The Bourbon King, The Inside Story: Government Corruption, Then and Now
The Bourbon King offers a window into government corruption at the highest levels. Any lessons we can learn for understanding today’s political scene?
Presidential corruption is a delicate matter. Incredibly partisan, one side sees something that the other does not. History helps sort out details and brings new evidence to light, but then how do we deal with scandal as it takes place?
George Remus built a far-reaching bribery network that stretched from the suburban Cincinnati police to the Harding White House. He virtually taught Newport, Kentucky, about graft, which enabled the city to become a model for corruption and vice. Decades later, the mafia would move into Newport and see the city as a model for Las Vegas.
Much of the corruption Remus took advantage of came directly from the Prohibition Bureau, particularly as enforcement began. At every level, “Prohis" (the nickname given to agents tasked with enforcing Prohibition) fell to corruption and payoffs.
For example, many leaders at the state level issued whiskey certificates—paper documents that gave the holder the ability to sell liquor legally to pharmacies, hospitals, doctors, and others for “medicinal usage”—for a hefty fee.
“They received considerations,” Remus explained. “Otherwise those withdrawals would never have come to the respective distilleries that I was owner of.”
As a result of the permutations, trust evaporated and criminality ruled, particularly as officials in the Harding administration learned that they could be so dishonest.
Much of the underhanded maneuvers originated in Attorney General Harry M. Daugherty’s office and ran through Jess Smith, his bon vivant friend and confidante. Jess ran interference for Daugherty and his Ohio cronies linked to Harding’s White House. The money changed hands, which fit with Remus’s worldview of how men acted when they had a deal, but he had no guarantee that Smith could do what he said.
Amidst this setting, and with his own loose lips, could Remus possibly keep his central bribe secret? A journalist reported that he heard a rumor around town about George, explaining, “He was once heard to boast that he was immune from prosecution because he had the ear of the private secretary of a cabinet officer.”
The bribery network soon crumbled…
On May 30, 1923, Jess startled awake in the middle of the night. He drew a pistol from a bedside drawer, stumbled to the bathroom, and lay down on the floor. Positing his head on the side of a wastebasket, Jess put the revolver to his temple and pulled the trigger.
Smith killed himself a little more than two months before the shocking death of Warren G. Harding, who declined quickly on a trip out West and ultimately passed away on August 2, 1923, only 57 years old.
The Ohioan was wildly popular at the time and mourners lined the train route that brought the dead president back to the nation’s capital. Only after his death would the full weight of his scandal-ridden administration become unraveled by a series of congressional investigatory committees and reporters hot on the trail of his Cabinet members and their cronies, many who seemed to specialize in corruption. For George, the deaths of Smith and Harding left him with little hope. Worse, the tragedies severed his ties to Daugherty.
“Misfortune came fast, suddenly,” Remus said. “Jess Smith was found dead in his bathroom. President Harding died. The Senate called for the impeachment of Harry Daugherty. The game was over. I had no place to turn.”
Shortly after President Harding died in office, many scandals came to light that revealed the full extent of his administration’s corruption. However, Harding was given a kind of free pass.
Today, with President Donald Trump, the accusations regarding corruption are much more vocal and public. Events that transpired in Harding’s era demonstrated how bad actors could really line their own pockets by using their power in various schemes.
Modern presidents are not given the same benefit of the doubt. The amplification of outrage based on social media and a more pervasive news cycle means that cries of government corruption are going to be louder and shriller.
The challenge for us today is attempting to determine how much of the dishonesty is real and what might be condensed down to partisanship. Calvin Coolidge — Harding’s successor — watched a series of Congressional investigations into corruption by Harding Cabinet members. He constantly worried about how those spectacles would influence voters’ minds in the 1928 election.
As long as the economy boomed, observers gave Harding and Coolidge a free pass. At the time, the scandals did not topple their administrations.
Today, however, the notion of a free pass is laughable as a president’s every move is scrutinized by a highly-partisan citizenship.
The media—crippled by the financial crisis that has left the industry in shambles over the last two decades—responds by chasing every sensational detail, forced to feed the bile back to consumers, hoping that their anger will result in advertising dollars and measured in online “impressions.”
The corruption of the Harding administration—with George Remus at its center—provides a case study in corruption by White House subordinates who realized how swiftly they could fleece the system. Today, are we too distracted by the daily shouting to scrutinize the details as they unfold just below the surface?
The Bourbon King, The Inside Story: George Remus as a Business Leader
George Remus as a Business Leader
Remus cashed out in Chicago and took his fat stacks to Cincinnati, the epicenter of the bourbon and beer industries in the early twentieth century. He parlayed his life earnings into a fortune that some estimate reached $200 million, which would be many billions of dollars today over the course of about two and a half years.
Remus realized that he could control every aspect of the bootlegging business, from production to distribution via other rumrunners and liquor operatives, while also selling directly to consumers. He called this idea “the circle,” which was probably modeled on what J. D. Rockefeller had done in the oil business. “Cornering the market” was a popular idea in the 1920s, a decade and a half after President Theodore Roosevelt had criticized business leaders for attempting to create corporate monopolies.
“Remus was to bootlegging what Rockefeller was to oil.”
— Paul Y. Anderson, St. Louis Dispatch
Basically, like Rockefeller in oil or J. P. Morgan in steel, George wanted to create a network that controlled all aspects of the bourbon industry, from creating the product in Kentucky distilleries to shipping and distribution, and then through the sales process. If he controlled all these points—thus creating the circle—he would dominate the market.
Creating this national network took a lot of money and a lot of hubris. Remus had both in spades. He pulled it off, but in the end, faced some of the same challenges businesses have always faced: lack of talent to manage the organization and deals that fell through. Remus needed henchmen that were as smart as him and he had trouble finding them. Then, his “sugaring” network—the term for bribery in the 1920s—fell through. These challenges essentially put him out of business.
Check out The Bourbon King: The Life and Crimes of George Remus, Prohibition’s Evil Genius for the whole story, including how Remus assessed his own abilities as a corporate leader.