In August, 1915, the Treasury Department contract with the express company, under which national bank circulation for many years had been shipped to the banks, was discontinued and all shipments thereafter were required to be made by registered mail insured. This change necessitated the use of postage stamps on all money packages shipped by the Comptroller to the banks. The postage was furnished the Comptroller by the Treasury Department upon requisition, and the Treasury was reimbursed by the banks receiving the currency.
This method of affixing postage on currency shipments proved to be unsafe and unsatisfactory, as it involved the use of large amounts of postage stamps and accounting therefor, and was soon superseded by an arrangement made with the city postmaster to have the postage placed on the money packages by the postmaster at the branch post office in the Treasury Department. A postage account was opened with the postmaster and settlement made by check at the end of each month through the regular disbursing officer of the Treasury Department, thus avoiding the handling of any cash or postage by the employees of the Comptroller's office.
Some time after this change became effective the attention of the Secret Service Division of the Treasury Department was called to the fact that an employee of the department had recently made several purchases of goods from a mail-order house in Chicago, paying for the goods in postage stamps of the larger denominations.
Investigation of this complaint led to the discovery that this clerk was an employee of the Comptroller's office and had charge of the postage accounts at the time these purchases were made. When called upon to explain the payment for his purchases in postage stamps he admitted having appropriated the stamps at the time he had charge of the postage and had stolen from time to time about $60 worth. He explained that his method of procedure was to place short postage on a number of packages each day and appropriate to his own use the amount of the shortage.
This man had been a trusted employee of the department for a number of years and was one of the clerks who had access to the money vaults of the bureau in which a half billion of dollars were stored.
Although a count of the vaults had been made only a short time previously it was feared that he might have stolen some national bank notes after completion of the count. The Comptroller therefore deemed it advisable to have a recount made and at his request the Secretary of the Treasury appointed a committee of three to make the count, composed of one each from the offices of the Secretary, the United States Treasurer and the Comptroller of the Currency, with the necessary counters and other clerical assistance.
With the exception of a few minor discrepancies between the vault balances and the books, which were readily reconciled, no shortage was discovered.
A few days subsequent to the completion of this count and before the committee had made up and submitted its report, it became necessary to reissue circulation to a certain bank on account of the redemption of some of its notes. When the vault package containing the circulation of this bank was counted it was found to be short ten sheets of fifty dollars each. This same package had been counted by the committee a few days previously and found to be correct and no shipment had been made therefrorru It was evident, therefore, that the missing sheets had been taken between the date of the count and the time the shortage was discovered, a period of about two or three days, and that some one connected with the count had taken them.
The Secret Service Division of the Treasury Department was immediately notified of the missing sheets and furnished with a description of the notes, and the Redemption Division of the Treasurer's office was advised of the theft and requested to look out for any of the notes that might come in for redemption. In the course of a few days some of these notes were received by the United States Treasurer for redemption, having been signed with fictitious names and placed in circulation in Washington, but as they were mingled with a miscellaneous lot of notes received from different banks it was impossible to obtain any clue to the source from which they came.
In the meantime the secret service agents of the department had been at work on the case and several employees who had assisted in the count were under investigation and surveillance, finally by the process of elimination suspicion was narrowed down to one man who was shadowed and caught in the act of passing one of the notes in a department store. He was immediately placed under arrest and charged with theft of the notes, some of which were found on his person. He admitted his guilt and informed the secret service agent where the remainder of the notes could be found concealed at his home.
This man was detailed from another bureau of the Treasury Department to assist the committee in making the count. He had been in the employ of the department for a number of years and was considered honest and trustworthy, having been previously assigned to similar work several times. He was quick to observe the defective system employed in making the count and to take advantage of its weakness. Fortunately, however, very shortly after the package containing the missing sheets was counted it became necessary to ship some currency to this particular bank in reissue of circulation redeemed, which disclosed the shortage. Had no shipment been made that, bank for some time after completion of the vault count it would have been impossible to account for the missing notes or the manner of their disappearance and suspicion would have fallen upon all of the regular vault clerks of the division, as it would have been assumed that the sheets were taken or in some unaccountable way disappeared after the committee had verified the vault balance and completed its work.
No one was quicker to realize this fact than the thief who stole the money. He gambled on the possibility of escape from suspicion or detection, took the chance and lost. He was indicted and admitted his guilt, but escaped the penalty of his wrongdoing by being paroled by the court instead of being sentenced to a term in the penitentiary.
Almost immediately following the disposition of this case another very suspicious circumstance was accidentally brought to light which upon investigation disclosed a further shortage through an entirely different source.
In the rearrangement of the contents of the shelves in the office file room in the sub-basement of the Treasury to make space for additional stock, nineteen sheets of incomplete national bank circulation, amounting to $950, were found concealed under some old record books. How long these notes had been hidden there or what the original sum amounted to never was definitely ascertained. But these particular notes were part of the last package of eight hundred sheets of new circulation in the vaults of the Comptroller for a bank whose charter had been extended several months previously.
When the charter of a national bank is extended a new series of notes was then required by law to be issued, of a design readily distinguishable from the notes issued to the bank before extension, and the cancellation and destruction of all the old notes.
The office record of the amount of old circulation in the vaults to the credit of this particular bank had been changed so as not to show the receipt from the Bureau of Engraving and Printing of the stolen sheets.
The notes on hand for this bank, of the old series, were carefully checked against the record as previously changed and found to agree, but subsequently it was ascertained that a number of the notes of this same series had been placed in circulation with forged signatures of the president and cashier of the bank and apparently with no attempt whatever to disguise the handwriting of the forgers or to imitate the signatures of the officers.
A year or more before these occurrences the chief of the issue division of the Comptroller's office was stricken with paralysis and was incapacitated for duty for several months. While he never fully recovered from this attack, in the course of time he got sufficiently well to return to the office and supervise the work of his division.
During the progress of investigation of this matter this chief had a second stroke of paralysis and while confined to his home from this attack committed suicide by shooting himself.
This man had been employed in the Comptroller's office for nearly a half century. He was a veteran of the Civil War and a member of the famous "Iron Brigade" of Michigan. During the greater part of his service in the bureau he held positions of trust and responsibility. At one time he was chief clerk of the office. For many years and up to the time of his death the money vaults of the bureau were in his charge, containing at times as much as a half billion dollars. Every Comptroller under whom he served had absolute confidence in his integrity and honesty. He was a man of excellent habits and of good moral character. Of the entire force of his division he was probably the last person upon whom the slightest suspicion of dishonesty or wrongdoing would rest, and when information of his suicide reached the office, although the investigation of the forgery and circulation of these notes was then in progress, he was not even then suspected of being concerned. Subsequent disclosures, however, furnished such conclusive evidence that he not only committed the forgeries and put the notes in circulation, but had manipulated and falsified the records in an endeavor to conceal his crime. The evidence was so convincing that his family unhesitatingly made good the loss to the Government to the extent of their financial ability.
With the memory of his long and previously good record in the service of the department it was the charitable belief of those who knew him and were familiar with these facts, that he was mentally irresponsible at the time he committed this crime as a result of paralysis, from the effects of which he suffered two or three years before his death, and that his knowledge of the fact that the matter was under investigation with the certainty of detection, led him to self-destruction.