The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1861-02-14
THE GREAT FRAUD.
Nepsrt Of the Special Committee Of the
Heute on the Fraudulent Abstraction of
the Bonds Of the Indian Trust Fund.- Over.
issue of S6,ooO.oo0 of Acceptances by Sec
retary Eloyd.

tssue OF S6,o0O.o 900 of AcceptanCes by Sec
rotary Floyd.
lhe report of the Select Committee of the
House of Representatives, of which Mr.. Nor
ris, OF H., is chairman, gives a detailed
count of the facts relative TO the abstraction
of the Indian Trust Bonds Thirty forty
witnesses were examined, including ex -Sccre-
taries Floyd and Thompson. The latter is
exonerated from any completely in the defal
cation, but he, well as the former Secre-
taries of the Interior, eensured for the in
sufficient manner in which the bonds have
been held in that Department, there being no
adequate responsibility attached to the custo-
dian. According TO Mr.. Russers own evil
dence he did not know at first where the
bonds OF which he obtained possession came
from. Mr Bailey was am agent for the nego-
tiation or sale of the bonds, and Mr. Lea was
an intermediate party between Russell and
Bailey. II was also ;,scer tanned that Secre-
tary Floyd gave acceptances 10 the amount
of nearly seven millions or from two 10 three
millions more than Messrs. RUSSELL Majors
| Il Co. ever earned, while these contractors
received all the money due them. The accept
| ances were given on the strength OF their con-
tract.
VIM H. Russell is the head of the house of
Russell, Majors 81 Waddell, n firm widely
known rs contractors with the War Depart
ment for transporting army provisions over
| the Western and South western plains Mr.
| Russell stated to the Committee that he had
heard in New York OF such a man as Mr. Bal
| ley, although lie did not exactly remember
| his name, who had been in that city to sell
| Chriqui securities and Florida bonds, the lat
! ter for Nr. ulee, 4 Senator from that State.
| When asked from whom he received his in
formation, he gave the answer usually resort
ed 10 in such cases, viz he should MOI remem-
Der. The next heard OF Mr.. Russell is that he
Is on his way from New York to Washington,
in company with Luke Lea, Esq. Il banker i'll
the latter city. Mr.. Lea was formerly Com
missioner of Indian Affairs, and is partner
of Mr.. Russell IN the banking business, at
Irayenworth, Kansas.
MI Lea is, however, careful to state in his
evidence that he gave no in tirnatlon to Mr.
Bailey that he might use the stocks he had in
his charge belonging TO the Indian Trust
Fund. Dir. g. q. Wagner, who Is nearly re-
lated to bIr. Bailey, and in whose hands was
first placed his confession, states, in his eyi-
dence. given your Committee are pleased 10
say with full and honorable frankness, that
he learned from Mr.. Bailey that Mr. Lea did
mention the stocks in the conversation be-
tween them. And, indeed, this would rat
urally be inferred, from the fact that Mr.
Lea was perfectly familiar with the busi-
ness OF the department, and knew that
Mr. Bailey had the stocks i'll charge, and
had no large command OF private means.
Mr.. Lea admits that after the delivery of the
first ins talment of bonds to Mr.. Russell, he
knew that Dir. Russell and Mr.. Bailey We're
engaged i'll rifiing the Indian Trust safe that
they SO confessed 10 him. that he had cOnyer-
sduons with them on the subject and that he
endeayored 10 dissuade them from fur ther
commission OF the crime. He also states that
he relrained from informing the Secretary of
the Interior of the transactions referred to-
and that he exacted the most solemn pledges
from his TWO friends that his name should
never be publicly known in connection will.
the business. But his precautions have not
ayailed 10 afford him tire exemption from
responsibility i'll connection with the transac-
tonS your Committee have Inquired into
Mr. Lea did not introduce Mr.. Bailey TO Mr..
Russell, nor does he state that lie appointed
for them q place OF meeting, yet 1T happened
that these two persons did meet at The Var
Department on the same day that the inter-
view between Mr.. Lea and Mr.. Bailey occur
red. Mr.. Russell says this was between the
18th and 18th days of last j uly. 1t was proba-
bly, on the 18th day of that month.
The Chief Clerk of the War department,
Secretary tloyd's most intimate friend, Col
w. X. Drnkard, was the medium through
whom the introduction took place. On that
day they had their first interview at the W ar
Department. Col. Drinkard, as shown by his
own evidence, impressed Mr.. Bailey with tho
belief that hir. Russell was a gentleman Of
great respcctability and pecuniary resources,
| and that If the acceptances of the Secretary OF
/ War We're allowed to go to protest, he (the
| Secretary would be greatly agoniZed and dis
/ turbed. Messrs. Russell and Bailey held
! private interview in the third story of the
! Department, and within few hours thereaf-
/ ter Mr.. Bailey delivered TO MI Russell one
hundred and fifty thousand dollars OF bonds
| at the room OF the latter person, in Washing
ton city, and on the same morning the recipient
returned with them TO New York. Mr. Rus.
| sell states that he lett with Mr.. Bailey one
/ note OF Russell, Majors X Waddell's in their
stead, security.
| Why Mr.. Bailey abStracted the bonds, is a
| questio to which your Comm tee can pre-
| sent no satisfactory answer. AS he and Mr.
| Russell were entire strangers previously to
| their meeting at the War Department. neither
| the obligations of friendship, nor the sugges-
| tions of kindly feeling, seem TO have prompted
! the act Rlr. Russell insists that no money,
| or other valuable con slderltion, ever passed
! 10 Mr.. Bailey, or indeed, was ever mentioned
| in their in teryiews. Mr.. Bailey confirms thu.
| statement in various communlca tionS which
| have reached your Committee. Ii is not as
| certained, either, that Mr. Bailey came sud
| denly into the possession of any large amounts
of money. His bank account was kept with
Messrs. Riggs Il Co, OF Washington city; and
| Mr.. Riggs testiiieS, that between July and tho
18th December his deposits increased largely
over former ones, but amounted, i'll the ag-
gregate, TO not more than five six thou
sand dollars. 1t is true, that this sum is
I large one to be i'll the possession of Il pers on
whose SALARY was but 81 900 per annum, and
who WAS supporting a family, yet it would
not, OF itself, constitute a ground for grave
suspicion, or afford clue 10 the discovery OF
the purposes of the distraction.
Mr.. Bailey in his conversations with va
rious WITNESSES, stated that his design was
to protect the charac ter of Governor Floyd,
and save him from the dishonor and retire
ment from the Cabinet that would be neces-
sarilv incident to the protest and discovery of
the acceptances which had been illegally
issued TO the firm of Russell, Majors l. Wad-
dell Whether this consideration was the sole
motive of his conduct, it is left to the House
10 determine Your Committee are, however,
constrained to express the conviction that be
hind the events that have been made conspicu-
pus and beneath the exterior of the transac
tions that have been described is Il purpose
which although successfully hidden, was
none the less powerful and efficient, and has
given unity aud vitality 10 the schemes now
partially exposed.
AUDITOR FULLER THE cAusE OF THE EXPOSURE OF
THE FRAUD.
Mr. Bailey in the exercise of forethought
prudent to avoid detection, made up his stock
account for the current year, showing on its
face that all the bonds were safely in his Gus
tody, and had caused its presentation to the
Second Auditor, Mr. Fuller. That officer re-
fused 10 approve it for the reason that the
coupon account designed TO be 4 check upon
l., did not accompany it. 1t is, perhaps, TO
this refusal that may in part be attribu ted the
early disclosure Of the fraud
IL VIII be observed that, while Mr.. Bailey's
statement is dated December Ist 1860 and
embraces the entire number of bonds and
fixes the month of July as the time at which
hc entrus ted them to other parties the testi-
mony OF Mr. Russell shows that they were
not all delivered at one time, but that three
hundred and thirty three We're transferred to
him on the 18th Of December--nearly two
weeks subsequent TO the date OF Mr.. Bailey's
confession The only sa atisfactory explanation
that can be given of this noticeable discrep-
aney is the supposition that the sta tenn n
was actually prepared on the day IL was given
TO Mr.. Wagner, and the day the last bonds
were delivered to Mr.. Russell, and dated
wroppfuliy stDec. lst," to allay any suspicion
thai ,uiDht he aycifpd if il were seen that the