The Bear’s Lair: Back to the politics of Henry Fox

Henry Fox, 1st Baron Holland (1705-74) made £400,000, equivalent to about $100 million today, from the office of Paymaster of the Forces during the Seven Years War. Shortly after his departure, British politics was cleaned up, so that fifty years later statesmen such as Lord Liverpool lost money on 15 years as Prime Minister. In the United States, Presidents such as McKinley, Coolidge, FDR and Truman remained relatively poor men. Yet the post-presidential career of Bill Clinton and now the allegations about Joe Biden suggest that U.S. politics may be reverting to the Henry Fox standard. It is worth looking at what that implies for the quality of government and the people who go into it.

Henry Fox’s fortune was not built primarily on taking bribes directly – there were already laws against that, albeit intermittently enforced. He had been a rapidly rising politician and Leader of the House of Commons, thought likely to become prime minister, but on the outbreak of the Seven Years War and the formation of the Pitt/Newcastle government in 1757 decided that the office of Paymaster of the Forces, while politically of only secondary importance (often outside the Cabinet, for example) was potentially so lucrative he would abandon his hopes of the top office to build his family fortune.

The office’s profits came from receiving the immense sums owed for payment of the Army and reinvesting those sums for several months or even more before passing them on to the regimental paymasters; it also received a commission of up to 5% on the sums disbursed. It had traditionally had the potential for huge financial rewards in time of war; James Brydges, later first Duke of Chandos, had made an immense fortune as Paymaster of the Forces during the War of the Spanish Succession in 1705-13, then Robert Walpole had “put some flesh on his bones” as Paymaster of the Forces even in peacetime in 1714-15 and 1720-21. Indeed, Henry Fox’s father Sir Stephen Fox (1627-1716) had made the family fortunes through the office (although the Army had been much smaller then) as the first holder of it in 1661-76 and 1679-80. Henry Fox’s High Tory, but idle half-brother Charles Fox (1660-1713) had also held the office, less lucratively we are told, in 1682-85 and 1702-05. Conversely, Henry Pelham (Paymaster, 1730-43) and William Pitt the elder (Paymaster, 1746-55) had both established reputations of immense probity by not enriching themselves while holding the job.

For Henry Fox, money was clearly more important than a reputation for probity. Not only did he hold the job of Paymaster of the Forces through the Pitt/Newcastle ministry, he kept the job under the Tories Bute and George Grenville even though he was a lifelong Whig (Bute and Grenville benefited from his support in the House of Commons as well as his valuable advice about the weaknesses of the leading Whigs who opposed them). Only in 1765, when another Whig administration took office under the young Marquess of Rockingham, was he forced to retire with his loot.

Henry Fox left no lasting artistic monument, gambling away much of his fortune, though his second son Charles James Fox was to achieve even greater fame at the cost of less solvency. However, the Duke of Chandos was a patron of George Frederick Handel, giving us the “Chandos anthems” and Walpole accumulated Britain’s finest non-royal art collection in history, eventually sold to Tsarina Catherine the Great in 1779 to become the bedrock of the State Hermitage Museum in St. Petersburg. Regrettably, any modern equivalents of Chandos or Walpole are unlikely to leave us such artistic or musical excellence.

Just as Henry Fox did not directly take bribes but relied on interest and fees from the money flowing through his office, so his modern equivalents, the Clinton family and Joe Biden, do not appear to be directly corrupt. Instead, they receive from foreign companies and institutions charitable donations for the Clinton Foundation or, it appears, business propositions for Biden’s family, possibly in return for favors when they are in office (The Clinton family’s “Uranium One” deal, selling U.S. uranium deposits to Russian interests, appears a clear example of this.)

It is not immediately clear how much damage is done to the quality of government by this activity. In the cases of Chandos and Fox, their political careers were effectively ended by it, since their profiteering made them so unpopular among the informed electorate, that they were not offered further senior posts in government. Equally, there is no question that the Whigs’ “Economical Reform” movement of the 1780s, which removed the opportunities for major self-enrichment, and William Pitt the Younger’s drive thereafter for sound administration greatly improved the quality and efficiency of British government, as well as reducing its extraneous costs. The sale of political influence for favors and sinecures, so important a part of 18th Century politics, had become impossible by the time Liverpool became prime minister in 1812. Indeed, this is why Liverpool found House of Commons control difficult; there were no useful dollops of patronage to give out, while there were still no mass political party organizations that could enforce discipline against MPs who voted against the government.

In today’s world, a move back to the Henry Fox style of government would represent a marked deterioration from past U.S. practice, although certain states and municipalities, such as Chicago, have always been run that way. A bidding war would take place between foreign companies seeking lucrative U.S. government contracts, much as takes place in countries where corruption is normal. The main danger in the U.S. is that, whereas corruption in 18th Century Britain was effectively bipartisan, the media concentration in one ideological direction would make it very one-sided in the U.S., so that decades of Democrat corruption could be followed by a tsunami of prosecutions and jail sentences every time a Republican administration came to power. Even outside the U.S., participants in the Lockheed bribery scandals of the 1970s could reasonably feel aggrieved that U.S. rules were changed on them, outlawing practices that had been perfectly normal in the world of military aircraft procurement.

The question of openness is also important. In 18th Century Britain, a moderate level of corruption was expected, but those like Henry Fox who were exceptionally corrupt suffered politically. There were no “tax havens” or anonymous corporate shells that could hide transactions, so they tended to be revealed by the already active press supporting each politician’s opponents. In the modern globalized world, it appears to be easier to hide such transactions from either the media or the taxman, so the public will not be aware which politicians are especially corrupt. This produces perverse incentives and reduces the quality of government still further.

Britain was not an especially well-run country in Henry Fox’s time, although it benefited from the fact that France, its main geopolitical opponent, was even more corruptly managed. The reform movement of the 1780s not only reduced the cost of graft throughout the system, but made political decision-making much better than it had been; none of Henry Fox’s contemporaries were of the quality of the younger Pitt, Liverpool, or even such lesser figures such as Spencer Perceval, Castlereagh, Sidmouth, Bathurst and Vansittart.

What is needed now is a bipartisan reform movement, like that of the British 1780s, that outlaws behavior like that apparently indulged in by the Clintons and the Bidens, and ensures that American decision-makers are again of the sterling quality of Calvin Coolidge and Harry Truman. A good first step would be to abolish the tax deduction for charitable donations, which permits so many murky transactions of the Clinton Foundation type, making them tax-benefited and cloaked with a spurious eleemosynary gloss. That would force all such murky deal-making into the taxable sector, making it much easier to trace payment flows and identify the worst offenders.

We still would need an impartial media that did not indulge in cover-ups of its favored side, however.
