A GREAT SCANDAL OF THE TIME. The next step in this transaction was in Stevens’ telegraphing, on August 5, 1861, a notification to General Fremont, commanding at St. Louis, that he had five thousand new carbines, in perfect condition, and inquiring whether Fremont would take them. From Fremont’s headquarters came word to ship them to the army headquarters at St. Louis at once. During all of this time the carbines had remained at the arsenal in New York City. Upon receiving Fremont’s order, Morgan paid the Government the sum of $17,486—at the rate of $3.50 a carbine. The rifles were shipped direct from the arsenal to St. Louis. And what was the sum charged upon the Government for them ? The bill made out to Fremont called for the payment of $22 apiece for the consignment.15 This was one of the many army contracts popularly and officially regarded as scandalous in the highest degree ; one of the select Congressional Committees of 1862 lost no time in the investigating of it. After making a full inquiry this committee reported : Thus the proposal actually was to sell to the Government at $22 each 5,000 of its own arms, the intention being, if the offer was accepted, to obtain these arms from the Government at $3.50 each. . . . It is very evident that the very funds with which this purchase was effected were borrowed on the faith of the previous agreement to sell. The Government not only sold one day for $17,486 arms which it had agreed the day before to repurchase for $109,912—making a loss to the United States of $92,426—but virtually furnished the money to pay itself the $17,486 which it received. The committee further reported that the rifles were so bad that it was found that they would shoot off the thumbs of the very soldiers using them. But not only did the Government condemn the transaction as a bare-faced swindle ; Marcellus Hartley, himself a dealer in arms and a self-confessed swindler, had declared before the committee, “ I think the worst thing this Government has been swindled upon has been these confounded Hall’s carbines.”16 The Government refused to pay Morgan the $22 demanded for each of the five thousand carbines, whereupon Morgan pressed his claim. Thus it was that the case of J. Pierpont Morgan vs. The United States Government came into the public records. It figured as case No. 97.17 To adjudicate this claim, as well as many other similar claims, the Secretary of War appointed a Commission composed of J. Holt and Robert Dale Owen, son of the famous Robert Owen. Reporting on July 1, 1862, this commission stated that one hundred and four cases, involving demands upon the National Treasury to the extent of $50,000,000 had been referred to it, and that it had cut Out $17,000,000 of claims as extravagant and fraudulent.18 In passing upon Morgan’s claim it declared that General Fremont had no authority to contract for the rifles, but that it, the committee, recognized a legal obligation on the part of the Government arising from the fact that the arms passed into the service of the army. As the best way out of a bad bargain it decided to pay Morgan at the rate of $13.31 a carbine, and it pointed out that even at this price Morgan and Stevens stood to make $49,000 above the price at which the rifles had been sold to them by the United States.19 Under this ruling a total of $55,550 was paid to Morgan by the Government, which sum was accepted on account only. This settlement, however, was not satisfactory to the claimants ; the full pound of blood was demanded. Suit was brought in the Court of Claims at Washington for $58,000 more. This time the case was entitled Simon Stevens vs. The United States Government.20 In the statement of the case before the court the fact was emphasized that, according to the Government, the carbines had been inspected and pronounced unserviceable by the Government ordnance officer. In delivering his decision Judge Peck said : “ By an arrangement between Stevens and one J. Pierpont Morgan the voucher for the first two thousand and five hundred carbines delivered was to be made out in the name of Morgan, which was done ; the said voucher was signed by F.D. Cadwallader, Captain of Ordnance, United States Army, and was for the sum of $55,550. By further arrangement this voucher went into the hands of Messrs. Ketchum, Son and Company.” This voucher was paid on or about September 10, 1861. The other twenty-five hundred rifles, the court said, had also been received by Fremont.21 These are the facts as set forth in unimpassioned court records.
Posted on: Wed, 28 Aug 2013 21:18:34 +0000
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