House Investigations and Corruption Allegations (1872-76)
Robeson's management of the Department of the Navy was investigated on multiple occasions. On May 22, 1872, a Select Committee to Investigate Alleged Abuses in the Navy Department, created in response to news reports of impropriety in the department, held a hearing. During this hearing Robeson was accused of having amassed a fortune worth more than $500,000 in the two-and-a-half years since his appointment. Robeson and his political ally, former Senator Alexander Cattell, were both said to have profited immensely (to the tune of more than $1.2 million) from no-bid contracts for the sale of coal, iron plate, timber, and brick to the Navy. Robeson was also accused of drawing $93,000 out of department funds on January 1, 1870, when most of the department's clerical staff had the day off, without proper accounting; he stated that this was to make a long-overdue payment to a shipbuilder who, years earlier, had not been paid for incorporating late-requested modifications into three monitors his firm had built. In the end Robeson's principal accuser, Charles A. Dana, editor of the New York Sun, who had (strangely) been allowed to run the proceedings, failed to produce any witnesses or other proof to back his accusations, and the matter was dropped.
The Navy, and Robeson's administration of it, was investigated a second time in July 1876 by the House Committee on Naval Affairs, chaired by Representative Washington C. Whitthorne. This time a very wide array of charges were made, not all aimed directly at Robeson, but virtually all painting his oversight in a bad light. Major charges made against the Navy Department as an institution included:
--letting contracts without any competitive bidding process being required; and when competitive bidding was required, raising prices paid by the Navy by covertly raising the amounts of winning bids after the winners had been announced, simply by erasing the original figure and entering a higher one. The actual winners still won, but were only paid on the basis of their actual bids, leaving the difference to be divided up among department personnel and facilitators;
--failing to get authorization to sell naval property (notably stockpiles of ships' machinery that had been built, but never installed in any ship), and failing to deliver the proceeds from the sale of such commodities to the Treasury, as required by law;
--transferring money appropriated for one specific purpose to another without authorization;
--spending more money than had been allocated during a given year, covering up such occurrences by deferring payment requests into the following year;
--hiring unqualified laborers at Navy Yards just before elections, and paying them to do little or nothing, as a way of bribing them to vote for particular candidates; or to take involuntary political contributions out of those wages;
--failing to enforce the terms of contracts against suppliers who failed to live up to them by levying fines or other punishments against them, in accordance with statutes;
--failing to take proper measures to guard property in their care, notably during the hasty 1874 relocation of the Philadelphia Navy Yard, including all equipment, to a new location; theft was said to have been rampant;
--allowing personnel with conflicts of interest to inspect and assess the value of property being considered for purchase or sale; this often involved condemning Navy-owned property, leading to its being sold at a discount to a collaborator, and then re-evaluating it and approving it for sale back to the Navy at full price;
--allowing people to take multiple jobs, drawing full pay for all of them; in some cases these people were being paid to patrol stands of timber reserved for the Navy, to guard against wildcat harvesting, while holding full-time positions at Navy yards hundreds of miles away;
--and, most notoriously, participating in a scheme under which entirely new ships were built with monies appropriated for repairing existing vessels; the fact that this had been done with some wooden ships laid down in 1872 had come out before the hearing, but the fact that the same thing was being done with five ironclads that had been laid down two years later was still secret at the time.
An additional accusation concerned the spending of $400,000 on the repair of 15 or 16 ironclads; it is not made clear in the majority report what this refers to, but it may be an off-the-mark accusation drawing in both the repair monies diverted toward the construction of new ironclads, and the turning over of old ironclads to the builders of the new ones as additional payment, before the scheme that involved both became known.
Among the accusations made against Robeson personally were that, after awarding A. G. Cattell & Company—a company founded by his political patron, but now apparently run by his brother, E. G. Cattell—a no-bid, $30,000 contract for the purchase of grain, Mr. Cattell had kicked some of the total back to Robeson, and then used the influence thus purchased to secure similar contracts for others, taking "brokerage fees" for doing so. Within an incomprehensible mass of transactions documented in Cattell's books are some payments to Robeson from what was labelled a "gratuity account." The accusers believed that ill-gotten gains had been laundered through real estate transactions, many related to a vacation house, allegedly worth $320,000, at Long Branch, on the New Jersey shore, in which Cattell and Robeson apparently held joint ownership of a 5% share.
Robeson's association with banking issues also came up during the 1876 hearings. Prior to May, 1871 the U. S. Department of the Treasury had, since 1805 (with short interruptions), contracted with a respected London banking house, Baring Brothers & Company, to manage foreign accounts on behalf of the U. S. government, including the Navy. But in May 1871, apparently at Robeson's instigation, the government pulled out of this agreement, and instead contracted with the firm of Cooke, McCullough & Company, a far less well-established firm than Baring Brothers, to handle their overseas banking needs. The principal of the new firm, Jay Cooke, was a prominent American banker who had made a fortune selling war bonds during the Civil War, and had only recently opened up a subsidiary in Britain. Robeson's critics suggest that his cultivation of a relationship with Cooke had little to do with the latter's skill and reputation as a banker, and more to do with his substantial holdings in the United States, which made Cooke and his associates "very powerful friends, where actively interested in the success of the administration, and dangerous enemies . . . when indifferent or unfriendly." Robeson stated that Cooke's firm was chosen largely because it was wholly American-run, but the company was not on a firm financial footing: its initial capitalization had come entirely in the form of personal deposits made by the principals, and once Navy contracts started to move significant amounts of money through the bank, Cooke and his partners quietly withdrew their own money. By 1873 Cooke's influence was on the wane: his American bank, Jay Cooke and Company, went bankrupt in September 1873, helping to precipitate the Panic of 1873. To help shore up what was left of Cooke's remaining finances, Robeson helped get his political backer, former Senator Cattell, appointed as the Treasury's representative in London, placing him in a position to stabilize, but also "control and manipulate," the remaining holdings of Cooke, McCullough & Company.
This did not last for long. When Benjamin Bristow was appointed Secretary of Treasury by Grant in June 1874, he decided that he did not want Cattell to continue as the Treasury's representative abroad and, over Robeson's objection, lobbied Grant to appoint John Bigelow, head of the Treasury Department's Loan Division, instead. Grant accepted Bristow's choice; Bristow then garnered further hostility from Robeson by telling Grant that the Navy Department was financially mismanaged, bringing to his attention Robeson's connection with Cooke and McCullough. Bristow's advisers, apparently believing that this accusation was pushing things too far, warned Bristow to cool things off and take a less confrontational approach.
Lastly, the House committee noted that, between 1872 and 1876, Congress had allocated $56 million to the Navy Department for ship repairs, and now, at the end of that span, some $15 million could not be accounted for. Over the same span Robeson had deposited more than $300,000 into various bank accounts, while claiming that his only source of income was his government salary, which amounted to only $8000 per year. Many on the committee, for obvious reasons, believed there was a connection between Robeson's windfall and the shortfall in the repair budget, but, while his explanation was considered questionable, no witness would testify that the documentary evidence against him was accurate, so no charge was filed against him for this.
Among the majority's recommendations to prevent recurrence of what they considered to be crimes were that a bill be passed requiring that detailed estimates of the cost of any proposed undertaking be provided to Congress before work began, and then be strictly adhered to; a bill eliminating the position of Civil Engineer from the Navy's structure; and the creation of a Board of Naval Commissioners, a board of naval officers that would take control over administrative matters, such as the letting of contracts, from the Secretary of the Navy.
The majority confidently stated that, with these reforms in place, the maintenance of the Navy, as intended by Congress, could be readily achieved for a sum of $12 million per annum, roughly two-thirds of what was being expended under Robeson's administration, if only strict compliance with all laws and regulations could be enforced. As for expansion of the Navy, they opined that all that was needed could be achieved through the expenditure of $3 million more per annum. The majority concluded by recommending that the minutes of the hearing be passed on to the House Committee of the Judiciary, and that if that committee should find that, through whatever loopholes or alternative interpretations, Robeson and other individuals singled out as offenders had not committed any crimes, that they revise the laws to make certain that such offences were, in the future, defined as criminal.
In rebuttal, the Republican minority argued that, in the context of the 1870s, strict adherence to statutes would make it impossible to maintain a Navy capable of providing useful service:
"It will not do for the majority, in one breath, to complain of the Secretary of the Navy for not having a larger or more formidable navy, and in the next to deny to him the right to rebuild or remodel even those which he has, without special authority from Congress; to condemn him for not having rifled cannon of the largest caliber, and at the same time deny his power to make experiments even in that direction; to complain that the iron-clads of the country are in an unfinished and worthless condition, and at the same time to declare that he violates the law when he rebuilds and makes them efficient. And yet such is the position taken by the majority of this committee, who have even gone so far in their report as to deny that the Secretary has power to break up a ship of the Navy and use the material taken therefrom to repair and reconstruct other ships of war!"
President Grant, five months after the hearing, would use the same language in defense of Robeson during his final State of the Union Address.
The Republican minority pointed out that some of the department's accusers had themselves violated the very laws that Robeson and his underlings in the department had been accused of violating. One conspicuous example of this was Porter's expenditure, entirely on his own initiative, of $29,500 in Navy funds to refurbish the pre-war yacht America so that it could participate in a race under his Admiral's flag. The Republican members suggested that actions like this, which had motivated Robeson, soon after coming into office, to take steps to curb the Admiral's activities, offered a view of what might happen if the Navy, per the Democratic majority's recommendation, actually created a Board of Commissioners to supersede, or at least directly supervise, the Navy's bureaus, to ensure compliance with regulations. Such a board, made up largely of senior line officers, had existed from 1815 to 1843, but had been abolished because it was realized, even in the 1840s, that such officers lacked an understanding of specialized fields that were becoming critically important, such as steam engineering and extended-range gunnery, as well as a more basic understanding of how quickly new technology was rendering even Civil War-era technology obsolete. The need for technical personnel in senior roles was what brought in the Bureau system in 1843. An example of just how out of date the line officers had become can be found in a prominent argument in the Democratic majority's report: in a lengthy statement the majority argued vigorously against the adoption, for use in Navy vessels, of compound engines, which allowed steam produced by the boilers to be used more than once to power, sequentially, first a high-pressure cylinder and then one or more lower-powered ones, thereby augmenting the power extracted from that steam, and economizing on the use of fuel to heat it. The line officers failed to understand that the difference was not merely in the use of hotter, higher-pressure steam—which, they argued, could simply be applied to engines of the simpler, traditional type, with comparable results. Engineer officers, at home and abroad, knew better, and double- and, later, triple-expansion engines, by c. 1890, would completely supplant single-expansion engines in naval vessels.worldwide.