The record-union., 1894-03-27
Special to the REcoRD-UN1oN.

WASHINGTON, March 26.-Naval Secre-
tary Herbert made detailed reply to the
resolution passed by the House calling
for the details of the recent alleged viola
ton by Carnegie, Phipps Il 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 en-
ployes of Carnegie, Phipps Il Co. an offer
for consideration to reveal facts as to
extensive frauds being practiced in the
manufacture of armor plates for naval
vessels in the works at Homestead, and it
was finally agreed 10 pay them % per
cent. of all damages recovered by the
Government as a consequence Of their
revelations. The men came to Washing
ton and submitted 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 tenn
pered, and that after the Naval Inspectors
had selected one plate from each group to
be tested as representative OF the entire
group, these test plates were taken at
night, carefully annealediand all the blow
holes plugged, so as to give them much
higher quality than the rest of the plates
furnished. It was further shown from
the original slips that the records of the
times of heating and the manner of hand
ling, as furnished by the workmen, to be
reported to the Government, had been
tainpered 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 in
vestigation, demonstrating the truth OF
the revelation, and assessing the damages
at 15 per cent. on the amount of armor
delivered.
Then the chief officers of the company,
Frick and Hunsicker, 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 astoniShed, but thank ed
the Secretary for the fairness with which
the investigation was made. Frick also
said he had been informed that irregu-
larities were being practiced, and had
written letter to Schwab, in charge o1
heating and tempering, cautioning him to
extra vigilance in the fulfillment of the
contract, which letter he turned over to
the Secretary.
Yesterday Herbert informed them be
had decided to approve the recommends
tion that the company be assessed 10 per
cent. damages. At a later date Frick
asked if the Secretary's decision was sub
iect to appeal to the President. Being in
formed that it was, they went before the
President and presented their case. The
President, after long and careful conSid-
Grafton, rendered decision TO the effect
that, the executive officers of the COM
pany 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
damages should be assessed at 10 per cent.
on all armor delivered within the time
shown within which frauds existed, that
was from November 3, 1892, to September
10, 1898, the amount manufactured during
that time being 2,647 1887 tons, valued al
81 40, ,4S9. Ten per cent. of this, $40, 4S9,
the President, therefore. decided should
be forfeited to the Government
This decision was accepted by the COM
pany, who paid at the Pittsburg Bank to
the credit of informants $50, III, and cred
tied vouchers for plates furnished to the
Government to the amount of S105, 800.
The Secretary adds that though the
plates on which the damages were as
sessed were not up to the limit of the
very best work possible. they neverthe-
less were fully tive per cent. above the
limit OF tolerance, anu DelleN6U 10 De DoD-
ter than those furnished the ships of other
countries. This was because of the ex-
tremely high standard of excellence de-
manded by the speciications-so high, in
fact, that the company was compelled to
discard at least one-third Of the plates
made. Moreover, it was fortunate the
company at the time was engaged on
light armor, not on that for the battle
ships.
rPhn S.ecratarv is also nleased 10 state
that no naval officer was suspected of any
Irregularities in the matter. Further
more, Superintendent Schwab has been
removed to another department of the
work, and the annealing put in the hands
of Hunsicker, and arrangements made tc
have the Government inspector on duty
night and day.