Scandals

Orville E. Babcock, Grant's private secretary, was indicted as part of the worst scandal to rock the Grant administration, the Whiskey Ring of 1875

The presidency of Ulysses S. Grant was marred by a series of scandals. Grant's standards in many of his cabinet appointments were low, leading to widespread charges of corruption. Beginning with the Black Friday gold speculation ring in 1869, corruption was uncovered during Grant's two presidential terms in seven federal departments. Reform movements initiated in both the Democratic Party and the Liberal Republicans, a faction that split from the Republican Party to oppose political patronage and corruption in the Grant Administration. Nepotism was prevalent, with over 40 of Grant's family members or relatives benefiting from government appointments and employment.

Black Friday

The first scandal to taint the Grant administration in 1869 was Black Friday (also known as the "Gold Panic"), which was an attempt by two financiers to corner the price of gold without consideration for the nation's economic welfare. This intricate financial scheme was primarily conceived and administered by Wall Street manipulator Jay Gould and his partner James Fisk in September 1869. They managed to involved Grant's brother in law, Abel Rathbone Corbin, with the scheme in order to access Grant himself. Gould had also given a $10,000 bribe to the assistant secretary of the treasury, Daniel Butterfield, in exchange for inside information. Corbin himself had $2,000,000 invested in the gold market, and had given both First Lady Julia Grant and Grant's personal secretary Horace Porter $500,000 speculative accounts. On September 6, 1869, Gould bought the Tenth National Bank with the intention of using it as a buying house for gold, and Gould and Fisk began buying gold in earnest.

Secretary Boutwell tracked the situation and found that the profits made in the manipulated rising gold market could ruin the nation's economy for several years to come. By September 21, the price of gold had jumped from $137 to $141; Gould and Fisk jointly owned $50 million to $60 million of it. Boutwell and Grant finally met on September 23 and agreed to release gold from the treasury if its price continued to rise. On the same day, Boutwell also ordered that the Tenth National Bank be closed. Then, on September 23, 1869 (known infamously as "Black Friday"), the price of gold soared to $160 dollars an ounce. This spurred Boutwell to release $4 million in gold specie into the market and buy $4,000,000 in bonds. The gold market crashed, foiling Gould and Fisk, while ruining many investors financially.

The gold panic devastated the United States economy for months. Stock prices plunged, and the price of food crops such as wheat and corn dropped severely, devastating farmers.

Whiskey Ring

The most infamous scandal associated with the Grant administration was the Whiskey Ring of 1875, which was exposed by Treasury Secretary Benjamin H. Bristow and journalist Myron Colony. Whiskey distillers in the Midwest were no strangers to evading taxes, having done so since the Lincoln Administration. This intensified during the Grant administration, as whiskey distillers bribed Treasury Department agents, who in turn helped the distillers evade taxes to the tune of up to $2 million per year; the agents would neglect to collect a duty of 70 cents per gallon, then split the bonus profits. The ringleaders had to coordinate distillers, rectifiers, gaugers, storekeepers, revenue agents and Treasury clerks by way of recruitment and extortion.

On May 13, 1875, Bristow, with Grant's endorsement, struck hard at the ring, seized the distilleries and made hundreds of arrests. Missouri Revenue Agent John A. Joyce and two of Grant's appointees, Supervisor of Internal Revenue General John McDonald and private secretary to the president Orville E. Babcock, were eventually indicted in the Whiskey Ring trials.

After Babcock's indictment, Grant requested that Babcock go through a military trial rather than a public trial, but the grand jury denied the request. Grant unexpectedly issued an order not to give any more immunity to persons involved in the Whiskey Ring, leading to speculation that he was trying to protect Babcock. Because Bristow needed distillers to testify with immunity in order to pursue ringleaders, the order caused friction between him and Grant. Prosecutor Henderson accused Grant of interfering with Secretary Bristow's investigation.

The accusation angered Grant, who fired Henderson as special prosecutor. Grant then replaced Henderson with James Broadhead, who had little time to research the facts surrounding Babcock's case and those of other Whiskey Ring members. At the trial, President Grant read a deposition stating that he had no knowledge of Babcock being involved in the ring. The jury accepted the president's testimony, and quickly acquitted Babcock of any charges. Broadhead went on to close out all the other cases in the Whiskey Ring. McDonald and Joyce were convicted in the graft trials and sent to prison. On January 26, 1877, President Grant pardoned McDonald.