Grant’s White House was under siege almost from the time he took office in 1869. First, financiers with access to Grant tried to corner the gold market, leading to the 1869 gold panic. Then in 1872 came disclosures in the Credit Mobilier scandal about some shareholders of the Union Pacific Rail Road bribing lawmakers to win contracts for new rail lines. One former lawmaker implicated in the scandal was Grant’s vice president, Schuyler Colfax, who was dropped from the ticket in that year’s presidential race.
Grant still won reelection in 1872. Voters revered the general as a Civil War hero. Many blamed the corruption on disloyal friends whom Grant had appointed to federal jobs. Meanwhile, Grant had appointed another old friend, Gen. John McDonald, as supervisor of the Treasury Department’s internal revenue operations in St. Louis. But his main job was to boost Republican efforts to reelect the president.
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McDonald organized “whiskey rings” in several parts of the country to siphon off money from the 70-cents-per-gallon federal tax on alcohol sales. He did this mainly by underreporting alcohol sales and funneling the extra money to the Republican Party. After the 1872 election, the whiskey rings became an ongoing criminal operation, with many government officials and whiskey distillers profiting.
In mid-1874, new Treasury Secretary Benjamin Bristow discovered the loss of more than $4 million in tax revenue in two years. He found evidence in the form of coded telegrams that the scheme reached into the White House to Grant’s personal secretary, Gen. Orville Babcock. But when Bristow showed Grant the evidence, the president refused to believe it. Babcock had fought by Grant’s side in the Civil War and was his closest friend. Still, the president urged Bristow to continue the investigation, saying: “Let no guilty man escape, if it can be avoided.”
To show there wasn’t any conflict of interest, Grant appointed America’s first special prosecutor. He was Republican Sen. John B. Henderson of Illinois, another Civil War veteran. Henderson convened a grand jury in St. Louis and soon began indicting and convicting scores of people. McDonald was among those who went to jail.
Grant began raising objections when the prosecutor started focusing on his personal secretary as well as members of the president’s family. Fellow Republicans began complaining about a “rebel Grant jury” that was out to get the president.
Finally, in mid-December 1875, Henderson indicted Babcock on charges of defrauding the government. In remarks to the court, he also hinted at possible interference by the president. Grant was furious. He ordered Attorney General Edwards Pierrepont to fire Henderson, which he did. Pierrepont said the reason for the firing was the Cabinet’s “outrage” at Henderson’s remarks, which reflected, “without a shadow of reason, upon the President.”
The firing set off a public outcry — at least in Democratic circles. The protests foreshadowed the flap over the “Saturday Night Massacre” of 1973, when President Richard M. Nixon dismissed the two top Justice Department officials before the third one agreed to fire Watergate special prosecutor Archibald Cox.
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Henderson, when asked why he was fired, told the New York Herald, “I can only account for it by Grant’s madness, and desire for revenge on hearing of the indictment of General Babcock.” One newspaper mocked Grant’s own words, saying he apparently meant: “Let no guilty man escape, unless he lives in the palace.”
Grant blamed a biased press for fueling the controversy, and he “wanted it stopped.” At a Cabinet meeting, he told his attorney general to try to bring reporters before a grand jury to substantiate their stories. The president even tried to keep the prosecutors from giving immunity to witnesses in return for their testimony.
According to Secretary of State Hamilton Fish, Grant had reached a stage of paranoia; the president complained that “the prosecution was aimed at himself, and that they were putting him on trial.”
Meanwhile, Grant remained adamant that his old friend Babcock was innocent. He stunned colleagues at a Cabinet meeting when he said he would go to St. Louis to testify at Babcock’s trial. Instead, both sides agreed to question the president at the White House in February of 1876. It was the only time that a sitting U.S. president has testified in a criminal trial.
The Babcock case drew sensational national attention, like an early version of the O.J. Simpson trial. Reporters flocked to the St. Louis courtroom. “Except for the trial of Aaron Burr and the impeachment of President Johnson, no more important trial has been held in the United States,” the St. Louis Globe-Democrat declared.
Thanks largely to Grant’s testimony, the jury acquitted the obviously guilty Babcock. But Babcock was soon forced to resign his White House post. He was the only major target of the probe to go free. Prosecutors eventually convicted more than 100 men and retrieved more than $3 million in stolen tax revenue.
Some Democratic newspapers suggested that Grant should be charged with obstruction of justice. But he was never touched.
The generally accepted view was that Grant’s “fault was again one of supervisory judgment rather than political corruption,” author Ron Chernow concludes in his biography of Grant. “The world of politics is filled with duplicitous people, and Grant was poorly equipped to spot them, remaining an easy victim for crooked men.”
Ronald G. Shafer is a freelance writer in Williamsburg, Va., and a former Washington political features editor at the Wall Street Journal.
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