Did J.P. Morgan really sell the US defective rifles in the Civil War?

[F.U.Shakespeare]

A synopsis of the story as I’ve heard it: During the Civil War, a young J.P. Morgan obtained a set of rifles that had been rejected by the Union Army, and sold them back to the Army. He bought them for around $3 apiece, and marked them up to around $20. Union soldiers got their fingers blown off by these defective rifles. Morgan received no punishment, and had the chutzpah to SUCCESSFULLY sue for payment when the government balked. (Details may be off – I’m remembering this off the top of my head).

I have read this in various places over the years. Is it in dispute?

At first glance, it sounds incredible, and the sort of story that would be fabricated about someone like Morgan.

On the other hand, business ethics (and laws) were a LOT different then; there wasn’t a whole lot of government oversight.

Any historians out there care to fill us in?

[Johnny_L.A]

From http://www.us-history.info/chap_4.html

J. P. Morgan bought some rifles at bargain basement prices and sold them to the Army at a huge profit. However, the rifles were defective in that they would injure any user. There was a Congressional investigation, and Morgan was exonerated.

And from http://www.washingtonpost.com/ac2/wp-dyn/A44476-2002Feb8?language=printer

Meanwhile, Morgan was financing a deal to buy 5,000 rifles from an Union Army arsenal in New York for $3.50 apiece, then sell them to the Union Army in Virginia for $22 each. The rifles were defective – causing soldiers to shoot their thumbs off – but a judge ruled the deal legal. Morgan earned a 25 percent commission, plus interest.

I entered “j.p. morgan”, “civil war”, “defective” and “rifles” into google. The first link was to “Progressive Review”. Since they have an agenda, I took their article with a grain of salt. The first quote I posted is from csf.colorado.udu (Progressive Sociology Network) and the second is from The Washington Post.

[Johnny_L.A]

Correction: The first link is not from the .edu domain – I had looked at it, and then posted the quote from the URL I posted.

[samclem]

One of his first deals nearly ended in disaster. The Civil War was just beginning when Morgan was approached by a man named Simon Stevens, who asked him to finance the refitting of 5,000 rifles known as Hall carbines for the Union army. Stevens arranged to purchase the guns, which the army had already declared obsolete. Once they were refitted, they were to be sold for $22 per rifle, about twice Stevens’s cost, to Union Maj. Gen. John C. Frémont for his troops.

The deal was too good to turn down, and Morgan made the loan. But he grew impatient when the refitting took longer than anticipated, and he may have gotten wind of a possible congressional investigation into fraudulent war contracts, so he demanded and received his money back. Later, Congress did indeed investigate the contract; it became known as the Hall Carbine Affair. Morgan’s name never surfaced in connection with the scandal.

From http://www.cigaraficionado.com/Cigar/Aficionado/Archives/200004/fa400.html

You be the judge. I just work here.