"...bonanza. There was thus an incredible amount of interest, particularly by Congressional Democrats but also a fair deal of moderate Liberals, to investigate potential war profiteering and alleged corruption in "procurements," as it was called. The LaFollette Committee was at the heart of this, a strange animal unlike any that had come before or after. The Senate was, narrowly, majority Democratic, but Wisconsin's Robert LaFollette was a longtime Liberal with a maverick reputation who largely marched to the tune of his own drum and whose home state was something approximating a personal political fiefdom, at least in years when he was on the ballot. In some cases, he was more left-wing than many populist Plains Democrats, and he had forged an electoral ceasefire with Socialists in Milwaukee that benefitted both sides. When officials in the Hughes administration had pushed back on acquiescing to Congressional inquiry in wartime, the compromise forged between Senate Majority Leader Kern and the President had been a committee that would have full cooperation of the executive, with LaFollette as its head to mollify skeptical Liberals who were convinced Democrats sought to run on baseless allegations ahead of 1916 that various Cabinet officers had profited from the war, or at least mismanaged the procurement of shells, guns, and other materials. LaFollette was known first and foremost for his honesty, and so Democrats begrudgingly accepted the set up.
They perhaps should not have been so begrudging. The LaFollette Committee may have been chaired by LaFollette, but six of its nine members were nonetheless Democrats, and as one of the first Congressional committees to utilize full-time staff and researchers, it quickly became not only a highly professional but sophisticated vehicle of what many Liberals grouchily disdained as "the Wisconsin Inquisition." LaFollette's partisan allegiances, it turned out, were left at the committee room door - along with Democrats such as Iowa's Claude Porter, the Deputy Chair, and Colorado's John Shafroth, he charged headfirst into making the investigation comprehensive and thorough with no stone unturned. Businessmen, War Department bureaucrats, union bosses - nobody was safe from coming before LaFollette, perched imperiously at a high centered desk with his great head of hair casting a shadow before him, to answer for why their prices were X, when their competitors were charging the government Y.
LaFollette's endeavor had tacit support from Stimson, who was a fiscal conservative who appreciated "daylight" on how the war was actually being financed on the home front (bank loans, often foreign, for the government were in his view unfortunately not under the Committee's remit), and Hughes had largely arrived at a point where he deferred most decisions on the nitty-gritty of the war to Stimson, seeing in him at last a totally competent War Secretary who he could finally relinquish his instinct for direct control over to. Other Cabinet officials were not so sure, particularly Richard Ballinger at the Naval Department, and for good reason. The First LaFollette Report was released in late August of 1915, shortly before Congress was to return from a brief summer recess that LaFollette and his chief aide, John J. Blaine, had foregone to put the finishing touches on their report. Modern scholarship has largely diminished the severity of the findings in LaFollette's report as being accurate but poorly contextualized, but the contemporary reaction, in part encouraged by Democratic-leaning newspapers such as those owned by the Roosevelt family, treated its findings as incendiary and its publication as a bombshell.
In its second section, the LaFollette Report suggested that several major firms, including a few of US Steel's successors, were marking up war orders, and that a great number of businessmen or union bosses, often working in concert, had leveraged their connections to individual War Department officials or Congressmen to secure favorable contracts in which their services were more expensive but the product cheaper. This was not the core of the report, by any means - LaFollette's first, third and fourth sections outlined inefficiencies in transportation, procurement, storage and coordination and suggested a number of improvements that the War Department ought to consider making, and he himself treated its contents as something of an independent audit designed to help Stimson - but it was treated as an attempted crucifixion by conservative Liberals and hailed as "the necessary view into the inner dealings of a triangle of graft between the administration, industry and certain organs of labor" by many Democrats.
The most crucial allegation in the Report, which made it such a scandal upon its release, was its well-evidenced allegation that shipbuilding firms in Seattle had benefitted from contracts given to them at low bids by the Naval Department thanks to the status of Naval Secretary Ballinger having previously been Mayor of that city, and that Ballinger had coordinated illegally with the city from Philadelphia to suppress labor activity after gross abuses in the area's shipyards, in coordination with powerful local allies such as newspaperman Alden Blethen. On its face, this was not necessarily outright corruption - Ballinger insisted to his deathbed that he had saved the Navy critical funds by leveraging personal relationships - but it reminded many Democrats of the circumstances that had brought down former Navy Secretary Lewis Nixon during the Hearst years and they cried, with good reason, hypocrisy. Hughes, uninterested in a public relations battle to save one of his least favorite Cabinet officials, requested Ballinger quietly resign, which the Naval Secretary begrudgingly did.
LaFollette had thus proven that Congressional inquiry of an administration even in a time of war could not only prove problematic issues but even potentially malfeasance, up to and including taking down a powerful member of the Cabinet riding high after the successes of his department. The Ballinger Affair was thus a major moment in executive-legislative relations in the United States in terms of Congress asserting itself regardless of partisan affiliation, and forever changed the nature of Congressional accountability against the Presidency..."
- Total Mobilization: The Economics of the Great American War