Final answer:
The loss of faith in the Federal government during Grant's administration was due to the economic hardship caused by the Panic of 1873, corruption scandals within the administration, and a failure to effectively protect black rights and enforce a southern policy.
Step-by-step explanation:
The American public's trust in the Federal government significantly eroded during President Ulysses S. Grant's time in office due to numerous factors. Firstly, the Panic of 1873, an economic downturn that resulted in depression, left many looking for federal support which was not forthcoming. This economic crisis was exacerbated by the Grant administration's inability to manage the scandalous corruption within, as uncovered in several incidents involving high-level officials and close associates of Grant.
Furthermore, the Grant administration's southern policy was largely seen as a failure. Although President Grant initially aimed to promote black rights and sustain Republican power, these goals were undermined by the entrenched racism in the south, violence against black voters, and the weakening resolve of Republicans to intervene in southern affairs. The Mississippi Plan and the subsequent violence in Mississippi highlighted the lack of federal intervention to support black voting rights and maintain lawful governance in the South.
Additionally, the Grant administration's perceived preoccupation with patronage and the spoils system, which prioritized political loyalty over competence, compounded the disillusionment. Revelations of scandals such as the Whiskey Ring and the Belknap bribery scandal reinforced the public's perception of a government more concerned with self-preservation than public service. This culminated in a shift away from Republican dominance in subsequent elections and the eventual compromise that ended Reconstruction.