Q. What are these routes that are marked with a star?—A. Those are the routes that were included in the trials of the Dorsey case.

Q. Was it the opinion of the Post Office Department that the expedition obtained upon these routes was obtained through fraudulent representations?-A. Yes, sir.

Q. If the expedition was obtained through fraudulent representations or false affidavits, then the whole amount paid for expedition was illegally paid under the rulings of the Department?-A. We thought that if suits were brought we should sue for all the payments made for expedition. There is no middle ground at all in the matter. I told Colonel Ingersoll that if we were to sue we should probably sue for all that had been paid, alleging fraud in the inception.

Q. There were some 90 and odd routes, were there not, that were mentioned as being implicated in these fraudulent transactions?—A. Ninety-three.

Q. Have you made any estimate of the others not included in this statement?-A. No, sir; I have no data on the others. I picked out the largest routes, all that we had evidence upon. As to the other, we have no information upon which we could base suits.

Q. Is it your opinion that an investigation of the other routes making up the 93 would show a similar state of facts to that which you found in these forty included here ?-A. I think it would in some cases, but it is hard to say about that. Undoubtedly on some of the routes it would not. Some of them are good cases where there is no fraud at all; small service on which allowances were properly made for expedition

Q. I see here that on the route from Fort Worth to Yuma John T. Chidester is put down as having expedition to the amount of $477,000. Who is he? A. I never saw John T. Chidester; but it is generally understood that the persons interested in that contract are Logan H. Roots, of Little Rock, and R. C. Kerens, of Saint Louis, Mo.

Q. Any others?-A. There may be others, but I cannot now recall heir names.

By Mr. STEWART:

Q. Is this Chidester, a man of straw?-A. Chidester was the contractor, but how much personal interest he had in the routes, I never knew.

Q. Who was on his bond?-A. One Senator was on the bond on a proposal, on that route.

By Mr. VAN ALSTYNE:

Q. Do you remember his name?-A. No; but the case came up in the discussion before Judge Key, as to whether that Senator could legally be a bondsman on that proposal, and Judge Key held that he could, and accepted the proposal. There was a question about accepting it.

Q. That seems to be a very large_contract.-A. Well, the route is 1,420 miles long from Fort Worth, Tex., to Yuma, Ariz. It was expedited, and $165,000 was allowed in the order for expedition.

By Mr. STEWART:

Q. I suppose it may have been true that on some of these routes expedition was necessary?—A. Yes; I think expedition was necessary on some of them.

Q. And some additional compensation was, of course, required in

those regions where the country was filling up?-A. Oh, yes; the dif ficulty was in having too slow a schedule to start with on the routes. Of course, the Department can never tell what causes may arise for increasing the speed in the future, and they sometimes make their schedules slow, because expedition may never be required; and if you put on a fast schedule, of course it will cost more than a slow one.

Q. State whether or not the officers of the Department have ever entered into any computations to ascertain or have been able to ascertain how much expedition could have been made legitimately on those routes so as to determine, for instance, what percentage of the gross sum might have been properly allowed for expedition.

Mr. VAN ALSTYNE. The truth is that the officer of the Department who was expediting this service was interested in these improper transactions as particeps criminis.

The WITNESS. That is what the Government attempted to maintain in the star-route trial.

Mr. VAN ALSTYNE. And he has been indicted and has several indictments pending against him for his connection with these very transactions.

The WITNESS. Yes, sir.

Mr. STEWART. That is another question entirely. What I was trying to get at is how much of the gross sum that has been paid for expe dition the Government has actually lost, the estimate being made upon the theory that some payment was proper and necessary.

The WITNESS. I think it is impossible for any person to tell how much should have been allowed in any of these cases. Under the statute which authorized the Postmaster-General to expedite a schedule and make an allowance for it there is no way in which the Department can make an accurate allowance for the increased speed. The Department has to rely entirely upon the contractor's statements as to what the cost will be. The methods employed in making these allowances for expedi tion were, in my opinion, wholly unwarranted and not authorized by the statute at all.

By Mr. VAN ALSTYNE:

Q. You did subsequently investigate several of these routes. Now, did you make an estimate or a calculation of the extent of the claim of the Government against these various contractors for overpayments improperly made to them?-A. Yes, sir. I took Mr. Brady's method of figuring the expedition.

Q. And is this statement which you have presented here the result of that calculation?-A. Yes, sir; that is the statement of all the amounts paid for expedition on those various routes without regard to the question of what amount of the money was actually earned by the contractors. In other words, we claim that there was fraud in all those cases, and if we went to suit we would sue for all the payments, on the ground of fraud in the inception.

Q. Now, the question of Mr. Stewart is this: About what proportion of the money so paid do you regard as actual overpayments to these people?-A. I have no means of ascertaining that, and I think it cannot be determined.

By Mr. STEWART:

Q. I understand you to say that the methods adopted by the Department in making allowances for this expedition were in your judg. ment unauthorized by the law as it stood?-A. Yes, sir.

Q. Please state in what respect.-A. Section 3951 of the Revised Statutes is as follows:

No extra allowance shall be made for any increase of expedition in carrying the mail unless thereby the employment of additional stock and carriers is made necessary, and in such case the additional compensation shall bear no greater proportion to the additional stock and carriers necessarily employed than the compensation in the original contract bears to the stock and carriers necessarily employed in its execution. Section 620 of the Post-Office Regulations provides that

When it becomes necessary to increase the speed on any route, the contractors will be required to state, under oath, the number of horses and men required to perform the service according to the contract schedule, and the number required to perform it with the proposed increase of speed.

That regulation, you will perceive, substitutes in place of the word "stock," which is used in the statute, the word "horses," and for the word "carriers" in the law, it substitutes the word "men," so that when they desired to expedite the schedule on any route, the contractor came in and made oath that on the present schedule so many horses (or “animals," as the case might be) and men were required to perform the service, and that so many horses and men would be required to perform it on the expedited schedule. Now, the method employed to adjust the pay for expedition was to add together the horses and men on the original schedule and to add together the horses and men on the expedited schedule, subtract the one from the other, find out what the increase was, and make the allowance pro rata. In other words, a horse was a man, and a man was a horse, for the purpose of calculating the expedition. Now, I have not heard any discussion on that point, but it seems to me that that way of figuring expedition is entirely unwarranted by the law. Indeed I don't know how any man can fix an allowance for expedition under that law as it stands and be safe. I have taken the ground upon all requests for expedition of that character that we would readvertise the service unless the contractor would carry the mail on the expedited schedule without additional compensation, because I say I do not know how to fix compensation for that expedition under the statute.

Q. So you practically make the contractors work under the original contracts-A. Yes, sir. In the first place, I try to get the schedule as fast as possible at the beginning. In some cases the expedited service can be performed with little or no additional cost.

Q. Do you think any amendment of the law is necessary with reference to that matter; and if so, can you suggest what amendment should be made?-A. I drew a bill and had it introduced at the last session of Congress which provided for the repeal of this statute. I can almost remember the terms of the bill, but I can send you a copy of it.

Q. What became of that bill?-A. It did not get through.

Q. Was it reported favorably?—A. I think it was reported favorably from the committee, but I am not certain about that.

By the CHAIRMAN:

Q. What were the general provisions of it?-A. That whenever i becomes necessary to increase the speed at which the mail is carried on any post route the service shall be readvertised for the reduced time required, provided that the contractor for the service shall have the option of performing the expedited schedule without additional compensation therefor. Then it provides for the repeal of section 3961 of the Revised Statutes and the subsequent act which limited the allowance for expedition to 50 per cent. upon the contract as originally let.

By Mr. STEWART:

Q. As I understand you, your practice at present amounts to pretty much the same thing?-A. Yes; we carry it into practice, but I do not like to see the law stand as it is.

By the CHAIRMAN:

Q. What was the weak place in the statute which permitted this improper expedition of service?-A. I do not see that the statute does permit any such method of calculation as was adopted in making the expedition on these routes. The regulation says that the contractor shall make oath as to how may "horses," and how many 66 men required, but the law says "stock and carriers." Now, can anybody tell what "stock" means there, whether it means men and horses, or what it means.

are

Q. Who wrote that regulation ?—A. I do not know. It was prepared, I suppose, at the time they got up this book of regulations in 1879, as there is no regulation before that that I can find touching the question of expedition of service.

Q. Who was Second Assistant Postmaster-General when that book was compiled?-A. Mr. Brady, I think. Mr. Key was Postmaster-General.

Q. You say you have not been able to discover who was the author of that regulation ?-A. No, sir. We made a careful inquiry in order to be able to testify to that on the star-route trial, but we were unable to find anybody who knew anything about it.

Q. You state that it is your opinion that that regulation was not warranted by the statute?-A. I don't think it is in pursuance of the statute.

By Mr. STEWART:

Q. Why is it not abrogated?-A. It stands there just as it is because we have been expecting to get the whole business repealed. I told Judge Gresham that I would draw a regulation to repeal this one, and he approved of the idea.

By the CHAIRMAN:

Q. Then you are not acting under that regulation ?-A. Not at all. I don't think we have had any requests for expedition beyond three or four within the last two or three years. In one case we found that the application was worked up by the contractor, and we readvertised the route on him, and when he found that out he got the people to say that they did not care for the expedition.

Now, let me illustrate the method by which expedition was calculated in these cases. I will not take any particular route; I will take a case where the pay is, say, $2,000 per annum. Suppose that on the slowest schedule the contractor swears it will take two men and four animals to perform the service. For the purpose of getting the proportion those are added together and they make six-either six animals or six men. Then for the expedited schedule he swears that it will take six men and fourteen animals; that makes twenty. Subtract the six from the twenty and you have fourteen, and the increase of the pay is made in that proportion. That is, as 6 is to the original pay, $2,000, so is 14 to the amount to be paid; so that if you are paying $2,000 for the slow schedule you will pay $4,666.66 for the expedition on that method of calculation, and in proportion to the number of men and horses that the contractor swears are necessary will be the increased compensation allowed.

H. Mis. 38, pt. 2-26*

Q. Hence, the importance of these oaths as to the men and horses required for expedition.-A. Yes, sir. Now, you see the contractor can understate the number of men and horses required on the first schedule and overstate the number required on the expedited schedule, and thus fraudulently increase the allowance for expedition.

Q. Is that the way you found it had been done?-A. Yes; it was changed about in various ways. Sometimes they figured in stock tenders, drivers, and the men driving the supply wagons. Everybody working on the route would be figured in under the head of "men," and all the horses used, including extras, would be included; everything would be figured in on the expedition. I think the testimony on the trial shows that on the Bismarck and Tongue River route they figured in every man they had working on the route, including those engaged in clearing the road, so that the expedition figured up over $70,000, and the allowance was made at a rate a great deal less than pro rata on the basis of the oath.

Q. Please state now whether any suits have been instituted to recover the amounts set forth in the table marked C, by direction of the Postmaster-General under section 4057 of the Revised Statutes.-A. I cannot answer that question. The Postmaster-General, on the 25th day of October, 1883, addressed a communication to the Attorney-General giving a brief outline of nineteen cases on which there was claimed to be fraud. On the 27th of March, the Attorney-General detailed two of his assistants to examine the papers in the Post-Office Department relating to suits, but what further action he has taken in the matter I am not able to say.

Q. So far as you know, then, no suits have been begun ?-A. No, sir. By Mr. STEWART:

Q. Do you know whether the statute of limitations has run on any of those cases ?-A. I do not. I have heard some of the counsel discuss that question, and they seemed to think that the statute did not run against the suits.

Q. It does not run against the Government in civil suits. Do you know whether Mr. William H. Bliss, of Saint Louis, has been employed to begin suits?-A. He is one of the Attorney-General's assistants that I have referred to.

Q. Detailed to begin suits -A. No; to examine the papers. He is one of the assistants detailed for that business, and Mr. Blair is the other.

Q. Does the Department have in view the beginning of any suits at Saint Louis, Mo.-A. No, sir; all the Post-Office Department has done is to call on the Attorney-General to institute proceedings, and to furnish him with all the information at its command.

Q. Is there any difference of opinion between the Post-Office Department and the Department of Justice as to whose duty it is to institute these suits?—A. I cannot answer for that. The Attorney-General and the Postmaster-General may have had some discussion in relation to it that has not come to my knowledge; I have no knowledge about that. I had some discussion about it with Mr. Elmer when he was here, and I thought that the right course was to state these balances to the Solicitor of the Treasury through the Auditor, and that he, being an officer of the Department of Justice, and having control of the district attorneys, would proceed in the regular channels. That is the way all suits are instituted in cases of balances due the United States on account of failing contracts, and it was finally determined that the Postmaster-General