The evening times., 1901-05-17
THE GOV VRRNMENT' S LOSSES
Defrauded of sf6,000,00O in a Lit
tie Over a Century.

Operations of Dishonest Agents and
officials in the PostofTfce Depart
ment and Internal Revenue Ser
vice-BondIng Companies Favored.
In 10 years the gross receipts OF the
United States Government have amounted
to 81, SIS. 81, ,54S. Is. In that time the Gov
erument has lost through dishonest agents
and officials approximately S16,G00ooo.
Gradually portions of these defalcations
are being collected by Uncle Sans agents.
Occasionally some bondsman of a default
ct, who failed to make good his pledge
has Il balance due him from the Govern
n7ent from some contract secured OF sery-
ices rendered. which is withheld and ap-
piled to his former indebtedness In this
way a considerable portion OF the $I6,o00,-
00a due the United States is gradually be
ing collected
ReimbursementS were numerous in the
Spanish-American war. A number of men
who were defaUlters, or who had been on
the bonds of dishonest agents of the Gov
ernment. secured positions in the voIun-
teer army. In some cases their unsatistied
obligations had been running on for many
years They supposed that the account
had been lost sight of by Uncle Sans
agents They were surprised when the
paymaster visited their regiments and
rendered them, instead of their salary, a
t certificate Of receipt for the amount of
| money due them. which had been ap-
piled on their old Indebtedness to the
Government In that way a good many
thousands of dollars were collected in
1875 and 1888.
When officers discovered that they
were not to receive the cash for their
services but merely q certificate of al
Iowance on their old Indebtedness, they
usually rendered their designations In
| one case, however, a major OF voluH-
teers continued to serve until his regi-
ment was mustered out, his entire sal
| airy being applied to the extinction of
his old debt to the Government, while
he merely drew his subsistence allow
ance. At the Solicitors office in the
| Treasury Department is kept minute
| record of all Government creditors
whose terms of service has expired. This
| record dates back to 17S9. 1t includes not
| C-1ly a list of defaulters and enbezzIers,
| but d list of their bondsmen as well. In
| some cases the amounts are small, while
/ in others they extend into thousands Of
| dollars In nearly every case the detauiter
| had given a bond which proved worthless
/
| his shortage In some cases not dollar
was realized on the bond which had been
| accepted by Uncle Sans agents.
1t is an interesting fact to note that for
| twenty years after the organization of the
! Government there was not a single de-
faIcation- From 1870 to 1870 shortages in
! the accounts Of the Government officials
became numerous. and from 1910 TO 1850
there was a very marked increase. The
from
| similar period, as the opportunities for
| embellishments were greater me POST
/ Office Department has been since the be-
ginning OF the government the most opu-
I lent field for the defaulter Shortages IN
the accounts OF pOStmasters from lS2O 10
| 1889 when the system OF inspection be-
| came extremely rigid. were or frequent
| occurrence In most cases. however. the
| full amount of the defalcation was col
| Tected from the bondsmen. In about 10
per cent of these defalcati0nS, however,
| the bonds proved to be practically worth
less and Uncle Sam became the loser
| Shortages for small amounts were usu-
ally DaiG promptly by the hondsmen, but
when II came to setting Tor iafse
| amount il has been more dldfcult-
| So much trouble has been experienced
! in connecting bOndSmen to make good the
! amount of their pledges that the Govern
/ meut has adopted the policy IN recent
| years of encouraging bonds by companies
/ organized for that purpose. There dTt
/ two advantages in this: First. a Fedora
| official realizes when he has company
! on his bond that If there is a shortage II
| his accounts there viii be no mercy shown
| him. ard that he must suffer the extreme
| penalty of the law This has tendency
10 make him careful Second. the Govern
ment has no difficulty in exacting the
bond from the company, for should there
| be any unnecessary delay IN payment tht
| company realizes that It would secure nC
| more Government business, and for this
| reason il IS PuuctilioUs in settling
| Only few months ago a bonding com
! pany was called upon to pay 100000 fol
! defaICatIon which occurred in Cali
| fornfa- Within twenty-fOur hours after
| a fun vestigatiou had been completed q
| certified check for the amount was sent
to the Secretary of the Treasury Al
! though the company lost d considerable
sum, the expense proved invaluable as al
| advertisement.
in addition TO the advantage offered th'
! Government by having companies i!
surety for officials, it has been found
that the defaICations Of employees giving
such security are rare In the last three
wears only four defalCatiOn where com
panies have been on bonds Of officials
: Rave been reported AS compared Will
The iefalcatiOnS Of those who gave pTi
yate bonds, this is q remarkable record
The Internal Revenue service from tbs
beginning Of the Government 10 the pres
ent time has been remarkably free from
! dishonest officials. There IS not a caS1
on record in the Treasury Department o
/ an Internal Revenue collector being a de-
faulter. Treasury officials are at a los'
to assign a reason for this. as the system
| Of inspection is no more rigid. and as tht
amount Of money handled by lnterna
Revenue collectors is greater than tha
! handled by any other officials of the Gov
eTnment-