[531] In June, Grant and Congress abolished the moiety system.[532]
Bristow effectively cleaned house, tightened up the Treasury's investigation force, implemented civil service, and fired hundreds of corrupt appointees.[533] Bristow discovered Treasury receipts were low, and launched an investigation that uncovered the notorious Whiskey Ring, that involved collusion between distillers and Treasury officials to evade paying the Treasury millions in tax revenues.[534] Much of this money was being pocketed while some of it went into Republican coffers.[535] In mid-April, Bristow informed Grant of the ring. On May 10, Bristow struck hard and broke the ring.[536] Federal marshals raided 32 installations nationwide and arrested 350 men; 176 indictments were obtained, leading to 110 convictions and $3,150,000 in fines returned to the Treasury.[537]

Harper's Weekly cartoon on Bristow's Whiskey Ring investigation
Grant appointed David Dyer, under Bristow's recommendation, federal attorney to prosecute the Ring in St. Louis, who indicted Grant's old friend General John McDonald, supervisor of Internal Revenue.[538] Grant endorsed Bristow's investigation writing on a letter "Let no guilty man escape..."[539] Bristow's investigation discovered Babcock received kickback payments, and that Babcock had secretly forewarned McDonald, the ring's mastermind boss, of the coming investigation.