All About The Whiskey Ring-A Scandal of Bribery In The 1970s? 

The Whiskey Ring was an American bribery scandal that occurred between 1871 and 1875, under Ulysses S. Grant's administration. The scandal featured a conspiracy involving whiskey distillers and distributors to bribe U.S. government officials to avoid paying government excise taxes on booze. High-ranking members of President Grant's administration were found to have colluded with the distillers in 1875 to steal liquor taxes that were supposed to be paid to the government.

 

•    During Ulysses S. Grant's presidency, between 1871 and 1875, the Whiskey Ring scandal occurred.

 

•    The scandal involved a plot by whiskey distilleries to pay off U.S. Treasury employees so they wouldn't have to collect excise taxes on alcohol.

 

•    It was discovered that high-ranking members of Grant's administration had planned with the distillers in 1875.

 

•    By 1877, more than $3 million in tax money had been recovered after 110 people had been found guilty of participating in the Whiskey Ring.

 

•    Grant was never specifically charged with any crime, but his reputation and legacy as president were severely damaged.

 

By the time the crisis was over, Grant had made history by being the first American president in office to appoint and then dismiss a special prosecutor and to voluntarily testify as a witness for the defense in a criminal prosecution. The public was alarmed by claims that the Republican Party had supported Grant's 1872 reelection campaign with funds that were unlawfully retained in their possession. Grant was never connected to the conspiracy, but his private secretary, Orville E. Babcock, was charged but freed after Grant gave a testimony proving his innocence.

 

Grant's administration was dogged by scandal by the time his first term was coming to an end in 1871. The financial panic of September 1869 was first caused by Grant's friends, renowned bankers James Fisk and Jay Gould, who illegally attempted to corner the gold market. In the 1872 Credit Mobilier incident, it was found that officials of the Union Pacific Railroad had paid several Republican lawmakers to gain lucrative government contracts for the construction of a key stretch of the Transcontinental Railroad. When a group of liberal Republicans in Missouri broke ranks after becoming disillusioned with the war-hero president, Grant’s chances for reelection were threatened.

 

Still respected as a Civil War hero- Grant won reelection in 1872. Many voters attributed the previous corruption to Grant's nomination of unfaithful pals to federal positions. Gen. John McDonald, another of Grant's close allies, was chosen to lead the Internal Revenue Service's activities in St. Louis, Missouri, for the Treasury Department.

 

The Republican-controlled Congress had gradually raised excise duties on the sale of beer and liquor to help pay for the Civil War. During the Grant administration and the post-war Reconstruction Era, the Republican Party's political economy continued to be characterized by these high taxes that were instituted during the Civil War.

 

Since the end of the Civil War, whiskey producers and sellers in the Midwest had been bribing treasury officials and avoiding taxes. The Whiskey Ring was established in 1871 by a group of Republican Party insiders with the goal of funding party candidates. Even though the actual campaign contributions they raised were little, the leaders of the ring were thought to have made up to $60,000 each, which is more than $1.2 million in today's dollars. 

 

The ring eventually included distillers, IRS agents, and Treasury clerks, operating mostly in St. Louis, Chicago, and Milwaukee. By the end of Grant's first term, the ring had given up politics and transformed into a real crime organization, frequently resorting to violence to keep engaged Treasury agents quiet.

 

Republicans increased the excise tax after the Civil War, and whiskey was subject to a $.70 per gallon charge. However, distillers involved in the Whiskey Ring paid Treasury employees a $.35 per gallon bribe in exchange for stamping the illegal whiskey as having been taxed, instead of paying any taxes at all. The money they had saved in unpaid taxes was subsequently divided among the distillers. A group of lawmakers that took part were successful in stealing millions of dollars in federal taxes before they were discovered.

 

Grant appointed Gen. John McDonald as the Missouri Revenue Collector in 1869, and he was in charge in St. Louis. Grant's personal secretary and friend in Washington, D.C., Orville Babcock, helped McDonald prevent the ring from being discovered.

 

The once-tight web of secrecy around the Whiskey Ring began to loosen in June 1874, when President Grant chose Benjamin H. Bristow to succeed William Richardson as Secretary of the Treasury. Richardson had resigned as a result of his involvement in another scandal. Bristow committed himself to dismantling the Whiskey Ring after learning of it and bringing those responsible to justice. Bristow developed a case against the Whiskey Ring using information acquired by undercover agents and informants, which resulted in the arrest of more than 300 accused ring members in May 1875.

 

The next month, Grant selected John B. Henderson, a former Missouri senator and potential target of accusations of conflict of interest, as a special prosecutor in the case. General McDonald was one of the suspects in the St. Louis ring that Henderson and U.S. prosecutors quickly indicted.

 

General Orville Babcock, Grant's close friend and private secretary, was charged with a crime. McDonald allegedly tried to bribe Babcock to convince him not to check into the scam, according to coded telegrams sent between Babcock and McDonald.

 

Initially accepting the investigation's conclusions and threatening to remove McDonald, Grant later retracted this warning, saying, “Let no guilty guy escape if it can be avoided." However, McDonald was able to persuade the president that he was innocent by claiming that the prosecution in the case, particularly Treasury Secretary Bristow, was politically motivated in order to help himself secure the Republican presidential nominee in 1876.

 

Grant apparently became irate over the probe by the time Babcock was charged in December 1875. By this time, McDonald had already been found guilty in St. Louis, jailed, and fined tens of thousands of dollars.

 

Henderson charged Babcock with obstructing justice during the trial of another alleged ring member, implying that Babcock's conduct prompted concerns about Grant's potential involvement in the affair. Grant finally had enough of it and sacked Henderson as the special prosecutor, appointing James Brodhead in his place. Early in February 1876, when Orville Babcock's trial in St. Louis got underway, Grant informed his cabinet that he intended to testify on behalf of his friend. Grant consented to testify through sworn deposition in the White House rather than in person at the request of Secretary of State Hamilton Fish, who wanted to prove Babcock's innocence.

 

Grant's testimony played a significant role in the jury's decision to acquit Babcock, making him the only significant defendant in the Whiskey Ring Scandal to do so. Despite Babcock's efforts, the public outcry compelled him to quit from his position at the White House. Days later, he was charged with and tried for his alleged involvement in the Safe Burglary Conspiracy, another Grant administration crime, but was once again found not guilty.

 

At the conclusion of all the trials, 110 of the 238 suspects in the Whiskey Ring investigation had been found guilty, and more than $3 million in stolen tax money had been recovered. A victim of the political consequences, Benjamin Bristow resigned as Grant's treasury secretary in June 1876. He did run for the Republican presidential nomination, but Rutherford B. Hayes won it instead, going on to win the contentious 1876 presidential election.

 

Although Grant was never explicitly accused of any wrongdoing in the controversy, the involvement of his acquaintances, political appointees, and friends significantly damaged Grant's reputation and legacy as the Civil War hero president. Grant expressed his disappointment to Congress and the American people, reassuring them that his "Failures" had actually been "errors of judgment, not of malice."

 

Grant resigned office in 1876 after eight scandal-riddled years and embarked on a two-year globe tour with his family. Grant's last-ditch efforts to become the 1880 Republican presidential nominee fell short in favor of James Garfield.

 

The Compromise of 1877, an unwritten agreement informally arranged among some members of the U.S. Congress that resolved the hotly contested 1876 presidential election, ended Grant's presidency. This was due to the Whiskey Ring Scandal and other alleged Republican Party abuses of power by the Republican Party. 

 

Even though Democrat Samuel J. Tilden had won the majority of the popular vote, Republican Rutherford B. Hayes was still given the presidency by Congress on the condition that he would withdraw the last of the federal troops from the former Confederate states of South Carolina, Florida, and Louisiana. The Reconstruction Era was virtually over when Hayes kept his word.