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Whiskey Ring Scandal of 1875: History & Explanation

Whiskey Ring Scandal of 1875: History & Explanation
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  • 0:00 Beginning the Scandal
  • 0:58 The Participants
  • 1:45 Breaking Up the Whiskey Ring
  • 2:41 The Role of President Grant
  • 3:37 The Aftermath
  • 4:29 Lesson Summary
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Lesson Transcript
Instructor: Amy Lively
In this lesson, you'll learn about the Whiskey Ring scandal, one of the biggest controversies of Ulysses S. Grant's presidency. Discover how the liquor industry and the Treasury Department defrauded the government out of millions of dollars in unreported tax revenue.

Beginning the Scandal

When John McDonald arrived in St. Louis in 1871, it did not take long for him to realize that there was money to be made. McDonald was a regional superintendent for the Bureau of Revenue, and he was sent to St. Louis to collect liquor taxes from distillers and distributors. The required tax was 70 cents per gallon.

However, McDonald realized that he could make more money by reporting fewer alcohol sales. For example, if 100 gallons of liquor were sold, but he only reported 75 gallons, he could keep the tax on the other 25 gallons—and thus began the Whiskey Ring scandal.

The Whiskey Ring quickly grew to include hundreds of government officials and people in the liquor industry throughout the Midwest. It spread as far south as New Orleans, although St. Louis remained the center of the operation. Estimates are that two-thirds of the liquor made in St. Louis during the Whiskey Ring's four years of existence was untaxed.

The Participants

The Whiskey Ring involved hundreds of people from both the liquor industry and the federal government. Some distillers and distributors were eager to get in on the plan because it saved them money if a revenue agent was willing to accept a bribe that was still less than the taxes owed. Agents from the Treasury Department pressured others in the liquor industry by threatening to charge them with some type of rule infraction unless they agreed to be part of the scheme.

The money that was taken was divided among many people, with government officials and liquor distributors getting most of it. Some of the money went to finance the Republican Party's successful campaign to get President Ulysses S. Grant re-elected in 1872. This raised questions later about what the president did and did not know about the scandal.

Breaking up the Whiskey Ring

Grant made many questionable presidential appointments, but naming Benjamin Bristow to the Secretary of the Treasury was not one of them. Rumors that the liquor industry was cheating the government out of tax money had been swirling around Washington, D.C. for years. In 1875, Bristow assembled a team of investigators who were not associated with the Treasury Department. They started in St. Louis and audited railroad and steamboat records to determine exactly how much liquor had been shipped out of the city. Those records did not match up with the tax records.

With Grant's support, Bristow's agents seized control of 32 distilleries and bottling plants in the Midwest and placed several Internal Revenue offices under the control of the Treasury Department. After all files, ledgers, receipts, and books were examined, it was revealed that the Whiskey Ring had skipped out on paying over $4 million in taxes over the previous two years.

The Role of President Grant

President Grant did not know about the Whiskey Ring, but he was responsible for giving jobs to many old friends who ended up being corrupt. None came under more scrutiny than the appointment of Brigadier General Orville Babcock. The general was Grant's aide during the Civil War, and he became Grant's private secretary during his presidency. When told that Babcock was involved in the Whiskey Ring, Grant said, 'Let no guilty man escape!' However, Grant gave a sworn deposition in February 1876, in defense of Babcock's character, which led to Babcock's acquittal.

Grant also became hostile to federal prosecutors when his brother and son were mentioned in connection with the scandal. Grant fired the lead prosecutor and would not permit the prosecution team to give immunity to minor players in the scandal in exchange for their testimony. Without that testimony, some of the people who were more deeply involved in the Whiskey Ring were never charged.

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