The Whiskey Ring: Bribery Scandal of the 1870s

The Whiskey Ring was an American bribery scandal that took place from 1871 to 1875 during the presidency of Ulysses S. Grant. The scandal involved a conspiracy among whiskey distillers and distributors to bribe U.S. government officials to avoid paying government excise taxes on liquor. In 1875, it was revealed that high-level officials within President Grant’s administration had conspired with the distillers to illegally pocket liquor taxes that should have been paid to the government. 

By the time the scandal ended, Grant had become the first sitting American president to appoint—and fire—a special prosecutor, and to voluntarily testify as a defense witness in a criminal trial. Allegations that the Republican Party had used the illegally held tax money to fund Grant’s 1872 reelection campaign stirred public concern. While Grant was never implicated, his private secretary, Orville E. Babcock, was indicted in the conspiracy but was acquitted after Grant testified to his innocence.

Background 

By the time his first term was drawing to a close in 1871, Grant’s administration had been plagued by scandal. First, Grant’s associates, notorious financiers James Fisk and Jay Gould had illegally tried to corner the gold market, leading to the financial panic of September 1869. In the 1872 Credit Mobilier scandal, it was disclosed that officials of the Union Pacific Railroad had bribed several Republican lawmakers to win lucrative government contracts for the construction of a major section 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 revered as a Civil War hero Grant won reelection in 1872. Many voters blamed the earlier corruption on disloyal friends whom Grant had appointed to federal jobs. Meanwhile, Grant had appointed another one of his old friends, Gen. John McDonald, to oversee the Treasury Department’s Internal Revenue Service’s tax collection operations in St. Louis, Missouri. 

To help fund the Civil War, the Republican-controlled Congress had steadily increased excise taxes on the sale of beer and liquor. These steep taxes established during the Civil War remained a hallmark of the Republican Party political economy during the Grant administration and the post-war Reconstruction Era.

Since the end of the Civil War, liquor distillers in the Midwest had been bribing treasury agents and evading taxes on whiskey they produced and sold. On the premise of raising money for party candidates, a group of Republican Party operatives organized the Whiskey Ring in 1871. While the actual campaign contributions they generated were minimal, the amount of money the ring’s leaders pocketed was estimated at as much as $60,000 each—over $1.2 million today. Operating mostly in St. Louis, Chicago, and Milwaukee, the ring eventually involved distillers, Internal Revenue Service agents, and Treasury clerks.  By the end of Grant’s first term, the ring had abandoned politics and became a true crime syndicate, often using force to keep involved Treasury agents silent. 

Under the excise tax increase laws passed by Republicans after the Civil War, whiskey was to be taxed at $.70 per gallon. However, instead of paying any taxes at all, distillers participating in the Whiskey Ring paid Treasury officials a $.35 per gallon bribe in return for stamping the illicit whiskey as having had the taxes paid. The distillers would then split the money they had saved in unpaid taxes among themselves. Before they were caught, a group of participating politicians had succeeded in siphoning off millions of dollars in federal taxes.

Appointed by Grant in 1869, Missouri Revenue Collector, Gen. John McDonald led the ring in St. Louis. McDonald was assisted in keeping the ring from being exposed by Grant’s private secretary and friend in Washington, D.C., Orville Babcock. 

Breakup of the Ring 

The Whiskey Ring’s once-tight knot of secrecy started to unravel in June 1874, when President Grant appointed Benjamin H. Bristow to replace Secretary of the Treasury William Richardson—who had resigned after being implicated in a different scandal. When he learned of the Whiskey Ring, Bristow dedicated himself to breaking the scheme and punishing those involved. Using evidence gathered by undercover investigators and informants, Bristow built a case against the Whiskey Ring leading to the arrest of more than 300 suspected ring members in May 1875. 

The next month, Grant, hoping to head off criticism of conflict of interest, appointed John B. Henderson, a former U.S. senator from Missouri, as a special prosecutor in the case. Henderson and U.S. attorneys soon began indicting suspects in the St. Louis ring, highlighted by General McDonald. 

Evidence implicated Grant’s longtime friend and personal secretary, General Orville Babcock. Coded telegrams between Babcock and McDonald indicated that McDonald had allegedly been trying to bribe Babcock to dissuade Grant from looking into the scheme. 

Stating, “Let no guilty man escape if it can be avoided,” Grant initially accepted the investigation’s findings and threatened to fire McDonald. However, McDonald managed to convince the president that he was innocent, arguing that prosecutors in the case were politically motivated, especially Treasury Secretary Bristow, who McDonald claimed had been trying to bolster his own chances of winning the 1876 Republican presidential nomination. 

By the time Babcock was indicted in December 1875, Grant had reportedly become angered by the investigation. At this point, McDonald had already been convicted in St. Louis, sentenced to prison, and ordered to pay thousands of dollars in fines. 

During the trial of another accused ring member, Henderson accused Babcock of obstructing justice, hinting that Babcock’s involvement raised questions about Grant’s possible role in the scandal. That was the last straw for Grant, who fired Henderson as special prosecutor, replacing him with James Broadhead.

When Orville Babcock’s trial began in St. Louis in early February 1876, Grant told his cabinet that he intended to testify on his friend’s behalf. At the urging of Secretary of State Hamilton Fish, Grant agreed not to testify in person but to give a sworn deposition in the White House attesting to Babcock’s innocence.

Thanks largely to Grant’s testimony, the jury found Babcock innocent, making him the lone major defendant in the Whiskey Ring Scandal to be acquitted. Though Babcock attempted to resume his duties in the White House, the public outcry forced him to resign. Days later, he was indicted and tried—but again acquitted—for his alleged role in the so-called Safe Burglary Conspiracy, another scandal within the Grant administration. 

When all of the trials had ended, 110 of the 238 individuals indicted in the Whiskey Ring case had been convicted, and over $3 million of the stolen tax revenues had been recovered. A victim of the political fallout, Benjamin Bristow resigned as Grant’s treasury secretary in June 1876. Although he did seek the Republican presidential nomination, he lost out to Rutherford B. Hayes, who would be elected president in the disputed election of 1876. 

Aftermath and Effects 

Though Grant was never directly accused of any wrongdoing in the scandal, his public image and legacy as the Civil War hero president were greatly diminished by the proven involvement of his associates, political appointees, and friends. Disheartened, Grant assured Congress and the American people that his “Failures” had been “errors of judgment, not of intent.”

After eight scandal-plagued years, Grant left office in 1876 and departed along with his family on a two-year trip around the world. While his remaining supporters made a bid to make him the 1880 Republican presidential nominee, Grant lost out to James Garfield. 

The Whiskey Ring Scandal, along with other alleged abuses of power by the Republican Party, contributed to a national weariness of politics, which ended Grant’s presidency with the Compromise of 1877, an unwritten deal informally arranged among some members of the U.S. Congress that settled the intensely disputed 1876 presidential election. While Republican Rutherford B. Hayes had lost a majority of the popular vote to Democrat Samuel J. Tilden, Congress awarded Hayes awarded the White House on the understanding that he would remove remaining federal troops from the former Confederate states of South Carolina, Florida, and Louisiana. Hayes made good on his promise, effectively ending the Reconstruction Era. 

Sources

• Rives, Timothy. “Grant, Babcock, and the Whiskey Ring.” National Archives, Prologue Magazine, Fall 2000, Vol. 32, No. 3.
• Calhoun, Charles W. “The Presidency of Ulysses S. Grant.” University Press of Kansas, 2017, ISBN 978-0-7006-2484-3.
• McDonald, John (1880). “Secrets of the Great Whiskey Ring.” Wentworth Press, March 25, 2019, ISBN-10: 1011308932. 
• McFeely, William S. “Responses of the Presidents to Charges of Misconduct.” Delacorte Press, 1974, ISBN 978-0-440-05923-3.