) No. 2033.

2d Session.

WILLIAM BOLDENWECK.

FEBRUARY 3, 1909.-Committed to the Committee of the Whole House and ordered to be printed.

Mr. HAWLEY, from the Committee on Claims, submitted the following REPORT.

[To accompany S. 890.]

The Committee on Claims, to whom was referred the bill (S. 890) for the relief of William Boldenweck, assistant treasurer of the United States, in charge of the subtreasury at Chicago, after hearings on, and careful consideration of, the questions involved, report the same favorably and recommend the passage of the bill.

The committee regard shortages in the public funds in the custody of officials of the United States Government as an exceedingly serious matter, and would not favorably report a bill providing for the relief of any such official unless, upon careful scrutiny, it clearly appears that the official was in no wise implicated in the shortage, and that he took every precaution to prevent losses and exercised due diligence in the discharge of his trust.

We believe Mr. Boldenweck did all these things, and we do not find that his honesty and integrity are anywhere called into question.

William Boldenweck was appointed assistant treasurer of the United States, in charge of the subtreasury at Chicago, on July 16, 1906. With Mr. Franklin W. Lantz, Chief of the Redemption Bureau of the United States Treasury, he counted the funds in the subtreasury. The fact that it required some three weeks to do this counting indicates the large amount of money received and kept in that place.

Upon assuming control Mr. Boldenweck made certain changes in the methods of conducting the business of the subtreasury, for the purpose of providing additional safeguards for the keeping of the funds. The following affidavit contains an explanation of these changes, as well as a history of the case, and a statement of the measures taken after the discovery of the shortage to ascertain who were the guilty parties:

To the honorable MEMBERS Of Congress,

Washington, D. C.

GENTLEMEN: On February 20, 1907, the sum of $173,000 was found to have disappeared from the subtreasury at Chicago, Ill. As assistant treasurer of

the United States in charge of the subtreasury at Chicago, I was charged with the custody of these funds, and inasmuch as a bill has been laid before Congress to relieve me and my bondsmen from liability for the loss thus sustained by the Treasury Department, I deem it proper that I should make a full statement covering the whole period of my incumbency in office, but embodying more especially those facts which tend or may tend to throw light upon the mys terious disappearance of these funds.

My appointment as assistant treasurer of the United States having charge of the subtreasury at Chicago, took effect on July 16, 1906. On July 14, following my appointment by His Excellency the President of the United States and the confirmation of that appointment by the Senate, I was informed that on July 16 Mr. Lantz, chief of the Redemption Bureau, would be at the subtreasury in Chicago, with his assistants, to verify the cash then on hand, and that I should be there with one representative (whose pay should not exceed $5 per day) to satisfy myself as to the correctness of the count. I appeared there at the time appointed with my representative, and in so far as I could I watched the entire count in person. To count all the money then in the vaults of the subtreasury took about three weeks, business going on uninterruptedly in the meantime. It was not until the count was finished that I could devote my undivided attention to the day-to-day duties of my office and look into the system and working of the department. I had been informed by my predecessor in office that on three different occasions, within a very limited period, three packages of unfit currency which had been entered upon the books as having been deposited by the banks had either disappeared from the subtreasury or had not been brought in by the banks at all. This led me to. first investigate the manner in which the business of the redemption department was conducted.

I found that it was the practice of the banks to bring their mutilated currency to the subtreasury in sealed packages, with the amounts which these packages contained on the outside of the wrappers. These sealed packages, done up in bundles, were accepted by the redemption teller, who gave a conditional receipt for the whole amount which the bundle was supposed to contain. I felt that this practice ought to be corrected, and accordingly I at once notified the banks that all bundles of mutilated currency tendered to the subtreasury should be so done up as to expose the number of packages contained in the bundle and the amount of money contained in each package, so that these could be then and there verified by the redemption teller, and a receipt obtained from him for the number of small packages, as well as for the amount which each of the small packages contained. The redemption teller was also ordered to take a like receipt from the assorting teller, and the assorting teller was instructed to take a like receipt from the men assisting him. I also directed the assorting teller to keep an account of all mutilated currency turned in to him, and of all overages, shortages, and counterfeit money, and instructed him to make a report to me daily with respect to these items.

In the silver and minor coin department the practice was to receive the bags of coin and issue receipts for them without weighing them in the bulk, and the banks were continually complaining on account of shortages. To correct this condition I at once gave orders that no coin should be received and no coin shipped without having first been weighed in bulk, and my instructions were that if it was found to be either too light or too heavy the bag should be at once returned to the depositor and a count made for verification; and in this department also an order was given that in future a daily report should be made to me of all shortages, overages, and so forth Following the practice which I thus inaugurated, experience has shown that time and again bags have been returned to the depositor as being from ten to one hundred dollars short in each instance. On occasions, too, overages have been found.

The subtreasury at Chicago has three vaults. These are under the constant supervision of two vault clerks, neither one of whom is allowed to enter the vaults in the absence of the other. After I had been in office for some months I accidentally discovered that the bars of the doors were so wide apart that the clerk having what is known as the "master key" could insert his hand through the bars and open the vault from the inside. I immediately reported this condition to the custodian of the Treasury, but the change which I deemed wise as tending to greater security was not approved by the Supervising Architect. Accordingly, at my own expense, I provided temporary means of better pro tection, until the Secretary of Treasury presently ordered the doors to be made safe.

Then, again, I found that the wire cages in which the currency counters and gold weighers worked were inadequate, so that the practice had grown up of counting outside of the cages. Moreover, the cages were scattered in different parts of the department. I had all these cages grouped together, and I added to them several cages which were in the basement and were not in use. The cages as rearranged were so placed that a man at work in any one of the cages commanded a view of all that was going on in the other cages.

Formerly, the general checking up of the cash had been allowed to go for several months, while now it is never allowed to go longer than fifteen days, and is often checked up every three or four days. What we call the vault proper, which used to be checked up about once in two weeks, is now checked every day.

Formerly the shipping of mutilated currency was in charge of the vault clerks, but it is now done by two men under the supervision of the assorting teller, who takes their receipt for all moneys turned over to them, while they in turn take the express company's receipt for the moneys when shipped.

Formerly no record was kept of gold brought in by the banks in exchange for gold certificates, on which the banks have to pay for light-weight gold at the rate of 4 cents a grain. As the office is now managed, the gold tendered in exchange for certificates is first weighed in bulk and the gross weight marked on a tag. The bag is then opened and the pieces are counted. If the number of pieces is found to be correct, each piece is weighed separately, and all light weight is charged to the bank. Then whatever gold is found to be one-half of 1 per cent light (the government regulation) is put in separate bags and held at the subtreasury until orders arrive for its shipment to the mint, while the full-weight gold is bagged and put in store. Neither unfit currency nor light-weight gold is now paid for out of the subtreasury until the count and weight are amply verified and found to be correct. Departing now from the practices prevailing at the subtreasury before and since my incumbency of the office, and the added precautions which I have from the very first taken to make my custody of government funds more secure, I beg to present all of the facts which are known with respect to the shortage of $173,000 which was discovered on February 20, 1907, as above stated.

Nothing had occurred to arouse suspicion or in any way to suggest that any shortage existed until the very moment when the shortage was reported. On Wednesday, February 20, 1907, at about 3.30 o'clock p. m., Mr. G. W. Fitzgerald reported that his cash was short $173,000. The last checking up of all of the tellers and of the cash in the vault had been done six working days before that, on the afternoon of February 11, after office hours, and everything had been found to be correct. On February 20 Mr. Fitzgerald, who had been out to lunch, returned to his post about thirty-five minutes late. He was informed that his wife had telephoned to him that her sister had died and that he should come home as early as possible. This information was brought to me by my cashier, and as Mr. Fitzgerald had asked to be excused for the following day, I told my cashier to put Mr. Lock in charge. It appears that after Mr. Lock had finished his own work, at about 3.30 p. m., he inquired of Mr. Fitzgerald if he had balanced his cash, and Mr. Fitzgerald told him he was $173,000 short. Mr. Lock then went into the cage and assisted Mr. Fitzgerald in counting the currency and found the shortage just as stated. Then my cashier, on learning of the shortage, immediately went into the cage, and with the aid of one of the vault clerks counted the cash, and he, too, found a shortage just as stated. The currency in the vault was then verified and found to be correct. We worked that night until 9 o'clock without getting any clue to the missing funds. The next morning I immediately notified Capt. T. Porter, of the Secret Service, and on his suggestion I employed Pinkerton's detectives to shadow all the men who had any dealings with Mr. Fitzgerald. At the same time, thinking that perhaps the missing funds had been by mistake packed and shipped to the Treasury at Washington, I telegraphed to the chief of the Redemption Bureau at Washington to personally supervise the opening and counting of the packages of money shipped from Chicago on February 19 and 20 and report to me any error.

On the same day (February 21), in the afternoon, in the presence of Mr. Schumacher and Captain Porter, I had the men working under me brought before me, one by one, in my private office, and there they were closely ques

tioned with respect to whatever they knew or had seen which could tend to throw any light upon the disappearance of the money. This investigation was continued throughout all of the next day (Washington's Birthday). Mr. Fitzgerald's statement was that he had balanced the night of February 19; that he had checked his cash into the vault that night, and had again checked it out of the vault the following day, the 20th, and that it was correct. During his absence at lunch on February 20 his cage was locked, and it would have been impossible for any one to have entered it without being seen, as the men's lockers were very close to Fitzgerald's cage, and all of the employees, in going to and returning from lunch, had to pass his cage in order to get to their lockers.

On the day when the shortage was reported there was only one visitor at the subtreasury. He was shown through the office, after registering, by Mr. G. Stapp. And an investigation was afterwards made as to him by the Pinkerton detectives.

Mr. Fitzgerald, on being asked what his opinion was with respect to the shortage, felt very positive that the money had not been shipped to Washington. Word was not received from Washington until Saturday, February 23, at 5.30 o'clock p. m., and the reply which I received was that the shipments made from my office on February 19 and 20 were found to be correct.

From that day to this there has been no development, so far as I know, to throw any real light upon the strange disappearance of these funds. Although the secret-service agents of the Government and the force of Chicago detectives have been continuously at work on the matter it still remains a mystery.

In conclusion, I can only say, with the consciousness that I am speaking with perfect truth, that I have taken every step during my incumbency which I thought calculated to improve upon the practices prevailing in the office before · my time; that I have done all in my power to safeguard the moneys of the Government; that it has been my invariable practice to be at my post at 8 o'clock in the morning and continue there until the vaults are closed at night; and that I have lost no opportunity to circulate among the men who are working under me, so as to exercise over them the strictest and most diligent supervision.

I earnestly hope that the foregoing statement will appeal to you as the unvarnished truth, so far as the truth has come to my knowledge, and that you may find in it good ground for believing that I have done all that could be done to prevent this heavy loss, a loss which would fall as an overwhelming hardship upon me and my bondsmen unless Congress acts for our relief.

STATE OF ILLINOIS, County of Cook, 88:

WM. BOLDEN WECK.

William Boldenweck, being first duly sworn, upon his oath says that he is the assistant treasurer of the United States in charge of the subtreasury at Chicago, Ill.; that he prepared the foregoing statement to which his name is subscribed; and that all of the matters therein set forth are true of his own knowledge.

WM. BOLDEN WECK.

Subscribed and sworn to before me this 9th day of January, A. D. 1908. [SEAL.] HENRY LOCK, Notary Public. The cage in which the shortage was found was checked, we are informed, on February 11, 1907, and reported as correct by the employees assigned to do the checking. Mr. Boldenweck stated to the committee that no employee knew when or by whom his accounts were to be checked, nor did the employees who were to do the checking know that they were to check any particular employee until assigned to do so.

He also stated that he was in his office every business day from the date of his appointment until the date of the shortage, and gave his personal attention to the business.

The Treasury Department, upon being informed of the shortage, ordered Mr. G. C. Bantz, then deputy assistant treasurer of the

United States, to Chicago to investigate, and under date of February 26, 1907, he reported as follows:

OFFICE OF THE ASSISTANT TREASURER

The SECRETARY OF THE TREASURY,

OF THE UNITED STATES, Chicago, Ill., February 26, 1907.

Washington, D. C.

SIR: I arrived at the subtreasury last night at 4.15 p. m., and was in consultation with the assistant treasurer, Captain Porter, and Mr. Schumacher, the Pinkerton man, until 7 o'clock. This morning I telegraphed you the information I received from the assistant treasurer and also from Captain Porter and the Pinkerton man, a copy of which I inclose. As stated therein, the shortage was discovered on the afternoon of February 20. Mr. Boldenweck explains his failure to inform the department at once of the shortage in this way: He says he was not sure until Saturday, at about 6 o'clock, that it was not an error in shipments to Washington. He had wired the treasurer in regard to the matter, but up to that time had no reply. Then he received a telegram from the treasurer saying that the money shipped to him on February 19 and 20 was found all right. Immediately on receipt of this telegram he wired you the amount of the shortage. He says that it was hard to believe that anyone could take $173,000 from the assorting teller's cage. Mr. Fitzgerald, the teller, had his entire confidence, and until Saturday night he could not believe that anything was seriously wrong. Captain Porter and Mr. Schumacher have several of the employees under suspicion and watched. Just what may develop from their efforts I am unable to state.

Mr. Boldenweck states that on the 21st all the paper money in the office was counted, bill by bill, to make sure that no error had been made in any of the paper money. This count was in addition to a count that was made on the 20th of the paper money in the vaults. Not finding anything wrong there, he felt that the error was in the shipments to Washington, until he received the telegram from the treasurer. Neither the assorting teller (Fitzgerald) nor the others suspected have been suspended as yet. This action or inaction by the assistant treasurer is the result of the advice of Captain Porter and Mr. Schumacher. Neither think that suspension or arrests at this time is the proper thing, and the United States district attorney (Mr. Sims) seems to think they are right. Mr. Fitzgerald will be given leave of absence to-morrow, I think. The assorting teller does not deal with the public in any way. His dealings are entirely with the different tellers, and the loss is not the result of a wrong payment to anyone on the outside. Personally, I think it is a clear case of steal. In order to establish the fact that the shortage is not somewhere in the case, I suppose an otlicial count will be necessary. I have not had an opportunity to give much attention to the books, as I have been busy with Captain Porter and others all day. The books do not seem at all promising to me. The assorting teller has nothing to do with any of the books except the cash settlement book and the tellers' settlements. All these books have been checked by the cashier and nothing found. I shall take them up to-morrow. I shall report immediately anything of importance. Awaiting your instructions, I am,

Respectfully,

G. C. BANTZ,

Deputy Assistant Treasurer.

And on March 30, 1907, Mr. Bantz reported further:

Hon. GEORGE B. CORTELYOU,

TREASURY DEPARTMENT,

OFFICE TREASURER OF THE UNITED STATES,
Washington, March 30, 1907.

Secretary of the Treasury.

SIR: I have the honor to submit the following report of the examination of the book accounts and moneys in the office of the assistant treasurer of the United States, Chicago, Ill., made under authority of department letter of March 2, 1907.

I was assisted in the examination by Mr. John Moon, of the office of the Secretary of the Treasury, and by Messrs. W. J. Manning, E. M. McLeod, and H. H. Hulbirt, of the office of the Treasurer of the United States.

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