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The War's Carnival of fraud.

Colonel Henry S. Olcott.
Mine is the most repulsive task that any one of the writers of this series of Annals will have assigned to him. All the others have their stories to tell of the clang of arms, the marshaling of armies, the thrilling episodes of personal danger and suffering, the political vicissitudes of the might struggle. To me comes the duty of showing the corruption that festered beneath the surface. The eye kindles, the pulse leaps, the imagination fires with their narratives of martial deeds; but what I shall say will make writer and reader alike deplore the baseness of human nature, which most displays itself in times of national calamity. Gladly would I leave my tale untold, and suffer the official record of my experience to lie in the archives of the government undisturbed, like a loathsome corpse in a dishonored grave. But a history of the Rebellion which should not embrace this chapter would be no history worthy of the name; and so, as no one can serve as my substitute, I comply with the editor's request.

I passed at the front the first year of the war, joining the Burnside expedition at Annapolis, participating at the capture of Roanoke Island, the battle of Kewbern, the siege and capture of Fort Macon, the battles on the Rappahannock during Pope's retreat, and other military operations. Exposure to malaria finally disabled me with fever, and I was obliged to return home from Washington, where my horse stood ready saddled for a start the next morning with General Burnside to join Hooker with our Ninth Corps. I recovered after two months, and, while convalescent, was first [706] intrusted with the responsible duties which occupied my whole attention subsequently until the close of the war, and for some nine months longer.

By this time, November, 1862, the government had expended many millions of dollars, and the little army of twenty thousand men that we had when Sumter was fired upon had been increased to hundreds of thousands. The initial Confederate act of war not only forced upon us the gigantic work of transforming an industrial people into soldiers, but of arming and equipping them as well. This was the harder task of the two. Men there were by the hundred thousand, ready to take the field; but, to uniform them, cloth had to be woven, leather tanned, shoes, clothing, and caps manufactured. The canvas to shelter them had to be converted from the growing crop into fabrics. To arm them the warehouses and armories of Europe, as well as of this country, had to be ransacked. All considerations of business caution had to be subordinated to the imperious necessity for haste. If it was the golden hour of patriotism, so was it equally that of greed, and, as money was poured by the million, by the frugal, into the lap of the government, so was there a yellow Pactolus diverted by myriad streamlets into the pockets of scoundrels and robbers-official and otherwise. The public necessity was their opportunity, and they made use of it.

The rush of men to the front left the War Office no time to be nice over details; so that, as the volume of administrative business overflowed the bureau machinery for its supervision, things were, in a measure, suffered to take their course. An unhealthy tone pervaded everything; speculation was the rule-conservatism the exception. We floated, on a sea of paper, into a fool's paradise. Contractors, bloated with the profits on shoddy, rode in emblazoned carriages, which, a little while before, they would have been glad to drive as hirelings; and vulgar faces and grimy fingers were made more vulgar and coarse with the glare of great diamonds. Intrigue held the key to the kitchen-stairs of the White House, shaped legislation, sat cheek by jowl with Congressmen, and seduced commissioned officers from the strict path of duty. Our sailors were sent to sea in ships built of green timber, which were fitted with engines good only for the junkshop, and greased with “sperm” oil derived from mossbunkers and the fat of dead horses. For one pound of necessary metals, one yard of fabric, one gallon of liquid, the price of two was paid. Our soldiers were given guns that would not shoot, powder that would only half explode, shoes of which the [707] soles were filled with shavings, hats that dissolved often in a month's showers, and clothing made of old cloth, ground up and fabricated over again.

In the navy yards there was a system of corrupt bargains between the public servants and contractors, under which goods of inferior quality and short of quantity were accepted as of the lawful standard and count; public property was purloined and carried off in open daylight; scores of superfluous men were quartered on the pay rolls by politicians; navy agents colluded with ring contractors to buy of them all supplies at highest market rates on an agreement for a fifteen per cent. commission, and clerks in the yards, for a consideration, would slip the pay requisitions of these ring thieves from the bottom to the top of the pile that awaited the official certificate of approval, so that they might draw their money at once, to the prejudice of honest dealers. There was no such thing as the taking of a general account of stock — not even a keeping of the accounts by double entry. The old regular officers in charge of bureaus, high toned and unsuspicious, were flattered into a fatal sense of security by subordinates bound body and soul to thieves.

In the military arsenals, the same rottenness prevailed. Here and there were to be found public servants without a moral ulcer within their breasts. But such were annoyed and hampered in the execution of duty, overridden, too, often by positive orders from superiors to receive supplies not up to army standard, and, when too obstinate, were removed to posts less desirable. The army standards were themselves debased under the plea of an exigency. In the lettings of contracts, a fair competition was frustrated by the transparent conspiracy of bidders, who would put in absurdly low proposals under fictitious names, and then bid themselves at the highest price that, from surreptitious information received, they knew would throw out honest competitors and secure them the contract. Their profits were calculated to come out of the delivery of inferior articles of skimped measure to government inspectors, with whom they had an understanding. Presents of horses, carriages, jewelry, wines, cigars, and friendly help toward promotion, though passing under a politer name than bribery, effected the same results as though they had not. Every artifice that rascally ingenuity could devise, and clever men and women carry out, was resorted to to procure the brigadier's stars or the colonel's eagles for ambitious incompetents. The sacredest secrets of our government were sold to the enemy; loud-mouthed hypocrites trafficked across the lines; the very medicines for the sick were adulterated, and dishonest gains were made [708] out of the transportation of the wounded. Nay, so vile was the scramble for money, so debasing its influence, that our dead heroes were followed into the very grave by the plundering contractor, who cheated in the coffin that was to hold the sacred dust, and amassed fortunes by supplying rotten head-stones in defiance of accepted stipulations. What shall we call this wretched episode of national history but a Carnival of Fraud This was the Augean stable to cleanse which the broom of authority was placed in my hands.

Of all this I knew nothing in November, 1862, when Secretary Stanton first applied, through the United States Marshal at New York, for my services. There had been much talk and a good many wholesome truths told by the Democratic papers, but my experience had been in the field, and, besides, it was not the likely thing for Democratic papers to be seen about the camps in North Carolina. Of one or two specific cases of fraud, the members of the Burnside expedition had been forced to have a very accurate knowledge. We lay in Hatteras Inlet a whole month, waiting upon McClellan's movements in Virginia, so as to co-operate with him. Of water we had a sufficient supply, but the contractor had put it in cheap barrels, that had contained kerosene oil, and our stomachs turned against it. When the order came to move upon Roanoke Island, we attempted to cross the “swash,” the great shoal that lies between the ocean beach and Albemarle Sound, but scarcely a vessel could be dragged through the channel, even by two powerful tugs, until it had been emptied of everything portable; the agents, instructed to hire vessels of a certain draught only, had accepted others that drew two or three feet more of water at exorbitant rates-some, if I remember aright, at one thousand dollars per day! Conversing with Burnside as the vessel we were on stuck fast half way over the swash, I offered to send an account of this infamy to the Northern press and denounce the responsible parties by name. But he protested, saying that as he would reap the credit of success, so he ought to take the blame of failure. It was his fault and none other that such vessels had been taken, and as commander of the expedition it was his business to have seen that the agents did their duty. The man's character, at least as I have always known it, is expressed in that sentiment.

The occasion of my employment was the giving of a Delmonico dinner by a German Israelite to a distinguished company of guests. The host was one Solomon Kohnstamm, who had accumulated a fortune of over a quarter of a million in the importing business at New York, and enjoyed the reputation of a giver of good dinners [709] and a jolly sort of fellow in general. In an evil hour he took to discounting the vouchers of recruiting officers, cheated, was suspected, in danger of arrest, and as a grand coup of diplomacy had spread the feast in question and bidden to it every civil and military official in the New York district who, under any contingency, might have a hand in arresting or prosecuting him criminally. I will spare the blushes of men now, as then prominently before the public eye, by not mentioning the names of Kohnstamm's guests. His frauds had come under the surveillance of the United States Marshal, and the circumstances of the dinner alarmed the authorities, who saw through the trick and feared the ends of justice might be defeated. I was, as I have said, convalescent at this time, and getting ready to return to the front at a very early date, when I received a notification that my services to examine the papers in this case of Kohnstamm were required. The Marshal told me that I would be free to leave for the army within a fortnight at farthest, and that the amount of fraud was supposed to be within twenty-five thousand dollars; in place of which my service was continued more than three years. The frauds of Kohnstamm turned out to be some three hundred thousand dollars, and the little local examination of a single case grew into a general inspection of arsenals and navy yards as connected with the equipment and clothing of the land and naval forces.

The vouchers discounted by Kohnstamm were the bills of landlords for the lodging and board of recruits for volunteer regiments prior to their muster into the United States service. They were certified by the ranking officer of the regiment and by the company officer engaged in the recruiting. After muster the men were duly taken on the regimental rolls, and the quartermaster was then legally empowered to issue to them tents, rations, and clothing. These necessary costs of organization were at first defrayed either out of the Union Defense Committee's fund or advanced by the officers of regiments and their friends out of their private means.

Kohnstamm's crime consisted in his procuring from landlords-generally German saloon-keepers-their signatures to blank vouchers, which he would have filled up by his clerks for, say, one or two thousand dollars each, and then either get unprincipled commissioned officers to append their certificates for an agreed price, or, cheaper still, forge them. By this device he drew over three hundred thousand dollars from the “Mustering and Disbursing office” in New York, of which sum the greater proportion was in due time ascertained by me to be fraud. The examination of all these accounts was a work of time and laborious and patient research, as may be [710] imagined. It was also necessary to proceed with the greatest prudence, for only a few days after my taking the papers in hand Secretary Stanton, acting, as soon became evident, upon erroneous reports, caused the offender to be arrested and lodged in Fort Lafayette. Kohnstamm was a Democrat, except, of course, in business matters, and a rich importer of thirty years standing; had plenty of money, spent it liberally, and had but just given his grand dinner at Delmonico's. No wonder, then, that his arrest should have excited a bitter feeling against the War Department in the minds of people who knew nothing whatever of his offenses. There was a Democratic Governor at Albany, a Democratic Mayor at New York, a Democratic District Attorney, and Democrats on the grand jury. It came to my ears that the Secretary of War, the United States Marshal, and myself, were to be indicted for resisting the writ of habeas corpus under the alleged unconstitutional act of Congress suspending the same. It was an emergency demanding a bold course; so with the consent of the department, I went myself before the grand jury with my papers, and offered to answer any questions that might be asked of me. The result was a vote of commendation for what had been done, and all danger of indictment was removed. I pursued the same course with Governor Seymour and the District Attorney with equally satisfactory results, and then the trump card was played of giving the facts to the press, which was only too willing to publish them, and never subsequently, to my recollection, interfered with my official labors.

This adroit and epicurean criminal employed the best counsel at our bar, and enjoyed all the immunity from annoyance, after his release from Fort Lafayette, that one so circumstanced could expect. But that there were thorns in his bed of roses is beyond a doubt. In due time, he was held in one hundred and fifty thousand dollars bail in a civil suit, and, after a three weeks session with me, the grand jury, under the lead of the late James W. Beekman, brought in forty-eight bills of indictment against him. Failing to get the required security, he lay two months in the House of Detention, after which his bail was reduced, and he was liberated from confinement. I found so many obstacles to getting him to trial that, finally, the Secretary caused a resolution of inquiry to be introduced in the Senate by Mr. Wilson, which settled the business. The case was peremptorily moved on, and that venerated jurist, Judge Samuel Nelson, turned a deaf ear to the excuses of counsel, and ordered the District Attorney to open for the prosecution. Out of the forty-eight indictments one had to be selected on the spur of the moment, [711] and the court would only permit us to introduce testimony about seven others, to show the scienter, or guilty knowledge. Accordingly, eight cases of palpable forgery were designated, the trial proceeded (May 17th, 1864), and, on the 21st, the jury, after deliberating only twenty minutes, brought in a verdict of guilty. The court promptly sentenced him to ten years imprisonment, at hard labor, at Sing Sing, and the rich Kohnstamm made his exit from the busy scene of his tradings and his triumphs.

So unexpected, but so welcome, was this result to the Secretary of War that, upon receiving the news, he telegraphed back a characteristic message, which, as I recall it, was as follows:

War Department, May 21st, 1864.
Colonel H. S. Olcott, New York:
I heartily congratulate you upon the result of to-day's trial. It is as important to the government as the winning of a battle.

Edwin M. Stanton, Secretary of War.

Since I have anticipated events somewhat, to give a connected history of the Kohnstamm case, it may as well be said here that the civil suit was duly prosecuted to a successful issue, and a large sum of money paid over to the Treasury by the trustees of the felon's estate. As a farce after the tragedy, naturally followed his pardon by President Johnson, after two years imprisonment, upon the petition of the usual string of wealthy and influential New Yorkers, who so often give their signatures to papers of this kind without proper consideration.

In December, 1862, being in Washington, the Assistant Secretary of War handed me, for examination, a claim for above three thousand dollars, which had been collected by one D'Utassy, colonel of the Garibaldi Guard, a New York volunteer regiment, upon his affidavit that it was correct. I found it to be a total fraud, the very signatures upon the sub-vouchers being forged. The delinquent was court-martialed, convicted, and sentenced to the penitentiary. The inquiry into this and the Kohnstamm cases developed such an astonishing condition of moral obliquity among contractors and regimental officers that the Secretary of War took prompt measures to bring the guilty to punishment. Several commissioned officers were dismissed the service, and a number, among them two officers of the regular army, were handed over to the civil authorities for prosecution. The Adjutant General also availed of my help, sending me claims filed for payment, that I might report my opinion of their validity; and various practical suggestions from me, for the [712] reformation of abuses in local bureau management, were favorably received and acted upon. By the time that six months had elapsed, I had examined some two hundred witnesses, taken two thousand folios of testimony, and all idea of my being relieved from this unwelcome, though necessary, duty had been abandoned. The department threw upon me more and more responsibility, but, it must be confessed, accompanying it with a more than ample discretionary authority, thus affording me the highest proofs of the Secretary's satisfaction, and stimulating me to deserve its continuance. At the date of my second semi-annual report to the War Department, I had, in the preceding six months, made inspections in ten States; taken testimony in twenty-four cities and towns, beside camps and military posts; examined, with assistance, eight hundred and seventeen witnesses, written five hundred and fifty-three letters, and traveled over nineteen thousand miles.

With a department behind him whose chiefs approved his course, it was no very difficult affair for a non-partisan officer to effect reforms by the display of impartial severity. Old standards had been departed from; they had to be re-established. The old statutes of peace times were inadequate to meet new exigencies; new ones had to be enacted. Politicians had saddled their dishonest parasites upon the country; it was for us to convict these of their crimes, and warn their patrons to nominate no more such. And so it happened that, throughout the entire term of my Commissionership of the War Department, every reasonable suggestion that experience, in my particular department, warranted my making in the direction of reform, was unhesitatingly adopted by Mr. Stanton, and the successive Assistant Secretaries with whom I had the honor and pleasure to be brought into relation-Messrs. P. H. Watson, C. A. Dana, and Thomas T. Eckert. These suggestions covered the passage of laws by Congress, the reformation of standards for army-supply contracts, the suspension of contractors' vouchers and certificates, new regulations for the procurement of supplies, new methods of inspection, transportation, and chartering, the transfer and removal of influential officers, and other particulars which it is not necessary to specify.

At the East and North the army frauds were principally in manufactured articles; at the West and Southwest in animals, forage and transportation. I had comparatively little to do with the Ordnance Bureau, and will, therefore, leave the curious reader to glean from the papers of the day, and the records of Congress, a comprehensive idea of the swindling, greater or less, that the necessities of [713] our government obliged it to submit to. But of the Quartermaster's Department I am as competent, perhaps, as any one else to speak. On the 5th of August, 1863, I received an order to inspect the Quartermaster and Commissary Departments of the Military Department of the Ohio, which included the States of Ohio, Indiana, and Kentucky. Major General Burnside was in command, with headquarters at Cincinnati. Upon reporting there my first care was to cause to be prepared by the chief quartermaster a complete list of all contracts awarded within a certain period, with the names of the bidders at each letting. With this as a guide it was a simple matter to learn what fraud had been practiced, for I had only to direct my orderlies to serve a summons upon each disappointed bidder to report at headquarters and testify, when the whole chicanery was invariably exposed. The regular dealers and responsible merchants were always to be found among this class, and, when satisfied the War Department was really in earnest, and would throw the market open to fair competition, they would tell the honest truth. Thus I discovered within forty-eight hours that by a corrupt conspiracy between a government purchasing agent, an inspector, a Cincinnati contractor, and an Indianapolis horse dealer, and Republican politician, the United States had been systematically robbed of one million dollars in the purchase of horses and mules, at the Cincinnati corral, during the preceding year. My duties were greatly lightened by the prompt and efficient co-operation of the Department Adjutant General, and Judge Advocate-Captain W. P. Anderson, and Major Henry L. Burnett.

At Louisville frauds alike shameful had been perpetrated in the purchase of animals, while one Black — a captain and assistant quartermaster, who boasted much of his influence with Secretary Stanton, and whom I especially gratified that official by bringing before a court-martial-had not only connived at the fraudulent adulteration of grain by his contractors, but absolutely stood by to see it done, and handled a shovel himself. This unconscionable rascal in uniform was convicted of the crime, and sentenced to “be dismissed the service of the United States, with loss of all pay and allowances due or to become due; to pay a fine of ten thousand dollars; and to be imprisoned at such place as the commanding general shall designate for the period of two years.”

The delinquent horse, mule, hay, grain, and other contractors in the Department of the Ohio were thoroughly punished by fines and imprisonment, and thenceforward the government was enabled to obtain supplies at fair prices, and of good quality. This result, it [714] should be noticed, was, in a peculiar degree, owing to the ability, zeal, and industry of Judge Advocate Burnett, whose services were appropriately recognized by the Secretary, by promoting him successively to colonel and brigadier general.

Many will recollect the great interest that was felt, in the year 1863, in the matter of the chartering of steam and other vessels at Fortress Monroe, in consequence of the discovery that a certain very influential Republican Senator of the United States had accepted a fee of three thousand dollars from the harbor master of that military post, while lying under charges in the Old Capitol Prison. There had been some very acrimonious passages between the Senator and Secretary Stanton, the former peremptorily demanding the prisoner's unconditional release (without mentioning the fact of the fee), the latter refusing. As a compromise it was finally agreed that I should be ordered to Fortress Monroe to prepare the case for speedy trial, and the necessary instructions were sent me from the department. I found plenty of fraud, but more to lay at the doors of others who had chartered vessels at the North, than at that of the prisoner. Enough, however, of probable cause was connected with him to induce his being tried before a military commission, over which Brigadier General Isaac I. Wister, of Philadelphia, presided, and his conviction followed.

In my “Third semi-annual report to the War Department,” in reporting this case, I used this language:

Evidence was elicited tending to show that the abuses of which the commission complained extend over the whole seaboard. The government has been in the habit of paying ruinous prices for the charter of vessels, some of which have been perfectly unseaworthy. The precious lives of officers and men, and public property to the value of millions of dollars, have been intrusted to rotten steamboat hulks, and greedy speculators and middlemen have been paid for their use prices of the most extortionate nature.

I have referred above to the loyal support constantly given me by Secretary Stanton. One instance will suffice by way of example. The Provost Marshal on Major General Schenck's staff, at Baltimore, had been guilty of scandalous conduct, which was at last brought to the Secretary's notice by a brigadier general of volunteers, who preferred formal charges. Through the Judge Advocate General I received the Secretary's order to investigate the charges and recommend what action should be taken. The result was the officer's arrest, confinement in the Old Capitol, his subsequent trial by court-martial, conviction of theft and perjury, and his sentence to the Albany Penitentiary, where he served out his term, if my memory [715] is not at fault. The commanding influence of General Schenck in Congress, and the persistent interference of the Congressional delegation from the culprit's native State, gave Mr. Stanton much trouble. he was beset with petitions, remonstrances and personal appeals, but to no purpose. At last the Governor of the State came himself to Washington, and, in company with its Senators and Representatives, proceeded to the War Department and vainly coaxed the iron-willed chief to relent. “When you can show me that Colonel Olcott has furnished me with false testimony, or exceeded the limits of justice in his recommendations, then I will release your man and put mine in his place,” was his reply. Thus baffled, one testy Congressman lost his temper and used a more peremptory tone, whereupon Mr. Stanton, rising and giving way to his wrath, threatened to put the member in the Old Capitol if he said another word, and the stormy interview was abruptly terminated. I have the story from the lips of the Assistant Secretary of War, who was present.

In the case of a contractor for transporting wounded soldiers through the city of New York, it was found that the government had been defrauded in both transportation and the cooked rations supplied, but on each of a pile of uncollected vouchers found in his desk when he was arrested by the general commanding, was the official certificate of the medical director that “this account is correct and just, and that the services were rendered by my order, and that they were necessary for the public service.” Comparison of them with the medical director's own books showed at a glance the fraud. For instance, on May 30th, 1863, a charge was made by the contractor “for nursing and subsisting three hundred and fifty men from the steamer Cosmopolitan and delivering them at David's Island.” But the hospital books in the office of the medical director, who certified to the correctness of the account, showed that on that day only ninety-seven men arrived at the island! The scamp was found guilty before a court-martial, after several hundred witnesses had been examined, and was sent to the penitentiary for a term of ten years. A radical reform in this branch of service was, of course, the most substantial fruit of.the department's investigation.

The responsible officers of the War Department were all overworked. From the Secretary down there was no exception. Each crowded at least three years proper work into one year, and some of us four or five. It was all I could do, though working night and day, Sundays and all, and with one, two, and at times three and four stenographers to help me, to keep ahead of my work. Again and again I urged the organization of a special bureau to have charge of [716] the execution of the acts of Congress against fraud and malfeasance, and in a measure combine the duties and powers of the Judge Advocate and Inspector General. For this was what my own office had grown into, and there was more work than a dozen officers could thoroughly accomplish. “It is a curious anomaly,” I said, in one of my reports to the department, “that a government disbursing one billion of dollars annually, has no organized system for the prevention and punishment of frauds, its effects in this direction having been entirely spasmodic and irregular. I am firmly convinced that a bill containing provisions calculated to remedy this evil would meet with the cordial support of the whole people, without regard to political party.” What was true in 1864 is equally so in 1878, and to-day the creation of a respectable and responsible inspection bureau, clothed with large discretionary powers, would, in the hands of an honorable and courageous commissioned officer, do incalculable good.

While Philadelphia set a bright example of patriotic devotion during the war, and poured out her resources in unstinted measure for her country's salvation, yet it is true that vast frauds were perpetrated in that city. These extended to tents and other canvas goods, clothing, shoes, and stores of various kinds. In the two years preceding my inspection of the Schuylkill Arsenal the disbursements of the quartermaster had exceeded two hundred million dollars, and at that time were running on at the rate of from seventy million dollars to eighty million dollars annually. To inquire into so vast a business I was obliged to take it up by divisions; so, as nearly as practicable, I took testimony and inspected, seriatim, canvas goods (including tents, paulins, wagon-covers, knapsacks, and haversacks), leather and manufactures of leather, cloth, and clothing, and miscellaneous articles. The same old results ensued; inspectors, contractors, manufacturers, and middlemen, were arrested, commissioned officers displaced; trials were followed by convictions, fines, and assessed damages; new inspectors were appointed, new standards established, and abuses were reformed. The close of the war found me with this work only half completed, and so some great culprits, military and civilian, escaped the just punishment of their offenses, to figure as noisy politicians and be looked up to as successful men of affairs The archives of the War Department have many an ugly secret smothered in its pigeon-holes, and, heaven knows! it will not be myself who will disturb them; there is stench enough in the air without this carrion. [717]

I was unfortunate enough (or fortunate, as some might have it, though I did not see it in that light) to have so commended myself to the Secretary of the Navy by my work for the War Department that, February 6th, 1864, he applied to Secretary Stanton for my detail to him for temporary service. Receiving my orders, I reported to Mr. Welles a few days later; and, on the 16th, was officially commissioned as “Special Commissioner of the Navy Department.” Mr. Welles had some suspicion that there were abuses in his navy yards needing correction, but no very definite information. A contractor, named Henry D. Stover, had been convicted by courtmartial of an attempt to defraud the government in some trifling matter of sheet copper,.and I was ordered to visit and confer with him in Fort Lafayette. I found him uncommunicative and evasive, and soon departed. Upon reflection, I concluded that the better course was to take the sworn testimony of our most responsible business men, who would assuredly lay bare existing abuses, if any existed. I first summoned Mr. William E. Dodge, Jr., and then, upon his recommendation, other dealers in metals. As Mr. Dodge's affidavit presents, in a condensed form, the facts about the system of navy contracts that flourished everywhere, it will be instructive to present extracts in this connection:

Our facilities, says he, for supplying metals to the government are almost unlimited. We have not, in one instance which I can now recall, furnished or sold anything to the Navy Department; but, according to the usages of the trade, have sold through brokers to a comparatively limited extent. We have not been able to transact business with the department without sacrificing self-respect! We have made several attempts to trade with the department in a fair, liberal spirit, without caring to realize any profit, except barely enough to cover expenses. We have never bid, except in reply to telegrams received from the Navy Department direct, and have been invariably underbid by parties without standing or respectability among merchants. In fact, so satisfied were we that our offers, however liberal they might be, would not result in business, that we finally were obliged to decline to enter the list against the set of disreputable characters, who seemed to have secured the favor of the department! It is a matter of personal knowledge with us that the leading houses of New York entertain the same views. It is also generally understood that some of our best houses, dealing in metals which have a fixed value like gold or silver, and which are liable to all the fluctuations incident to the times, have been obliged to wait three or four, five, or even six months for their money; while other houses, of no standing or reputation, have got their money for immense sales within two or three days!

With such a start, the sequel was not difficult to foresee. Before two days had passed the whole villainy was exposed. Within ten days General Dix, under orders of the Secretary of War, acting at the instance of Secretary Welles, had arrested every member of [718] this infamous ring of contractors and middlemen, and turned over their books and papers to me for examination. I employed additional clerks, had ledgers, invoice, letter, requisition, check and deposit books analyzed, and one of the great sensations of the day was the reading to the United States Senate by Mr. Grimes, of Iowa, of — a tabulated exhibit of Stover's profits on oil contracts during one year. Without having bought a gallon of “best winter strained sperm oil,” such as his contracts called for (and despite his taking the same at one dollar per gallon, when the market price stood at two dollars), he had realized a profit of one hundred and seventeen thousand dollars on the year's transactions! What he had supplied to the Brooklyn yard was horse fat, menhaden, and other stinking fish oils, etc. The inspectors who passed it, and the engineers who used it, can best explain why it happened.

Regular dealers, as Mr. Dodge tells us, in oil, in sheet copper, in block and plate tin, spelter, timber, machinery, boiler felting, clothing, and every description of naval supplies, were crowded out of competition by these dishonest middlemen, and a general demoralization of public officials prevailed. My experience in the War Department made me wary about beginning a campaign against such a rich and formidable ring of contractors as I immediately discovered to exist, without full assurance of the support of the department. This came in the shape of the following letter:

Navy Department, Washington, February 18th, 1864.
Sir:--Your letter of the 17th instant is received. Unless otherwise directed, from information which you shall obtain, you can pursue the course deemed most advisable from your experience. The department has no political object in these inquiries. The Secretary has directed me to carry forward this matter in conjunction with yourself, and I have never been in political life. You may rest assured, and such information may be given to witnesses, that the guilty will be exposed and punished without regard to influence or position.

Very respectfully, your obedient servant,

[Signed] G. V. Fox, Assistant Secretary of the Navy. To Colonel H. S. Olcott, Special Commissioner, Navy Department.

No one could ask more. In fact, no subordinate ever had a more honorable, untiring, prompt or patriotic superior than I found, for the next year and a half, in Assistant Secretary Fox. An attempt was made at one time to make political capital out of an alleged expression of his in a letter to me, that a certain naval court-martial “was organized to convict.” The only thing Mr. Fox ever said (in response to my particular request that the court to try these New [719] York cases should be composed of none but high-toned and fearless officers, without any political bias or aspiration) was, that I need not fear but that the guilty would be convicted, and punished if proven guilty. His official letter of February 18th, now first published, shows the whole attitude of the Navy Department toward this question of abuses and toward myself.

Senator Hale, of New Hampshire, from his place in the Senate openly charged Mr. Fox with having instructed me to inquire into his business relations, and of having made use of the expression above referred to; but in a document communicated to the Senate by Secretary Welles, in compliance with a resolution, Mr. Fox thus emphatically put his foot upon the falsehood. Addressing the Secretary of the Navy, he says:

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 [720] in his shop; the inspectors would see sperm oil in horse fat, two whole boxes of tin plates in the two halves of one box that had been sawed in two and fitted with an extra side each, pure “Banca” or “Lamb and flag” tin in ingots of an equal mixture of tin and lead; and the benevolent navy agent, on a “divy” of fifteen per cent., would order of his pal the other ninety per cent. at open market prices, and throw in all additional orders that fortune might put it in his way to give out! And this was what I found in New York. The contractors were all convicted; arrests and removals were plentiful in the Brooklyn yard; Navy Agent Henderson was, December, 1864, indicted eight times by the grand jury, gave bail in thirty-two thousand dollars, was tried and escaped because the government could not prove whether it was H. . Stover or his book-keeper who had paid him (Henderson) the fifteen per cent. commission in the transaction, which was the subject of the indictment we had elected to try. We proved the general agreement, the payments in gross of fifteen per cent. on all Stovers' open purchase orders, the deposit of the money in Henderson's bank, and its deduction each time from Stover's. But the Secretary had confidingly accepted Stover as State's witness, and was cheated when the pinch came! The other seven indictments were not tried. One experiment with such witnesses was enough.

Things were bad enough at New York, but, if anything, worse at Philadelphia. Discovery was brought about by an honest dealer, named Barstow, sending to the Navy Department, for examination, four cases of thirty-two ounce sheathing copper, that he had bought, in good faith, of a responsible firm, but which was of the kind rolled at the Washington Navy Yard. The copper was easily traced back to one Harris, keeper of a sailors' boarding-house, and a man of bad repute at the time. He was arrested by General Cadwallader, for account of the Secretary of the Navy, and lodged in Fort Mifflin. A political striker named Anthony Hale-“Tony” Hale-employed as a boss carter in the yard, was next arrested, and then one thing brought on another until, before I was through, thirty-one prisoners were in military custody. The arrests were effected by Mr. Benjamin Franklin, chief of detective police, whose services the Mayor placed at my disposal. A more untiring and faithful officer I never encountered than Mr. Franklin. Besides the man Harris, the prisoners were the Naval Constructor, first assistant engineer, timber inspector, master plumber, caulker, joiner, blacksmith, laborer and painter, the clerk of the yard, his chief clerk and check clerk, three clerks of the storekeeper, the master caulker's clerk, a quarterman [721] laborer, a quarterman joiner, two quartermen plumbers, four receivers of stolen property, six contractors, and one purser's steward. A pretty lot of patriots and Republicans, indeed!

A few days of confinement in military prison brought on a contagion of repentance, confession and supplication. My time was taken up in hearing revelations of their rascalities from the cowardly culprits, whose friends, ignorant of what was going on, were besieging my offices with petitions for their release, and making my feelings cheerful with threats of personal violence conveyed by anonymous letters. The press overran with sensational articles, which I was too busy to read, and Congressmen became interested to a degree in the affairs of my commission. But it is only fair to say that not one newspaper thundered against the “arbitrary arrests” of the government; all united in expressing the hope that offenders might be brought to punishment. Nor did the Congressmen intercede or throw any impediments in my way.

Large recoveries of stolen copper, pitch, rosin, and other public property were made. Some fifteen hundred barrels of naval stores had been carted out of the yard by Hale in broad daylight, and, to say nothing of copper bath-tubs, brass filings, and other smaller things, the thieves had removed a steam engine bodily, and sold it to a junk dealer. Some sixty thousand and odd dollars in money and property were placed in my hands as restitutions, and by me turned over to the commandant of the yard. As usual, there were trials, convictions, and pardons, and the several cases presented features of comedy, tragedy, or farce, as it happened. There lies before me now, in a file of old documents, the certified memorandum of property given up by a poor young clerk who had been ruined by the richest of the New York gang of contractors-one Charles W. Scofield. This young man had a wife lying dangerously ill; she needed delicacies which his poverty denied her, when the contractor came, as the victim said to me, “like an angel out of heaven,” and presented him with fifty dollars as an act of “pure friendship.” No favors were asked at the time except that he would look after the contractor's goods, and see that they were duly inspected. But soon afterward something was asked — that short deliveries of goods might not be noticed, nor too close an inspection of them made. In return for which service (which he was assured was rendered at every other yard) the clerk should receive half the contractor's profits on the overcharges. The sick wife's needs settled the matter, and the clerk turned up at last in prison. His contrition being sincere, the Secretary permitted him to make restitution, and be released from [722] confinement. He gave into my keeping nearly four thousand dollars in United States bonds, and was released on his parole. I found employment for him, and, at last accounts, he was living an honest life. Scofield was tried by court-martial, convicted, and sentenced to be imprisoned and pay a fine of twenty thousand dollars.

There were abuses in the Kittery, Boston, and Portsmouth yards also; but I need not go into particulars, since it would but be to repeat the same disgusting tale of treason, perjury, conspiracy, theft, and greed. The Secretary, no less than Mr. Fox and myself, was weary of these arrests; and, atter taking some months to turn it over in his mind, Mr. Welles at last approved a plan I presented him, at the instance of Mr. J. P. Veeder, my chief assistant in the naval investigations, for the thorough reorganization of the affairs of the navy yards. My argument was that a system of book-keeping that was adequate to the wants of a vast commercial business like that of the house of A. T. Stewart & Co., or H. B. Claflin & Co., was good enough for a navy yard, where each ship was a customer, each master workman the head clerk of a department, the paymasters cashiers, the Navy Department principal creditor, and the Secretary of the Treasury book-keeper-in-chief. I proposed that we should begin with the taking of an account of stock, create the new office of chief accountant, open invoice-books like those of merchants, and not only devise a self-maintaining system of checks of one bureau upon another, and both upon the navy agent, but have a page for each transaction, where its complete history, from beginning to end, should be seen at a glance. Such unheard — of innovations upon naval routine could not, of course, be lightly approved; but at last the order came, and I was given the Boston yard to try the experiment in. I hired a competent book-keeper, had a suitable set of books made under Mr. Veeder's directions, overrode all opposition of officers and clerks, and, at the expiration of the first quarter, handed the Secretary the first trustworthy balance-sheet of a navy yard that had ever been seen. The credit for it is all due to my assistants.

The result was so satisfactory that the department ordered the new system applied to all the yards on the Atlantic seaboard, which was done-Philadelphia following next after Boston, and then New York and the others. Thus the primary object of all our labors was, apparently, effected in the bringing about of a reformation, of which individual arrests were but painful incidents. I was more than glad when, the war having closed, my resignation of the special commissionership of the Navy Department was finally accepted, after a [723] delay of some months in considering the question. I was permitted to suggest the new office of Inspector of the Navy Department, and Mr. Veeder was appointed to the berth. But that amiable and non-combative old gentleman was soon forced, by the powerful influences arrayed against him, to retire, and since that time, as I learn, the old routine has, in a large degree, been re-established. Contractors and employes whom I convicted have been restored to favor, and a series of. scandals is now being investigated by the present Congress.

My temporary detail to the Navy Department had not at all relieved me of my War Department duties. Quite the contrary; it seemed as though the more I had to do in the former field of labor the greater were the calls upon me in the latter. A subcommittee of the Committee on the Conduct of the War, visiting my New York offices one day, found the desks, chairs, and floor covered with the business papers of the navy ring, a dozen clerks assorting and analyzing them, and I taking depositions about army frauds in an adjoining room. They had come there to investigate my doings, at the instance of complaining contractors; but a half hour's observation amply sufficed, and they returned to Washington, and reported that if I asked for the whole power of Congress I ought to have it, for at least two departments of the government were rotten with fraud.

My narrative, as may readily be conceived from what has been given above, might be indefinitely extended. But I have not the heart to expatiate longer upon this chapter of national infamy. It is my deliberate conviction, based upon the inspection of many bureaus, and the examination of some thousands of witnesses, in every walk of life, that at least twenty, if not twenty-five, per cent. of the entire expenditures of the government during the Rebellion, were tainted with fraud. That is to say, that over seven hundred million dollars were paid to public robbers, or.worse than wasted, through improvident methods. If the loss of the money were the only thing to be deplored, it would be, comparatively, a trifling affair; for this country has boundless resources, and unprecedented recuperative capacities. But every dollar of this ill-spent treasure contributed toward a demoralization of the people, and the sapping of ancient virtues. Let any one who surveys the present condition of public morals dare deny that we have made long strides toward the overthrow of the Republic since 1861.

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