When a government safe was raided — to fund the Pony Express illegally

When a government safe was raided — to fund the Pony Express illegally

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At about 9 p.m. on a Saturday in late December 1860, Interior Secretary Jacob Thompson rushed to his department’s D.C. headquarters to inspect a safe that held bonds and stocks for Native American tribes. The safe key was missing. So Thompson sent for a blacksmith, who smashed the iron safe open with a sledgehammer.

Thompson had heard that hundreds of thousands of dollars in stocks and bonds had been secretly removed and “loaned” to an unknown official. To his shock, the securities were indeed missing from the safe. The recipient turned out to be the president of the Pony Express, who had used the bonds to raise operating money for the private mail service.

The search didn’t rise to the level of this week’s announcement by former president Donald Trump that his home and safe at his Mar-a-Lago Club in Palm Springs, Fla., had been raided by FBI agents. But it was big news in its day. “Washington City yesterday was thrown into a high state of excitement” by the news that the Interior Department “had been robbed of a very large amount of stocks and bonds held in trust for the benefit of different Indian tribes,” the New York Herald reported.

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The Justice Department and FBI haven’t revealed what the agents were looking for at Mar-a-Lago, but the search required approval by a federal judge. The 1860 break-in was anything but authorized — an inglorious chapter in the legendary Pony Express’s horseback transport of mail across the northern plains of America’s wild west in the months leading up to the Civil War.

In early 1860, Pony Express President William H. Russell and two business partners created the Central Overland California & Pikes Peak Express Co., following protests over the postmaster general’s cuts in mail service to California. At that time, mail trains and telegraph service to the west ended in St. Joseph, Mo. Stagecoaches then carried the telegrams to a station in northern California and the mail on to San Francisco. The trip took up to three weeks.

The new company promised mail delivery by its Pony Express service in 10 days using relays of riders and fast horses. The company bought 400 horses and hired 80 riders. Mark Twain wrote that “the pony-rider was usually a little bit of a man, brimful of spirit and endurance.”

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Riders traveled light, carrying only a specially designed mail pouch called a mochila, a Bible and a revolver. They were paid about $100 a month, equal to nearly $3,200 now. The most famous rider was a young William “Buffalo Bill” Cody.

The first rider left from St. Joseph on April 3, 1860. A large crowd gathered “to witness the inauguration of this great and novel enterprise,” the New York Times reported. At 7:15 p.m., the rider’s “spirited bay mare … dashed off at a rapid rate, bearing her burden towards the Gold State.” The rider carried 49 letters, five telegrams, newspapers and other items. Ten days later, crowds lined the streets in Sacramento to witness the arrival of the Pony Express rider just after 5 p.m., as church and fire engine bells rang.

To promote the service, the Pony Express made an “extra” run in November to deliver the results of the 1860 presidential election to the West Coast in a record seven days from the new end of the telegraph line in Fort Kearney, Neb. The “Pony” delivered the news that Republican Abraham Lincoln had won New York state and was assured of election.

The federal government partially subsidized the Pony Express route, but the company wasn’t able to get the major mail contract. Behind the scenes, the Pony Express was losing money hand over hoof. Russell desperately began seeking ways to pay off creditors.

He turned first to the War Department, which owed the Pony Express’s parent company money for transporting military supplies. Congress hadn’t appropriated the funds yet, but War Secretary John Floyd illegally gave Russell and his partners a written assurance of future payment. Russell used the document as collateral to get short-term bank loans. Now the loans were coming due.

Then Russell learned about an Interior Department clerk named Godard Bailey, who was the custodian of a fund that made payments to Native American tribes for land sold to the U.S. government. Bailey was related to Floyd by marriage and worried that Floyd’s illegal assurance would be exposed if he didn’t help Russell. So he gave Russell bonds and stocks worth about $870,000, or $29 million today. Russell pretended the securities were his and used them to raise cash.

In December, the guilt-ridden Bailey wrote a letter to a friend confessing his theft. On hearing of the letter, Thompson raced to his agency and discovered the bonds were missing. A search of agency books went on “with members of the Cabinet and other prominent public men until three in the morning,” the New York Herald reported.

That same morning, federal authorities issued a warrant for Bailey’s arrest. “He attempted to cut his throat, but was prevented by his wife,” the Chicago Tribune reported. On Christmas Eve, Russell was arrested at his office in New York City.

The story of the Great Bond Robbery quickly became a newspaper sensation. In April, Russell resigned under pressure as Pony Express president. Floyd also resigned his Cabinet position under President James Buchanan because of the scandal and disclosures that he was siphoning federal supplies to Southern rebels. After the Civil War broke out on April 12, 1861, Floyd, a former Virginia governor, became a Confederate general. (Thompson, who had served as a congressman from Mississippi, also quit his post in the Buchanan administration in 1861 to become inspector general of the Confederate Army.)

Meanwhile, the rising tensions between the North and South boosted the Pony Express’s business, as people on the West Coast were anxious for timely news about the crisis. But the Pony’s days were numbered. On Oct. 26, the opening of a telegraph station in Salt Lake City established nearly nationwide service.

Two days later, the Pony Express company announced it was closing. Soon afterward, the last rider to California journeyed into the sunset. Over the 18 months the Pony Express existed, four riders were killed by Indians, one was hanged for murder, two froze to death and one was killed in an unrelated accident, according to the National Park Service.

With the Civil War underway, the missing bonds were never recovered. Russell and Bailey were never prosecuted. Eventually, U.S. taxpayers footed the bill for replenishing the Indian Trust Fund.

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