In obedience to your orders to cause to be investigated the alleged fraudulent transactions of all persons amenable to this department, the services of Colonel H. S. Olcott were temporarily obtained. This officer is attached to the War Department, is familiar with such investigations, and enjoys in an eminent degree the confidence of that department. * * * The allegation that I had said to him that the Navy Department had organized courts to convict, is not true. I said something like that of the recent law, passed by Congress, requiring contractors to be tried by court-martial.I will not burden with details the present historical retrospect. Suffice it to say that the same gang of scamps supplied the Washington, Philadelphia, and New York Navy Yards. Their programme was simple, but effectual. Under the regulations, a contractor who had faithfully complied with the terms of a contract, was entitled to the first consideration of the navy agent (the purchaser of supplies in the open market at each naval station, the paying officer through whom all money passed to contractors) when extra supplies had to be obtained in open market. The ring thief had only to collude, in each transaction, with three men to have everything as he could desire: 1. The master-workman, upon whose recommendation the Navy Department's annual estimates of the supplies that would be needed in that shop are based. 2. The inspector, who must pass upon the goods delivered, and was officially supposed to reject such articles as were scant in measure or weight, or inferior in quality. 3. The navy agent, dispenser of patronage, golden fountain of riches. Other minor potential obstructionists had, of course, to be disposed of; but a little money, a good deal of soft talk, unlimited liquor, and, occasionally, some pressure from superiors, went a long way. Thus, practically, the master-workman would estimate for not above ten per cent. of the supplies he was morally certain would be required
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