USA > Illinois > Cook County > Chicago > The great revolution; a history of the rise and progress of the People's Party in the city of Chicago and county of Cook > Part 3
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In obedience to Mr. Gage's request, an official report was made of the Finance Committee, as follows :
CHICAGO, ILL., OCT. 31, 1873.
L. L. BOND, ESQ., CHAIRMAN FINANCE COMMITTEE.
Sir : In the matter of the communication of D. A. Gage, Treasurer, referred to our committee, you are authorized to report that we find the Treasurer's accounts correct, and the cash in hand, so that the city funds are entirely safe, and the special funds in the condition required by law.
MAHLON D. OGDEN. J. W. MCGENNISS.
This report the Opposition used with tremendous ostenta- tion, and with considerable success. While there were many
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who regarded the report with grave misapprehensions, - owing to the absence of figures which, it is pretty well es- tablished, never lie,- yet, the instrument was a most advan- tageous missile to hurl at the heads of the People's Party. In their speeches through the city, the Opposition intro- duced the report at every possible opportunity, as illustra- tive of the base uses to which the People's party had come at last, in order to achieve the success of their ticket.
Had the " Law and Order " ticket been victorious, there is hardly any room to doubt but that the People's party were capable of some very mean business. In that event, David A.Gage would be our present City Treasurer. Victory perch- ing upon the banners of the People's party, however, the great public obtained admission into the inmost recesses of the treasury, and through the fingers of Daniel O'Hara, had the satisfaction of seeing the money counted.
The first reliable intelligence of Mr. Gage's misfortune- Mayor Colvin having just taken his seat-came, it would appear, through Mr. John A. Rice, one of Mr. Gage's bonds- men. On the morning of December 15, this gentleman ap- proached the Mayor elect, and informed him that David A. Gage was $350,000 ( three hundred and fifty thousand dol- lars ) short ! and that, in order to make good this amount, Mr. Gage would turn over everything he had. Anxiety being wild upon the topic from the first moment the rumor gained circulation, the daily journals next morning, as might be expected, threw forth columns concerning the startling defalcation. For days afterward, the defalcation was the most prominent subject on everybody's tongue. The
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exposure shocked the entire community, and perfectly dumbfounded those who had voted for the ticket which, for its success, depended almost solely upon the sterling integ- rity of David A. Gage.
The first thought, when the terrible indignation of the public had given place to reflection, was, in what manner the gigantic loss could be repaired. Now the public eye was turned upon Mr. Gage's bondsmen. But the bondsmen, it was said, claimed they were not altogether responsible, from the fact that shortly after the Medillian administration went into power, it was discovered that Mr. Gage was then short to the extent of some $200,000, and that the city officials, or some of them, knew it. The bondsmen, it seems, claimed that they should not be held for any deficiency previous to their bond being filed.
Whether the bondsmen presumed too much, nevertheless, was susceptible of a test. The legal advisers of the city, accordingly, filed a præcipe in a plea of debt on December .24, placed damages at $1,000,000, and made the following bondsmen of Mr. Gage parties defendant : David A. Gage, William F. Tucker, Albert Crosby, John B. Sherman, James H. McVicker, Nathaniel P. Wilder, John A. Rice, and George W. Gage.
On December 26, Treasurer O'Hara, pursuant to instruc- tions, wrote the following demand upon the Ex- City Treas- urer :
"' DAVID A. GAGE, EsQ.,
Sir :- Agreeably to the instructions of the law advisers of the city, and as your successor in office, I am requested
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to demand of you the deficit of money belonging to the City Treasury, amounting to $507,703.58.
I am very respectfully your obedient servant,
DANIEL O'HARA, City Treasurer."
In the meantime conferences were being held by the bonds- men of Mr. Gage, and his friends. At these meetings various propositions were agitated. The result was that, on Decem- ber 30, a formal conveyance of a trust deed of Mr. Gage's property was made to Mr. George Taylor. This action served in a measure to allay public excitement, which had waxed the more intense under the pressure of the bank panic, and the condition of the vast army of unemployed in the city.
But there was another matter in connection with the sit- uation of Mr. Gage. It was charged against him that he was guilty of perjury. The following oath, required to be taken by the City Treasurer, formed the basis of the accu- sation :
"I, D. A. Gage, City Treasurer, being duly sworn upon oath, say that the foregoing statement, so far as I know, or have reason to believe, is a fair, accurate and full statement of the matters to which it relates, and of all moneys in my hands which I, or any one for me, has received since my last official account was rendered; and that I have not directly or indirectly used, loaned, invested or converted to my own use, or suffered any one to use, loan, invest or convert to his or their own use, any of the public moneys receivable or received by me or subject to my warrant or control, and
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that I have rendered true and full account thereof in my said foregoing statement, and further saith not.
Sworn, etc.,
D. A. GAGE. FRANK BARRETT, Notary Public."
It having been known that if Mr. Gage had committed perjury at all he had committed it repeatedly - for it was required that the oath should be taken every month - it evi- dently became the duty of the State's Attorney to step in. He did so.
On January 2, 1874, State's Attorney Charles H. Reed sent the following to the City Treasurer :
" DANIEL O'HARA, ESQ., CITY TREASURER.
My Dear Friend, :- It is reported that David A. Gage, the late City Treasurer, has failed to pay over to you, as his successor, large sums of money belonging to the city of Chi- cago. In view of proceedings being about to be instituted against him for such failure to pay over to you said sums of money, I hereby request you to forthwith make a formal written demand on said Gage to pay over to you said sums of money. I desire this to be done by you under and by virtue of Section 16, page 179, of the Statutes of Illinois, Gross' Ed., 1871. Please make the demand in such a man- ner as that you can testify thereto under oath. The demand should be made by you officially and in person.
Respectfully yours, CHARLES H. REED."
In compliance with instructions Mr. O'Hara visited Mr. Gage, and Mr. Gage did not turn over as requested.
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State's Attorney Reed forthwith proceeded to the work of empaneling a Grand Jury. That body was in existence on January 6.
On January 7 the said Grand Jury indicted David A. Gage for failing to pay over the money entrusted to him, and also for false swearing.
On January 8, Mr. Gage was arraigned in the Criminal Court, and his bail was fixed at $100,000 on the former charge, and $10,000 on the latter.
Subsequently the indictment for false swearing was quashed on technical grounds ; and that for failing, etc., was sustained. On this indictment Mr. Gage has obtained a chance of venue to Lake county. The State's Attorney, moreover, succeeded in having the following additional indictment returned, which is still pending :
Of the February term of the Criminal Court of Cook County, in said county and State, in the year of our Lord 1874
The Grand Jurors, chosen, selected, and sworn, in and for the county of Cook, in the State of Illinois, in the name and by the authority of the People of the State of Illinois, upon their oaths present that David A. Gage, late of the county of Cook, on the 6th day of December, in the year of our Lord 1873, in said county of Cook, in the State of Illinois aforesaid, was the Treasurer of the city of Chicago, in said county and State, and that he, the said Gage, had been and was the Treasurer of said city for and during the period of one year and more immediately before and prior to the said 6th day of December; and, that he, the said Gage, as such
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Treasurer, during the period aforesaid was required by law, at the end of each and every month to render to the Comp- troller of said city an account under the oath of him, the said Gage, as such Treasurer, showing the state of the treas- ury of said city at the date of each of said accounts, and the balance of money in said treasury at the date of each of said accounts, and a fair, accurate, and full statement of all moneys in the hands of him, the said Gage, as such Treas- urer, at the date of each of said accounts; and that he, the said Gage, as such Treasurer, was, during the period afore- said, at the end of each and every month, and oftener if re- quired, required by law to attach said oath to each of said accounts, and to render, present, and deliver said accounts and oaths thereto attached to the said Comptroller; and that he, the said Gage, as such Treasurer, was required by law to render to said Comptroller at the end of the month of November, in the year last aforesaid, an account under the oath of him, the said Gage, attached to said account, showing the state of the treasury of said city at the date of such account, and the balance of moneys in said treasury at the date of such last-mentioned account, and a fair, accurate, and full statement of all moneys in the hands of him, the said Gage, as such Treasurer, at the date of the said last mentioned account; and that he, the said Gage, by his own fault and neglect, failed to render to said Comptroller the account last aforesaid at the end of the month of November last aforesaid.
And that the said Gage, as such Treasurer, was required by law to render the said last named account afterwards, to-
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wit, on the 6th day of December last aforesaid; and that he, the said Gage, as such Treasurer, was required by law on the said 6th day of December last aforesaid, to render to the said Comptroller an account under the oath of him, the said Gage, showing the state of the treasury of said city on the Ist day of December in the year last aforesaid, and the balance of moneys in said treasury on the said Ist day of December aforesaid, and a fair, accurate, and full statement of all moneys in the hands of him, the said Gage, as such Treasurer, on the said Ist day of December last aforesaid ;
And that the said Gage, as such Treasurer, did, on the said 6th day of December, render, present, and deliver to one Augustus H. Burley, he, the said Burley, being then and there the Comptroller of said city, an account showing the state of the treasury of said city on the Ist day of Decem- ber aforesaid, and the balance of moneys in said treasury on the said Ist day of December, and a statement of all moneys in the hands of him, said Gage, as such Treasurer, on the said Ist day of December ;
And that he, the said Gage, as such Treasurer, in order to render the said last named account under his oath, and in order to verify the same by his oath as he was by law required to do as aforesaid, did on the said 6th day of De- cember last aforesaid, come and appear in his own proper person, in said city of Chicago, and county of Cook, before one Francis M. Barrett, he, the said Barrett, being then and there a Notary Public in said city and county, and then and there, in due form of law, sworn by and before him, the said Barrett, as such Notary Public, and did then and there take
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his oath before said Barrett as such Notary Public, he, the said Barrett, as such Notary Public, then and there having' full and competent power and authority to administer said oath to him, said Gage, as such Treasurer in that behalf: and that he, the said David A. Gage, as such Treasurer, being so sworn as aforesaid, upon his oath as aforesaid, did then and there, to-wit, on the day and year last aforesaid, in the city and county aforesaid, before him, the said Barrett, as such Notary Public, falsely, willfully, unlawfully, and cor- ruptly say, depose, swear, and make oath and affidavit, partly written and partly printed, among other things, in substance and to the effect following, that is to say : that there was on the said Ist day of December in the year last aforesaid, so far as he, said Gage, knew or had reason to believe, a bal- ance of money in the treasury of said city in the sum of and to the amount of $1, 118,110.49, and that he, the said Gage, on the first day of December, in the year last aforesaid, so far as he, said Gage knew or had reason to believe had in his hands as such Treasurer, moneys in the sum, and to the amount last aforesaid, which said last named account and said oath and affidavit, said Gage, as such Treasurer, rend- ered, delivered and presented to said Burley, as such Comp- troller, the said oath and affidavit being then and there attached to said account, the said 6th day of December last aforesaid, as by said account, oath and affidavit now on file in the proper office of the Comptroller of said city more fully and at large appears. Whereas, in truth and in fact, as he, the said Gage, as such Treasurer, then and there, to- wit, on the said 6th day of December aforesaid, in the city
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and county aforesaid, well knew that there was not, and had good reason to believe that there was not, on the said Ist day of December aforesaid, a balance of moneys in said treasury in the sum and to the amount of $1, 118, 110.49 ; and whereas, in truth and in fact, he, the said Gage, on said 6th day of December, as said Treasurer, well knew that there was not, and had good reason to believe there was not, in his hands as such Treasurer moneys in the sum and to the amount last aforesaid.
And so the Grand Jury aforesaid, upon their oaths and affirmations aforesaid, do present and say that he, the said David A. Gage, as such Treasurer, well knew and had reason to believe, that the said oath and affidavit were will- fully and corruptly false in manner and form aforesaid, and that he, the said David A. Gage, did commit willful and corrupt perjury in manner and form aforesaid, contrary to the statute, and against the peace and dignity of the people of the State of Illinois.
CHARLES H. REED, State's Attorney.
Indorsed : A true bill,
R. R. CLARK, Foreman of the Grand Jury. Filed Feb. 10, 1874. AUSTIN J. DOYLE, Clerk. .
The civil and criminal actions are still pending. The financial status of Mr. Gage, as to the City Treasury, may be thus stated .
The deficit in the City Treasury, at the expiration of Mr. Gage's term, amounted to $507,703.58. Of this, in the banks were $147,500, leaving what might be called Gage's personal indebtedness $360,203.58.
THE GREAT REVOLUTION.
In the report given as the work of the Finance Committee. it is observed that the signature of Alderman Sherwood, one of the Committee, is not visible. In justice to Mr. Sherwood. the following is published, being a copy of an interview between that gentleman and a Tribane reporter :
" Alderman Sherwood, a member of the Committee, had been called to Minnesota by the death of a sister. On his return. after the election, he was asked to sign the report, but declined because he was not satisfied that all was right. He went into the Treasurer's office, and was shown that the balance corresponded with the anrount called for by the Comptroller's books. Mr. Sherwood then asked where the money was, and was given a list of the banks in which it was said to be deposited, as follows : *
Commercial $ 220,883.34
60.000.00 Union Stock Yards
Third National 133.780.53
Union National 204.113.70
Fourth National 50,000.00
Manufacturers' National 15.000.00
Badger's Bank 7.500.00
Second National
115.000.00
Mechanics' 38,500.00
Cook County 101.113.79
Hibernian 10,000.00
Bank of Chicago 5,000.00
State Savings Institution
122.125.08
November Balance, $1,OS3,016.44
* Mr. Sherwood obtained the foregoing statements some days before election ; but, being called suddenly away, did not have an opportunity to analyze them before his return from Minnesota.
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" Mr. Sherwood asked to see the bank books, to compare them with the balances above given. The clerk replied that Mr. Gage had taken the bank books away, and that they had not been written up for several months. He (the clerk) had entered the balances as Mr. Gage gave them to him, and, to the best of his knowledge, the accounts were all straight. The stubs on the check - book showed that there were but two "live " banks,- that is, banks on which checks were drawn,- the others being accounts that had not been disturbed from the time of the fire until the panic. The September balance sheet showed that the Second National had $100,000 and the Mechanics $35,000, while the Novem- ber balance showed an increase of $15,000 deposited in the former, and of $3,500 in the latter. With the exception of the two banks that were being constantly checked upon, these were the only changes that had been made in the accounts of other banks since the fire. Such is the report which Mr. Sherwood received from the clerk.
"Mr. Sherwood insisted that the bank books should be exhibited fully written up. Soon after, Mr. Sherwood re- ceived a note from Mr. Gage requesting him to call at the Pacific Hotel, as he desired to see him. The result was an interview, during which Mr. Gage acknowledged he was short, and appealed to Mr. Sherwood to give him ten days, and he would come out all right; that if he (Sherwood) had not discovered the real facts, nothing would ever be known about them. Mr. Gage felt keenly the situation in which he was placed. He appealed to Mr. Sherwood's generosity, and his appeal prevailed. Mr. Sherwood did not insist upon
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examining the bank books, though he now thinks he should have done so. He says he pitied Mr. Gage. He told Mr. Gage it was due to him that he should know the worst, that he understood that Mr. Gage had confessed to Mr. Bond and Mr. Burley, since the election, that the deficit amounted to $250,000. Mr. Gage replied that he was short $300,000.
"The interview closed, Mr. Sherwood retiring with the expectation and belief that Mr. Gage would make up the deficiency before his successor demanded a settlement. This explains why the report of the Finance Committee was never sent to the Council."
While pursuing his investigations, Mr. Sherwood procured from the Treasurer's office a statement which is interesting, as it shows the amount in the hands of the Treasurer each month from October, 1871, to October, 1873, inclusive :
Oct. 17, 1871 $ 645,727.98
Dec. 1, 1871 458,463.86
Jan. 2, 1872 5 16,666.60
Feb. 1, 1872 690,295,66
March 1, 1872 699,359.38
April 1, 1872
821,522.19
May 1, 1872
898,594.66
June 1, 1872
861,925.00
July 1, 1872
1,082,993.74
August 1, 1872
1,275,952.56
Sept. 2, 1872 1,256,584.21
Oct. 1, 1872 1,164,933.40
Nov. 1, 1872
1,077,975,35
Dec. 2, 1872 1,175,048.99
Jan. 2, 1873.
1,110,109.12
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Feb. 1, 1873 $ 958,901.51
March 1, 1873 984,326.62
April 1, 1873 889,559.53
May 1, 1873 1,087,051.45
June 2, 1873 1,016,998.99
July 1, 1873 999,588.48
Aug. 1, 1873 1,288,588.39
Sept. 1, 1873 1,444,909.57
Oct. 1, 1873 - 1,425,461.56
There were several good causes, in Mr. Sherwood's opin- ion, why he should not sign the report - if report it was. As regarded the water fund especially, all the information he could secure from officials could not explain to his satis- faction the remarkable shrinkage. All seemed to agree that this fund was over a million dollars before the fire. This fund was sacred under the charter, and Mr. Sherwood could not but be convinced that it was drawn from when the amount in the hands of the Treasurer on Oct. 17, 1871, was found to be $645,727.98.
Had this special water fund been put into bonds, bear- ing interest, instead of placing the currency in the hands of the Treasurer for speculation, it is certain that the city would draw the interest, and the principle would have been something over a million, instead of $645,727.98, as reported on Oct. 17, 1871.
In his investigation, Mr. Sherwood ascertained that not one of the special appropriation accounts had been bal- anced since the fire. Then, too, what purported to be the report of the Finance Committee was singularly irregular,
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as it was addressed to the chairman, L. L. Bond, instead of being signed, as is the custom, by the chairman, who is a member of the committee making the report.
If Mr. Sherwood had signed the report, it was the general impression that the white-washing process as regards the city Treasury would have been complete.
In the defense of Mr. David A. Gage, the able services of Hon. Leonard Swett have been secured. In an interview between this learned gentleman and the writer of this work, the following defense by Mr. Gage was ascertained :
"The defense lies in the fact that Mr. Gage used and loaned the City's funds by authority of the City of Chicago. The charter of 1863 provided that the City Treasurer keep the funds in a place designated by the city ; and a penalty of imprisonment in the penitentiary was met if the Treasurer converted, used or loaned such moneys in any manner what- soever, notwithstanding the specifications of a place, the city never did furnish a place ; and the city's safe being so insecure as to require a special guard over night, the habit arose, from necessity, to keep the money in the city banks. Each bank, desiring as much of the money as possible, com- petition arose, and between the years 1863 and 1869, interest was paid on balances, which was kept as a perquisite of office by the City Treasurer. As the banks were always considered good,-the fact of loaning being notorious - the city came to desire the interest. Consequently, in the winter of 1869, a law was passed providing that the City Council might, by ordinance, direct the City Treasurer where to place such public money at such a rate of interest, and
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with such security as were prescribed by ordinance. Mr. Gage was the first Treasurer elected after the passage of this law, and his first official act consisted of a written commun- ication to the Council in which he asked it to act under this law, and supervise the loaning of the city money. With this communication Mr. Gage sent in his official bond in the sum of $400,oco, which was the amount required of his pre- decessors. The Council, after mature deliberation, deter- mined that if they should direct where the money should be placed, and, if placed as directed, should be lost, the City must lose it. They therefore determined to exact a bond from Mr. Gage of $2,500,000, with most approved security; and this indemnified the city in a larger sum than any money in Mr. Gage's hands, and to permit him to do what he pleased with the money. As Mr. Gage assumed, by this arrangement, personal risk of losing, the City paid him $10,000 per annum for his risk. After two years Mr. Gage . accounted with the city, having made more than $100,000 by loans. Mr. Gage asked the Council for a relief of res- ponsibility, and to direct where to place the funds. The Council declined, telling him to do as he pleased - still paying him $10,000. And now, having invested and loaned in good faith, Mr. Gage denies criminal liability. It is not the case of a public officer using the public funds and becoming a defaulter, but simply a civil liability upon a loan by authority of the Council. At the end of Mr. Gage's term, every dollar had been loaned -aggregating about $1,000,000. It was during the great panic of '73, Mr. Gage collected about $500,000, and paid over about $150,000 in
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the city suspended banks, and about $350,000 in other loans. In this situation Mr. Gage, although his liability to do so was very doubtful, assumed payment of deficiencies, and put nearly $600,000 as assets into the hands of a trustee to cover any deficiency ultimately found in the settlement of his accounts."
. HOW IT WAS DONE.
The great meeting in the Seventeenth Ward was recog- nized as the inauguration of the local political campaign. It was held in Thielman's Theatre, on Clybourne avenue, on the evening of May 14.
The meeting was called to order by Mr. A. Hottinger, who denounced the way in which the municipal government was conducted under the Medillian administration. He said he believed so-called temperance notions, with which the heads of the local rulers seemed to be full, could be era- dicated as well as slavery had been. He could see nothing but tyranny in the then city government. The Germans would obey the law, or what was called the law, but would seek their redress with other liberal people at the polls in November.
Messrs. Adolphe Schoeninger and Frick were elected President and Secretary.
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