tracts in the name of George McDonough personally, instead of in the firm name. Sometimes the contracts were in the name of U. E. Fisher. However, they were all partnership assets and considered as such, and hence it made no matter in whose name the contract was, as each party made this stipulation not to sublet without my consent. Here is a letter from E. L. Fisher, who also had some contracts. I call your atten. tion to this to show you that my transactions with the Department were entirely legitimate and of a business nature. Mr. Bliss was aware of all these facts. The matter ran along for some time until there occurred a falling out in this firm, which was composed of McDonough, Kirk (a man living here), Jerome J. Hinds, and U. E. Fisher. Hinds seemed to be the aggressive man of the number. He fancied that he was not being dealt with properly. In point of fact they had no money, and having obtained from me the large amount which I have stated, I told them that I could not go any further; that they had no means at all which would justify me in going further, and I said to them, "Really, you had better look around and see if you can get some banker here to take this indebtedness and relieve me." Mr. McDonough said he was utterly at a loss to find any one, that he had applied to many people, but could not find any one who would take the matter off my hands; but he said he had some hopes through a firm known as Parker & Cluggage, a firm of mail contractors. He said that Mr. Parker, of that firm, or his representative, would be in the city in a few days, and he thought they would take the contract. You will remember that these contracts were in the name of George L. McDonough, especially route 40101, not in the name of the firm. Mr. McDonough came to me one day and said that the arrangements were perfected with Parker & Cluggage through their agent (a sort of a lawyer, not living here, however), who would pay me my money next day. I said I was very much obliged. That night Mr. Hinds arrived in the city, and went around to the various parties in interest and served notice on them that in case Parker & Cluggage bought the contracts there was to be war; that he, Hinds, was being left out entirely, and was being badly treated, and that there would be war-which meant an investigation.

I

Q. Was that Jerome J. Hinds ?-A, Yes, sir. Mr. Hinds undoubtedly imagined that he was aggrieved, and perhaps he was; I don't know. At all events Parker & Cluggage declined next day to have anything to do with the matter; they said that Hinds was aggressive, and that they preferred not to get into trouble, and they declined to carry out the transaction. Accordingly McDonough told me that the arrangement was abandoned. I then asked him what he would do. said to him, "You understand my position; I simply want my money, and I believe you want to pay me." He said that he did. I added, "Of course you cannot get any further money from me." He said, "Well, Walsh, the only thing I can do to secure you is to turn over the contracts to you; I will make you the subcontractor." I expressed assent to that, and I was accordingly made the subcontractor on the route from Santa Fé to Prescott. Mr. Hinds at once announced that there would be war to the knife, and commenced operations through his at torney, Mr. Nathaniel Wilson. He served notice on me that he wanted $15,000 for his share. The contract price of the service on that route was then $74,500 per annum. These men seemed to have no sort of an idea of figures or finance; they really seemed to believe that the contract was a bonanza-Hinds more than anybody else. I, of course, declined to comply with his demand. I was approached by several people who told me that I did not understand the business, and that I had H. Mis. 38, pt. 2——28*

certainly would have to go to him, because the amount was too large for me to take any risk about it, and the pay on the route as it stood, of course, would not justify any further advances.

Q. State what amounts you had advanced already.-A. At that time perhaps I had discounted warrants or postal drafts amounting to $4,000 or $5,000, and the contractors represented that they wanted a very much larger sum, as they did.

Q. How much more money did they ask?-A. It really amounted to $36,000 before I got through with it. I went to Mr. Brady, the Second Assistant Postmaster-General, and told him that these gentlemen were very impecunious and wanted more money, and I said to him that it would not be advisable for me to give them more money unless there was some show that their pay would be increased. He said there would be no doubt about it; that I could loan them money with perfect safety, that they were reputable contractors, and, generally, that I would be safe, he thought, in advancing to them. I accordingly did so. To show you that I went into this entirely as a commercial transastion, I may state that I went to the Sixth Auditor's office to ascertain the condition of McDonough, Kirk, & Co., in that office; that is to say, to ascertain what drafts they had on file, and then I gave them this addi tional advance which amounted to $36,000. Here [producing them] are the notes, the chattel mortgages, &c., of McDonough, Kirk, & Co. to

me.

Q. Those papers which you now exhibit to the committee are evidences of the indebtedness of those parties to you?-A. Yes, sir; amounting to $36,000.

Q. Upon what were those chattel mortgages given?-A. On the stock of the different mail routes that they had, and on such personal property as they had; further than that, they gave me all these vouchers as you see, these postal drafts, which were turned over to me in order that I might draw the pay.

Q. What do you mean by postal drafts?-A. Drafts on the pay of the contractor, anticipating his pay; when he comes and borrows money, he says to the banker, "I will give you my draft on the Post-Office Department on such and such a route; you file that in the Sixth Auditor's office, and when the pay comes due the Sixth Auditor will pay you to the amount of the draft."

Q. And you took postal drafts sufficient to cover the amounts which you advanced to those parties?-A. More than that; it ran through their pay for a long time; they did all that lay in their power to secure

Further than that, I did something that perhaps has never been done in any other case in the Post-Office Department; I asked these men to write to the Postmaster-General, saying in effect that I had loaned them money, and that they would not sublet their contracts without my consent. Ordinarily, you know, the Department allows a contractor to sublet on application to the Postmaster-General; but I asked them to write to the Postmaster-General in the way I have stated in order to further protect myself, and you will see by this letter which I now show you that the Postmaster-General acknowledged the receipt of their communication, and said that "they shall not be permitted to sublet without my consent."

Q. Were your advances made on any other route besides 40101?— A. On all the service that these men had.

Q. The contractor in this postal draft which I have in my hand is George L. McDonough ?-A. Yes, sir; in that case.

Q. Was he the original contractor?-A. Well, the firm held con

tracts in the name of George McDonough personally, instead of in the firm name. Sometimes the contracts were in the name of U. E. Fisher. However, they were all partnership assets and considered as such, and hence it made no matter in whose name the contract was, as each party made this stipulation not to sublet without my consent. Here is a letter from E. L. Fisher, who also had some contracts. I call your atten. tion to this to show you that my transactions with the Department were entirely legitimate and of a business nature. Mr. Bliss was aware of all these facts. The matter ran along for some time until there occurred a falling out in this firm, which was composed of McDonough, Kirk (a man living here), Jerome J. Hinds, and U. E. Fisher. Hinds seemed to be the aggressive man of the number. He fancied that he was not being dealt with properly. In point of fact they had no money, and having obtained from me the large amount which I have stated, I told them that I could not go any further; that they had no means at all which would justify me in going further, and I said to them, "Really, you had better look around and see if you can get some banker here to take this indebtedness and relieve me." Mr. McDonough said he was utterly at a loss to find any one, that he had applied to many people, but could not find any one who would take the matter off my hands; but he said he had some hopes through a firm known as Parker & Cluggage, a firm of mail contractors. He said that Mr. Parker, of that firm, or his representative, would be in the city in a few days, and he thought they would take the contract. You will remember that these contracts were in the name of George L. McDonough, especially route 40101, not in the name of the firm. Mr. McDonough came to me one day and said that the arrangements were perfected with Parker & Cluggage through their agent (a sort of a lawyer, not living here, however), who would pay me my money next day. I said I was very much obliged. That night Mr. Hinds arrived in the city, and went around to the various parties in interest and served notice on them that in case Parker & Cluggage bought the contracts there was to be war; that he, Hinds, was being left out entirely, and was being badly treated, and that there would be war-which meant an investigation.

Q. Was that Jerome J. Hinds?-A, Yes, sir. Mr. Hinds undoubtedly imagined that he was aggrieved, and perhaps he was; I don't know. At all events Parker & Cluggage declined next day to have anything to do with the matter; they said that Hinds was aggressive, and that they preferred not to get into trouble, and they declined to carry out the transaction. Accordingly McDonough told me that the arrangement was abandoned. I then asked him what he would do. I said to him, "You understand my position; I simply want my money, and I believe you want to pay me." He said that he did. I added, "Of course you cannot get any further money from me." He said, "Well, Walsh, the only thing I can do to secure you is to turn over the contracts to you; I will make you the subcontractor." I expressed assent to that, and I was accordingly made the subcontractor on the route from Santa Fé to Prescott. Mr. Hinds at once announced that there would be war to the knife, and commenced operations through his at torney, Mr. Nathaniel Wilson. He served notice on me that he wanted $15,000 for his share. The contract price of the service on that route was then $74,500 per annum. These men seemed to have no sort of an idea of figures or finance; they really seemed to believe that the contract was a bonanza-Hinds more than anybody else. I, of course, declined to comply with his demand. I was approached by several people who told me that I did not understand the business, and that I had H. Mis. 38, pt. 2-28*

better pay Hinds. I said, "Inasmuch as the concern owes me $35,000 or $40,000 already, I am at a loss to understand why I should pay Mr. Hinds anything." They said, "Well, Walsh, you don't understand the business; Hinds will compel an investigation."

Q. With whom was this conversation?-A. With Mr. Stephen B. Elkins and a man named Kerens, particularly. They came to my office as friends of Mr. Brady and tried to impress upon me that I had better deal in a politic way with Hinds. I told them that it had gone beyond all policy, that it was a matter of per cent., that I did not see how I would "get out," any way, and that if I was going to lose, I might as well lose then as at any other time, and I said I would not pay Hinds. There ensued a great deal of trouble. Hinds commenced to attack the Post-Office Department and to attack Brady, and he really threw them all into the greatest state of excitement. However, there was nothing for me to do but to look on. Mr. Hinds threw all sorts of obstacles in the way. He would send telegrams and letters to Santa Fé representing that he was going to carry the day, that he was backed by the contractors, and that Walsh would be annihilated. While I was performing the service, and while it was being performed as well as it could be and as well as service out there is performed in the best times, notwithstanding that fact, the Department, moved, as I have always felt, by the aggressiveness of Hinds, and by fear of him, declared McDonough a defaulting contractor. Mr. Wilson was at the Department every day with Mr. Hinds, his client, and with Kirk. There seemed to be a complete division of the old firm; Fisher and McDonough on one side, and Hinds and Kirk on the other, and between the two sides they proceeded to grind me out; which they did quite effectually. I stood by and witnessed the process. I said to the Department, "The service is being performed, and there is no occasion whatever for annulling that contract. Of course there is a little disturbance there, but it will come out all right." However, the contract was annulled, and the route was put back to the original price, $13,000 per annum-not to exceed that; service three times a week. It was then tendered to the bondsmen, in accordance with the law. The bondsmen in that case were Kirk, one of the partners, and a gentleman named Gleason, a Floridian, I think. They were tendered the service. Of course that was a result that they did not desire. They did not want the contract at $13,300 a year; so, after some conference-indeed, after some time had elapsed, two or three weeks, I think-they acknowledged that they could not proceed with it. I had my stock on the route, and I said to the Department, "I will carry the mail pending this trouble"; and accordingly a temporary contract was made with me. I do not know but perhaps there was a total suspension of the service for awhile pending the Kirk and Gleason effort. However, this temporary contract was made with me. Later, I declined to carry the mail any longer at that price, saying that I did not want it at any such figure. Then, in accordance with the regulations of the Department, they went up the list. In such cases the contract goes up what they term, technically, "the list." In this case McDonough was the lowest bidder originally at the public letting under advertisement, and the next lowest bidder was J. B. Price at $19,000. These, of course, are matters of public record. I noticed that the next highest bid was $19,000, and I wanted to save myself if I could, so I went to Brady and said, "Mr. Brady, you are fully cognizant of all the circumstances surrounding my loaning money to these men; indeed, I was moved to loan to them largely by your representations in regard to them. Now, what can be done for me?” "Well,"

He

said Mr. Brady, "Walsh, under the law I will allow you to have the contract if you bid lower than the next highest bidder, who is Price." I said. "Then I will take the contract at $18,500; "" which was $500, under Price's bid. I asked Mr. Brady what would be the chances for expedition and increase, representing, of course, as well as I could, what occasion there was for expediting and increasing the service; indeed, I felt that if there had been a necessity a short time before for daily serv ice on that route, that necessity would necessarily increase as the railroad approached Santa Fé. Mr. Brady gave me no satisfaction. He said, "You will have to use your own judgment about that. If there is any necessity for an increase of the service, it will be increased; but you must use your own judgment." He was vague and unsatisfactory. To be sure, as soon as I got the contract, Mr. Hinds proceeded at once to show that it was a very infamous piece of business. He said that it was all wrong, and he began to resume his tomahawk and battle-ax, and paint, greatly to the terror of the Department. I noticed that Mr. Hinds had the entrée and could get any information he wanted. knew a great deal better than I did what was going on on the route. He learned it through the Department. Shortly afterwards I instructed my agent out there to endeavor to get up petitions asking for the restoration of daily service on that route. He did so, and the petitions began to come in. I would speak to Brady about the matter occasionally, but I got no particular satisfaction. In the mean time the season progressed, and we were getting toward the month of July, 1879. I was spoken to by Mr. S. P. Brown, a friend of Mr. Brady's, the same gentleman who had seemed to act as an intermediary between Mr. Hinds and Mr. Brady in the matter of the increase that was awarded on this route in the first instance. Hinds, you will understand, was threatening war during all this time-threatening that he would have Congress investigate the matter of that contract, and charging that he had paid Brady $16,000 for the increase of service, and that I was cognizant of it to the extent that I had advanced the money; tha I had paid $8,000 on his draft to S. P. Brown, which was true, but I knew nothing about what they were doing with the money. I simply paid Mr. Brown as I would have paid anybody else. Having agreed to advance the money to these parties, I paid it out as they directed. In addition to that, I was also aware that Mr. Brown held about $8,000 of postal drafts on their routes, because the contractors came to me and asked me to relinquish my security to the extent of $8,000. I asked them for what, and they told me it was to secure Brown. Well, I thought I had ample security outside of that, and I let them have those drafts. Now, you will understand, perhaps, why these men were afraid of Hinds. At any rate, I was told that there would be no use in my expecting to get any increase of service whatever unless Mr. Hinds was placated. "Well," I said, "gentlemen, this is astounding. This comes back to where I was before. If I owe Hinds, then I owe McDonough and Kirk and Fisher; yet here are their notes to me for $36,000, and now I am asked to pay one of that firm a large sum of money to placate him." They said, "Yes, that that was the English of it; that that was what I would have to do or else nothing could be done in my case."

Q. Who told you that?-A. S. P. Brown; he told me that that must be done; I finally felt that there was a good deal of force in that view, and I concluded that I must do something, so I sent for Mr Hinds; he came to see me in accordance with my request; I asked him what he wanted me to do; he said he wanted to be paid. I said, "Mr. Hinds, I do not owe you any money." "Well," said he, "Walsh, it isn't worth