The evening world., 1894-03-26
CHEATED UNCLE SAM
Carnegie's Armor Plate Makers
Furnished Bad Work.
And the Company Had to Make Good
with the Government.
No Navy Officers Nor Firm Directors
Implicated in the Fraud.
INV Associated presal

10 HbboNiuttu .
WASHINGTON, March 26.-Secretary
Herbert to-day sent to the House an
answer to the Cummings resolution
calling for a statemnt of the details
Of the recent alleged violation by Car
negie, Phipps & Co. of the contracts
with the United States for the manufac-
ture Of armor plate for the navy. The
Secretary's answer is long and very in
teresting, giving in detail the history
Of the progress and discovery OF one
Of the most gigantic frauds known In
our Naval Administration.
Some time last September the Score
tary received from James Smith,. of
Pittsburg, an attorney representing GER
tain persons in the employ OF the Car
negie Steel Company, Limited, of Pitts
burg, notice that these employees had
in their possession Information which
would be valuable to the Government,
relating to frauds then being perpetrated
by certain employees of the Company,
which they would give to the Govern
ment for a sufficient consideration. The
Secretary agreed. If the Information
should lead to the recovery of moneys
from the Company, to the
informers from the sum recovered, but
not to pay any expenses. Three of the
employees and the attorney were care
fully examined by the Secretary. who
was satisfied that their statements were
not without foundation, and determined
upon a thorough Investigation. The EN-
pluyees revealed no feeling of hostility
towards the Company; had not been en-
gagged in the Homestead strike, and
seemed to be influenced only by n de-
sire to realize money.
The Acknowledgement found that the
Department might contract with these
men and a contract was made agreeing
to give them 70 per cent. Of the money
recovered, In consideration of the fact
that they would, of course, be discharged
and blacklisted. and that other EN-
plJyees, from whom they would procure
Information, would also lose their places.
The Secretary says at this point
These men had been gathering infor-
nation for a long time. This they sub
mitted to the Department In great de-
tail. The allegations were that the Com
pany employees had failed to temper
armor evenly and properly; had plugged
and concealed blow holes. which would
have probably caused a rejection of
plates by the Government Inspectors.
and had re-treated, without knowledge
CO.. ,n.n.'t,r., r,ttes which hnt been
plates better and tougher than the group
OF plates represented by them
ne seG..'a.y sens now tne naval In
from each group, which is thoroughly
tested. and upon the results of this test
depend the acceptance of the entire
group.
Capt: Sampson, Chief of the Bureau
OF Ordnance, was acquainted with the
facts developed n calling to his aid
Prof, Alger and Lieut.. Ackerman, Of
the Ordnance Bureau. proceeded to
make a thorough investigation. They
sustained the charges of the informants:
In a report to the Secretary, the Chief
damages sustained by the Government
at 10 per cent. upon the amount OF
m delivered to the Government and
upon all premiums received. The Secre-
tary says:
ut had taken time to make these in
yestigations,, which the Department had
directed to be conducted with as much
expedition as was consistent with thor
oughness. In conversation with the in
formants had carefully inquired
whether the chief officers of the Com
pany,, Mr.. Prick and Mr.. Hunsicker, had
any knowledge or information of the
fraud which had been committed. I was
Informed that these Irregularities had &C.
Cured chiefly at night, and always when
the Government inspectors were absent,
and that Messrs. Frick n Hunsicker
did not visit the works at night. / could
ind nothing whatever in the testimony
Of the informants to Indicate hat either
OF these gentlemen knew anything what
ever of these Irregularities"
I luils dtNludlllNlilS NltSSIS. It TICK
and Hunsicker with the facts in an APP
pointed interview, the Secretary de-
handed satisfaction for the damages re-
quilting from these Irregularities, and in
formed them that they would only be
allowed to proceed with the contract on
condition of making full reparation.
After two more interviews and an ap-
peal to the President, in which Mr.. Car
negie took part. a settlement was ef-
fected. The Carnegie Steel Company,
Limited, paid into the Bank of P%ittsburg,
Pa, to the credit of the informants,
S5, l21, and It credited vouchers for armor
furnished to the Government with $780,
$50, which vouchers are now on file in
the Department. No money whatever
passed through the hands OF the Depart
ment.
Tn Department is gratihed to be able
to state that all the Irregularities oc-
CURED while the Company was still
engaged upon light armor and before
their heavy forging plant was placed
In operation for the manufacture of the
heavy armor of the battle ships.
The Department deems 1t proper to
state that throughout the whole of this
transaction nothing occurred to show
that officer of the Navy had been
guilty of conniving at any of these ir-
regularities. Neither is there anything
whatever to show that any director OF
the Company had any knowledge of the
transactions herein set forth.
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