Gilpin observer., 1903-12-03
RESULTS OT POSTAL INVESTIGATION
Details of Fraudu
o the Presiden

briggs Beavers, and Miller have been
indicted by the Federal grand jury in the
city Of Brooklyn. N. T."
The report continues.
"In 1890 while John Wanamaker was
Postmaster an effort was made
to introduce the Bundy time recorder for
use In the postal service. but 1t failed.
Later. during the administration OF Post
master-General Wilson, upon the recon-
mendation of A. w. Machen, It was adopt
ed. Machen estimated that the entire
free-delivery service coula be supplied for
SIS. $3.50.
"In 1901 an effort was made by First
Assistant Postmaster-General W. M.
Johnson and his chief clerk, John M. Mas
ten. to reduce the price of these time re-
corders. but the effort was afterwards
abandoned.
III. j. Truesdell. who was agent of the
company at the time these clocks were
first adopted. states that he paid Machen
$1,000 for his services in securing their
introduction into the service. Criminal
action on such payment Is barred by the
statute of limitations.
By the purchasing OF canceling ma
chimes for use in the postal service it is
shown that the government has lost over
100000. which sum was divided among the
conspirators interested. Here again GRIM
inaf action Is barred by the statute Of lin
itations.
says Mr.. BristOw:
THE most important contract for can
ceiling machines was that for the Dore-
mus. Its original promoters were w. D..
Doremus. the inventor; L. T. Michener.
member Of the law firm of Dudley &
Michener. of Washington, and H. J..
Truesdell, Of Binghamton. N. Y. The
company was organized August g. 1893,
and capitalized for 100000. divided into
1000 shares of 500 each. Truesdell was on
intimate personal relations with Beavers.
and In 1889 an order was given for 100
machines. at $50 each. Long before all
OF the 100 machines had been delivered
the department received numerous COM
plants from postmasters stating that
they were worthless; and on account of
the great dissatisfaction with this first
100 known as Model No. / the Doremus
company established factory of its own
In Washington and created Model No. 2,
and Beavers. without testing its efficien-
cy. on June 30. 1900. contracted for 100 of
the new machines at Sz25 each. Model No.
2 also proved failure. and Model No. 3
was made, and Beavers promptly gave an
order for 100 machines Of that model at
$225 each.
'of the 200 machines purchased of mod
els Nos. and but 80 are now in use,
the remaining 161 being practically a net
loss
six hundred and seventy-one of these
machines have been ordered by the de-
partment, at a net cost of $143.4 ATS. This Is
repetition OF the story of automatic
cashiers and Elliott & Hatch typewriters.
except that II is on a larger scale
In 1901 Truesdell and Green became es.
tranged and Truesdell left the employ of
the Bunday company. and also sold his
interest In the Doremus canceling ma
chine When interviewed by the inspec-
tors Truesdell stated that before the sec
ond order on June 80. 1900, was given for
100 machines Green told him he had
transferred to Perry s. Heath, First AS
sistant Postmaster-Generai, $4,000 worth
OF his stock. In consideration OF receiv-
ing an order for not less than 800 ma
chimes.
Heath refused to make a written state
ment. but said verbally to Inspector Sim
mons that he never received any stock
from the Doremus Canceling Machine
kind. directly or indirctlye
"On October 5. 1903. indictments were
found against Green, Doremus and Beay-
ers for conspiracy to defraud.
The evidence against Heath was also
submitted to the district attorney. who
decided that II was not sufficient to war
rant his Indictment.
The administration OF Beavers was, IL
possible, more demoralizing upon the in
tegrity Of the service than that of Ma
chen"
In conclusion the report says:
tut the purposes OF this report, the
investigation ordered by you on March
has been completed. In the preparation
OF cases for trial where indictments have
been found, informal ton may be secured
which will necessitate further investiRa-
ton and possibly invoive persons not now
implicated.
THE system of organized corruptior
that. has been disclosed began In 1898 and
continued until stopped by this investiRa-
tion The amount of money secured by
the corrupt officials and their confeder-
ates is small as compared to the. total
loss TO the Government. To illustrate:
Barrett received but $4,000 from Ar
mold. yet that company defrauded the
people out of over 100000 Machen
probably did not receive more than y26.-
900 from the Gror fastener. Yet the gov
ernment has paid approximately $3.50, 600
Tor that device. which represents a net
loss, since the Department continued.
by the terms OF the contract for letter
boxes. to pay for the original fasteners.
Beavers and his associates received less
than 100000 from the automatic cashier,
Yet the Department expended $74,275 for
this wholly unnecessary machine. The
total amount that the perpetrators of
these frauds themselves received can not
be definitely learned. but IL will aRYre-
gate between 100000 and $i00, 900, while
the loss to the government considering
the unnecessary supplies that have been
purchased and the inferior quality of
those furnished by fraudulent contra CT
ors. can not be estimated with any de-
gree OF accuracy.
AS the gross abuses have been
brought to light they have been prompt
ly corrected by the proper departmental
officers. Contracts where fraud has been
discovered have been annuiled.
THE results OF the investigation dem.
onstratc that all travelling agents Of the
Department-such as. assistant superin-
tendents OF salaries and allowances Of
the free-delivery service. the Railway
Mail Service. and the registry system,
and inspectors-should be placed under
one organization.
"A number OF changes should be made
in the organization OF the Department in
order to provide more perfect check
on the operations OF various divisions. and
some restrictive legislation affecting the
divisions Of salaries and allowance. Of