The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1894-03-27
Secretary of the Navy Herbert Explains
Why the Carnegie Company Was
Fined Over $4,000.
CONSPIRACY OF EMPLOYEES
They Make Defective ArmOr Plate
and Sell the Information.
Herbert Agrees to Pay a Big Sum, and
then Informs the Carnegie Offic-
ials of His Discovery.

WASHINGTON, March 26. - Secretary
Herbert to-day sent to the House an
swer to the House resolution calling for a
statement Of details of the recent alleged
violation by Carnegie. Phipps & Co. Of the
contracts with the United States for the
manufacture of armor plate for the navy.
The Secretary's answer is long and inter-
esting, giving in detail the history of the
progress and discovery Of one OF the most
gigantic frauds known in naval admin
istration. A sketch of the most interesting
portions of the Secretary's communication
Is here given.
Some time last September the Secretary
received from James Smith, of Pittsburg.
an attorney representing certain persons in
the employ Of the Carnegie Steel Company,
CT Pittsburg. 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 government for sufficient con-
sideration The Secretary agreed If the in
formation should lead TO the recovery OF
moneys from the company to remunerate
the informers from the sum recovered, but
not To pay any expenses. Three of the en-
amined by the Secretary, who was satisfied
that their statements were not without
foundation, and determined upon thorough
Investigation. They discovered no feeling OF
hostility toward the company; had not been
engaged in the strike, and seemed to be in
fiuenced only by a desire to realize money.
The Attorney general found that the de-
partment might contract with these men,
and a contract was made agreeing TO give
them % per cent. of the money recovered,
In consideration of the fact that they
listed, and that other employees from whom
they would procure information would also
lose their places. The Secretary says at
this point:
THESE men had been gathering informa-
ton FOR a long time. This they submitted
TO the department in great detail. The allie
cations were that the company employees
had failed TO temper the armor evenly and
properly, had plugged and concealed blow
holes which would have probably caused a
rejection OF plates by the government in
spectors, and had retreated, without knowl-
edge Of the inspectors, plates which had
been selected for test so as to make these
plates represented by them
HERBERT INVESTIGATES.
The Secretary ordered an investigation
which showed that the test plates had been
plugged and retreated. and sustained the
charges of the informants. In report to
the Secretary the chief of ordnance and his
associates assessed damages sustained by
the government at Is per cent. upon the
amount of armor delivered to the govern
ment and upon all premiums received. The
Secretary says:
In conversation with the informants,
had carefully inquired whether the chief
officers of the company. Mr. Prick and Mr.
Hunsicker. had any knowledge or informa
ton or the fraud which had been committed
! was informed that these Irregularities haC
occurred chiefly at night and always whar
government tnEDQcfOrS absent
that Messrs- Prick and Hunsicker did MOI
visit the works at night. 1 could find moth
ing whatever in the testimony Of the In
formants to indicate that either of these
gentlemen knew anything whatever of these
irregularities. AS soon as the report from
Captain Sampson assessing penalties haC
been received the department photographed
for Mr.. II. C. Prick TO come to Washington
TO see the Secretary on important business
suggesting that he bring Mr.. Hunsicker
who was. more generally than Mr.. Frick
plates. The interview with Messrs Fricl
and Hunsicker was In the presence of AS
sistant Secretary McAdoo and Captain
whole transaction, stating who the inform
ants were, the nature OF the Information
acted on by the department, and placed IL
their hands the report made by the chief d
the bureau OF ordnance, assessing the dam
ages. as well as certain written statement:
by the informants. They were also informed
that Lieutenant Ackeman, who had for
short time been on special duty at th'
works while this investiga ton was going on
aroused by certain evidences which he oh
served, tending to show that the operatives
ere concealing facts from the observation
of the inspectors, and that Lieutenant Acke
mans cbServanceS were made without any
knowledge or information received by tn
department from the employees, as hereto
After fully acquainting Messrs. Fricl
and Hunsicker with the facts l demanded
satisfaction for the damages resulting from
these irregularities and informed them the!
would only be allowed To proceed with IL
V1sNN r TEEn
aration. MesSrs Frick and Hunsicker bott
seemed greatly astonished at the state
mentS made TO them. and Mr. Frick thanked
me for the care and fairness with which
the Investigation had been conducted, ant
asked time for himself to investigate anC
claimed, as did Mr. Hunsicker, any knowl
edge of the transactions. but mentioned tht
fact that he had been in some manner pu
upon guard as to irregularities that wert
being committed by the employees on the
arTTsor. and that he had thereupon writer
a letter TO Mr.. Schwab, who superintended
the heating and temperlng, cautoning MIN
TO the utmost care and diligence in faith
fully filling the contract
CLEVELAND'S DECISION.
The Secretary then tells of other inter
views between the Carnegie officials and
himself. and also with the President. Al
some of these interviews Mr.. Carnegie was
present. Finally. the matter of damage
was submitted to Mr.. Cleveland. who OF
jan III, wrote the IoiIoWns letter 10 sec
rotary Herbert;
Dear Sir-I have examined with care
the report OF the board appointed by yoU
TO investigate the alleged Irregularities In
the construction OF steel armor at the Car
negie steel and iron mills, and the assess
ment or the damage sustained by the gov
eminent on account OF deficiencies In tht
quality OF the armor which was effected by
such Irregularities. / have also examined
the evidence and the documents which form
the basis OF the governrn ant 5 claims fol
damages l am satisfied that a large por
ton OF the armOr supplied was not OF TIT
quality which would have been produced 4
all possible care and skill had been exer
ciSed in its construction. l am Of the opin
ion that. under the terms Of the contrac
between the government and the company
this constituted a default emitting the gov
eminent TO damages. IL is, however, al
exceedingly difficult matter to extract from
the facts developed a satisfactory basis FOL