The New York herald., 1869-11-13
THE CUSTOM HOUSE FRAUDS.
History OF the Drawback System-Checks
and Balances In the Treasury De-
partment-HOw Frauds Were
Perpetrated-The Condition or
Affairs Yesterday-Mr.
Blatchiord Tempora-
rIly Suspended.

II is about time that the people OF the country |
knew the real state OF the facts in regard TO the
Custom House frauds. so much has already been |
said about It, so much falsehood has been mixed up |
with little truth, mucn ationaism has been |
thrown around it, that most people not intimately
acquainted with the way that business Is done at |
the Custom House might well be induced to believe I
that this entire branch OF the financial department
or the government but sink Of corruption, !
thievery and fraud 1t Ia undoubtedly true that !
frauds have been committed on the revenues OF
Uncle Sam by unprinclped men, and, too, with the
aid OF persons In the employ OF the government.
II is true that these frauds extend over quite num-
ber OF yearsas far back perhaps 1864 It Is true,
1t may be SAID, that their inception dates
back as far as the first passage OF what IS called q
'protective tariff under which the heavy duties
collected on imported merchandise were refunded by
the government when 1t was shown that any par
ticular article which import duties had been
paid was again exported TO foreign country. In
providing for this ''drawlng back" Of duties paid,
known in the technical phraseo0gy OF the Custom
House as "drawbacks,n the Congress OF ihe United
States undoubtedly meant to grant facilities to the
foreiga trade OF the country. In order TO give Ame
rican importers an opportunity to compete with
European houses in the Central and South American
and the West Indian trade this provision wise
one. The system itself Is very old one.
1t commenced, in fact, with the granting
OF the fishing bonnties and the imposition
Of an Import duty on salt IL dates
back to the last century, and has been in vogue ever
since. Whenever salt on which duty paid was
used in the curing OF fish la 'drawDackn was allowed
by the government equivalent to the amount OF the
duty paid the salt thus used 1bis 1t seems,
the frst beginning of the system or draw backs -
and which, 1t IL asserted has wrought such dis
astrous losses To the Treasury OF the United States.
Now, how are "drawbacksn obtaineds This, in
the proposed investigation OF the case, ~ very
serious question The pending charge Is that Mr..
Samuel 4. Blatchfold had deiraudcd the government
out OF large sums OF money estimated yartously At
from to two millions OF dollars. II the frauds
known to have been perpetrated were chargeabe to
him aone-lf the money was refunded only on his
own g, ,h nd taere wd ae s9ns 81
But the people should know how these drawbacks''
are got IRON the government.
Suppose Smith makes an application 10 the Col
ector for being refunded the duties paid on certain
goods. re-expored. 1t Is not necessary thar he
should have imported them and paid the import
duty himself II he bought the goods IRON the i'm
porter and sold them TO the foreign merchant, the
foreign merchant himself, on exporting them, Is
emitted, under the law, to the ''drawbacks.n But
the mere application won't do. The applicant must
specify the articles which he has exported or Is about
70 export; he must state the amount Of the duty
paid thereon, when and where the specified articles
the duties were paid thereon This application then
goes INTO the bureau OF Drawpacks OF the
uasto House and from there mere II u 2 IS referred le to
in the latter branch in which all maniiests oi ariv-
ing and outward bound vessels are kept on lie, Is
to examine these and whether the statements in
| the application for drawback correspond with the
man1ests II they do correspond the clerk mas TO
"check" the applicatOn-that IL, he puIs his initials
| upon 1t and returns 1t to the Drawback Bureau
From IL again passes into the hands OF another
clerk, who has 10 investigate whether the state
ment Ia the application OF duties paid taliies with
the daily returns on the schedules on file. II thus
clerk finds matters .'a rignt' he also puts his lnl-
tals upon the application, his voucher tnat he has
examined the records and nat everything is correct
Alter the application for drawback has gone through
these processes and has passed through the two diff
erent and distinct departments named and has been
verified with the signatures, or rather the initials OF
the officers IN these Two departments then IL comes
70 the hand Of The chief OF the Draw back Bureau
| made that the application bears upon 1t the
"checks OF the officers entrusted with the duty of
faithful to their trust and to the government, what
else has he to do but to ax his signature, consist
ing again OF his initials, TO the documents
the application, having thus passed through q
triple ordeal, goes TO Washington, INTO the once Of
Is the principal auditing oncer OF the Treasury,
attached To the department Here again II comes
INTO the hands OF subordinate clerks, whose duty 1t
ls made TO compare ihe statements oi the ap-
piication with the returns as received from
The custom House; A.a n these ,,,. CLERKS and It
| uied to ~ being correct by the Auditor
aud from him IT passes INTO the office Of one OF the
| Conptroers Of the treasury, who has aeain
number OF clerks 10 investigate ali claims against
the Treasury. should the claim be found to be well
| suDstantiated the Comptroller draws his warrant
connterslgned by him and afterwards signed by The
Secretary or the Treasury and IN pursuance OF thai
warrant the Treasurer at Washington issues draft
a check on any SnD-Ireasurer or deposItary oil the
United states, ior tne amount named IN the warrant
! paid out on hts check OF draft.
| 1t IS most certainly not exaggerating the case
| thrown In The way OF fraud and peculatioa 1t takes
more than one man 10 assist In getting fraudulent
! application through these many offices and have 1t
cashed at last. ih,5 system Of ''checks and Oal-
ances'' was naugurated by the first Secretary OF
| the Treasury the United States ever h4--Gene-
Grs4a Yfu.Iafr
! ton OF George washington. IL has worked well for
upwards OF seventy years, and only lately, when
the greed Tor money and the desire to get IT, honestly
II possible, but get 1t at any rate, has Dlunted
| many consciences and has obscured the eyes Of
many hitherto honest men, tlat even TINS intricate
| machinery ior the management OF government
| finances was found TO need some Improvement.
How, then, were the frauds now complained OF
perpetrated2 Simply by chs means: lhat the con.
spirators bought the CLERK in the statistical Bureau
| III the somewhat weligrounded nope that his
| CHECK his initials upon the application, would
be a warrant 10 all the officers 10 Niom The aDpll-
cation should subsequently come 10 ailX tHer sig
natures also, without personal examination, rely
ing upon their becr that the first oliicer VINO had
| The most important inquiry 70 make, had fully per.
| formed his duty. lt was It seems a pain case
| OF slirNing responsibility and or throwing II all
| upon the shoulders OF one man, who, appears Dy
official documents, was the very man in whom they
should not have trusted or he Is uilder lndlct
ment by the United states Grand JHty ior con-
spracy 10 delraud the government
All these matters were fully investigated two years
ago. AT that time the investigation was lnsfgated
by Mr.. BlachfUrd, VINO first became suspicious as Is
credbly asserted, OF the correctness OF all these
claims for drawback. He and of his olerAs, a
MIR. Van Lapdt testified before tho Grand Jury, aud
on their testimony number OF pelsons-thc brothers
Caldwell ana Others among them tle clerk IN the
statistical Bureau above referred to- Mr. Iherrot
were indicted and placed under heavy bail. The
Investigations then carried on were pushed back to
the fall OF 1866, and nothing was found TO crimnate
Mr.. Blatchioru.
Lately, and since II known that the trial OF
the indicted partcs would be urged forward, and
Mr. BatchIord having since been promoted TO the |
position of Deputy Collector oi the Eighth DIVISION
he bonded warehouse braneh-rumois were given |
apf Nit an nHf
TO inc United states piltrIct Attorney, Juuge Ed. |
wards PIerrepont, TO the eliect that Mr Samuel I.
Batcnlord was party TO the conspiraoy that he I
received part OF the gvals OF the fraud, ana hut he
willingly affixed ms signature or initials 10 The an.
plcatons, knowing them to be false aud fraudulent |
and with the intent of sharing III the money thus
frauiulenLly ohLalnel from The government. This |