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THE SANBORN INCIDENT
Transcript of THE SANBORN INCIDENT
Who was involved?
How Did It Begin?
William A. Richardson, Secretary of Treasury, with the Bureau of Internal Revenue hired John D. Sanborn to find and collect any money belonging to the U.S. government.
His contract said that he would be allowed to have 50% of whatever he collected.
Sanborn began his efforts with whiskey taxes.
He discovered about 40 liquor retailers not paying taxes.
But not satisfied, he requested the government to extend his mandate.
Tuesday, February 23, 2014
Vol XCIII, No. 311
Effects on Grant and Reconstruction
Sanborn started accusing many more people of not paying taxes.
The Treasury accepted his list without checking if the victims were truly guilty or not.
Most of them weren't.
In July, 1873, Congress gave him 150 more railroad companies to analyze.
Sanborn also started making the BIR employees work under him, analyzing the several railroad companies he had received from Congress.
But still, he asked to take over all the railroad companies.
THE SANBORN INCIDENT
Soon, the department added 750 tax culprits to Sanborn's list, and later extended that to 2,000.
They even added 952 railroad companies to his list.
After these names were added to his contract, Sanborn would get the 50% whether the culprits were guilty or not.
He even started going after the companies that were assigned to the BIR employees, which created a lot of disturbance
On January 10, 1874, John D. Sanborn and his two assistants were called to trial for fraud.
But he proved himself innocent by saying he was under contract by the government and used an 1872 appropriations bill as support.
William Adams Richardson (Secretary of Treasury)
John D. Sanborn
The Bureau of Internal Revenue
This scandal, as well as the several others that took place, added to "Grantism." This was the build-up of accusations against Ulysses S. Grant and his administration. The Sanborn Incident added to this and even though Grant wasn't directly involved with this scandal, John D. Sanborn was working under him and was closely linked with the Treasury so he was blamed much for what happened.
The Sanborn Incident also made it very difficult for the country to move on from Reconstruction because it robbed many companies and individuals of money that they didn't really owe to the government. Some people whose money was collected were indeed tax culprits but most of them really weren't.
William A. Richardson resigned during the trial, saying that he did not read the contract properly.
John D. Sanborn was acquitted of all charges.
Even after this trial, Sanborn continued to scam people for the next four months.
The entire scandal lasted from July, 1873, to May, 1874.
He collected a total of $427,000 in "unpaid taxes." He received $213,000, $156,000 of which went to his workers.
Overall, he gained $57,000 through these scams.