11.5 Grant Administration Scandals

Grant Administration Scandals

Involved the building of the Transcontinental Railroad, sponsored by the government via the Pacific Railroad Act of 1862.
Government provided funds and land grants for each mile of track laid.
Union Pacific Railroad Company shareholders, including Representative Oaks Ames, formed a dummy company called Credit Mobilier in 1867.
Credit Mobilier was contracted to lay track at two to three times the real cost.
The excess money was funneled back to influential stockholders.
Shares of stock were given to about 20 members of Congress to prevent issues.
The scheme was revealed in 1872 by the New York Sun.
Investigation found that Credit Mobilier officers pocketed 23,000,000 in stocks, bonds, and cash for the last 600 miles of track.
Vice President Schuyler Colfax, House Speaker James G. Blaine, and Congressman James A. Garfield were implicated via stock gifts.
No prosecutions occurred, but some congressmen were censured.
The scandal tarnished the Republican Party and Grant administration.

In 1869, James Fisk and Jay Gould attempted to corner the nation's gold market.
They enlisted Grant's brother-in-law to keep the president uninvolved.
They purchased vast amounts of gold and gold futures to drive up the price.
Grant ordered the sale of 4,000,000 worth of government gold upon discovering the scheme.
The gold dump caused the price to plummet, resulting in losses for many.
Fisk and Gould refused to pay their obligations.
Grant was not involved, but the scandal negatively impacted his administration.

The federal government raised liquor taxes after the Civil War.
Liquor distillers bribed Treasury Department officials to receive tax stamps at reduced rates.
Treasury Secretary Benjamin H. Bristow launched an investigation.
238 people were indicted, and over 100 officials were convicted.
President Grant's private secretary, General Orville E. Babcock, was implicated.
Grant supported Babcock but was convinced to provide a deposition instead of testifying.
Babcock was acquitted, further damaging Grant's image.
Treasury Secretary Benjamin H. Pristow cracked the Whiskey Ring by monitoring distilleries and comparing grain input to whiskey output.
Grant offered to testify for Orville Babcock in the Whiskey Ring trial but instead gave a deposition.
During the deposition, Grant claimed ignorance and poor memory regarding Babcock's involvement.

In 1874, Treasury Secretary William Richardson hired John D. Sanborn to collect unpaid back taxes.
Sanborn was allowed to keep half of the collected amount.
Out of 427,000 due, Sanborn collected 426,000 and kept 213,000, with 156,000 allegedly going to Richardson through an assistant.
Some of the money ended up in Republican Party campaign funds.
Grant appeared to have no involvement.

In 1876, Secretary of War William Belknap accepted bribes from merchants selling goods to Indians in Indian Territory (modern Oklahoma).
Merchants bribed Belknap to maintain their trading licenses on reservations.
The House of Representatives impeached Belknap, who then resigned.
Investigation revealed Belknap also accepted bribes from shipbuilders.
The Secretary of the Interior was found unable to control corruption.

These scandals led to the term "grantism," meaning greed and corruption.
Many believed the money from these scandals was funneled into the Republican Party.
A liberal wing of the Republican Party began to form as a result.
Grant was never directly implicated but his reputation suffered.

Government jobs were often awarded based on political connections rather than qualifications.
The public demanded civil service reform to address this issue.