Hall Carbine Affair

During the American Civil War, John Pierpoint Morgan financed the purchase of five thousand surplus rifles at $3.50 each, which were then resold back to the government for $22 each. The incident became renowned as a scandalous example of wartime profiteering. Interest in the incident was revived in 1910 as an indictment of Morgan.^[2]

The weapons, known as "Hall's Carbines", were purchased by arms dealer Arthur M. Eastman in a deal negotiated with James Wolfe Ripley, Brigadier General and head of the US Ordnance Bureau, during June 1861. Subsequently, Eastman agreed to sell the weapons to Simon Stevens for $12.50 each, if Stevens would provide financing in the amount of $20,000 to allow Eastman to complete the purchase from the government. Stevens quickly negotiated a sale to field general John C. Frémont for $22, promising to bore out the rifles to fifty-eight caliber. With the deal completed, Stevens obtained a loan of $20,000 from Morgan. The weapons were delivered to Eastman in August 1861, refurbished during August at a cost of approximately 75 cents each, and 2500 arms were delivered to Fremont by the end of August. Meanwhile, Stevens obtained a loan of $46,226.31 from another banker, Morris Ketchum, of which $37,500 were used to repay Eastman. Morgan was still owed $20,000, and was still holding 2500 rifles as collateral. On Sept. 14, 1861, the US government paid for the first shipment, and Morgan released the remaining rifles for shipment to Fremont. A voucher in lieu of payment for the remaining funds due was sent to Morgan, who forwarded it to Ketchum.

By the time the 2nd payment was due to be paid, in Sept. 1861, a scandal was developing. Ripley discovered that Fremont had purchased the rifles without his authorization, and he felt that Fremont had been overcharged. Ripley complained to the Secretary of War, and the matter was reported in major newspapers on Sept. 26, 1861. By the next day, a House investigating committee was looking into the matter. In 1863, a Congressional Committee on Government Contracts was highly critical of the arms merchants, writing: "Worse than traitors in arms are the men who pretending loyalty to the flag, feast and fatten on the misfortunes of the nation, while patriot blood is crimsoning the plains of the South and bodies of their countrymen are moldering in the dust."

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