Liveblogging the Civil War False Claims Act: The House debates commission payments for purchasing ships

by Ben Vernia | February 15th, 2012

On February 15, 1862, the New York Times reported on proceedings the day before in the House of Representatives. The lawmakers were debating the budget for warship construction, and once again turned to the scandal of the Navy’s use of an agent to purchase merchant ships for wartime use. The agent, Morgan was paid a commission based on thge ships’ purchase price (thus providing him with a disincentive to bargain on behalf of the U.S.).

WASHINGTON, Friday, Feb. 14. . . . The report and resolution of the Naval Committee in regard to the Secretary of the Navy was taken up. Mr. FOOT, of Vermont, (Rep.,) said that the resolution stated that a certain mode of making purchases by commissions was unwise and not to be tolerated. He (FOOT) comenced that the trouble was not in the manner of compensating but in the character of the agent. A dishonest agent will cheat the Government under any mode. An honest man will make purchases and charge only the commission. A dishonest agent will purchase at, perhaps, the lowest price, but will hand over his purchases to the Government at an enhanced price and pocket the difference. The safety of the Government depends on the honesty and fidelity of the agent, and this is the only security. The resolution does not point at the real evil. Mr. WILKINSON said he could not go back to the people of [???] with a vote sanctioning a transaction giving one man more money than was paid to all her soldiers in the field — a fortune. He thought the question was not whether the Secretary of the Navy or Mr. MORGAN were honest man; he would not deny that; but it was a burning shame when the people of the country are taxed and going to be taxed to pay such amounts to one man; and the people of the country condemn it, and will condemn the Senate if they sanction it. The Secretary of the Navy doubtless thought he was paying a proper and usual price; but when he found he was paying too much, did he stop? Then he ought to have stopped paying so much, but he did not. What encuragement have the people to give up their hard earnings it we allow the officers of the Government to pay them out in such large sums to personal friends?

. . .

Mr. SEDGWICK showed the impracticability of Congress prescribing, as had been suggested, the form and draft of the gunboats, for the reason that they would have to be constructed to suit the waters in which they were to operate. Therefore, that branch of the subject must be left to the best discretion and good sense of the Navy Department. He should regard this as of little consequence. But there is an admitted purpose and intent to cast censure on the Secretary of the Navy. He was not prepared to say that the Secretary of the Navy had not done anything calling for reproof or condemnation, and there was nothing in the character of the transaction calling for rebuke. He had read the response of the Secretary of the Navy, and considered it a fair and frank exposition of the transaction, and he solemnly declared that in his (SEDGWICK’s) judgment it was a complete vindication of the honesty and integrity of the Secretary of the Navy, and it ought to be perfectly satisfactory to anyone not predisposed to fault-finding. The Secretary of the Navy on the commencement of the war was placed in a difficult position. He was called on for vessels immediately, and he had no time to procure them in the ordinary way, but had to go into the market and buy them. The Secretary tried purchasing through brokers, but the most outrageous frauds were perpetrated and he was compelled to select an agent. He (SEDGWICK) referred to the character of Mr. MORGAN as high and unimpeachable, and contended that the Secretary had done the best he could, and had selected the very best agent he could, and that the purchases made by Mr. MORGAN were made on the best terms and with great advantage to the Government. Mr. MORGAN was not allowed to make any purchases until the vessels had been examined by a Board of Naval Inspectors. But the chief complaint is not that the agent (MORGAN) paid too much for the vessels, or that the Government did not receive the full benefit of every dollar paid, but that the agent received too large a compensation. At the time the agent was appointed, no one knew the amount of the purchases he would have to make; but the amount proved to be large — three and a half millions — and the commissions reached the sum of $70,000. The per centage was one, decided by long years of experience to be proper. Shall a high public officer be held up to reprobation because he had adopted the rule of the commercial world under the force of circumstances! He (SEDGWICK) thought the country, in its sober judgment, would decide three was absolute economy in the course of the Secretary of the Navy, although it had been profitable to the agent. He (SEDGWICK) contended that Mr. MORGAN had saved a large amount to the Government, and at this time the naval achievements were sending joy through the country. The head of the Navy Department ought not to be stricken down. The amendment appropriating $15,000,000 for building additional gunboats was adopted, 118 against 25. Also, the amendment appropriating $50,000 for an ordinary foundry at Washington, and for ordnance $1,000,000. The bill then passed.

Leave a Reply

Recent Posts

Recent Comments