Grant's Whiskey Ring: The $3 Million Tax Fraud

In 1875, President Ulysses S. Grant's administration faced its most devastating scandal. A secret conspiracy between Treasury officials and whiskey distillers had been diverting millions of dollars in federal taxes—$3 million stolen through elaborate bribery schemes that reached into the White House itself. In St. Louis, the epicenter of corruption, distillers paid Treasury agents 35 cents per gallon in bribes to stamp illegal whiskey as tax-paid, pocketing the 70-cent federal tax.

Treasury Secretary Benjamin Bristow launched an unprecedented undercover investigation using coded telegrams and private citizens operating in absolute secrecy. In May 1875, over 300 suspected ring members were arrested. The scandal exploded when evidence implicated Grant's own private secretary, Orville Babcock, forcing the President to choose between justice and loyalty.

The aftermath revealed the true cost of corruption: 238 indictments, 110 convictions, and a presidential legacy forever tarnished. The Whiskey Ring didn't just steal money—it shattered America's faith in Reconstruction-era government and ultimately ended Grant's political influence through the Compromise of 1877.

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In This Episode:

• How Civil War tax increases created opportunities for massive corruption
• The secret code used by investigators to expose the $3 million fraud
• President Grant's testimony that saved his friend from conviction
• Why 110 conspirators went to prison while Grant's inner circle walked free
• The political compromise that ended Grant's presidency and Reconstruction

Key Figures:

• President Ulysses S. Grant - Civil War hero whose administration was consumed by scandal
• Benjamin Bristow - Treasury Secretary who risked everything to expose corruption
• John McDonald - St. Louis Revenue Collector and Whiskey Ring leader
• Orville Babcock - Grant's private secretary indicted for conspiracy
• George Fishback - St. Louis Democrat owner who helped crack the case
• Myron Colony - Undercover investigator who used commercial statistics to trace fraud

Timeline:

• 1861-1865: Civil War leads to whiskey tax increases
• 1869: Grant appoints McDonald as Missouri Revenue Collector
• 1871: Whiskey Ring officially organized as "political fund"
• February 1875: Bristow launches secret coded investigation
• May 1875: Over 300 arrests made, scandal becomes public
• December 1875: Babcock indicted for conspiracy
• February 1876: Grant's testimony saves Babcock from conviction
• June 1876: Bristow resigns, 110 of 238 defendants convicted
• 1877: Whiskey Ring fallout contributes to Compromise ending Grant presidency

The Fraud Explained: Federal whiskey tax: $0.70 per gallon Bribe to Treasury officials: $0.35 per gallon Distillers' illegal profit: $0.35 per gallon on unstamped liquor Total recovered: $3 million (equivalent to ~$75 million today)

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