Secrets of the Great Whiskey Ring

by Gaz Regan · Wednesday, November 12th, 2014 · gaz regan's library

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“Containing a complete exposure of the illicit whiskey frauds culminating in 1875, with documentary proofs … to which is added the author’s remarkable experiences while a convict in the Missouri penitentiary, at Jefferson City. By Gen. John McDonald”

This book is all about a huge scandal that surrounded President Grant, and it’s said that this scandal prevented him from serving a 3rd term as President (which was legal back then).

Here’s what I wrote about this scandal in The Book of Bourbon and Other Fine American Whiskeys:

Whiskeygate–the Tale of the Infamous Whiskey Ring

The major players in what became known as the “Whiskey Ring,” were General Orville E. Babcock, Grant’s secretary; John A. McDonald, the regional superintendent of the Internal Revenue, headquartered in St. Louis; and Benjamin Helm Bristow, the man who initiated the investigation into the affair when he became Secretary of the Treasury in 1874.secrets of the great whiskey ring 006

Here, in very simple terms, is how the scam worked: Sometime around 1870, government agents, charged with keeping an eye on how much whiskey was being made, arranged to ignore a certain percentage of the distillate in return for cash in the amount of roughly half the money the distillery would have paid in taxes.  When “straight” tax collectors who were not part of the ring were due to call, the distillers were forewarned to “play safe” and pay up.

The “Whiskey Ring” agents claimed to have a “higher” purpose in their treachery; they told distillers that the dollars they collected were going into a special fund to help re-elect Grant.  Was this Whiskeygate?  Although we can’t say for certain how many people believed their claim as patriotic party do-gooders, evidence points to up to 15 million gallons of whiskey a year, which would have generated a cool $7.5 million in taxes–an extraordinary amount of money at the time–going untaxed between 1870 and 1874.  And Grant was returned to office in 1872.

Due to his incompetency and the number of other scandals within his administration, by the end of 1874 Grant was not a popular man.  He was thinking of running for a third term–even though he had once told Congress that he was not prepared for the office at all–and people within his administration despaired of some of the people he had chosen to work alongside him.  Rumors of the Whiskey Ring were rife at this point, and many upstanding aides at the White House breathed a sigh of relief when Benjamin Bristow was appointed to the Treasury–he was a very well respected man.  One of his first acts was to convince Congress to grant money to investigate the alleged corruption within the Internal Revenue Service.  With the help of some newspapermen in St. Louis, Bristow was about to crack the ring wide open.

The first money used for the investigation went to reporter Myron Colony, who was hired by the Treasury Department to gather evidence against whoever was responsible for misdirecting the excise taxes.  Colony did a very thorough job and accumulated enough data to place John McDonald (the St. Louis-based superintendent of the Internal Revenue) at the head of the Whiskey Ring.  First off, McDonald was confronted with the evidence, and he did, indeed, confess to his crimes.  However, McDonald had a few cards up his sleeve, and although he offered to replace the money in return for immunity (claiming he would get it from the distilleries), he also dropped mention of Grant’s name to add weight to his plea for clemency.

McDonald was somewhat of an old pal of the President’s, having been recommended for his position by more than a couple of Julia Grant’s family’s friends.  Even so, Grant, at this point, made it clear that he wanted to clear up the whole mess and prosecute whoever was responsible for stealing the money.  The following month over 300 people (distillers and government employees) were arrested for their involvement in the Whiskey Ring, and everyone was certain that justice was being served.  But Grant was about to have a change of heart that would rock his White House aides and change the outcome of the whole affair.

Further investigations implicated Babcock, Grant’s personal friend and trusted secretary, in the ring–but Grant refused to believe the evidence.  And whereas Grant had originally claimed to have been “grievously betrayed” by McDonald, he now said that McDonald was a reliable friend, and cited McDonald’s friendship with Babcock as good enough reason to believe him innocent of the charges.  However, some documents had been discovered that pointed to reasons other than friendship for Grant’s change of heart.

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A series of cryptic telegrams in the Treasury Department’s possession tied Babcock to the affair.  Not only did they point to Babcock’s warning McDonald of the impending investigation (dated prior to McDonald’s being accused), they bore a strange signature–”Sylph.”  Was Sylph the Deep Throat of the day?  No, not really, it turns out she was more a *sexual dalliance in the White House than an anonymous inside source, and that it was Babcock who wired the warning and added the odd signature.  According to most reports, Sylph was a woman said to have had an extra-marital affair with Grant, and she was a woman who had pestered him ever since.  Rumor had it that McDonald had helped Grant by making sure Sylph left him alone, and if the rumors were true, it was no wonder that Grant allied himself with McDonald.  Why did Babcock use the name Sylph on the telegrams?  Well, he certainly didn’t want to use his own name on them–they were, after all, fairly incriminating–and it seems that Babcock and McDonald used Sylph’s name as a kind of inside joke when exchanging correspondence.  If trouble occurred, perhaps the name Sylph could help secure a show of friendship from the President.  The ploy seems to have had the desired effect.

From there, things went from bad to worse for the investigators.  According to William S. McFeely, author of Grant, A Biography, although both Grant and Babcock were confronted with this very damning evidence, Babcock insisted that the telegrams were about something other than the Whiskey Ring, and Grant sided with him.  However, the treasury was not to be deterred.  Even though some documents pertaining to the case were stolen (allegedly by a man in the employ of Grant himself), Babcock was indicted.

Grant’s actions in this sordid affair can be interpreted in several ways:  Grant was trying to help out some old friends; he was afraid that his alleged affair with Sylph would be revealed; or members of Grant’s family–or maybe even Grant himself–was implicated in the Whiskey Ring.

Babcock was finally brought to trial in 1876, and due in large part to testimony from Grant in the form of a deposition (Grant had offered to testify in person at the trial but was persuaded that Presidents just didn’t do that sort of thing), he was acquitted of all crimes.  And although Grant allowed Babcock to return to his job at the White House, officials made sure that he was replaced just a few days later.  Babcock became an Inspector of Lighthouses and drowned in 1884; McDonald was found guilty of his crimes in 1875, fined $5,000, and sentenced to three years imprisonment–but was pardoned, less than two years later, by President Hayes.

Upon his release from jail McDonald accused Grant of taking part in the Ring in his book, Secrets of the Great Whiskey Ring (1880).  In it, McDonald maintains that his actions in the Whiskey Ring were a direct result of instructions from Babcock, and since, according to McDonald, Babcock was widely regarded as being “the President’s chief advisor,” he regarded any requests from Babcock as having “emanated from the highest authority.”  Sylph, again according to McDonald’s book–and we should take into consideration that he wrote the book to throw most of the blame for the Whiskey Ring scandal on others–was a woman with whom he had arranged a liaison for Babcock, not Grant.  He described her as “unquestionably the handsomest woman in St. Louis,” and went on to say, “Her form was petite, and yet withal, a plumpness and development which made her a being whose tempting, luscious deliciousness was irresistible.”  Obviously, McDonald was quite taken with the woman (although a sketch of Sylph in McDonald’s book reveals her to have been more “homely” than irresistible).

secrets of the great whiskey ring 008And here’s that picture of Sylph!

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