Worcester daily spy. [volume] (Worcester [Mass.]) 1850-1888, 1871-09-18
From Washington.


ing recently been published respecting the de-
falcation Of Hodge derived from the paymaster-
generals office, the following information has
been derived in similar way from prominent
gentlemen connected with the treasurer's office,
and may therefore be considered an authorized
reply to the pay department. The attempt of
the pay department to foist upon the treaSurer's
office the responsibility for the failure TO dis
cover at an earlier date the misrepresentation of
public funds by Paymaster Hodge, is regarded
by the treasury officials as entirely unwar-
ranted by the facts. The abSurdity of the at
tempt is, it is claimed by them apparent to all
familiar with the mode OF discussing public
funds, and would render the statements put
forth unworthy Of attention, had they not been
extensively circulated, and made the occasion
of partisan attacks on the administration OF the
treasury The grounds for holding the treas
urer responsible, as presented in the pay depart
ment version, were, it will be remembered, the
following: First-The letter addressed by the
treasurer to the paymaster general, on the 9th
of May, 1866, i'll which he said:
at Instructions should be issued from your Of
fee directing all paymaSterS to report to this
office the balances remaining to their credit at
the close OF each week, designating the place of
such deposit, think the present system might
be made to work safely" In accordance with
this suggestion the paymaster general forthwith
issued a circular requiring all paymasters TO re-
port their balances weekly to the treasurer. 1t
is claimed by the pay department that proper
comparison of these reports at the treasury with
those from the various depOSitarieS showing the
balances held by them to the credit of disburs-
ing officers would have led to the speedy detec-
ton of any defalcatiOn. In the second place the
pay department alleges that the payment by the
treasurer by checks drawn by Paymaster Hodge
payable TO cash or bearer for large amounts, al-
iorded him facilities for the improper with
| drawal of money which he would have enjoyed
had the circular of the secretary of the treasury
of Nov. %, 1869, concerning the disbursement
of the public money been complied with.
To the first allegation the treasury officials re-
ply that the letter of General Spinner was never
intended to be construed as assuming for the
treasurer the responsibility for the proper dis
burSement of funds entrusted to officers of the
pay department, or as a6solying that depart
ment from the responsibility of keeping all
proper checks on the officers. Experience soon
demonstrated that the reports required of pay
masters were no protection against fraud. Even
in cases of honest officers the balances reported
by them would always be less than the amounts
reported by depostaries by the just amounts of
their outstanding checks. In case of an officer
like Major Hodge, who disbursed a half a mil
lion or more every month, the discrepancies
arising from this cause between the two bal
auces reported would be so great as to render
the reports utterly useless as checks upon each
other.
If the officer were dishonest, and had misap-
propriated money, nothing would be easier for
| him than to make his reports agree with those
of the depository who kept his funds. Every
officer, honest or dishonest, knows the amount
Of funds to his credit, and it would require an
amount of stupidity amounting to faulty for
dishonest officer to report to the treasurer an
amount to his credit larger than that he knew
would be reported by the depOsitary with whom
he kept his account. For these reasons the
treasury soon ceased to place reliance on these
reports as a means for the detection of fraud,
and was not always prompt in requiring them
to be made when officers failed to send them in.
Viewed in this light the failure of the treasurer
to require reports from Major Hodge is utterly
immatera so far as any responsibility for de-
facation goes, since no scrutiny or comparison
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 by
comparing them with his reports to the pay
master general; but inaSmuch as the misap-
propriated checks were all drawn from his ac-
counts with the treasurer discrepancies could
have been just as easily discovered by an eX-
animation OF the treasurer's books by pay
department official, or by examining Hodges
reports to the treasurer. Hence the absence of
the reports is Il matter of no importance what
ever. The most complete reiutation of the allie
cations of the pay department is, however,
furnished by the fact that for some time gen
tleman connected with the pay department, who
is now engaged in the investigation of Hodges
His D6Sll III lllt dulL VI CdlllllS upon
the treasurer office for the balances reported
to the credit Of paymasters, and has, in several
instances, at his request, been furnished with
statements of the balances held by the treasurer
to the credit Of Major Hodge.
The books of the treasurer have always been
open to any examination which the pay depart
ment might choose TO make. The attempt to
use his letter of May 9, 1866, in the face of the
foregoing facts, as a basis for holding General
Spinner responsible for Hodges shortcomings,
is regarded as a cruel wrong, in the absence of
the treasurer, who was prompted in writing it
by spirit of accommodation for the depart
ment which had Just lost heavily through the
defalcaton of Hodges old cOnfrere, Major
Pauldng, and who could have entertained no
suspicion of the use to which it was TO be per-
verted. The second allegation of the pay de-
partmeut is, it is claimed, quite as immaterial as
the first. 1t is alleged by the treasury officials
that although the circular of November 90,
1863, has not been literally complied with in the
payment of Hodges checks, yet that had it
been observed it would have furnished no pre-
ventive of his populations. The circular does
not, it is true, permit checks TO be drawn, as
Major Hodges were, "to cash or bearer"
1t does, however, require that exception GER
tain specified cases, checks drawn by disburs-
ing officers must be in favor OF the person by
name whom payment is to be made, or in favor
of such person by name or bearer. Had pay
menU been refused on checks drawn payable to
cash or bearer, it would have been perfectly
feasible for Hodge under these regulations to
have drawn upon checks payable to any titltious
person aud bearer. Suppose Hodge had drawn
these fraudulent checks in this manner, and had
presented them in person, the treasurer could
not have refused payment under the rules. The
fact that names of payees were fictitious and
were not those of persons entitled 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 check
Since, therefore, the enforcement Of the regula-
tions could not have prevented Hodges fraudu-
lent operations, the failure to enforce them like
the failure to call upon him for reports is utter
ly immateria in fixing the responsibility for his
being permitted to carry on his fraudulent OPP
eratiOns so long unchecked.
The officers of the treasury claim with much
apparent justice that their functions in the mat
Ter of discussing officers funds are confined to
the safe keeping of money deposited, and to their
payment on genuine and proper checks, and
that they are in nowise responsible for misap-
preparations of funds which have been with
drawn from their custody by disbursing officers
who render no accounts to them, and are not in
the slightest degree under their control. The
secretary of war to-day notified the treasury Of
ficias that if it was the intention Of the treasury
department TO proceed against the New York
bankers engaged with Paymaster Hodge in his
late transactions in Wall street, that the pay
master general has mass of evidence concern
ing the relations between the banker and pay
master which is at their disposal.
The secretary of war has not been applied to
to release Hodge on bail, as he is a military
prisoner, but he has been requested to release
him from close confinement, which he has re-
fused to do The case was yesterday referred to
the Judge advocate general with instructions to
prepare charges and specifications Immediately.
court martial for his trial will be designated
by the secretary. There will be no court of in
quirv in the case of Gen. Brice's administration
n the 1pUartmpnt ten. Rricp pstpd