The New York herald., 1871-09-17
TIE DEPAULTING PAYNASTRR.
Treasury Officials Indignant
Shifting the Responsibility.
Paymaster General grice's Statement Repudi-
ated-Major Hodge To Be Retained
In Close Confinement
WASHINGTON, Sept. is, 1871


A abatement having recently been published re.
spectme the defalcation OF hodge, derived from the
Paymas,er Generals ofice, the following informa-
pon has been derived IN a similar way from pro-
minent gentlemen connected with the Treasurer's
once, and may, therefore, be considered an
authorized reply to the Pay department. The
attempt OF the Pay Department TO fost upon
the Treasurer's once the responsibility for the
failure 10 discover at an earlier date the mis-
appropriation OF pubic funds by Paymaster
Hodge is regarded by the Treasury officials as
entirely unwarranted by the facts. The absurdty of
the attempt Is 1t Is claimed by them apparent to all
familiar with the mode OF disburslng public funds,
and would render the statements put forth un-
worthy OF attention had they not been extensively
circulated ana made the subject OF partisan attack
On the administration OF the Treasury. The grounds
for holding the Treasurer responsible as presented
An the Pay Department version, were, 1t VIII be re-
membered, the following
First-The letter addressed by the Treasurer to
the Paymaster General on the 9tn or May, 1866, In
which he said
II instructions shoud be issued from once directing
credit al The close Of each week the
ar such deposit think the present system might be made to
In accordance with this suggestion the Pavmaster
General forthwith issued a circular requiring all
paymasters to report their balances weekly to the
Treasurer. II Is claimed by the Pay Department
that proper comparison OF these reports At the
Treasury
showing the balances held by them to the credit OF
lisbursing officers, would have led TO the speedy
Setection OF any delalcanon; In the second place
ment BY the Treasurer Of checks drawn
BY Paymaster Hodge, payable 70 cash OF bearer for
large amounts, afforded him facilities for the I'M
proper withdrawal OF money which he would not
have enjoyed had the circular oil the Secretary Of tho
Treasury Of November %. 1869, concerning the dis
bursement of the public money been complied
with. To the first allegation the treasury
Oficials reply that the letter OF General spin.
assuming Tor the Treasurer the responsibility Tor
8hc proper disbursement OF funds entrusted to OIL
GERS OF the Pay Department, or as absoving that
department from The responsibility OF keeping all
monsiraled the reports required OF paymasters
were no protection against fraud. Even IN cases OF
honest officers the balances reported by them would
always be less than the amount reported
by repositories by the just amounts OF
their outstandng cheeks; In 's case OF an on, l,
million or more every month. The discrepancies
arising from this cause between the two balances
reports utterly useless rs checks upon each
other. II the otlcer were dishonest and had mis-
appropriated money, nothing would be easier for
him than to make his reports agree with those Of
the depository which kept his funds. Every ohcer,
to his credit, and 1t would require an amount OF
stupidity amounting TO fatuity Tor dishonest OIL
dit larger tnan that be knew would be reported by
The depository with which ne kept his account
For these reasons the Treasury soon ceased to
place reliance on these reports as means for the
detection OF fraud, and was not always prompt in
requiring them to be made when officers failed to
Bend them IN. Viewed In TINS light, the failure Of
the Treasurer 10 require reports from Major
Hodge is utterly immateria so lar any response
bility FOR deaicat1on goes since no scrutiny CON-
parlsOn TO which the Treasurer could subject them
would reveal their dishonest character. The only
way in which any discrepancies in his reports could
have been discovered, had such reports been made
would have been py COMPARING them with his re.
the ms Appropriated checks were ali drawn from
his accounts with the Treasurer, discrepancies
ami mai n n a na
partment onlcial or by examining Hodges reports
70 the Treasurer. Hence the absence Of the reports
Is q matter Of no importance whatever.
The most complete reutation OF the allegation OF
the Pay Department is, however furnished by
Connected CON @ WITH vii, tSe @ Fay % DepaTiments @ % vino IS
now engaged in the investigation Of Hodges
the Treasurer's once for the balances reported to
the credit Of paymasters, and has IN several H.
ments OF the balances held by the Treasurer to the
credit OF Major Hodge. The books OF the
treasurer have always been open TO any examna, a.
make. The attempt to use his letter OF May 9.
as6e in the face OF the foregoing facts, as basis
Tor holding General Spinner responsible for Hodges
Shortcomings is regarded as cruel wrong in the
absence Of the Treasurer, who was prompted in
writing 1t by spirit OF accommodation Tor the De-
partment, which had just lost heavily through the
deialcaton Of Hodges old coTJrere, Major Pauding,
nse 10 which 1t was to be perverted. The second
allegation OF the Pay Department ls, IL Is claimed,
quite as immaeral as the first IL Is alleged 10y the
Treasury oficials that although the circular OF
November 90, 1869, has not been literally complied
with in The payment OF Hodges checks, yet that,
had II been observed, 1t would have furnished no
preventive OF his peculatons.
The circular does not, IL is true, permit checks to
be drawn as Major Hodges were, ITO cash or
bearer" II does however, require that except
In certain specified cases, checks drawn by disburs
name to whom payment is to be made, or in
favor OF such person by name or bearer Had pay
ent been refused on cheeks 9o SFSW nay
been perfectly feasible for Hodge, under
these 70 nave drawn out Igds
TO any fictitious person and bearer suppose
hodge had drawn these irauinlent checks IN TINS l
manner and had presented them IN person; the
Treasurer could not have refused payment under
the rules. The fact that names OF payees were
Tied to receive money from the government
could not have been known TO the Treasurer
since he has no means OF knowing whether proper
voucher has been taken up by the drawer Of the
pheck Since, therefore, the enforcement OF the
regulations could not nave prevented Hodge
fraudulent operations, the failure TO enforce tnem
ike tile failure to call upon him for reports, 4:
utterly immaterial in fixing the responsibility fol
his being permitted to carry on the iraudu
lent operations so long unchecked. The
ocers Of the Treasury claim win ,n mnsh appren pa ea
bursting officers FUNDS are connned 10 the SAFE
keeping OF moneys deposited. and to their payment
on genuine aud proper checks, aud that they are IL
nowise responsible for misapproprauons OF funds
which have been Withdrawn from their custody b
them and are not In the slightest degree unde
their control
The secretary OF war tO-uay nOtincU tnc lTehSuI.
ofncals that II It the intention or the Treasury
Department to proceed against the New York bank
ers engaged with Paymaster Hodge In his late trans
bctions III Wall street that the Paymaster Genera
has mass OF evidence concerning the relations ne
tween the bankers and the Paymaster, which is a
lheir disposal The Secretary OF war has not beer
applied to TO release Hodge on ball. as he Is mill
tary prisoners but he has been requested 10 releas
him from close confinement, which he refused u
40. The case was yesterday referred 70 the Judg
Advocate General, with instructions to prepar
charges and specifications Immediately. A cour
martial for trial Will then be designated BY the Sec
retary.
There will be no court OF inquiry in the case
General Brice's administration Of the Pay Depart
@ ,,u. a atts0ed mai there have neen no ryao
nlarities, and deeming II lnexpedient, under sue
circumstances, to incur the expense OF assembllD
such court OF inquiry.
Nicholas Sullivan, ageu twenty-five years, resi-
ING at No. 27 Seventh avenue. was committed,