Civil War Contractors Defraud Government with Defective Weapons and Shoddy Goods Costing Lives and Millions

Throughout the Civil War, military suppliers systematically defraud the government and endanger Union soldiers by selling defective equipment and supplies in what becomes known as the “shoddy” scandal. Contractors sell boots made from cardboard that dissolve in rain, clothing made from dry-rotted cloth that falls apart, blind and diseased horses and mules unfit for service, ship hulls painted to hide rot, and even bullets filled with sawdust instead of gunpowder. Author Morford’s 1864 novel “The Days of Shoddy” defines the term as “a wide and disgraceful synonym for the miserable pretense of patriotism—shoddy coats, shoddy shoes, shoddy blankets, shoddy tents, shoddy horses, shoddy arms, shoddy ammunition, shoddy boats, shoddy beef and bread.” The fraud becomes so pervasive that one profiteer boasts, “You can sell anything to the government at almost any price if you’ve got the guts to ask.” In the war’s first year, the government spends $50 million on soldiers’ sustenance and $50 million on quartermaster supplies; by war’s end, these figures reach $369 million and $678 million respectively. Post-war analysis determines that fully one-quarter of government war spending—hundreds of millions of dollars—is lost to fraud.

The systematic fraud emerges from weak oversight, rapid procurement needs, and the War Department’s reliance on private contractors and special agents to supply massive armies mobilized with unprecedented speed. Secretary of War Simon Cameron’s chaotic management—keeping minimal records and allowing unaccountable special agents to award multi-million dollar contracts—creates ideal conditions for corruption. Contractors prioritize profit over patriotism, selling recycled wool and cardboard-soled shoes while soldiers fight and die. The “shoddy millionaires” emerge as a new class of war profiteers who accumulate fortunes from defective goods that undermine military effectiveness and cost soldiers’ lives. The fraud becomes so notorious that it prompts Congress to pass the False Claims Act in 1863 (known as “Lincoln’s Law”), which for the first time allows private citizens to sue on behalf of the government and receive a portion of recovered funds, creating financial incentives for whistleblowers to expose contractor fraud.

The shoddy scandal exemplifies kakistocracy through the subordination of military effectiveness and soldiers’ welfare to private profit. The episode demonstrates how crisis conditions—wartime urgency, massive spending increases, rapid governmental expansion—enable systematic corruption when oversight mechanisms fail to scale with spending. Contractors exploit patriotic rhetoric while selling defective goods that endanger the troops they claim to support, revealing the corruption inherent when profit motives dominate public service. The War Department’s failure to maintain adequate records, conduct quality inspections, or hold contractors accountable creates a system where fraud becomes routine rather than exceptional. The scandal shows that corruption at scale requires not just individual wrongdoing but institutional failures that allow fraud to flourish—weak record-keeping, inadequate oversight, reliance on politically connected intermediaries, and absence of accountability for those who award contracts or accept defective goods. The eventual passage of the False Claims Act represents recognition that traditional enforcement cannot combat contractor fraud, requiring citizen-initiated lawsuits to protect government interests when officials fail to do so.