The New York herald., 1871-09-17
An Insight Into the Manner Of Conducting
Business in the Departments.
Officials Excited Over Major
Hodges PeculatiOns.
IRREGUl lARITIES IN THE WAR OFFICE.
Appointment of Counsel Before the Tri-
bunal of Arbitration.

WASHINGTON, sept H. 1871.
Responsibility for the Hodge DefaIcafiOn.
The Treasury Department was this morning fur
nshed an official copy of the letter Of Paymaster
General Brice concerning the declaration OF Pay
master Hodge, and accusations having been made
against the United States Treasurer statement de-
tending the course of General Spinner was given
out by Mr.. Leroy Tuttle, who Is acting United
States Treasurer In the absence or the General
The Treasurer is not alone held responsible for the
payment Of checks to "cash or bearer" but the
Secretary Is charged with issuing regulations
for the government Of the Treasurer by which
the act OF Congress Of March 3, 1857 might
be evaded. The law requires that ''every disbursng
o1lcer or agent Of the United States having any
money OF the United States entrusted him for dis
bursement shall be, and he Is hereby, required to
deposit the same with the Treasurer Of the United
States or with some Of the Assistant Treasurers
or public repositories. and draw for the same only
in favor Of the persons to whom payments are to
be made in pursuance of law and instructions, ex-
Cept when payments are to be made In sums under
$780, In which cases such disbursing agent may
check IN his own name, stating that it Is to pay
small sums"
strict construction OF the act was found to hin.
der In very many instances the prompt transaction
of business. ana 1t was the urgent request OF the
Paymaster General himself that the order OF the
department was modified 1t Is claimed that the
only duty Of the paying teller OF the Treasury " to
know whether . cheek presented for payment Is
genuine. He stands IN the position OF guardian Of
| the funds deposited in the Treasury, and has no
| right to dispute the payment OF check drawn by
q government official when he knows that the
check is genuine. Much stress has been placed
upon the payment OF the checks drawn
to "cash or bearer" and without doubt the money
so obtained was used by Major Hodge in his stock
speCulatiOEs. 1t is asserted by parties who know
Hodge that very frequently, while ill., company with
General Brce he would consult the telegraphic report
OF the condition OF the STOCK market In New York. but
as the head OF the Pay Department had unlimited
confidence in his subordinate he never suspected
that he was frittering away government funds in
such transactions as he has since confessed
he was engaged in Fifty Thousand dollars
was drawn from the Treasury on Wednesday and
Thursday preceding the gold panic on Wall street
September "a, 1869. Prior to that time the largest
amount drawn out was $IO,OOO but the majority OF
the checks were for sums ranging from $3.50 to
$4,000. After his heavy losses in 1869 he became
bOlder, drawing two checks In July, 1870, for
$780, 900 and $50 OO0 and in April last he drew 00O
The voucher which the Paymaster General states
was the occasion OF discovering the peculaJi0ns Of
Major Hodge was detected In the Second AUDITORS
office IN June last, and explanation asked from
the Chief Clerk OF the Paymaster's Department.
entered the room, and noticing the voucher, ex-
planned that 1t correct, that Major Webb
mad given him the receipt for $4,000 trans.
ferred in 1865 Major Webb, now an ex.
Paymaster and residing In New York, was
written TO for explanation, responding with the
| statement that If any such voucher on file 1t
| must be forgery. lie subsequently, however,
wrote to the Treasury Department that he
| ready to assume the responsibility Of the amount
| Drsn has aniA sn11u
| informed OF the existence OF this voucher until
| short time since, and that he Immediately
called upon Major Hodge for an explana-
tion. This Hodge furnished and it was
submitted to the Second Comptroller, who did not
hesitate to say that 1t was lame excuse to cover
up some irregularity. General Brice then demanded
OF Hodge q satisfactory explanation and the de-
faulter asked permission to visit New YORK and see
Webb. This was granted but on his return the
Paymaster General, not satisned with the answer,
ordered Hodge to Immediately close his accounts
and transfer the funds on hand 10 Major Rochester,
Even up to this time there was no suspicion Of de.
falcaton and 1t was not untn Hodge confessed that
the fact was made known.
The accusation made against the Treasury ON
cias for not complying with the law Is said TO apply
with equal force against the Peymaster General,
but the Secretary Of War to-day declined to order
OF inquiry into his Official conduct, and so the
charge will not be investigated OF one thing how
ever there can be no dispute. The act OF Congress
or May l5 1920, limits the appointment OF all dis
bursting officers OF the government to four years,
which implies that if they reappointed they must
renew their bond. Paragraph $50 Of article Al,
Army Regulations, prescribes that
| All officers OF the Pay, Commissary or Quarter
| masters Department, and military storekeepers
SHALL previous TO their entry on the duties oil their
respective Offices, give good and sufilcent bonds TO
the United States fully TO account for all moneys
| such sums as the Secretary OF War shall hx, ana
the officers Aforesaid shall renew their bonds every
| shall so require ana whenever they receive new
commission or appointment
Major Hodge was appointed Paymaster In the
regular army January II, 1867, having previously
served as Additional Paymaster in the volunteer
service. According to the requirements OF the army
regulations the Old accounts Of Major Hodge should
have been completely examined by the Paymaster
Generals Office before accepting the new bond
filed by him on receiving his new coniIns-
sion or appointment But the fact Is,
according to the statement OF Major Hodge
himself that the very voucher which led to the
discovery OF his defalcatIon and when he failed to
satisfactorily explain 10 General Brice was accepted
I'm September 1865, fully eighteen months before
his appointment In the regular army. The next
fact Is tnat the commission OF Major Hodge,
plring by limitation January H. 1871. and he
reappointed and Obliged TO renew his bond, it i'm
plies closing up OF his accounts for the previous
four years and a commencement entirely anew Of
his responsibility to the government. Had his ac
counts been examined, as the army regulations re-
qure In 1867, Irregularities would have then been
discovered Sufficient to debar his reappontment, or
had they been examined IN January last, when he
renewed his bond, the defalcaton must necessarily
have been discovered.
The examination of the accounts referred to does
not mean their being audited by the Second Audi
tor. The Paymaster General, In half an hour,
can, at any time, If he liz suspicious, learn
the amount to the credit of paymaster In his office,
what the amount OF his disbursements have been
and what amount he should have on hand. When
Hodge confessed that he defaulter the officials
OF the Pay Department were not long In ascer-
tanning the amount OF the deficit according to
ms books. General Brice admits that unwaverlng
confidence in Major Hodge dlsarmed suspicion, anu
the only use for not examining his accounts