Matilda Gresham.

Life of Walter Quintin Gresham, 1832-1895 (Volume 02) online

. (page 1 of 38)
Font size
QR-code for this ebook

SJh




GIFT OF
JANE K.SATHER




J



28



LIFE OF
WALTER QU1NTIN GRESHAM

VOLUME II




WHEN HE BECAME SECRETARY OF STATI



LIFE OF

WALTER QUINTIN GRESHAM

1832-1895



By
MATILDA GRESHAM



IN TWO VOLUMES
WITH PORTRAITS

VOLUME II




CHICAGO

RAND McNALLY & COMPANY

1919



COPYRIGHT, 1919, BY
OTTO GRESHAM



MCNALLY & COMPANY



LIFE OF

WALTER QUINTIN GRESHAM

18321895



VOLUME II



CHAPTER XXVII
WHISKEY RING" TRIALS



BRISTOW MADE SECRETARY OF TREASURY INTERNAL
REVENUE FRAUDS THE " WHISKEY RI N G " GRESHAM
BREAKS THE WHISKEY MEN S DEFENSE BREACH WITH
GENERAL HARRISON GRESHAM s PRINCIPLE OF CONSTITU
TIONAL CONSTRUCTION NOT APPROVED BY BENJAMIN HAR
RISON NOR SUPREME COURT SUBSEQUENTLY UPHELD -
THE COUNSELMAN CASE BROWNLEE TRIAL GRESHAM s
CLEMENCY.



second injury of his leg, and the close confinement
to which Walter Q. Gresham subjected himself after
going on the bench, undermined his health, and we spent
the winter of 1874-1875 in California Judge Rhodes, of
the California Supreme Court, said he would resign and
enter into a law partnership with Judge Gresham, if we
would come to California to reside permanently.

But the spring of 1875 found us back at Indianapolis.
For the next four years, until the repeal of the Bankruptcy
Act in 1879, my husband, except for very short intervals,
was steadily at work in court. He usually held court all
through the summer, never adjourning before the middle
of August. During this period he began court at 9 A. M.
and seldom adjourned before six in the evening. Under

437



437830



438 7. JFK OF WALTER QUINTIN ORE SHAM

the Bankruptcy Act of 1867, all contested matters were
required to be heard by the judge; the register duties were
largely if not purely ministerial.

My husband had suggested to General Grant the ad
visability of making Benjamin H. Bristow, who was then
United States District Attorney for Kentucky, Solicitor of
the Treasury. General Grant liked General Bristow so well
that he first made him Solicitor-General and afterwards,
in 1874, promoted him to be Secretary of the Treasury.
Major Bluford Wilson, United States District Attorney for
the Southern District of Illinois, was, upon the request
of General Bristow, appointed in June, 1874, Solicitor of the
Treasury. Major Wilson was the brother of Major-General
James Harrison Wilson, who had been in the early days of
the war on General Grant s staff. During the days off from
court my husband made trips to Washington. Long before
they became public he heard the rumors about Secretary of
War Belknap. Belknap had been his friend in the field.
In April, 1875, Bristow told my husband that extensive
frauds had been discovered in the Internal Revenue Depart
ment, which were then being secretly investigated.

General Henry V. Boynton, of the Associated Press, and
George Fishback, one of the owners of the St. Louis Globe-
Democrat, brought to Solicitor Wilson the first evidence of
the existence of the "Whiskey Ring." Major Wilson
immediately took General Boyn ton s and Mr. Fishback s
evidence to Secretary Bristow, and with the sanction of
his chief pressed the investigation and then the prose
cutions. Aggressive and fearless, Major Wilson was a man
after my husband s own heart.

The distillers and rectifiers of whiskey and high wines
at Cincinnati, Evansville, St. Louis, Chicago, Pekin, and
Milwaukee had for several years been defrauding the govern
ment of much revenue by a systematic system of bribing
revenue officers, many of whom were active associates in
the wide-spread conspiracy.



"WHISKEY RING" TRIALS



439



General Bristow and Major Wilson laid the matter be
fore General Grant, who later, in a personal letter to Bris
tow, wrote his famous epigram, "Let no guilty man escape."
Aside from doing their duty, Secretary Bristow and Solici
tor Wilson were General Grant s loyal friends, but when
they discovered the connection of the President s private
secretary, Orville Babcock, with the conspiracy, through
a telegram in Babcock s own handwriting, General Grant
became first cold, then enraged, and afterwards said they
were trying to smirch him. Nothing was further from their
thoughts. General Grant claimed to believe in Babcock s
innocence. He was incensed when Babcock was indicted
at St. Louis, and finally the breach thus occasioned led
Bristow to retire from the cabinet. Early in the investi
gations my husband was summoned to Washington to use
his good offices with General Grant. It was a delicate
mission and for many reasons he did not want to go, but he
felt it was his duty to do so. He found General Grant ob
durate, and so reported to Bristow. But he told Grant
that Bristow had his sympathy, was loyal, honest, and
capable. On this visit to Washington, after my husband s
call on General Grant and report to Bristow, he conferred
with Judge David Davis, and the two called on Bristow
and advised him to resign, which he did not do.

Babcock s acquittal by a jury before United States Cir
cuit Judge Dillon in the United States District Court at
St. Louis, aided by the charge of the judge and by every
influence the press, the Chief Executive, and the soldier
element could bring to bear in his behalf, confirmed General
Grant in his opinion.

Judge Dillon s instructions to the jury to find the de
fendant not guilty were but little short of peremptory.
Patrick H. Dyer, now United States District Judge, then
the United States District Attorney, General John B. Hen
derson and Lucian Eaton, assistants, were the only men in
St. Louis, the newspapers said, who claimed Babcock guilty.



440 LIFE OF WALTER QUINTIN GRESHAM



After a half century, looking back at the facts that author
ized the indictment and were developed at the trial, "it is
difficult," said Major Wilson, "to reconcile the verdict with
Babcock s telegrams to McDonald and his intimacy with
the other chiefs of the ring."

One of the best court stories I ever heard was how "Pat
Dyer" closed his argument to the jury in the Babcock
case, in December, 1875. He started in vigorously to pre
sent the case for the government, but soon met with ob
jections from Judge Dillon as to his line of argument. As
he progressed many of his assertions were flatly contra
dicted by the court, and finally, after an interruption, Pat
said: "Gentlemen of the Jury, I want to tell you a story.
Two years ago I went down into southwestern Missouri
to visit an old friend and with him to hunt w r ild turkeys.
My friend was an elderly man with an old smooth-bore,
single-barrel musket loaded with buckshot. Soon we were
on the trail of a flock of wild turkeys. My companion
blazed away at the biggest gobbler in the flock, but the
only damage done was to break the gobbler s left wing.
Then there was a foot race between the old man and the
gobbler, with me bringing up the rear. The gobbler led
from the clearing to the timber. As the race proceeded
the old man threw away his musket, canteen, and powder-
horn so as to lighten ship, and was gaining on the gobbler,
who was weakening from loss of blood, when the old man
stubbed his toe over a sapling some one had cut down across
the path and went down. The gobbler w r as soon out of sight
behind the trees and underbrush by reason of a bend in the
path. As he arose to his feet the old man said, I did not
kill you, but, by God, you won t roost as high tonight as
you did last night. I thank you, gentlemen, for your atten
tion." Then turning to Judge Dillon very deferentially,
Dyer said, "Instruct the jury, Your Honor." Just short of
a peremptory instruction to acquit was the gist of Judge Dil
lon s charge. Promptly there was a verdict of Not guilty.



"WHISKEY RING" TRIALS 441

With Major Wilson in active command of the proceed
ings against the ring, the first acts were the seizures in
April, 1875, of distilleries, rectifying houses, spirits, coal,
and other tangible property at Cincinnati, Evansville, St.
Louis, Chicago, and Milwaukee. A great many of the
leading Internal Revenue officers, including the chief clerk
of the Bureau of Internal Revenue, were finally convicted
of being in the conspiracy. The seizures were made on the
theory that the government had a lien on the property
seized.

The first trial was at Evansville, Indiana, June 9, 1875.
The government was represented by District Attorney
Nelson Trussler, his assistant, Charles L. Holstein, and
Major Wilson, as the special representative of the Treasury
Department. The defendants, Gordon B. and John H.
Bingham, who were ably defended by Charles Denby
and General J. M. Shackelford, were charged with run
ning the distillery at Patoka during the absence of the
storekeeper. The only penalty in the event of a con
viction was a fine of $1,000, but because a verdict of
guilty w r ould be a break in the line of the ring, the case
was vigorously defended and as vigorously prosecuted.

The local press at Evansville sided with the defendants.
The Evansville Courier, in commenting on the charge of
Judge Gresham to the jury, said it was most severe, leaving
no loophole for escape. There was proof that the distill
ery was operated at night several hours after the store
keeper had gone home to bed. This neglect of duty on
the part of the storekeeper, the defendants by their counsel
claimed, could not be regarded as a violation of the statute
by them. The charge was that the jury should not take
into consideration the fact that the law was a strict one;
that it w r as the duty of the distiller to see that the store
keeper was at the distillery while the distillery was operated;
that knowing the storekeeper had left the distillery, it was
the duty of the distiller to close down the distillery and



442 LIFE OF WALTER QUINTIN ORES II AM

make complaint to the proper authority. ; The law makes
no exception and does not inquire as to the distiller s mo
tives. Congress, in passing the act, knew what incentive
to defraud the government there was in manufacturing
whiskey, and therefore passed strict laws to prevent even
an opportunity for defrauding the revenue." There was a
verdict of "Guilty."

This charge to the jury Major Wilson made the subject
of a special telegram of congratulation to the Secretary of the
Treasury. It broke the defense all along the line. "And
this pioneer trial and conviction," said Major Wilson,
"greatly strengthened the hands of the government in later
trials in Milwaukee, Chicago, and St. Louis."

Judge Blodgett had authorized seizures at Chicago and
Judge Dyer at Milwaukee, but still the government was
without certain important evidence necessary to enforce
its liens for unpaid taxes, and to indict and convict. In
every instance accurate accounts were kept by the distill
eries of all their transactions. An inspection of these books
would enable the government to get evidence that would
complete its case.

In defining the law and enforcing the liens under the
seizures, Major Wilson and Judge Gresham continued to
be in the lead. The first proceeding was against Distillery
No. 28, Evansville. The government was in possession of
the distillery but could not dispose of it by sale until it had
established by evidence that the Binghams had defrauded
the government out of its just revenue by corrupting certain
of the revenue officers. Furthermore, the Binghams inter
vened; that is, came into court and asked that their property
be restored to them. They were represented by notable
counsels, Charles Denby and General J. M. Shackelford of
Evansville, and Harrison, Hines & Miller of Indianapolis.

Extended mention of these prosecutions is made because
they show that the practical side in enforcing the just and
legitimate powers of the government was never lost sight



"WHISKEY RING" TRIALS



443



of by Judge Gresham, and also show the tendency of the
reviewing courts to be pedantic to play upon words, thus
to limit the powers of the government until finally, when
the consequences of their own acts are brought home to
them, they "distinguish" or depart from their original
narrow, technical construction. All are familiar with the
English maxim, incorporated into the Constitution of the
United States, "that no man can be compelled to give
evidence against himself." To remove the embargo that
this put on the government, State as well as National
acts that of Georgia before the Revolution were passed.
The National act, known as Section 860 of the Revised
Statutes of 1875, provided that in the event that a party
was required to make a disclosure that might incriminate
him, this disclosure as evidence could never be used against
him. It was in the "Whiskey Ring" prosecutions that
Section 860 was first given effect by a Federal court, so far
as the records disclose. Judges Gresham, Blodgett, and
Dyer applied Section 860, and upheld its constitutionality
in opinions that the Supreme Court at first refused to
follow. Subsequently, when the consequences of the ruling
were pressed home, the Supreme Court reversed itself. It
was in these prosecutions that the differences between
Judge Gresham and General Harrison first arose.

On June 25, 1875, on motion of the District Attorney
for the District of Indiana, as was provided by sections of
the Revenue Act of 1874, Judge Gresham ordered the safe
of Distillery No. 28 opened. It was opened but found
empty. The court then ordered the Binghams to produce
in the courtroom at Indianapolis on September 14, 1875,
the books, blotters, and journals regularly kept and those
irregularly kept. The last mentioned showed the actual
transactions of the distillery. The regular books were so
incomplete that they were useless. To the production of
the books irregularly kept, the Binghams by their counsel
objected, because they said these were private papers.



444 LIFE OF WALTER QUINTIN GRESHAM

It was further objected that Section 5 of the Act of 1874
and the order made in pursuance of it were invalid because
in controvention of the Fourth, Fifth, and Seventh Amend
ments to the Constitution of the United States, "that the
rights of the people to be secure in their persons, houses,
papers, and effects against unreasonable searches and seiz
ures shall not be violated; that no person shall be com
pelled in any criminal case to be a witness against himself;
and when the value of the property in dispute exceeds $20
in value, be deprived of his right to trial by jury."

There was an extended argument and a carefully pre
pared opinion in which the court said :

The first Congress that sat under the Constitution, the Con
gress that proposed to the States the first ten Amendments to
the Constitution, the Fourth, Fifth, and the Seventh here in
question, provided by Section 15 of the judiciary act for the
production of books and papers to be used as evidence in suits
at law, and also as the Constitution had enjoined in order to
collect revenue, passed an act creating the internal revenue
system a system that of necessity the history of all govern
ments shows must be drastic and arbitrary in its nature, pre
scribing every step to be taken in the erection and management
of a distillery. . The government has, therefore, practically

assumed control of the manufacture and sale of spirits; they
[distillers] are required to keep books in which they are to enter
daily all their business transactions with the utmost particularity.
These books are at all times open to the inspection of the proper
revenue officers and are popularly known as government books.
If properly kept, they will show the exact amount of spirits
produced, Teceived, and removed on any given day. If so kept,
they will correspond with their business books, and this corre
spondence ought to exist. No one can engage in the manufacture
and sale of spirits without the consent of the government. This
consent is obtained on certain terms and conditions. No one
can be allowed to say that a distiller or wholesale liquor dealer
has kept a private record of his transactions. His books and
entries are quasi-public books and entries.

It is now too late to question the power of Congress in the



"WHISKEY RING" TRIALS



445



premises. If the so-called private books correspond with the
distillery books, the Binghams will not be hurt; if they do not
correspond, then any incriminating entries they contain can
never be used against the Binghams in any criminal case, because
the Act of Congress of 1868, Section 850, provides that the
witnesses in all such cases should have complete immunity.

We are not here to try the criminal case. When it comes
to that, there would be a jury trial. Besides, it is not a suit at
law or in equity, but a proceeding in rem to collect the govern
ment revenue.

This opinion was read November 2, 1875, and an order
entered that the order of July 28 stand; and in the event
it was not complied with, the claim of the government would
be taken as confessed and the Binghams imprisoned for
contempt.

November 12, 1875, the Binghams, by their counsel,
Harrison, Hines & Miller, withdrew their claim to the spir
its in Distillery No. 28 and to the distillery itself and the
claims of the government were confessed. Subsequently
the Binghams were indicted, plead guilty, and became wit
nesses for the government.

Eleven years later Judge Gresham s interpretation, and
that also of Judges Blodgett and Dyer of Wisconsin, of
Section 5 of the Act of 1874 as being constitutional, was
rejected by the Supreme Court of the United States in
Boyd vs. U. S. (116 U. S. 616) because it held that section
provided for an unreasonable search in that it might subject
a party to a forfeiture or a criminal prosecution to compel
him to produce his books and invoices in a customs case.
Little or no consideration was given to the Immunity Stat
ute, Section 860 of the Revised Statutes. "It was the writs
of assistance providing for the searches and seizures in 1761
that James Otis declaimed against," said Justice Bradley,
"that gave rise to the Fourth Amendment to the Consti
tution of the United States." It was not the writs but the
customs laws of Parliament that these writs were being
used to enforce, that Otis attacked. Had these revenue



446 LIFE OF WALTER QUINTIN GRESHAM

laws passed by the Parliament been passed by the colonial
legislatures, Otis would not have objected, but would have
championed their enforcement by writs of assistance or
otherwise. So in 1890, in the Counselman case, in giving
effect to the Interstate Commerce Act of February 4, 1887,
Circuit Judge Gresham distinguished the Boyd case and
upheld the constitutionality of Section 860, the Immunity
Statute.

The Counselman case arose out of an investigation by a
United States Grand Jury for the Northern District of
Illinois as to whether the Rock Island, the Burlington, and
the Santa Fe Railroad companies were violating the anti-
rebate section of the Interstate Commerce Act. Charles
Counselman, a Chicago grain dealer, who, after admitting
he was a large shipper over the roads named, under the
advice of counsel refused to testify further, and especially
in response to questions as to whether he had received re
bates, for the reason that his answers might tend to incrimi
nate him. The Grand Jury reported to Judge Blodgett,
who ordered Counselman to testify, because Section 860
granted him immunity against any future criminal prosecu
tion. Again Counselman refused to testify, and again he
was ordered to testify under penalty of a fine of -$500 and
to stand committed until it was paid. On a habeas corpus,
Judge Gresham sustained Judge Blodgett.

In 142 U. S., 547, the Supreme Court promptly and
unanimously reversed Judges Blodgett and Gresham in the
Counselman case, condemned what they and Judge Dyer
had said in the Whiskey Ring" cases, held Section 860
void as being in contravention of the Fourth Amendment,
and consequently upheld Counselman s refusal to answer

Then it was that the Chicago Tribune, in a page article
showed the price of grain at St. Paul, Omaha, and Kansas
City; at Chicago, the great grain market and gateway to
the East; the price at the seaboard, New York, and Balti
more; the rates on the railroads from the first named three



"WHISKEY RING" TRIALS 447

points to Chicago, to the seaboard; the rates from Chicago
to the seaboard, New York, and Baltimore; and the price
of grain at the seaboard, New York, and Baltimore. The
difference in the price of wheat at Omaha and Chicago was
much less than the freight rates between those points; the
same was true as to St. Paul and Kansas City and Chicago;
the same was true as to Chicago, New York, and Baltimore.
Counselman was doing an immense grain business. He
owned most of the elevators on the Rock Island and had a
practical monopoly on its lines.

The Tribune article attracted wide attention. The in
ference was irresistible that Counselman was receiving re
bates and that the railroad companies under investigation
were guilty. The decisions that went to the length that the
witness might refuse to answer because his answers would
tend to degrade him in the eyes of his fellows, even if they
would not subject him to a criminal prosecution, were ab
surd, because the witness who refused to answer, accused,
tried, and condemned himself at the bar of public opinion.
Congress passed another immunity statute differing not. in
principle from Section 860, and but little in words. At the
first opportunity the Supreme Court sustained it.

In the "Whiskey Ring" trials at Indianapolis, includ
ing the two Binghams, thirty-one men were indicted by the
Federal Grand Jury that met in that city on the first Mon
day in December, 1875. The indictments were for violating
the internal revenue laws, for conspiracy, for bribery, and
for receiving bribes. The latter was the charge against
Hiram Brownlee, a young man of good family. Brownlee
was one of the two who went to trial who were acquitted.
He was defended by George W. Steele of Marion, Indiana,
Brownlee s home; by his venerable father, who simply sat
in the courtroom; by General Benjamin Harrison, and his
partners, Messrs. Hines and Miller. It was this trial that
evidenced the breach between Judge Gresham and General
Harrison. The trial lawyer thought the trial judge not



448 LIFE OF WALTER QUINTIN GRESHAM

only had been hard on the Binghams, but also that he
disregarded the constitutional limitations on his judi
cial powers, while the trial judge afterwards criticized the
length to which "a Presbyterian elder would go" in order to
win a verdict. General Harrison was an elder in the First
Presbyterian Church of Indianapolis.

The Brownlee jury was sworn to try the issue, Friday,
the 1 4th of January, 1876, and after the opening statement
by the government, was excused until 10 A. M. of Tuesday,
the 1 8th, because the court was congested with an accumu
lation of bankruptcy business and motions for new trials
in the case of those convicted. One of the convicted men
was an old soldier. It had been thought the jury that tried
him would acquit. He did not get a new trial but a sen
tence of two years in prison. Only one defendant, who was
a soldier, was acquitted. All the others were convicted or
plead guilty, and received sentences varying from two years
in prison to three months in jail. The majority received
jail sentences. Most of these sentences were imposed be
fore the Brownlee trial was resumed on the i8th. Brownlee
was the last to be tried. The pressure that was brought
to bear on my husband in behalf of the defendants was
terrific, especially in behalf of those who had been soldiers,
and most of them were of that class. Much of the soldier
element resented the prosecution as a reflection on their
"Old Commander." Walter Q. Gresham could not quarrel
with every man who approached him, and as no surveillance
was kept on the jurors and they were allowed to go to their
homes, all that was done was to w r arn them to allow no one
to communicate with them. Even a layman can understand
the advantage which the defense had. On the jury was a
man who had been a major in an Indiana regiment, a follower
of General Grant, and later, one of the 306 in the memorable
convention of 1880. A member of the machine, forceful
and fearless, that major never hesitated to put anything over.
Many were the circumstances outside of the courtroom that



RING TRIALS 449

contributed to, if they did not make, the verdict in the
Brownlee case, it was said. There never was any question
about District Attorney Nelson Trussler, his assistant, C. L.