On June 3, 1874, President Grant appointed Bristow
Secretary of the Treasury after
William A. Richardson was removed in light of the
Sanborn incident that involved Treasury contract scandals. Bristow was hailed by the press as a much needed reformer. Bristow took control of the Treasury during the
Long Depression, that was started by the
Panic of 1873. The Republican Party at this time was divided over currency. Bristow supported the hard money North Eastern Republicans and favored a resumption of species (coin money) to replace greenbacks (paper money). President Grant had vetoed the
Inflation Bill, on April 22, that would have increased paper money into the collapsed economy. Bristow's support of Grant's veto helped him get nominated for the Treasury by Grant. Sixteen days after Bristow took office, on June 20, Bristow's 42nd birthday, Grant signed a compromise act that legalized $26 million greenbacks released by previous Treasury Secretary Richardson, allowed a maximum of $382 million greenbacks, and authorized a redistribution of $55 million national banknotes. The act had little affect to alleve the devastated economy.
Internal reforms made Fulfilling the press's reformer expectation, Bristow immediately went to work. He drastically reorganized the Treasury Department, abolished the corrupt office of supervising architect made famous by
Alfred B. Mullett, and dismissed the second-comptroller and his subordinates for inefficiency. Bristow shook up the detective force and consolidated collection districts in the
Customs and
Internal Revenue Services. He dismissed over 700 people and implemented civil service rules in the Treasury Department.
Feud with Robeson Within a few months after Grant appointed Bristow to run the Treasury, Bristow developed a feud with Grant's appointed Secretary of Navy
George M. Robeson. The controversy centered around Robeson wanting to have Senator
A.G. Cattell appointed financial agent in London to negotiate a bond issue. Cattell had performed a similar service in 1873 under previous Secretary Richardson. Bristow refused to make the appointment and believed a Treasury appointee could do the job. Bristow lobbied Grant to appoint
John Bigelow, head of the Treasury Department's Loan Division. Grant accepted Bristow's choice of Bigelow, but he warned Bristow that Bigelow had a previous episode of drunkness. Bristow went further to undercut Robeson's influence in the Grant cabinet. Bristow told Grant that Robeson's Navy Department was financially mismanaged, and was under the control of former treasury secretary
Hugh McCulloch's banking house. Bristow's advisers told Bristow to cool things off, and take a less confrontational approach.
Feud with Williams Grant's appointed Attorney General
George Williams position on the cabinet was not secure, after Williams nomination was withdrawn by Grant for Supreme Court Justice. His personal reputation and that of his wife, Kate Williams, was under public scrutiny. To defend her husband and herself, Kate sent out anonymous letters to slander Grant's cabinet, and others, including alleging sexual misconduct. Cabinet members who had received letters included Secretary of War
William Belknap and Secretary of Navy
George M. Robeson. Treasury department solicitor,
Bluford Wilson, hired H.C. Whitely to investigate Kate and the letters. Wilson, Belknap, and Robeson agreed that Williams had to go. Bristow, supporting Wilson, urged Grant to fire Williams. Secretary of State
Hamilton Fish told Grant that Kate had received a bribe of $30,000 from
Pratt & Boyd for the Justice Department to drop a case against the company. Grant finally fired Williams, and replaced him with New York reformer
Edwards Pierrepont, who cleaned up the Department of Justice.
Feud with Delano Columbus Delano was Grant's Secretary of Interior, who allowed corruption in the vast Interior Department. Bristow, a reformer, wanted Delano out of office, believing Delano's departure would establish integrity in the Republican Party. Also, Bristow believed Delano was plotting to remove Bristow from the Interior. Bristow called Delano a "very mean dog" and said Delano deserved the "execration of every honest man." Bristow hired
Frank Wolcott to investigate Delano's department, that was ripe with corruption. Wolcott discovered that surveyor general of Wyoming, Silas Reed, had been making contracts with corrupt surveyors who shared enormous profits with silent-partners. One of those silent-partners was Delano's son John, who had no survey training or work experience. Wolcott sent Bristow damaging evidence against Delano, while Bristow shrewdly turned the documents over to Grant. Although the silent-partner contracts were technically legal, the scandal would embolden the Democrats. By April 1875, Delano had to go, but Grant delayed his resignation for several months. Delano fought back, by revealing information that other cabinet officers wanted Delano to stay in office, in addition to having made a false charge against Bristow. In October 1875, Grant finally replaced Delano with reformer
Zachariah Chandler, who cleaned up corruption in the Interior Department.
Broke the Whiskey Ring In the Spring of 1875, Bristow began an anti-corruption campaign that would put him in the national spotlight. Bristow's greatest work in the Treasury Department came in prosecution and break up of the notorious
Whiskey Ring headquartered in
St. Louis The Whiskey Ring was powerful and corrupt machine started by western distillers and their allies in the Internal Revenue Service; it profiteered by evading the collection of taxes on whiskey production. Distillers tended to bribe revenue agents, rather than pay excessive levies on alcohol. Past efforts to uncover the Whiskey Ring were unsuccessful, because ring members in Washington D.C. alerted other ring members of pending investigations. A November 1872 investigation, by three revenue investigators, into St. Louis distilleries, had found significant irregularities, but one agent who was bribed, submitted a whitewashed version of corruption. Despite Washington rumors of its existence, the ring seemed to be impregnable to prosecution.
Investigation In the Fall of 1874 Bristow received a $125,000 (~$ in ) appropriation from Congress to investigate the Whiskey Ring. In December 1874, Bristow convinced Internal Revenue Supervisor J.W. Douglas to send a new investigation team, but Grant's private Secretary at the White House, Orville E. Babcock, convinced Douglas to revoke his order. An effort to transfer revenue supervisors, proposed by Douglas, to new locations, to dismantle the ring, was defeated when, out of political objection, Grant suspended the order on February 4, 1875. Grant desired to "detect frauds" that had already been committed by the Whiskey Ring, rather than transfer the supervisors. Bristow, and Grant appointed Treasury Solicitor
Bluford Wilson, lost faith in Douglas' willingness to go after the ring, and launched a covert investigation by independent undercover investigators, suggested by revenue agent Homer Yaryan. Harper's Weekly, March 1876 Political journalist, George W. Fishback, owner of the
St. Louis Democrat advised Bristow and Wilson, on how to expose the ring and to bypass any corrupt federal appointees who would tip other ring partners of a federal investigation. Washington correspondent,
Henry V. Boynton, also aided Bristow and Wilson in their investigation. Monitored by Wilson, incorruptible investigative agents, that included Yaryan, obtained a vast supply of evidence in
St. Louis of frauds committed by the ring. Bristow, in order to secure the enormity of the Whiskey Ring corruption, audited railroad and steamboat
cargo receipts for accurate figures of the shipment of liquor in St. Louis and other key cities. To keep the investigation secret from the ring, Bristow gave the agents a cipher different from the Treasury code, while messages were relayed through Fishback and Boynton. Similar investigative work was done in
Chicago and
Milwaukee. Evidence of fraudulent activity was quickly obtained, into a profiteering scheme, that involved corrupt distillers and revenue agents. To escape taxes, the Whiskey Ring shipped whiskey labelled vinegar, listed whiskey at a lower proof, or illegally used revenue stamps multiple times. As a result, millions of dollars were depleted from the treasury in tax revenues. Bristow's investigation revealed that Grant appointment, General John McDonald, St. Louis Collector of Internal Revenue, who controlled seven states, was the ring leader. In April 1875, McDonald was called to Bristow's Washington office and confronted by Bristow and showed massive evidence against McDonald, who confessed to being the ring leader. However, after McDonald left Bristow's office, knowing he would be indicted, he unsuccessfully asked Wilson for indemnity from prosecution, and that the corrupt distilleries not be raided. McDonald pleaded that prosecution of the Whiskey Ring would hurt the Republican Party in Missouri. Wilson said later that he would have had McDonald fired on the spot, had he had the authority to do so.
Prosecution On May 7, 1875, Bristow gave Grant the investigation findings of corruption by the Whiskey Ring and stressed the need for immediate prosecution. Without hesitation Grant gave Bristow permission to go after the ring, and told Bristow to move relentlessly against all those who were culpable. Three days later, on May 10, Bristow struck hard shattering the ring at one blow. Treasury agents raided and shut down distilleries, rectifying houses, and bottling plants in St. Louis, Chicago, Milwaukee, and six other Mid-Western states. Internal Revenue offices were placed under custody of the Treasury, while thirty-two installations were taken over. Books, papers, and tax receipts were confiscated, that proved and identified individual ring members guilt. Overwhelming evidence against the ring was collected, while federal grand juries produced over 350 indictments. A Republican Party patronage boss in Wisconsin was linked to corruption found in Milwaukee. Evidence suggested almost every Republican office holder in Chicago profited from illegal distilling. St. Louis proved to be the kingpin city of the Whiskey Ring. In the past six months, $1,650,000 in taxes was evaded, while over two years the tax evasion number reached $4,000,000. Bristow instituted almost 250 federal civil and criminal lawsuits against ring members, and within a year, Bristow, recovered $3,150,000 in unpaid taxes, and obtained 110 convictions on 176 indicted ring members. Chief clerk of the Treasury, Willam Avery, St. Louis revenue collector General John McDonald, and St. Louis deputy collector,
John A. Joyce, were indicted and convicted.
Babcock's St. Louis trial Bristow's investigation extended into the White House, as evidence suggested Grant's private Secretary,
Orville E. Babcock, was a secret and paid informer of the Whiskey Ring. Bristow found two incriminating and cryptic letters signed "Sylph", believed to have been Babcock's handwriting. The first was dated December 10, 1874, that said, "
I have succeeded. They will not go. I will write you." The other letter was dated February 3, 1875, that said, "
We have official information that the enemy weakens. Push things." In October 1875, Bristow brought the two letters to Grant's cabinet meeting. Babcock was brought in and confronted by both Bristow and Grant's Attorney General
Edwards Pierrepont. Babcock said that the messages had to do with the building of the St. Louis
Eads Bridge and Missouri politics. Grant accepted Babcock's explanation over the letters. In December 1875, nonetheless, Babcock was formerly indicted in the Whiskey Ring and his trial was set for February 1876 in St. Louis. During the trial President Grant, who believed Babcock was innocent, took a deposition at the White House that defended Babcock, and it was read to the jury in St. Louis. Babcock was acquitted by the jury and he returned to Washington, D.C.
Resignation In the aftermath of the Whiskey Ring prosecutions, including Babcock's trial, and an upcoming 1876 presidential election, Bristow's position on Grant's cabinet became untenable. Grant was grieved at Bristow's prosecution of Babcock, whom Grant maintained was innocent. Also, rumors swirled that Bristow prosecuted the Whiskey Ring, to get the Republican nomination, that caused Grant to feel betrayed by Bristow. Largely owing to friction between himself and the president, Bristow resigned his portfolio in June 1876; as Secretary of the Treasury he advocated the resumption of
specie payments and at least a partial retirement of "
greenbacks"; and he was also an advocate of
civil service reform. With his resignation, unlike other Grant appointed cabinet members, such as
Ebenezer R. Hoar (
Attorney General),
Amos T. Akerman (
Attorney General), and
Marshall Jewell (
Postmaster General), Bristow avoided the harsher reality of direct dismissal by Grant. ==Presidential run (1876)==