The Great American History Blog: Custer and the Trading Post Scandal

The classic Custer movie, They Died with Their Boots On, starring Errol Flynn, presents a mangled version of the life and death of George Armstrong Custer. According to the movie a few corrupt politicians goaded the western tribes into war for personal profit, threatening the survival of all settlers in the Dakota Territories. Custer and his men give their lives at the Battle of the Little Bighorn in order to slow the Native American advance. A letter left behind by Custer, now considered his dying declaration, names the culprits and absolves the Indians of all responsibility for the war. Custer dies but wins his final campaign for the right and the good.

Although almost totally nonsensical, there is a nugget of truth here. In 1870, Secretary of War William Belknap lobbied Congress to pass a law vesting sole authority in the War Department to license 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 The authority previously granted to U.S. Army regimental officers, at the individual forts, was revoked.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 reservation Indians bought supplies at these trading posts now under the patronage of William Belknap.

Belknap awarded traderships at the forts based largely on the size of the kickbacks he received from the investor to support his lavish lifestyle. To increase profits, Belknap forced soldiers and reservation Indians to buy supplies only from these authorized traderships, which charged exorbitant prices. Belknap, awarded Orvil Grant, the brother of President Ulysses S. Grant, four traderships. In February 1876, the New York Herald reported that Orvil Grant made money in the Sioux country by starving the squaws and children while selling repeating rifles to Indian tribes, to make even more money. It was known that the Lakota Sioux on the reservations were buying frayed blankets, rotten beef and concrete-hard flour at the traderships with the money appropriated by the government for their maintenance and well-being.

Democratic Representative Hiester Clymer launched an investigation into corruption in the Grant administration. George Armstrong Custer was called to testify before Clymer’s committee. Custer accused President Grant's brother and Secretary of War Belknap of corruption. An enraged President Grant stripped Custer of overall command of a column chosen to subdue the Sioux and placed him under the command of Brigadier General Alfred Terry. Custer was on the brink of professional and financial ruin, having run up massive gambling debts and then having alienated the President of the United States.

Only one thing could save Custer, victory on the battlefield. If Custer could win a smashing victory over Indians in the West, all would be well again. In his most hopeful fantasies Custer imagined a draft Custer for President Movement at the Democratic convention which was to open in St. Louis on June 27, 1876. Custer had spent part of his trip East jawboning with political “King Makers” and had a following among some Democratic politicians.

More realistically, a victorious Custer could expect accolades at the Centennial Exhibition in Philadelphia and big box office receipts for a lecture tour for which he was already scheduled.

Instead of being swept into either riches or the White House in a wave of martial euphoria, George Armstrong Custer met his death along the bluffs overlooking the Little Bighorn River, in Montana, on June 25, 1876.

Custer’s death was immediately politicized. Enemies of the administration …pointed accusing fingers at President Grant, blaming him for Custer’s death, and urging voters to settle with the Republican Party in the fall elections. Grant’s partisans struck back vilifying Custer. Grant weighed in personally claiming that Custer overextended himself and his men to deprive fellow officers of their share of victory.

As for Belknap. He confessed to President Grant that kickback payments had been made, but that they were engineered by his wife, unbeknownst to him. The President accepted Belknap’s resignation. The Democratic House of Representatives went on to impeach Belknap, notwithstanding his resignation. Belknap was acquitted by the Senate, many Senators believing that that a private citizen could not be impeached by the House or put on trial by the Senate.

William Belknap is buried at Arlington National Cemetery.