Created by Congress under the so-called Sweet Act of 1921, the Veterans Bureau had as its responsibility the oversight of the system of health care and benefits for VETERANS of the armed forces in WORLD War I. In particular, the United States faced the return of many veterans who were disabled or in need of vocational training and placement or health care. The new Veterans Bureau had a central office in Washington, D. C., and 14 regional offices. President WARREN G. HARDING, under pressure to address the needs of veterans, appointed a social acquaintance, Colonel Charles Forbes, as director of the bureau. Harding viewed Forbes as “a fine, outstanding man” who had performed “constructive service” and had a “brilliant record.” Harding and his wife, Florence, hoped that Forbes would provide needed leadership for the “boys” who had returned from France disabled or in need of long-term medical care and disability pensions.
As soon as he was in office, Forbes sought to expand his area of authority. He arranged to have veterans’ hospitals and supply depots, which had previously been under the supervision of the U. S. Public Health Service in the Department of the Treasury, transferred to the Veterans Bureau. At that point, Forbes, without the knowledge of the Executive Branch, proceeded to contract for new buildings, sell surplus supplies, and acquire land for hospitals through private hands. In each case, Forbes was able to make a profit by private bidding for public construction contracts. To private firms, he sold surplus food, clothing, sheets, towels, medical supplies, drugs, alcohol, and even floor wax at incredible discounts while he paid obscenely high prices for hospital land and new supplies. When Harding found that Forbes had sold nearly $3 million in government surplus for a modest $600,000, Harding quietly fired him. By that time, Forbes had already stolen a fortune from the government coffers. By modest estimates, he and his friends had appropriated over $200 million ($33 million by Forbes alone) from a Veterans Bureau that in the aftermath of the war was one of the best-funded and most loosely supervised arms of the federal government.
When President Harding died unexpectedly of a heart attack in 1923, his administration came under congressional scrutiny. The granting of oil leases, which came to be known as TEAPOT Dome, corruption in the Justice Department, and the Veterans Bureau scandal surfaced in Senate testimony. The story gradually unfolded of how Elias H. Mortimer, an agent for a construction company, had bribed Forbes through loans and direct payments to grant his firm government contracts. Forbes had become fast friends with Mortimer and his wife Kathryn, but it was the affair blossoming between Forbes and Mortimer’s wife that led to revelations of widespread graft and corruption. Not only through government construction contracts and land deals, but also through the Veterans Bureau’s procurement system, millions of dollars had been siphoned from the hospital budget. On the testimony of Mortimer, Charles Forbes and one of his coconspirators, J. W. Thompson, a construction contractor, were sentenced to two years in prison for their part in raiding the treasury of the Veterans Bureau. Forbes alone served his term, as Thompson died in the interim. None of the money was recovered.
Despite the publicity surrounding the Harding administration, the REPUBLICAN Party did not suffer any electoral losses in the subsequent election, an outcome shaped by the distance of CALVIN COOLIDGE, who succeeded Harding after his death, from the scandals. At the same time, the scandal probably left many veterans with an embittered view of the government’s role in providing for its citizen-soldiers. It may have contributed to the continued push for a Soldiers’ Bonus. The Soldiers’ Adjusted Compensation Act finally passed over Coolidge’s presidential veto in 1924.
In ensuing years, the Veterans Bureau was presided over by Brigadier General Frank T. Himes, who kept himself and the Veterans Bureau free from scandal. He continued to improve and bolster Veterans Hospitals, vocational training, and rehabilitation efforts through the period. At a time when the federal government retrenched from wartime expansion, the Veterans Bureau grew and broadened its functions, and the cost of veterans’ benefits soared. From 1918 to 1941, the cost of services and benefits paid to World War I ex-servicemen, including disability, insurance allotments, and health care costs, equaled $14 billion, which represented 11.8 percent of government expenditures.
See also LOBBYING AND INTEREST GROUPS.
Further reading: M. R. Warren, Privileged Characters (New York: R. M. McBride, 1935).
World History
