complex quasi-judicial procedure for adjudicating trade disputes away from politics and policy concerns. Not surprisingly, the process relied on more lawyers and litigation. The Trade Acts of 1974 and 1979 could have been titled “Full Employment Acts for Trade Lawyers.”
During the 1980’s, trade-remedy practice became a thriving source of profit for many Washington law firms. The simplest antidumping or countervailing duty case might cost domestic petitioners $300,000 to $400,000. With multiple foreign parties having differing priorities, respondents might spend well over $1 million to defend their interests. The biggest cases involved hundreds of attorneys and expert witnesses. They produced billings in excess of $100 million.
With so much money in the regulatory valleys of Washington, other professionals sought to join the “gold rush.” Economists succeeded. At the International Trade Commission Richard Boltuck, a University of Chicago all-but-the-dissertation economist, designed a computer-assisted money machine—that is, an economic model to measure the impact of imports on domestic industries. With assistance from several commissioners, eager for ideological reasons to discourage case filings, parties to trade-remedy proceedings soon encountered another costly expense. To win a trade case, they needed to retain not only lawyers but also economists. Having imposed a new form of tariff on imports—one that diverted additional money from producers of wealth not to fund government but to retain economists—Boltuck and several colleagues left public employment to prospect for gold.
During my nine years on the ITC from 1981 to 1990, I watched the revolving door spin round and round. Friends and colleagues briefly punched tickets in the public sector and then left to enjoy foreign lucre.
I remember vividly certain episodes. One day a senior attorney in our General Counsel’s office came in to shake my hand; he was departing for the green fields of private law. He did not leave the corridors of government for long. The next business day he reappeared in the Commission hearing room to represent a foreign client in an ITC proceeding. Although no laws were broken, the episode left a sour taste—and an appearance of impropriety.
On another occasion, a senior legal counsel walked the ITC corridors to lobby staff against an affirmative finding in a commodity case. A few weeks later the same attorney resigned to take up employment with the very law firm that had represented the foreign producers. Some months later when a similar case was filed, the former government attorney now appeared on behalf of foreign respondents. It was another example of the revolving door in action.
Some of the most revolting episodes have involved presidential appointees, especially fellow commissioners. Former ITC Commissioner Daniel Minchew gained notoriety in 1978 when he traveled to Japan and signed a private agreement to represent Japanese business interests before he had resigned his government post. Several of Minchew’s successors learned from his public example and sought foreign clients more discretely. During the 1980’s eight commissioners departed from the ITC. Four of the five who remained in Washington, all professionals in mid-career, registered as foreign agents or represented foreign interests before the commission within two years of resigning their public position.
Over a longer span of time, from 1975 to 1988, Presidents designated eight individuals to chair the quasi-judicial ITC. Five of them subsequently passed through the revolving door to represent foreign or import interests at the Commission. Only one former chairman returned to the ITC to represent domestic producers. The same pattern applied at other trade agencies. A deputy assistant secretary of commerce resigned from office one day and appeared in Europe the next morning after an all-night flight to hustle clients for his trade-remedy practice.
Not all public officials exploit the revolving door to accumulate personal wealth. I will always remember the many honest and hardworking civil servants I encountered in government service. These unsung heroes merit admiration for their constant dedication to the public’s business. At a time when some young professionals chase the Asian dollar, they persevere, patriotically and impartially administering laws while maintaining high ethical standards. Their efforts keep the wheels of government moving.
What is the solution to foreign-interest lobbying? Already government requires presidential-level appointees to fill out annual disclosure forms as complicated as the Form 1040. True, burdensome reporting requirements do not guarantee individual ethics, but such restrictions address the James Wilkinson-and Daniel Webster-type indiscretions.
To slow the revolving door, the Clinton administration has promised new restrictions on post-government employment. Senior noncareer employees will be barred from lobbying their former department for five years. Trade negotiators will be forbidden from representing foreign governments, political parties, or companies.
At first impression such changes seem overdue. But problems remain. Many experienced and talented people may find such restrictions intolerable. As a result, efforts to mandate ethical public conduct also hamper recruitment of top-quality individuals with requisite experience. This leaves the United States with a second-class government of inexperienced amateurs. Moreover, mandatory restrictions invite circumvention. Are American affiliates of foreign corporations barred from retaining former officials? Such an interpretation could jeopardize the constitutional right to petition government. But, without such limitations, proposed rules have only a cosmetic effect.
From my vantage point, the best defense against impropriety remains a vigorous and adversarial press. The prospect of negative coverage in a national newspaper or on a network television program like 60 Minutes operates as a powerful deterrent to improper activity. For, with a vigilant press oversight, those who go to Washington to do good must contemplate the embarrassment of public exposure if they betray the public trust and dishonor the folks back home.