The weekly pioneer and Democrat. [volume] (Saint Paul, Minn. Territory) 1855-1865, 1861-01-04
The Defalcati0n i'm the Interior De.
partment--Nearly q million OF Doll
lars Missing.

The Defalcation in the Interior De-
partment--Nearly q million Of Doll
lars Missing.
In the House of Representatives, on the
Oath, the Speaker laid before the House
communication from Secretary THOMPSON
of the Interior Department, stating that on
Saturday last, the 22d, he was informed by
voluntary confession Of an officer of the
department that State bonds held in trust
by the United States for the benefit of In.
dians, amounting to $4,000, have been
distracted from his custody, and converted
to private uses. The Secretary says the
enormity of the fraud demands full investi-
cation by Congress-, in order to vindicate
bis own honor, and expose the guilty and
derelict. He therefore appeals to the House
for the appointment of committee, with
full power to send for persons and papers,
and asks for investigation with the view
that full justice may be done in the prem
ises. The House promptly acceded to the
request Of the Secretary, and Committee
consisting of Messrs. MORRIS of Illinois,
CoNKL1Na of New York; BoCooK of Vir-
ginia, HARRIS of Maryland, and CASE of
Indiana, was appointed. Mr.. BococK was
subsequently excused from serving on the
Committee.
The defaulting official, GODDARD BAILEY,
is relative of Secretary FLOYD. He was
disbursing clerk of the Interior Department
and had charge of the Indian trust fund.
This fund, which is invested in State and
United States stocks, is held in trust for the
benefit of the Indians. 1t amounts, accord
ing to the last report, to $3,396,24l 80,
yielding net annual revenue of $l99,352
go. Mr.. BAILEY visited Minnesota last
summer, and acted with Major CULLEN as
Commissioner to negotiate treaty with the
Red Lake and Chippewa Indians. The
Herald's Washington correspondent gives
the following particulars as to the defalca-
ton:
1t appears from the facts in connection with
the late distractions of the bonds of the Indian
| trust fund, that about five months ago VIM. E.
Russell, of the firm of Majors, Russell & Wad.
dell, held about one million dollars of the Off
cial acceptances of the Secretary of War. These
acceptances had been given conditionally. in
accordance with the usual business, for trans
portation of supplies for the army under con-
tract with the Government.
| Mr. nof inoc Fob RI
tiote the acceptances, and being greatly en-
barrassed pecuniarily, and ascertaining from
GODDARD Bailey, with whom he was intimately
acquainted, that the latter had control of over
three millions of Indian Trust Funds invested in
bonds of different States, arranged with him to
let him have about half million of these bonds
to be hypothetical in New York, and as surety
for which he gave Bailey the aGceptances of
the War Department, which Bailey placed in
the safe where the bonds were kept.
Recently these bonds have greatly depreciat-
ed, and the bankers in New York who made
advances on them therefore called for add.
tional security, Baily, in order to save the
bonds, delivered over 100000 worth of them,
additional, in all $50 900. On the 18th inst he
addressed letter to Secretary of the Interior,
frankly imparting these facts, requesting an in
vestgation. This letter he gave to Senator
to be delivered to the Secretary on his return
from North Carolina, which request was COM
piled with.
The investigation yesterday proved the truth
of these statements. Sutterlee & Co. compose
the banking firm through which the negotia-
| tions were transacted. Nothing either in the
| papers nor on the Investigation, shows that
any of the parties, except those Immediately
| connected in this business, as above related,
are in the slightest manner concerned in the
transaction. 1t may be said the acceptances
of the Secretary of War have been given from
time to time, in compliance with contract
with Russell, Majors q Co., and usually that
| firm has had no difficulty in negotiating them.
To-day Baily was arrested, at the instance of
the government, and required to give bail in
the sum of $50 900 for his appearance at the
next term of the Criminal Court.
their acceptances more than cover the amount
of bonds distracted.
WIN. II. RUSSELL, referred to above, as a
party to the transaction, was arrested in
New York on the Oath, by Marshal RYN.
DERs, and Immediately forwarded to Wash
ington.
The Herald of the Oath, says another
loss has been discovered in the Interior De-
partment; $4,000 in cash is reported to
be missing. Secretary THOMPSON promises
to restore this loss from his private for
tune.
The SOUTH CAROLINA M. C's.-On the