Daniel James

Daniel James, born in Truxton, New York, was a wholesale grocer who in 1829 married Elizabeth Woodbridge Phelps (born 1807) daughter of merchant Anson Greene Phelps (born 1781). In 1831, Daniel moved to Liverpool with his wife to replace Anson Phelps's existing partner – Elisha Peck – who had spent fifteen years in the job and wanted to return to America.

In December 1872, Daniel James arrived at his office to be greeted by a newspaper article that read: "Phelps, Dodge & Co., New York. — This great firm have had their books and papers seized by the United States for alleged frauds on the revenue to the amount of $1,750,000." The shock was such that there were concerns for his health and even a year later he had not fully recovered.

The events that led up to this involved a Phelps Dodge employee in New York who noticed a discrepancy in the declaration made to the Customs House. This resulted in an underpayment of import duty. He removed the pages from the ledger and took them to an agent of the Custom House called B. G. Jayne. He was empowered in law to seize the entire value of the import from Phelps Dodge if the case against them was proven. The Custom House received 50% of any money recovered in this way and the remainder was split between Jayne, his associates and the informer. This system had been in place for many years and was referred to as Moiety.

Jayne made an unannounced visit to the Phelps Dodge office and seized their books. Later he informed them that they were liable to pay a forfeit of $1,750,000. Without access to his ledgers, the senior partner of the firm, William E. Dodge, was unable to verify the underpayment of duty and was forced to reach a settlement with Jayne of $271,000.

When the ledgers were returned to Phelps Dodge they discovered that the underpayment was as little as $1664.68. The reason for this discrepancy had been the difference of the value of the goods declared in Liverpool and the eventual market value in America, which had fallen. The apparent injustice of the fine against Phelps Dodge, one of the most respected merchant firms in America, became a public scandal. William E. Dodge appeared before the House of Representatives' Ways and Means Committee in Washington in 1874 when they investigated the Moiety system. Jayne was also called and he was questioned about his associates and eventually admitted that the lawyer he used was General Benjamin Franklin Butler. He was asked to appear before the committee but due to illness refused. At a later date (June 19, 1874) Butler addressed the House of Representatives on the matter and was highly critical of Phelps Dodge and in particular Daniel James. However, his accusations were totally unfounded in fact and other members of the House rounded on him. His speech also gave member of the House the opportunity to raise the issue of his involvement in the Sanborn scandal where large sums of recovered Government money went into private hands.

See also the article Anti-Moiety Acts for additional information.