The morning call., 1894-03-27
TESTED BY FRAUD.
Weak Armor Plates for
the Navy.
FURNISHED BY CARNEGIE.
Officials of the Works Not to
Blame.
SECRETARY HERBERTS REPORT.
One Of the Greatest Naval SwlndIes
in the History of the
Republic.
SECRETARY HERBERTs REPORT.

WASHINGTON. March 26.-Secretary OF
the Navy Herbert to-day made a detailed
reply to the resolution passed by the House
calling for the details of the recent alleged
violation by Carnegie, PhipPs & Co. of
their armor-plate contracts. 1t discloses
one of the most gigantic frauds known to
our naval administration. The Secretary
says that last September he received from
an attorney representing certain employees
of Carnegie, Phipps & Co. an offer for a
consideration TO reveal facts as to extensive
frauds being practiced IN the manufacture
OF armor plates for naval vessels in the
works at Homestead. aud 1t was finally
agreed t. pay them % per cent of all dam
ages recovered by the Government as a
consequence OF their revelations. The
men came to Washington and submitted d
to the Secretary large mass of evidence
which they had been gathering for long
time to show that the plates were not
properly or evenly tempered. and that
after the naval inspectors had selected one
plate from each group to be tested as rep
resentatiVes of the entire group, these test
plates were taken at night, carefully an
nealed and all the blow-holes plugged, so
as to give them a much higher quality
than the rest of the plates furnished. II
was further shown from the original slips
that the records of the time of heating
and the mapner of handling, as furnished
by the workmeD, to be reported to the
Government, had been tampered with.
This was done under the direction of
Superintendents Schwab, Corey and Cline.
Captain Sampson, chief of the Bureau
OF Ordnance, was then called in and put in
possession OF the facts. and, with skilled
assistants. made thorough investigation,
demonstrating the truth oil the revelations
and assessing the damages at 15 per cent
on the cost of the armor delivered.
Then the chief officers Of the company,
Frick and Hunsacker. were called in and
informed of the facts, the informants hav-
ing said they had no evidence that they
knew anything about the matter. They
seemed greatly astonshed, but thanked
rhe Secretary for the fairness with whIc b
the investigation was made. Frlck also
said he had been informed that irregu.
laritieS were being practiced, and had
written a letter to Schwab, in charge of
heating and tempering, cautioning him to
extra vigilance in the fulfillment Of the
contract. which letter he turned over to
the Secretary.
Secretary Herbert informed Frick and
Hunsaker he had decided to approve the
accommodation that the company be as
sessed 10 per cent damages. At a later date
Frlck asked if the Secretary's decision was
subject to appeal to the President. Being
Informed that it was they went before the
President and presented their case. The
President. after a long and careful con-
sheraton. rendered decision to the effect
that. the executive officers of the company
not appearing to be involved in the
frauds. and having in fact put stop to
them Of their own motion as soon as made
aware of them. he was willing the dam.
ages should be assessed at 10 per cent on
all armor delivered within the time shown
in which frauds existed. That was
from November 3, 1892 to September 16,
1693 the amount manufactured during
that time being 2.647. 937 tons, valued al
81, ,4G4. 439. Ten per cent of this (S140. .489)
the President therefore decided should be
forfeited to the Government.
This decision was accepted by the COM
pany. who payed at the Pttsburg Bank to
the credit of informants $50. 121, and
credited vouchers for plates furnished to
the Government TO the amount of S105, 1850.
The Secretary adds that though the plates
on which the damages were assessed were
not up to the limit of the very best work
possible, they nevertheless were fully {
per cent above the limit of tolerance, and
were believed to be better than those fur.
nished the ships of other countries. This
was because of the extremely high stand.
ard of excellence demanded by the specif
catiops-so high. in fact, that the company
was compelled TO discard at least one-third
of the plates made. Moreover, 1t was
fortunate that the company at the time
was engaged on light armor, not on th al
for the battle-ships.
The Secretary is also pleased to state
that no naval officer was suspected of any
irregularities in the matter. Furthermore
Superintendent Schwab has been removed
to another department of the work, and
the annealing put in the hands of Hun
sacker. and arrangements made to have
the Government inspector on duty nigh
and daV