Corruption and Reform: Lessons from America's Economic History (National Bureau of Economic Research Conference Report)

Despite recent corporate scandals, the United States is among the world's least corrupt nations. But in the nineteenth century, the degree of fraud and corruption in America approached that of today's most corrupt developing nations, as municipal governments and robber barons alike found new ways to steal from taxpayers and swindle investors. In Corruption and Reform, contributors explore this shadowy period of United States history in search of better methods to fight corruption worldwide today. Contributors to this volume address the measurement and consequences of fraud and corruption and the forces that ultimately led to their decline within the United States. They show that various approaches to reducing corruption have met with success, such as deregulation, particularly "free banking," in the 1830's. In the 1930's, corruption was kept in check when new federal bureaucracies replaced local administrations in doling out relief. Another deterrent to corruption was the independent press, which kept a watchful eye over government and business. These and other facets of American history analyzed in this volume make it indispensable as background for anyone interested in corruption today. Corruption and reform : introduction / Edward L. Glaeser and Claudia Goldin The concept of systematic corruption in American history / John Joseph Wallis Limiting the reach of the grabbing hand : graft and growth in American cities, 1880 to 1930 / Rebecca Menes Digging the dirt at public expense : governance in the building of the Erie Canal and other public works / Stanley L. Engerman and Kenneth L. Sokoloff Corporate governance and the plight of minority shareholders in the United States before the Great Depression / Naomi R. Lamoreaux and Jean-Laurent Rosenthal Water, water everywhere : municipal finance and water supply in American cities / David Cutler and Grant Miller The rise of the fourth estate : how newspapers became informative and why it mattered / Matthew Gentzkow, Edward L. Glaeser, and Claudia Goldin Bank chartering and political corruption in antebellum New York : free banking as reform / Howard Bodenhorn Regime change and corruption : a history of public utility regulation / Werner Troesken The irony of reform : did large employers subvert workplace safety reform, 1869 to 1930? / Price V. Fishback The determinants of progressive era reform : the Pure Food and Drugs Act of 1906 / Marc T. Law and Gary D. Libecap Politics, relief, and reform : Roosevelt's efforts to control corruption and political manipulation during the New Deal / John Joseph Wallis, Price V. Fishback, and Shawn Kantor. "The United States today, according to most studies, is among the least corrupt nations in the world. But America's past was checkered with political scandal and widespread corruption that would not seem unusual compared with the most corrupt developing nation today. We construct a "corruption and fraud index" using word counts from a large number of newspapers for 1815 to 1975, supplemented with other historical facts. The index reveals that America experienced a substantial decrease in corruption from 1870 to 1920, particularly from the late-1870s to the mid-1880s and again in the 1910s. At its peak in the 1870s the "corruption and fraud index" is about five times its level from the end of the Progressive Era to the 1970s. If the United States was once considerably more corrupt than it is today, then America's history should offer lessons about how to reduce corruption. How did America become a less corrupt polity, economy, and society? We review the findings and insights from a series of essays for a conference volume, Corruption and Reform: Lessons from America's History, for which this paper is the introduction that attempt to understand the remarkable evolution of corruption and reform in U.S. history"--National Bureau of Economic Research web site. "Despite recent corporate scandals, the United States is among the world's least corrupt nations. But in the nineteenth century, the degree of fraud and corruption in America approached that of today's most corrupt developing nations as municipal governments and robber barons alike found new ways to steal from taxpayers and swindle investors. In Corruption and Reform, contributors explore this shadowy period of United States history in search of better methods to fight corruption worldwide today."--Jacket The USA has a reputation for being amongst the least corrupt nations, but it was not always so. The contributors examine the ways in which widespread corruption, swindling & fraud was tackled in America & suggest ways in which such practices might be confronted elsewhere in the 21st century.