Trader post scandal ( 1876 ) The trader post scandal involved Secretary of War William W . Belknap who received quarterly kickback payments derived from an illicit Fort Sill tradership contract between Caleb P . Marsh and sutler John S . Evans . In 1870 , Sec . Belknap lobbied Congress , and on July 15 of that year was granted the sole power to appoint and license sutlers with ownership rights to highly lucrative " traderships " at U . S . military forts on the Western frontier . The power to appoint traderships by the Commanding General of the Army , at that time William T . Sherman , was repealed . Having been granted the sole power to appoint traderships , Sec . Belknap further empowered those traderships with a virtual monopoly . Soldiers stationed at forts with Belknap appointed sutlers could only buy supplies through the authorized tradership . These monopoly traderships were considered to be excellent investments , and were highly prized . Soldiers on the Western frontier , who were thus forced to buy supplies at higher than market prices , were left destitute as a result . In 1870 , Sec . Belknap ' s second wife , Carita , successfully lobbied her husband to appoint a New York contractor ( Caleb P . Marsh ) to the trader post at Fort Sill located in the Indian Territory . John S . Evans , however , had already been appointed to that position . To settle the question of ownership , regarding the tradership , an illicit partnership contract , authorized by Sec . Belknap , was drawn . The contract allowed Evans to keep the tradership at Fort Sill , provided that he pay $ 12 , 000 of the annual profits to Marsh . Evans would be allowed to keep the remaining profits . Marsh , in turn , was required to split half of his receipts from the contract , $ 6 , 000 per year , with Carita . However , Carita only lived to receive one payment . In 1870 , she died from tuberculosis , shortly after giving birth . After Carita ' s death , Marsh continued to pay Sec . Belknap Carita ' s share of the profits , for the benefit of her child . Although the child died in 1871 , Sec . Belknap continued to accept quarterly kickback payments from Marsh . When Sec . Belknap subsequently remarried , to Carita ' s sister Amanda , both Belknap and Amanda continued to accept the quarterly payments from Marsh . On February 29 , 1876 , the U . S . Congress launched an extensive investigation run by Democratic Rep . Hiester Clymer ' s Committee into Sec . Belknap ' s War Department . The investigation discovered through testimony that profits from the Fort Sill tradership were split between Sec . Belknap , Marsh , Evans , and two of Sec . Belknap ' s wives , Carita and Amanda . On March 1 , 1876 , Sec . Belknap appeared before the committee , but did not testify . The following morning , on March 2 , 1876 , in a White House meeting with President Ulysses S . Grant , Belknap tendered his resignation . The acceptance of Belknap ' s resignation by President Ulysses S . Grant was reported to Congress at 11 : 00am , but did not deter the Clymer Committee from voting out articles of impeachment , which were forwarded to the full House that same day . The subsequent vote for impeachment was unanimous , and was promptly forwarded to the Senate for trial . In May 1876 , after lengthy debate , the Senate voted that Belknap , a private citizen , could be put on trial by the Senate . Although there was strong evidence Belknap willingly accepted unlawful quarterly payments from Marsh , Belknap was acquitted when the vote for conviction failed to achieve the required two - thirds majority . Most of the Senators voting against conviction expressed the belief that the Senate had overstepped its authority in attempting to convict a private citizen . The Congressional investigation by the House created a rift between President Ulysses S . Grant and Col . George A . Custer . Prior and during the investigation Col . Custer was associated with aiding and writing anonymous articles for the New York Herald that exposed trader post kickback rings and implied that Sec . Belknap was behind the rings . During the investigation Custer testified on hearsay evidence that President Grant ' s brother , Orvil , was involved in the trader post rings . This infuriated President Grant who then in retaliation stripped Custer of his command in the campaign against the Dakota Souix . Col . Custer however , lobbied Grant and was able to participate in the campaign against the Dakota Souix , however , Custer ' s reputation had been damaged . While attempting to restore his military prestige in the U . S . Army , Col . Custer was killed in action at the Battle of the Little Big Horn . Sec . Belknap had allowed the sale of superior military weapons to hostile native Americans at trader posts , while having supplied soldiers in the U . S . Army defective military weapons . This upset the balance of fire power between Indians and U . S . soldiers and may have contributed to the defeat of the U . S . Military at the Battle of Little Big Horn . In 1876 , after Belknap ' s resignation , Grant appointed Alphonso Taft , as Secretary of War . Taft initiated a new protocol which only allowed fort commanders to appoint traderships . Belknap appointed Secretary of War . A native of New York , and Iowa attorney , William W . Belknap entered the American Civil War in 1861 fighting for the Union . Belknap , having efficiently served at Shiloh and Atlanta , was appointed Major General by the end of the war . Belknap was known for serving coolly under pressure at Shiloh and for bravely attacking a Confederate breastwork at Atlanta . At the wars end in 1865 Belknap retired from the military and was appointed internal revenue collector in Keokuk ; having served until 1869 . After Secretary of War John A . Rawlins died in 1869 , President Ulysses S . Grant appointed Belknap to head the War Department . Grant believed Belknap has served with honor and deserved a cabinet position . Tradership monopolies established . At the beginning of the war , Union soldiers began purchasing supplies from private vendors known as " sutlers " . These sutlers set up tradership posts inside U . S . Army forts and were chosen by the regimental officers to do business . This policy changed in 1870 , when Secretary of War Belknap lobbied Congress to pass a law vesting sole authority in the War Department to licence and choose sutlers at Western military forts . The authority previously granted to U . S . Army regimental officers , at the individual forts , was revoked . Both U . S . Army soldiers and Indians shopped and bought supplies at these traderships . These traderships controlled by Sec . Belknap became lucrative monopolies and considered profitable investments during the 1870s . Weapons sold to Indians . Under Sec . Belknap ' s tenor American Indians were sold by top of the line breach - loaders and repeating rifles at the tradership posts on the Western frontier . The money Indians used to purchase weapons ironically came from federal appropriations to keep Indians pacified . Under Sec . Belknap , soldiers were forced to buy supplies from tradership monopolies at exorbitant prices and were left destitute . Sec . Belknap supplied soldiers defective breach loading rifles that jammed after the third round . This discrepancy in military weapons between hostile Indians and the U . S . Military was a significant factor in the defeat of the U . S . Military at the Battle of the Little Big Horn in 1876 . Fort Sill . In August 1870 , Carita S . Tomlinson , the second wife of Sec . Belknap , lobbied on behalf of Caleb P . Marsh , to receive a tradership . Having filled out and submitted an application on August 16 , Sec . Belknap ' s War Department awarded Marsh a tradership at Fort Sill in the Oklahoma Territory . John S . Evans , the experienced sutler already at Fort Sill , appointed on October 10 , 1870 , did not want to give up his lucrative trader post to Marsh . An illicit financial arrangement , approved by Belknap , was made where Evans would keep the tradership and gave Marsh quarterly payments amounting to $ 12 , 000 per year . Marsh then split this profit in half ; giving $ 6 , 000 per year to Sec . Belknap ' s wife Carita in quarterly payments . Evans would keep the remaining profits from the Fort Sill tradership . Carita had come from a wealthy Kentucky family and was used to living in opulence . It is believed that the kickback payments were intended to support this lavish lifestyle . However , Carita only lived to receive one payment . She died in December 1870 from tuberculosis , one month after giving birth to her child . After Carita ' s death , Sec . Belknap and Carita ' s sister , Amanda Tomlinson Bower , who had previously moved in with Carita and Belknap , personally continued to take quarterly profit payments from Marsh . Belknap eventually married Amanda in December 1873 and she became known as the " Queen " among cabinet member wives . Caleb Marsh was the husband of one of Amanda ' s closest friends . Amanda had , just as her sister Carita , enjoyed an opulent life style that cost a considerable amount of money during the Gilded Age . Belknap ' s $ 8 , 000 yearly salary was unable to support his third wife ' s lavish spending habits . When suspicious people asked Belknap how he could afford such a high standard of living on his salary , Belknap stated that Amanda , a wealthy widow , had received money from her deceased husband ' s estate . In total , Sec . Belknap received more than $ 20 , 000 in payments derived from the Fort Sill tradership . According to Congressional testimony , Belknap received money from other trading posts , as well . House investigation . National attention was drawn to the plight of American Indians in 1874 when paleontologist Othniel Marsh revealed that the Lakota Souix had " frayed blankets , rotten beef and concrete - hard flour . " Secretary of Interior Columbus Delano , responsible for Indian Bureau policy , resigned office 1875 . The New York Herald , a Democratic newspaper , reported rumors that Sec . Belknap was receiving kick back money from tradership posts . On February 29 , 1876 Demrocratic Representative Hiester Clymer launched an investigation into corruption in the War Department . The Democratic Party had recently obtained a majority in the House of Representatives and immediately had began a series of vigorous investigations into corruption charges of the Grant Administration . Apparently , in a discussion with Sec . Belknap , Rep . Clymer , who was friends with Belknap , advised Belknap to resign office in order to keep him from going to prison . Sec . Belknap hired an attorney , Montgomery Blair . Sec . Belknap defended himself by acknowledging the that payments took place , however , he stated that the financial arrangements were instigated by his two wives , unknown to himself . Clymer , however , had an informant , Caleb Marsh , who exposed the Fort Sill ring under Congressional testimony . Marsh testified under oath that he had directly made payments to Sec . Belknap and that Sec . Belknap gave Marsh receipts for these payments . Resignation of Secretary Belknap . Sec . Belknap with his counsel , Blair , testified before the Clymer Committee on February 29 , 1876 . Belknap then withdrew from further testimony , and his attorney Blair proposed Congress drop charges against his client if Belknap resigned . The Clymer committee , however , was in no mood for compromise and declined . On March 2 , Rep . Lyman K . Bass informed former Solicitor General and current Treasury Secretary Benjamin Bristow , who informed Secretary of State Hamilton Fish , who in turn told him to tell President Grant . When Bristow reached the White House , President Grant was eating breakfast and getting ready for a studio portrait session with Henry Ulke . Bristow told President Grant of Belknap ' s tradership scheme and suggested he speak with Rep . Bass for further information . After Bristow left , Grant scheduled an afternoon meeting with Congressman Bass . He then began to leave for Ulke ' s studio when he was interrupted by Sec . Belknap and Interior Secretary Zachariah Chandler in the White House ' s Red Room . Weeping , the burly Belknap prostrated himself before Grant and confessed the kickback scheme , blaming his two wives . Belknap begged the President to accept his resignation . Moved by Belknap ' s emotional plea , President Grant personally wrote and accepted Belknap ' s resignation at 10 : 20 A . M . ; much to Belknap ' s relief . Immediately afterwards Senators Lot Morrill and Oliver Morton , intercepted Grant and advised him not to accept Belknap ' s resignation ; however , Belknap had already resigned . Belknap impeached by House . Despite Belknap ' s resignation , the House voted to impeach the former Secretary of War . House members , however , argued over whether they had a right to impeach Belknap , now a private citizen . Democratic Rep . Blackburn criticized Grant for accepting Belknap ' s resignation . A false rumor spread that Belknap had committed suicide . The House passed five articles of impeachment , to be presented to the Senate for trial . Custer testimony . Rep . Clymer continued his investigation into Belkamp ' s War Department , having called upon Col . George A . Custer , stationed at Fort Lincoln , who testified in Washington D . C . on March 29 and April 4 . Col . Custer was rumored to have anonymously aided the " New York Herald " in their investigation into Indian Traderpost rings , particularly a March 31 " New York Herald " article , titled " Belknap ' s Anachonda " . Custer testified to Clymer ' s committee that sutlers ( military post traders ) gave a percentage of their profits to Sec . Belknap . Custer had initially become suspicious in 1875 as his men at Fort Lincoln were paying high prices for supplies , and then found out the sutler at the fort was only being paid $ 2 , 000 out of the tradership ' s $ 15 , 000 in profits . Custer believed that the $ 13 , 000 difference went to partners in the tradership , or to Sec . Belknap himself . Custer said he had heard that President Grant ' s brother , Orvil , was involved in the tradership rings , having invested in three posts with the President ' s authorization . President Grant was offended by the mention of Orvil Grant ' s name in that context . Custer also testified that Col . William B . Hazen had been sent to a remote post , Fort Buford , as punishment for Hazen having exposed Belknap ' s traderpost rings in 1872 . This angered Philip Sheridan , who wrote to the War Department and contradicted Custer ' s claims , including concerning Hazen ' s reputed banishment . Sheridan had been a staunch supporter of Custer until his testimony before the Clymer committee . Although Custer ' s lengthy testimony was mostly hearsay , his reputation as military commander impressed the Clymer committee , Secretary of State Hamilton Fish , William T . Sherman , and the American press , and added significant weight to the hearings . Belknap , despite his resignation , had strong connections in Washington , D . C . and used his influence to discredit Col . Custer ' s testimony . Response of President Grant . President Grant ' s acceptance of Sec . Belknap ' s resignation on March 2 , 1876 , caused considerable commotion in the U . S . House of Representatives , since the House was ready to vote on Belknap ' s impeachment on the same day . President Grant had Att . Gen . Pierrepont launch an investigation into Belknap ; however , no charges were made by the Justice Department against Belknap . Protective of his family , Grant was furious that Custer testified against the President ' s brother , Orvil , at the Clymer committee hearings . Sherman advised Custer to see Grant at the White House to talk over the situation ; however , Grant refused on several occasions to see Custer . < ref name = Dp111 < / ref > Donovan , p . 111 < / ref > Grant ' s refusal to see Custer was designed to humiliate the Colonel . When Custer left to return to Fort Lincoln , Grant had Custer arrested in Chicago , since Custer left Washington without visiting Grant or Sherman , a breach of military protocol . By Custer ' s own request , he was moved to Fort Lincoln under arrest to serve out his detention from active service . President Grant relieved Custer from command of the expedition against the Lakota Souix , eventually given to Alfred H . Terry by Sheridan , and forbade him from going on the expedition . The Eastern press was outraged by Grant ' s actions against Custer and stated Grant had punished Custer for his testimony at the Clymer Committee . After Custer wrote Grant a letter , from one soldier to another , to allow him to participate in the Souix Expedition , Grant relented . Custer had also gotten the reluctant endorsement of Sheridan , who knew that Custer was skilled military leader . Grant allowed Custer to join the expedition on the grounds that he would not take with him any pressmen . Custer bragged he would " swing clear " of Terry ' s command once on the Expedition . Senate trial and acquittal . On March 3 , 1876 a committee of five from the House of Representatives , headed by Rep . Hiester Clymer , presented to the Senate Belknap ' s articles of impeachment . After much debate , on May 29 , the U . S . Senate finally voted 37 to 29 that Belknap , as a private citizen , could not be barred from trial and impeachment . Belknap ' s lengthy Senate trial , which took place in July , was very popular and the Senate gallery was filled with onlookers . Unable to achieve the required two - thirds majority for conviction on any of the five impeachment articles , Belknap was finally acquitted by the Senate on August 1 . Many of the Senators voting against conviction expressed the belief that a private citizen could not be impeached by the House or put on trial by the Senate . President Grant ' s timely acceptance of Belknap ' s resignation had unquestionably saved Belknap from conviction . Aftermath . After Belknap was acquitted by the Senate , he was indicted in Washington D . C . District Courts . However , his case was not actively pursued since actions under $ 40 , 000 rarely won prosecution . Belknap , stigmatized by the House Impeachment and Senate trial , remained in Washington D . C . and made his living as an attorney . President Grant replaced Belknap with the judicious and popularly received Alphonso Taft as Secretary of War . Belknap wives . In 1854 , Belknap married his first wife Cora Le Roy , sister - in - law of Hugh T . Reid . Cora died in 1862 . In January 1869 , Belknap married a Kentucky " belle " Carita S . Tomlinson , " Carrie " , who died from tuberculosis in December 1870 . On December 11 , 1873 Belknap married Carita ' s sister , Amanda Tomlinson Bower , a wealthy widow who would be popularly known for her high society status , extravagant spending , and beauty .