Here’s a chance to read again one of our old Local History Room columns, first published in April 2012 before the launch of this blog . . .
Pekin was encircled by the Whiskey Ring
By Jared Olar
The era of Prohibition during the 1920s is remembered as a time of speakeasies, bootlegging and larger-than-life gangster kingpins. Not as well-remembered, however, is an earlier time when a vast and lucrative bootlegging conspiracy operated in the United States.
Known as the Whiskey Ring, this criminal enterprise got its start in St. Louis about 1870, spreading to several other major cities such as Chicago, Milwaukee and New Orleans, also putting down roots in Peoria and Pekin. It was aided and abetted by corrupt political officials both high and low. Among the leading conspirators was none other than Gen. Orville E. Babcock, private secretary to President Ulysses S. Grant (though the president himself was never implicated).
In the 1949 Pekin Centenary, we read, “The power of the ring was said to be tremendous in a wide area with headquarters at St. Louis, and something of its potency here in Pekin is indicated by the incident in which a revenue man was reportedly arrested by local authorities and held in custody on a trumped up charge while a boat-load of whiskey was cleared off the dock and hidden away.”
Alcohol was not illegal in those days — quite the contrary, it was a booming business. However, during the Civil War the federal government had imposed heavy taxes on whiskey to help finance the war effort, and the tax remained in force even after the war’s end. Before the war, whiskey cost only 25 cents a gallon, but the federal tax of $2 a gallon sharply increased the cost of doing business. Added to that were local taxes and fees, such as the doubling of Pekin’s liquor license fee from $100 to $200 per year in 1870 (as recorded in the 1887 Pekin City Directory).
It wasn’t too long before many distillers began to come up with ways to evade the tax, chiefly through bribery, smuggling and bootlegging.
“Officials were party to the secret alliances which made it possible for some whiskey makers to present false reports, with the effect of paying taxes on as little as one-third of their actual whiskey shipments. In 1870 the vast bootleg conspiracy received some attention, although it continued until 1874, using less bold methods,” says the Pekin Centenary.
“On the other hand,” continues the Centenary’s account, “there was nothing bashful about the business of emptying the vast city cisterns built for fire protection here in Pekin, and filling them with highly inflammable bootleg whiskey instead of water. Liquor was also cached in corn shocks, and kegs were sealed and sunk in the Illinois river, here and at Peoria and other locations. Hundreds of those invaluable kegs were recovered by federal agents dragging the river later.”
Powerful and well-connected though they were, the ringleaders of the conspiracy could not escape justice forever. On May 10, 1875, U.S. Treasury Secretary Benjamin Bristow, using secret agents from outside his own department (since he couldn’t trust his own men), coordinated a series of raids and broke up the ring. Due to Gen. Babcock’s closeness to the president, Bristow did not inform Grant of the operation.
According to the Centenary, “(T)he break-up finally came with wholesale arrests all over the state. It is recorded that Pekin people at that time saw whole carloads of prisoners hauled through to St. Louis to face a Federal court. Actually, however, no one of importance was ever sent to jail, as only a few ‘mediocrities’ took the punishment and the whole thing passed over; but at any rate the ‘whiskey ring’ was broken and the millions of dollars being sidetracked from the U.S. treasury into private hands, while never recovered, was at least discontinued.”
In fact, although Babcock managed to secure an acquittal, 110 people were convicted in federal court and more than $3 million in diverted taxes were recovered by the federal government.
This Feb. 1876 drawing from “Frank Leslie’s Illustrated Newspaper” depicts a hearing in St. Louis, Mo., at the start of the trial of Gen. Orville E. Babcock, private secretary of President Ulysses S. Grant. Babcock was one of the ringleaders of the Whiskey Ring tax fraud conspiracy, but was acquitted in federal court.