The “Morse” Code of Behavior
The first year of the bureau’s existence produced a massive scandal that threatened to confirm the worst fears Congress had expressed over establishing the agency: overreach of the Executive, in this case involving stacking and tampering with a jury to achieve conviction at all costs. In the history of federal agencies, key events sometimes change the organizational culture forever. The US Navy and Marine Corps will never be the same after the Tailhook scandal that came to light in 1991. The Cartagena scandal of 2012 changed the culture of the US Secret Service forever. The Bureau of Investigation went through a scandal as profound in 1909, and it involved the trial of Charles W. Morse. One could argue that the fallout from this scandal precipitated a cultural change within the bureau that is still palpable even today.
The story of Charles W. Morse’s downfall begins when on October 18, 1907, panicking depositors initiated a run on the Knickerbocker Trust Company in New York as a result of careless speculation and brinkmanship by one F. Augustus Heinze. He had tried to demolish John D. Rockefeller’s virtual monopoly of the copper market. The effort not only failed, but brought the US banking system, indeed the financial health of the United States, crashing down. John Pierpont Morgan, wealthier than the US government itself, came to the rescue with unprecedented loans. The situation became so tense that Morgan asked New York’s clergy to pray for “calm and forbearance.” Whether with God or J. P. Morgan’s help—or as a combination of both—the great bank panic of 1907 ended as quickly as it had come about. Investor confidence recovered within a month and the recession ended in June 1908, almost exactly a year after it had started.
However, among the many Wall Street schemes that came crashing down were the fortunes of the “King of Ice,” Charles W. Morse. The owner of virtually the entire US merchant marine had successfully cornered the ice market a few years earlier, a critical component for shipping perishable goods. He created a monopolistic trust, the American Ice Company. “The price of ice doubled in a week,” a newspaper reported in admiration.[i] Badly over-leveraged, Morse’s empire of steamship lines and warehouses succumbed to bankruptcy in the panic of 1907. A year later, Morse, who had fled to England but eventually decided to stand trial in the US, came under indictment for creating a monopoly. The disgraced tycoon fought tooth and nail to stay out of prison. Morse lost in the first round. He was sentenced to fifteen years hard time and $5,000 for violating the Donnelly Anti-Monopoly Act.[ii] However, that did not end his struggle. Morse demanded a retrial and alleged that agents of the Justice Department had engaged in jury-tampering. The charge seemed far-fetched.
The problem for the BI was the coverage of its role in this case. In an affidavit reported in the New York Sun in November 1909, revealed the extent to which agents went to achieve a conviction, leaving everyone in the new Taft administration, from the president-elect on down, aghast. BI agents detailed to guard the jury during trial allegedly provided the jurors with “unlimited quantities of liquor,” to the point that outgoing President Roosevelt’s personal physician had to attend to a juror who ended up at the “Bellevue alcoholic ward” with the “jumps” as a result of the BI agents’ liberal distribution of spirits.[iii] The affidavit further alleged that one of the jurors had a history of mental illness. One of his agents reported this kernel of interest to Chief Finch who allegedly never informed the court. Morse’s attorneys further alleged that agents of the BI influenced individual jurors. One of the special agents took a juror “across the street [from the courthouse] to a saloon and both took a drink of brandy.”[iv] Topping these allegations, the BI agents also provided the jurors with “all the newspapers every day, some of which contained hostile, incomplete, biased, partial and damaging reports…”[v]
The Circuit Court of Appeals rejected Morse’s allegations, as did the Supreme Court. However, the report of the BI’s alleged jury tampering was disastrous. Not only did the Sun print the charges in Morse’s affidavit, but it also outed fourteen of the bureau’s first thirty-four agents by listing their names. Attorney General George W. Wickersham, who just had taken over from Bonaparte, did not waver in fighting Morse’s appeal. Interestingly, just a year into serving his sentence, President Taft pardoned Morse who lay on his deathbed, according to his wife. Only days after regaining his liberty, Morse miraculously cheated death, recovered his health, and resumed his Wall Street career. He lived until 1933.
The scandal had a profound impact on the bureau. The first wave of hires, with a strong Secret Service component, had created a “can-do,” sort of “Rough Rider” atmosphere in the new department. This may have been the attitude President Roosevelt and Attorney General Bonaparte instilled in their pioneer investigative force. The new Taft administration did not share this view. Wickersham desperately needed Congressional approval and funding for the bureau. The special agents already had their hands full establishing their credibility with the courts, law enforcement, and citizens in the many localities where investigations took place. We will see the extent to which local resistance to federal influence ranked supreme in the many prosecutions the bureau brought. Without holding a moral and legal high ground, the bureau would not survive Congressional scrutiny for long.
Chief Finch insisted on documenting every move meticulously from 1909 on, accounting for every penny of expenditures. He standardized reporting and accounting, so that it became difficult for agents to engage in extra-legal adventures without the knowledge of bureau leadership. Although not a perfect system, the BI from 1909 on would not be an agency ostensibly engaged in political hack jobs. While politics surely steered their mission, Finch and Bielaski, as well as their successors, tried to investigate and prosecute by the book, even if, as we will see on many occasions, it meant that convictions could not be secured. Despite hostile judges, blatant jury tampering by locals, and seemingly ironclad cases falling apart, by and large the agents of the BI remained within the bounds of the law.
[i] Waterbury Evening Democrat, February 28, 1908.
[ii] Tacoma Times, December 11, 1909.
[iii] New York Sun, November 11, 1909.
[iv] New York Sun, November 11, 1909.
[v] New York Sun, November 11, 1909.
