Evening star. [volume] (Washington, D.C.) 1854-1972, 1861-02-13
The Great Robbery of the Indian Trust
fnnd-R-Psrt Of the Special House Com

resolution Of the House. adopted on the eth day
OF December last, directing them to inquire into
and report the facts In relation TO the fraudulent
abstraction Of certain bonds held by the Govern
ment In trust for the Indian tribes, from the De-
partment of the Interior, and to whom were also
referred the communication Of the Hon. John b.
Floyd late Secretary Of waf and the letter Of the
Hon. Robert McCielland, former Secretary Of the
Interior, have made their report.
The committee, after setting forth that they pro-
ceeded with their duties with as much expedition
as posi- ble state that IL soon became evident that
the mere abstraction Of certain bonds from the
Interior Departmental fact easily sscsrtained,
ana indeed admitted by the person who took
them-was an incident of minor impor lance Ia
comparison with the transactions preceding and
connected with that act, and the committee there
fore consider IL incumbent upon them 10 trace rs
accurately and thoroughly as possible. through
the tortuous windlngs Of vast and complicated
Interests and extensive Though concealed ramiH.
cations, the motives and purposes and deeds Of
those who have been the parties to daring and
unprecedented fraud upon one Of the depsrtnlen ts
OF the Government
The committee state the nature OF the bends:
they were purchased from time TO time by au-
thority Of law with the money of the Indians
arising from treaty stipulatlons Originally they
Were in charge Of the Indian bureau, while that
bureau was connected with the Department Of
War, and remained In It's custody after II became
one Of the bureaus OF the interior Department in
1919, and from that time mp to 1857. In that yeaf
the custody OF the securities transferred to the
secretary OF the Interior. The government hav-
the Indians, who were the actual owners Of them;
and presuming that its agents have exercised or
binary diligence and care as their custodians the
question arises as to the extent Of It's liability for
their loss The question, however, the commit
tee do not dem II necessary to pursue The re-
port states the manner in which the bonds were
kept and severely their insecure arrange
ment Fortunately for the government, however,
no loss was sustained during previous administta.
tons; nor Is there the slightest ground to believe
that the Hon. Robert McClelland, ofMichigan,
o. A.
sion Of the trust while It remained In the Indian
office has been called in question, and whose
letter was referred to your committee, acted at
any time or In any way unfaithful to IL.
The committee deem IL but Justice to add that
they have discovered nothing to involve the late
Secretary, the Hon. Jacob Thompson, In the
degree in the fraud and nothing to indi-
cate that he had any completely In the abstraction
or that he had any knowledge Of IL until the time
of the disclosure by GODDARD Bailey. They think,
however, that be should have exercised a more
watchful guardianship over the stocks and the
movements Of bis subordinates.
The whole amount Of the distracted bonds is
stated to be S72, OF 81 goo each, in all Ss.2 OOO
The negotiations between Bailey and VIM H.
Russell are stated. VIM. H. Russell is the head
OF the house Of Russell, Majors w addell, firm
widely known as contractors with the War De-
partment for transporting army provisions over
the western and southwestern plains Last sum-
mer Russell became embarrassed, and communi-
Gated the fact TO Mr.. Luke Lea, on his way to
Washington, a former Commissioner of Indian
Affairs, and partner Of RUssell's in a banking
concern in Kansas. Russell, it seems, stated that
he had heard Of a Mr.. Bailor or Barley, who was
a relation Of Gov. Floyd's, and asked Lea II he
knew him. Lea said he knew a Mr. Bailey and
Russell supposed that was the man. The report
Gays that Lea was both artful and unwilling
witness. II turned out that a. Russell's impor.
tunity, Lea saw Bailey and told him that unless
Russell WIS relieved Gov. Flovd's acceptances
would be protested and he would be compelled
10 retire from the Cabinet Mr.. Lea does not state
that he suggested to Mr.. Bailey to rifle the Indian
trust SAFE bat he subsequently, knew that the opt.
ration was going on and endeavored to dissuade
them from IL. He obtained the most solemn
pledges from both Russell and Bailey that his
name should never be publicly known In connec-
ton with the business
Mr. Lea did not Introduce Russell to Bailey, but
meeting took place at the War Department
about the 18th Of July. The parties were intro
duced to each other by Col w. r Drinkard
chief clerk of the War Department, and Secretary
Floyd's most intimate friend. Col ID as shown
by his own evidence, impressed Bailey with
tie belief that Russell was gentleman Of great
respectability and pecuniary resources, and that
If the acceptances were allowed TO go to protest
he (the Secretary would be greatly agoniLed and
disturbed. Russell and Bailey held p ivate in
terview In the thrd-story Of the Department and
within few hours thereafter Bailey delivered 10
Russell one hundred and fifty thousand dollars Of
bonds at the room Of the latter person in W ashing
ton city, and On the same morning the recipient
returned with them 10 New York. Subsequent
In September, 3S7 bonds, I'm addition to toe hrst
were transferred TO Russell, the note of Russell
Majors Waddell being left security, as In the
first case. In December, Russell again Appeared
In Washington and received 1893 bonds additional
The arrangement was that the first bonds were TO
returned within ninety days, but when the second
inst'llrnen, was taken the time extended to
the 4th of March, 1861.
Why Bailey distracted the bonds is 4 question
the committee cannot satisfactorily answer Rus
sel and Bailey both deny that the latter received
any valuable ccnsids ration for what be did His
bank account rose 10 some SO go between July
An Il1nn nhar ~ Lob 10.
ahnum, 10 the only peculiar fact in this connec-
ton. IL appears that the transaction was EXPRESS
| ly to protect Secretary Floyd from Disgrace
The account OF the confession Of Bailey, as
made through Mr.. Wagner 20 Secretary Thomp-
son, Is already known TO the public The imme-
| diate exposure Of the fraud is ascribed TO the
refusal of Auditor Fuller who refused to approve
BaiIeY's stock account, for the reason that tie
coupon account did not accompany IT,
From the testimony there procured, il was ap-
parent that the bonds had been disposed Of by
Mr. Russell and his agent, and that Mr. Russell
did not have 1t In his power 10 restore any of
them 4 limited number Of them were traced
into the possession Of certain individuals and
corporations
Russell appeared before the committee. but
being advised that be was under a crirn nal pros.
ecution, and might answer or not, as he chose be
expressed a wish 10 make a statement i'm writing
This he was permitted to do; but the committee
refer 10 bis letter as mere evasve and technical
| statement.
The principal part Of the report refers 10 the
ceedng Is of Secretary Floyd in the matter of ac.
cePtsnces issued by him. On this subject the
committee say:
When the Ubiquitous act perpetratcd by one Of
the subordinate officers Of the Interior Department
In the abstraction of bonds was made known, II
was discovered, at the same time that acceptances
unauthorized by law, and deceptive and fraudu-
lent In their character, had been issued by the
Secretary of War, in favor of Messrs. RUSSELL Ma
jors and Waddell. As a portion OF these are In
separately connected with the history of the bond
endorsement, ii IS proposed first 10 inquire into
the circumstances attending their issue
1t Is stated by Mr. Russell that on the day he
made his lastapplicaton for securities, Mir Bailey
agreed to furnish them the cond ton III at there
should be deposited with him, In their place. the
acceptances Of Gov. Floyd as Secretary of War
MIR. X usseli, 1t wonld appesr, had then on hand
seven hundred and thirty five thousand dollars of
acceptances, seventy-two thousand Of which were
unconditional, and the balance conditional and
payable out Of the earnings of X ussell Majors and
Waddell for 1861. The amount of the bonds he re-
ceived on that and previous occasions was eig bit
hundred and seventy thousand dollars There was
therefore wanting to make up the requisite sum
OF securities one hundred aud thirty Eve thousand
dollars, and we accordingly lind that there Ia an
acceptance bearing date December 18TH for that
precise amount. When it is remembered that
that is the date Of the last delivery of bonds and
Of the rece pit therefor, the inference seems una
voidable that the acceptance was issued to make
up an ascertained deficiency, and that IL was an