Political
Radical Honesty
Startling Discoveries Made in the Quartermaster’s Department
Half a Million Defalcation
The Money Lost in Speculations in Wall Street

Washington, September 13

The public were startled this afternoon by the report that Major John Ledyard Hodge, appointed in January, 1867, a deputy paymaster in the United States army, and stationed in this city, had been discovered to be a defaulter to the government to a very large amount. The few who knew of the grievous charges against him were loth to believe them, but subsequent events satisfied his friends that they are well founded, and that he is a defaulter to at least the extent of four or five hundred thousand dollars. It is said that a year ago detectives made the discovery that his financial affairs were in a loose condition, his accounts being behind, &c., and that an investigation was ordered, but for some reason, not known, it never took place. The accused served as an officer of the late war in the Pennsylvania volunteers, of which State he is a native, and was breveted lieutenant colonel. He lived in an extravagant style on a salary of about $3,500 per annum. Detectives, both here and in New York, were, today, generally endeavoring, on inquiry at banks and elsewhere, to discover further information. It is suspected that other parties are involved in the defalcations. Major Rochester has been detailed to discharge the duties of the office vacated by the arrest of Major Hodge. He was in charge of the United States officers, who were directed by the General of the Army to turn him over to the Commandant of Fort McHenry, with directions to place him in solitary confinement, with a sentinel to guard his cell. The accused has heretofore enjoyed an excellent reputation, and at the Paymaster-General’s office was regarded not only as a thoroughly honest gentleman but an accomplished scholar and accountant. On account of his extraordinary qualifications the Paymaster General, in 1866, detailed him for duty at his office, employing him in adjusting the irregular accounts of other Paymasters, and on special service until about two years since, when he assigned him as Paymaster of the Bounty Certificates of the Second Auditor’s office. This was a highly re[s]ponsible position, the payments sometimes amounting to $50,000 per month, but the Paymaster-General asserts that he placed the most implicit confidence in his deputy’s integrity, and fondly believed he would not betray his trust. The Evening Star of this afternoon says:

On Thursday last, the Paymaster-General discovered, as he thought, an erroneous charge in the returns of Major Hodge, and, by letter, requested him to explain it. He still could not believe that his deputy was dishonest, but expected that he would be able to make a satisfactory explanation. This he failed to do, and General Brice intimated his suspicions, and peremptorily ordered him to close his accounts by Monday last. On the next day General Brice received a letter from Major Hodge, containing a full confession of his guilt, and stating that he had been making fraudulent returns, and statements since 1866, and that the money thus obtained had been spent in gold and stock gambling in New York. He mentioned in his letter, the name of the firm who knew that the money he had sent them for investment belonged to the government, and concluded by stating that he was ready to turn over all of his property, both personal and real, amounting in value to something like fifty thousand dollars, to any agent of the government authorized to receive such an assignment. He expressed contrition for his crime, and said he intended to return the money he had taken, and implored that he be as leniently dealt with as possible.

Of course there was a but one course for General Brice to pursue, and on Monday last he placed the defaulting paymaster under close arrest. Yesterday he procured, by telegraph from General Sherman, an order for his confinement in Fort McHenry. The accused, who is about 36 years of age, is a native of Philadelphia, but, since his residence in this city, lived at No. 1423 Franklin Terrace, K street, between Fourteenth and Fifteenth streets. He is possessed of considerable real estate and personal property, mainly inherited from his uncle and his father, formerly Assistant Secretary of the Treasury, who died about three years ago. His mother is still living. One of his sisters is the wife of Admiral Rodgers, at present commanding the American China Squadron. He has a wife and four children, who are plunged into the deepest grief at his misconduct. The investigation of his accounts, now going on at the Paymaster General’s Office, has proceeded far enough to make safe the assertion that his defalcation will amount to between $400,000 and $500,000. He will, of course, be tried by court martial, which will doubtless impose as a penalty a certain term of imprisonment and dismissal from the military service of the United States. It can hardly be expected the amount of his defalcation, except, perhaps, a few thousand dollars from the sale of his private property will be recovered.