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Cornell University Library 1994.No. i.
WHEN THROUGH READING, HAND TO REPUBLICAN NEIGHBOR.
MILLIONS™™™
DOLLARS LOST!
A Startling Array of Facts by Goy. Black’s,
Fraud Investigation Commission.
THE PEOPLE DECEIVED.—THEIR CONFIDENCE
MISPLACED. — $1,000,000 STOLEN. — $2,000,000
MORE “UNNECESSARILY,” “ UN AUTHORIZED-
LY,” “INJUDICIOUSLY,” OR “IMPROPERLY”
SPENT.-CONSTITUTION VIOLATED BY STATE
OFFICERS —A MILLION OF DAMAGES AGAINST
THE STATE INVOLVED — STATE TRANSPORTA-
TION INTERESTS HARMED AND THREATENED,
A GREAT PUBLIC WORK IRREDEEMABLY HARMED.
Read these Facts given by the Cominission appointed to investigate
the expenditure of the $9,000,000 Canal Improvement Fund.— Over
$800,000 of the sum spent on imperfect and. insufficient surveys.—
An Advertising Job threw away $80,000.—Useless Inspection took
over $40,000.— Insufficient Engineering.— Elastic Specifications.—
Fraudulent Classifications of Rock and Earth.— Half a Million of
PAY DIRT in Canal Embankments.—Incomplete Contracts.—Dam-
age Claims kept alive.—$14,000,000 more required.
POLITICAL JOBBERY.
Shall the Men who have Maladministered this Trust go
Unpunished?
•a	■THE COMMISSION OF INVESTIGATION.
The Legislature of 1898 enacted a statute providing for the ap-
pointment of a Canal Investigating Commission and appropriated
money for such purpose. Governor Black appointed as members of
the Commission, George Clinton, of Buffalo, Chairman; Darwin It.
James, of Brooklyn; A. Foster Higgins, Frank Brainard and
Franklin Edson, of New York; Wiffiam McEcKron, of Glens
Falls, and Smith M. Weed, of Plattsburgh; Messrs. Weed-and Ed-
son being Democrats, and all the gentlemen comprising the Com-
mission being friends of the canals and directly interested in their
continuance and further improvement.
The Commission, under statute-, was required to report the result
of its examination, with its opinion and testimony, on or before
July 1st. The act further provided that the Governor might ex-
tend the period of time of making such report not longer than Au-
gust 1, 1898. Such extension was granted by the Governor and the
Commissioners’ report was given to the public August 4, 1898.
The report states that it was physically impossible for the Com-
mission, within the limits of time fixed by law for its labors, to
investigate fully the work assigned to it. It examined but fifty
of seventy-three contracts placed before them. In its report to
the Governor it says:	“ We have not found it possible, in all
cases, which it seemed to us that money had been wasted through
insufficient preparation, unskilled work, wrong classifications or
improper measurements to reduce the amounts to a certainty, or
attempt to report amounts in every case where the evidence makes
them capable of ascertainment.”MEN WHO ADMINISTERED THE CANAL IMPROVE-
MENT WORK.
Governor LEVI P. MORTON, Republican, who appointed GeoT W.
Aldridge, the Rochester city politician, Superintendent of Public
Works, and Governor FRANK S. BLACK, Republican, who
continued Mr. Aldridge in office.
CAMPBELL W. ADAMS, Republican State Engineer and Surveyor,
who prepared the plans, specifications, and maps and estimates
of material to be removed and work to be erected, with kinds
of material to be used in constructing the work, under whose
assistant engineers and inspectors the work progressed, and
upon whose certificate payments were made.
GEORGE W. ALDRIDGE, Republican Superintendent of Public
Works, who accepted the plans, specifications, estimates and
maps of the State Engineer, advertised for contracts upon same
and awarded the contracts.
STATE CANAL BOARD.
Lieutenant-Governor Timothy L. Woodruff............. Republican.
Secretary of State John Palmer...................... Republican.
Comptroller James A. Roberts........................ Republican.
State Treasurer Addison B. Colvin................... Republican.
Attorney-General Theodore E. Hancock................ Republican.
State Engineer and Surveyor C. W. Adams ............ Republican.
Superintendent of Public Works Geo, W, Aldridge .... Republican.
These men, comprising the Canal Board, adopted the State Engi-
neer’s plans and surveys, approved changes and alterations of terms
of contracts and canceled contracts found to be oppressive to
contractors.REPORT OF THE COMMISSION.
[Note. —The testimony taken by the Canal Investigation Commission comprises over
6,000 pages of type-written matter. The report of the Commission makes 156 pages of book-
page matter and the report of the eminent civil engineers engaged upon the work, 50
additional pages. The following comprises the main features of the Commission’s report
to Governor Black. The Commission,(in the brief period it was enabled to work, performed a
large amount of work. As high-minded citizens they acted without regard to party, and, as
** friends of the canals,” they use very mild language in their unanimous condemnation
of the gross fraud, abuses and methods which have accompanied the administration of the
People’s Trust Fund of $9,000,000 set aside for the enlargement of our State canals.]
To the Honorable Frank S. Black, Governor of the State of New York :
The undersigned Commissioners, appointed by your excellency pursuant
to chapter 15 of the Laws of 1898, as amended by chapter 327 of the Laws
of the same year, to investigate and report concerning:
1.	The work already done of enlarging and improving the Erie, Cham-
plain and Oswego canals, pursuant to the provisions of chapter 79 of the
Laws of 1895, and the vote of the people;
2.	The contracts for such enlargement and improvement made pursuant
to said act, and whether they were properly made;
3.	The amount of money actually expended for such purpose, and
whether it has been properly expended;
4.	The proportion of the enlargement and improvement of said canals,
provided for by Said act, included in such contracts, and that not included
therein;
5.	Whether any money in excess of that provided by isaid act will be
required to complete the enlargement and improvement of said canals, in
accordance with the provisions of said act, and if so, what amount;
6.	Such other matters in connection with the work of said enlargement
and improvement of said canals, as, in the judgment of the commission are
of public interest; do respectfully report:
*	m	*	*	*	*	*	*	*	*	*
After mature consideration, we concluded that to properly look into
the matters upon which we are required to report and to ascertain all the
facts possible, to enable us to give the information called for, it would be
necessary to make a personal examination, as far as possible, of the work
in progress, and that which had been completed, and to have Mr. Cooley
and Mr. North (civil engineers) make a thorough inspection of all the
work. This was done, we having personally inspected the work at the
most important points upon the Champlain, Erie and Oswego canals, and
Mr. Cooley and Mr. North having visited and examined those canals
throughout their entire length. -
*	* * * * * * * '*
The great scope of the duties imposed upon us by the act has compelled
us to devote much time to the investigation of the advertising and letting
of contracts, the preliminary surveys, inspection, the preparation of the
contracts, including the quantity sheets upon which bids were invited, the
specifications under which the work was done, the operation in actual con-
struction, of the specifications in connection with the quantity sheets, the
mode of supervising the work, both through inspection by the Superintend-
ent of Public Works, and by the engineers, the actual construction, theMillions of the People’s Dollars Lost.
5
measurements of quantities for the purpose of making monthly payments
to contractors, the final estimates where contracts were completed, the
condition and nature of the work upon which no construction has taken
place, the acts of the officials concerned in the improvement, the payment
of moneys, including not only amounts, but the manner of making pay-
ments and the correctness of the payments made, and such questions as
presented themselves in the course of the investigation, as we have deemed
necessary to take evidence, upon, as, for illustration, the various estimates
made for the work before it was undertaken, and those which have been
made as estimates for the completion of the work, and evidence bearing
upon the motives, integrity and conduct of all those engaged in or respon-
sible for the execution of the act of 1895.
*	N*	*	*	*	*	*	*	*	*	*
We have not attempted to report upon each contract separately, as
though it were connected with the others, nor to describe every instance
of such irregularities and abuses as we have discovered. We have con-
sidered the whole improvement as a single work including three canals
and subdivided into contracts; and have tried to so present the results of
our investigation as to give the most accurate information possible, with-
out losing ourselves in a maze of disconnected details.
We have not found it possible, in all cases in, which it seemed
to us that money has been wasted, through insufficient preparation,
unskillful work, wrong classifications, or improper measurements, to re-
duce the amounts to a certainty or to attempt to report amount^ in every
case where the. evidence makes them capable of ascertainment. *	*	*
If it be desirable, for other purposes, to know exact amounts, the evidence
which we have taken will furnish the information sought. *	*	*
We have necessarily dwelt upon such features of the work as have,
through some offense against proper principles of executive manage^
ment, attracted our attention.
The conditions as they developed were, most unfavorable, and re-
quired a high degree of skill and moral strength to meet them. Pres-
sure for haste necessarily resulting in disorganized and demoralized
execution, was exerted from quarters from whence it should not have
been expected; influences hereditary in canal work began to exert
themselves. The traditions and habits of canal contractors were a
power for evil which required continual watchfulness to oppose; here
and there political influences controlling the appointment of subordi-
nates and personal political ambition put its hand on the lever; divided
responsibility and double power of direction thwarted proper unity of
purpose; the necessity for doing the work throughout th6 very season
of the year which would be most favorable for pressing the improve-
ment to completion, disturbed its progress and largely increased its
cost.
During our investigation we have frequently been confronted with the
necessity of determining the responsibility for abuses which we have
discovered.
\ The statute prescribes the general nature of the improvement. As to
this the officials of the State have no power and no responsibility. Their
responsibility is confined to the manner of its execution, or to the nature
of the improvement, so far as the statute does not accurately prescribe it.
,The law provides that none of the work shall be contracted for until the
State Engineer shall have made estimates of quantities and maps, plansMillions of the People’s Dollars Lost.
and specifications. The Superintendent of Public Works had a certain
control over such estimates, maps, plans and specifications, by means of
his power (once exercised in the course of this improvement) to refuse to let
contracts upon them. These are also subject to approval by the Canal
Board. Yet neither the superintendent nor the Canal Board can make or
authorize contracts upon plans or specifications prepared by any other
person. The State Engineer was elected by the people to perform this
duty, and he is primarily responsible for the manner of its fulfill-
ment. Upon the Superintendent of Public Works, solely rests the re-
sponsibility for making the- contracts. He is responsible for the
character, extent and cost of the advertising, for the exercise of his power
to cancel or reject bids, for the security required of contractors, for the
choice and number of the contracts to be let, and for the distribution of
the work along the canal.
Joint Responsibility.
Upon the subject of administration of contracts there is a divided re-
sponsibility. The Superintendent of Public Works is the executive offi-
cer, but he is compelled by law to rely upon the State Engineer for the
performance of certain executive functions. The superintendent alone
can compel performance. No change in plans can be made without his
approval; he has the power to make or withhold payments, and the work
must be finally accepted and approved by him. This responsibility carries
with it the right to supervision of the work through his own employes.
Recognizing this, he has insisted on the appointment of inspectors to aid
him in exercising the power conferred upon him by law. The superin-
tendent is not responsible, necessarily, for the acts of the engineering
department. They are required by law to measure and certify the amount
of work done, iand without such certificate no payment can be made.
These certificates necessarily involve not only measurement, but classifica-
tion and sufficient inspection to determine that the work measured is such
as is described in the specifications. For all this the State Engineer is
responsible by virtue of his office. But it does not follow that the Super
intendent of Public Works is not responsible for anything but the char-
acter of the masonry, as he claimed when testifying. Although he can
not make payments without the engineer’s certificate, he is not com-
pelled to pay in accordance therewith without question. It is the pay-
ment which makes error or wrong in the engineer’s certificate effectual
to injure the State. If the work is not done in accordance with the
specifications, or if the engineer’s certificate contains such errors, as
are, or should be, known to the superintendent, through the medium
of an intelligent and zealous force of inspectors, the superintendent is
responsible for the loss to the State caused by the payments made
thereon. *	*	* The greater part of the abuses which we
shall point out were effected through the agency of the engi-
neers, but most of these would have been nullified in their
effect under proper and corrective inspection and administration.
The certificates made from month to month by the engineering depart-
ment, supplemented by proper reports from the inspectors, would have
furnished the information necessary, in many instances, to remedy or
nullify such abuses. The failure to so act unites the Superintendent of
Public Works with the State Engineer in a common responsibility.
*	*	. *	*	*	*	*	❖	*	*	H«7
Millions of the People’s Dollars Lost.
The Work Undertaken.
The improvement was divided by the State authorities into contract
sections, the contracts being numbered from one to the highest number
upon each division separately.
The contracts for deepening the canals vary greatly in length:	Thus,
contract No. 10 upon the Champlain canal is 11.75 miles in length, while
No. 8 is 1.3 miles; upon the Erie canal the lengths of the contracts vary
from 22.07 miles to .18 of a mile; contract No. 11 on the Erie canal,
Eastern Division, which is the one .18 of a mile long, although laid out as
a contract section under the plan of improving the canal, was let under
chapter 320 of the Laws of 1895, which appropriates an unexpended bal-
ance for the making of the improvement covered by that contract.
However, the cost of this work, $46,922.98, was paid from the $9,000,-
000 appropriated for the general improvement. *	*	*
The actual condition of the work on the different canals is as follows:
	Completed Incomplete		Work
	work.	work.	not let.
	Miles.	Miles.	Miles.
Erie canal — Eastern Division		26.56	27.99	51.687
Middle Division i 				 23.18	73.61	none
Western. Division 				 3.45	112.40	31.81
Total Erie canal			 53.19	214.00	83.497
Champlain canal . 					 5.886	24.03	. 36.11
Oswego canal . 									 6.63	6.73	24.11
Total, all canals ................... 65.706	244.76	141.017
The proportion of work done upon those contracts, the work under which
has not been completed, and has not reached a stage of practical comple-
tion, is as follows:
Erie canal —- Eastern Division, one-half; Middle Division, one-half;
Western Division, four-tenths.
• Champlain canal — Three-fourths.
Oswego canal — One-half. ***********
Breaks and Interrupted Transportation.
Inasmuch, however, as there have been a number of breaks upon the
canal, occurring during the period between the commencement of the work
under the act of 1895, and the present time, which would seem to indicate
that the work is defective, we deem it necessary to advert to this subject.
Some of the breaks have occurred upon portions of the canals upon which
no work of improvement, has been done, and some have occurred upon por-
tions wrhere work has been prosecuted. The latter, in our opinion, are
due in some instances to lack of sufficient care ior skill on the
part of the engineers; the three illustrations which we give plainly
showing our meaning.
Upon contract No. 2, in the city of Syracuse, a break occurred which
should have been avoided. Opposite the place of the break the Greenway
Brewery is situated, the cellar of which extends below the bottom of the
canal for several feet, and means sufficient and plainly necessary to ob-
viate the danger of water working through the bank of the canal into
this cellar were not adopted, and a bad break occurred, the old wall at
this place giving way, and the cellar of the brewery being flooded. That8
Millions of the People’s Dollars lost.
the accident could have been prevented by thei exercise of proper
engineering care and skill we deem beyond question.
A break occurred this season near Holly, on the Western Division. The
exact cause of this has not been ascertained, but it seems quite clearly
to have been the result of improperly restoring a culvert into
which the contractor had been permitted to drain. Had care been
exercised in seeing to it that the restoration of the culvert when it was
closed was such that the water could not have worked through the bank,
there can be no doubt that the bank at this point would have remained in-
tact. This should have been attended to by 'the engineers in charge
of the work, and the imperfeet restoration should have been re-
ported by the inspectors appointed’'by the Superintendent of Public
Works. This break was apparently due to neglect on the part of the con-
tractor, as w^ell as the State officials, but it does not affect the general
character of the work done under the contract.
In May, 1897, before the official acceptance of the work, a long stretch
of towpath bank upon contract No. 8 on the Champlain canal, was under-
mined by water and the outer half w:ent out. This accident is clearly
the result of a lack of engineering care. It was known that a bed
of water-carrying gravel underlay the prism of the canal, including its
banks. *	*	*	* * . *	*	*	*	*	*	*	*	*	#
The expense to the State of the breaks which have been caused
by the improvements through lack of care and skill in engineering
and proper inspection by the superintendent’s department, is large,
but we have not sufficient evidence to enable us to state the amount, lack
of time preventing our prosecuting inquiry into this subject sufficiently
to ascertain the damages to adjacent owners. *	*	*	*	*	*
Loose Contracts and Questionable Methods.
We annex hereto a schedule marked schedule “ C,” which shows the
contracts for the improvement under chapter 79 of the Laws of 1895, the
numbers of the contracts, the names of the contractors, the home office
of contractors, the names of sureties, the character of the work, the date
of the letting, the amounts bid and the aggregate of the bids. Whether
these contracts were properly let involves many considerations. There is
no evidence that improper influences induced the letting of any of these
contracts. Sufficient notice of the letting was given, there were a number
of bids upon each contract; and the bidders had full opportunity to be
present at the opening of the bids. It appears from the evidence', how-
ever, that the prices were not made public at the time thei bids were
opened. This should always be done, for the reason that it is impossible
for bidders to tell whether the aggregates arrived at by those who extend
and add up the figures are correctly calculated, or. truly stated, unless this
is done.
In some instances there was considerable delay in awarding contracts
after bids were opened. This should not be. Awards should be made as
speedily as possible after the bids have been made public. Delay in
awarding is unnecessary and may be made use of for improper purposes.
In the letting of contracts the law was complied with in all respects, so
far as formalities are concerned, except that the contracts' themselves
were not executed in triplicate, as required by the general canal law.
The evidence, however, discloses that in one instance the general
Canal Act was violated in a substantial particular. Section 33 of the act
provides “no public officer or appointee, connected with the care or
management of the canals, shall be interested in any *	*	*9
Millions of the People’s Dollars Lost.
contract on the canal as a contractor * ' . *	* or either di-
rectly or indirectly derive any benefit from the ordinary or extraordinary
expenditures upon the canals, beyond his established compensation.” It
further provides, in substance, that if any officer or appointee violates this
section he shall forfeit his office or appointment, be discharged, and that
the contract shall be void.
David I. Snell was one of the contractors to whom contracts Nos. 1 and
12, upon the Middle Division, were let. Work on contract No. 12 con-
tinued from soon after the letting, November 19, 1896, until some time in
September, 1897; and contract No. 1, awarded November 19, 1896, was in
progress until the spring of 1898. Snell was in the employment of the
Canal Department as a carpenter, upon section No. 3, Erie canal, during
the months of September, October and November, 1896, and June, July,
August, September and October, 1897. It would, therefore seem that the
law referred to was violated when contracts Nos. 1 and 12 were let to
parties, of whom David I. Snell, an appointee connected with the care and
management of the canal, was one. It follows that those contracts were
illegally let and by the terms of the statute were void. *	*	*
The arrangement of the quantity sheets, the ascertainment of quantities
to be inserted, the insertion of nominal quantities, and the effect of the
specifications were such as to prevent a substantial compliance with the
law, which provides that the contracts shall be let to the lowest bidder.
These subjects, however, and the contents of the proposals, including
quantity sheets and specifications, are fully considered in another part of
this report.
Contract No. 8, Eastern Division, Champlain canal, should not have been
a warded;, the bid should have been canceled and the work readvertised.
This contract, therefore, can not be said to have been properly let.
Whalen & Higgins, the successful bidders, presented the lowest aggregate
bid, and the prices bid by them were of such a nature as to show that the
bid was unbalanced. The engineers’ estimate for. embankment was 5,640
yards, and the bid was . eighty cents. This is nearly three times the
average price for such work, and showed upon its face that it bore no
proper relation to the price bid for lining —forty cents — which is exceed-
ingly low, about one-half the average. This bid was the lowest on its face,
for the reason that reductions were made on the price of lining and other
work, but it was not the lowest in fact, as will appear hereafter. The
evidence shows that the State Engineer and Surveyor expected to provide
spoil banks in locations that would have kept the amount of embankment
within the quantity estimated by hind; but this was not done. We do not
regard this expectation as a sufficient excuse for letting the contract. Not
only was the bid, upon its face, unbalanced, threatening a considerable loss
to the State, but the unbalanced nature of the bid was known to and con-
sidered by the Superintendent of Public Works and State Engineer and
Surveyor, they having their attention directed to the objectionable features
presented by the prices for embankment and lining, and it was the duty of
those officers to have canceled all bids. There were other contracts which
contained unbalanced features, but in none of them were the prices so
unbalanced as to indicate bad faith on the part of the contractor, or such
danger of loss that we can say it was the duty of the superintendent to
reject all bids in those cases.
The evidence taken by us indicates that the bids under the first letting
for contract No. 36, upon the Oswego canal, and No. 25, upon the Erie
canal were rejected for improper, that is, factional political reasons. The10
Millions of the People’s Dollars Lost.
facts show that the Superintendent of Public Works was warranted in re-
jecting these bids. On its face the bid of Chambers & Casey, for con-
tract No. 36, Middle Division, was the lowest. This bid contains prices
which are clearly unbalanced; the excessive price of $4 was bid for dry
excavation of rock, and the exceedingly low price of eight cents for em-
bankment. In the opinion of the State Engineer, communicated to the
superintendent, the bid was unbalanced. This being so, we are of the
opinion that the rejection of the bids for this contract was hot improper.
The contract was subsequently let, upon readvertising, to Edwin Lodder,
and the result, upon the completion of the work, is that the cost was less
than it would have been under the Chambers & Casey bid, by about $4,000.
All bids for contract No. 25, Eastern Division, were canceled. Chambers
& Casey being the lowest bidders. At the same time, other bids upon
contracts which had been advertised for letting at the same time and
place were canceled. The reason given for this by the. Superintendent of
Public Works is, that he and the State Engineer and Surveyor had con-
cluded that it was unwise to let all the contracts which were advertised
for letting at that time, and that it was necessary for them to select from
those advertised only those upon which they deemed it proper to begin
work.
A large amount of the work of improvement was done under special
agreements, made with the approval of the Canal Board, as provided
by law; some was done under an extension of the quantities, and some,
not included in the plans and specifications, without any agreement,
and without the approval of the Canal Board. *	*	*
All Money Expended.
The amount of money actually expended for the enlargement and im-
provement of the canal at the close of business on July 25, 1898, was as
follows;
1.	For disinfectants............................... $6,684 93
2.	For advertising ........•.............................. 92,320 70
3.	For inspectors employed by the Superintendent of Public
Works................................................ 178,969' 43
4.	For engineering expenses upon the drafts, of the engi-
neers................................................. 812,000 00
5. Paid to contractors..........................V......... 7,106,722 77
6.	Expended by the Superintendent of Public Works in com
tinuing the work on suspended contract No. 3 on the
Western Division..................................... 36,555 19
Total amount expended ................................•.... $8,233,253 02
$ * * * * ' * ■ * * * * *
In addition to the amount already paid to the contractors, as above set
forth, the State Engineer had, on July 25, 1898, pursuant to said act, certi-
fied that there was due to the contractors, including the 10 per cent, re-
serve, the sum of $706,098.36, and drafts amounting to $35,092.37 to the
order of contractors were outstanding. On the 25th day of July, 1898, the
account of $9,000,000, appropriated for enlarging and improving the canals,
was as follows;11
Millions of the People's Dollars Lost.
Paid out as above stated................................... $8,233,253 02
Drafts outstanding......................................... 35,092 37
Certified, but unpaid ...................................... 706,098 36
Apparent free balance.................................,....	25,556 25
Total appropriation.....................................	$9,000,000 00
$	*	*	*	*	*	*	Hs	*	*	!*
As, to whether the above amount of money has been properly expended,
we report as follows:
Disinfectants.
In the city of Buffalo certain sewers empty into the Erie canal, and the
excavated material was in such condition that a proper regard for public
health required that it should be treated with disinfectants. For that pur-
pose the sum of $6,684.93 was expended by the Superintendent of Public
Works for disinfectants and applying the same. We are of the qpinion
that this money was properly expended.
“ Fat” for the Party Organs.
Chapter 79 of the Laws of 1895, as originally enacted, contained the fol-
lowing provisions regulating advertising:
“All the work herein specified to be done shall be done by contract, en-
tered into by the Superintendent of Public Works, on the part of the State,
after being advertised once a week for six successive weeks in two news-
papers in each county in the State in which any part of the canal is
located, and the county of New York and Kings.”
The act was amended by chapter 794 of the Daws of 1896, and upon the
recommendation of the Superintendent of Public Works, the j>rovisions
regulating advertising were changed to read as follows:
“All the work herein specified to be done shall be done by contract en-
tered into by the Superintendent of Public Works, on the part of the State,
after being advertised in the State paper ten successive days, not including
Sundays, and in such other newspapers or journals, and for such period of
time or number of insertions as the Superintendent of Public Works may
select or deem necessary.”
When the specifications for the contracts were prepared by the State
Engineer they were not submitted to the Superintendent of Public Works.
The result was that the superintendent, who was desirous of introducing
certain provisions, adopted the device of inserting requirements in the
advertisements, in that way more than doubling the amount of advertising
matter. This was unnecessary and useless, as the inclusion of these re-
quirements in the contract could have been accomplished in other ways.
On the 12th of October, 1896, the superintendent began advertising con-
tracts. The advertisement of each contract was separate and complete
in itself and continued usually for three weeks with daily insertions; but
many of them were advertised on the same days and in the same issue of
the papers, and to that Extent consisted of useless repetitions of the
same matter.
$ * * . * - * - * * * * * * *
The total number of contracts advertised in this manner was thirty-
two, and the total amount expended for advertising them was $74,978.50,
being an average amount spent for Advertising each contract of $2,343.08.
No attention seems to have been paid to the amount involved in the12
Millions of the People’s Dollars Lost.
several contracts. Upon contract No. 7, Middle Division, for which the
engineer’s estimate was $11,381, and which was. let for $10,695, there was
expended for advertising the sum of $2,621.05, or 23 per cent, of the en-
gineer’s estimate of cost, while upon contract No. 1, on the Western
Division, of which the engineer’s estimate was $433,225, and was let for
$394,955, there was expended for advertising $1,634.85, or about one-third
of 1 per cent, of the engineer’s estimate.
After these contracts were let, this manner of advertising was aban-
doned, the superintendent’s requirements were omitted and several con-
tracts were grouped in one advertisement, so that thereafter forty-nine
contracts were advertised at a cost of $17,342.20, or an average of $353.92
for each contract. Of these:.
Twenty-one contracts on the Eastern Division averaged in cost.. $225 91
Eighteen contracts on the Middle Division averaged in cost....	366 80
Ten contracts on the Western Division averaged in cost ...... 599 55
The number of papers in which such advertisements were inserted
was increased in the majority of cases to upward of seventy.
The Superintendent of Public Works had been in office for over a year
prior to the time of beginning the advertisement of these contracts. Ac-
cording to his testimony, he had already advertised from twenty-five to
fifty contracts under special acts of the Legislature. These contracts were
advertised separately, and the cost Of advertising certain of them, as
proved, was $72, $98.25, $140, $160, $186, $187, $220, $227 and $495, re-
spectively, an average of $198.58 each. These advertisements, according
to the testimony of the superintendent, produced fairly good competition
and attracted a number of bidders for each contract.
We are of the opinion that an average of $150 for each contract adver-
tised under chapter 79 of the Laws of 1895, as amended, was enough to
properly advertise the same in compliance with the provisions of the act,
and that the remainder of the money expended for advertising, to*
wit: $80,170.70, was not properly expended.
Inspectors and Plenty of Them.
The act under which this work has been prosecuted provides that the
Superintendent of Public Works shall proceed to enlarge and improve the
canals as directed; it imposes upon him, jointly with the State Engineer,
the responsibility for the final approval and acceptance of the work; and
requires the approval of the superintendent before any change can be
made in the maps, plans or specifications of the work and contract during
its progress. The Constitution of the State provides that the Superintend-
ent of Public Works “ shall be charged with the execution of all laws
*	*	* relating to the construction and improvement of the canals,
except so far as the execution of the laws relating to such construction or
improvement shall be confided to the State Engineer and Surveyor.”
The State Engineer testified that in the beginning of the work he was
ef the opinion that the law so plainly required-the State Engineer to pass
upon the quality of the work that he did not perceive the necessity of in-
spectors to the same extent that the Superintendent of Public Works did,
and did not provide in the specifications which governed the work that
there should be inspectors, or that their authority should be respected by
the contractors. The Superintendent of Public Works, however, by the re-
quirements inserted in the advertisements as above stated, provided for
the appointment of inspectors and required the contractors to ^bservo13
Millions of the People’s Dollars Lost.
their orders and directions. In view of the responsibility as to the charac-
ter and performance of the work imposed on the superintendent by law,
he was justified in the employment of a proper force of inspectors who
should be responsible to him directly and through whom he could exercise
that control and supervision which the law contemplates. *	*	*
The pay of the inspectors was fixed at $4 per day, and they were furnished
with written instructions to guide them in the performance of their duty.
The amount paid for the services of inspectors assigned to contracts,
up to the 1st of May, and during December, 1897, which was the season of
closed navigation, was $38,532.80.
During the season of open navigation the work on the contracts substan-
tially ceased. There was some work done in topping out walls above the
water line; on two or three of the contracts excavation proceeded by
dredging; on certain contracts the canal banks were raised and strength-
ened; some work was performed on the towpath and some of the contrac-
tors were drawing materials for the future prosecution of the work.
There was comparatively little use for inspectors during the season of
open navigation; Nevertheless a large force was retained, and there
was paid for the service of inspectors during the months, of May* to
November, 1897, inclusive, $41,514.19. The payment by months was as
follows:
Month.	Closed Navigation. '	Amount.
January . . . ...........................;■............ $3,314 00
February............................................... 6,378 66
March..............-................................... 8,920 14
April . . ............................................. 10,312 00
December . . .......................................... 9,608 00
Total . . . ............................................... $38,532 80
Month.	Open Navigation.	Amount
May...................................................... $7,698 94
June............... ..................................... 4,746 87
July.....................................................   5,040	44
August...................................................   5,409	59
September. ..............'............................... 5,234 57
October...............................................      6,112	08
November.................................... . .......... 7,271 70
Total................................... ..................$41,514 19
We are of the opinion that a portion of the expense of maintaining
the force of inspectors during the season of open navigation was use-
less, and, therefore, improper. For instance, on contracts Nos. 3 and
10, Eastern Division, there were three or four inspectors stationed on
a dredge on each contract watching excavation.
On January 1,. 1898, on account of a change in the administration of the
city government of Rochester, many employes lost the places; of these 10
or 15 were appointed inspectors on the canal work without civil service
examination. The evidence shows that it must have been known at the
time of their appointment that some of these temporary appointees
were not competent to properly discharge the duties of inspedtors, and
it follows that the money paid for their services was not properly
expended.	‘14
Millions of the People’s Dollars lost.
The position of inspector on work of this character carries with it
important responsibilities. The character, and, in certain cases, the quality
of the work done, depends upon the manner in which the inspectors dis-
charge their duties. The pay which they receive is sufficient to secure
the services of men well qualified to perform their duties, yet the evi-
dence indicates that competency not made the test in selecting inspectors
not appointed from the civil service list.
There has been, to a great extent, a dual system of inspection of the
work under these contracts. The engineers upon whose certificates and
affidavits the contractors are paid, according to their testimony, consider
that the certificates involve the quality as well as the quantity of the
work. They have not, therefore, left the inspection entirely to the em-
ployes of the superintendent, but, to a greater or less extent, have inspected
the work themselves. The practical result has been that much of the
inspection work was duplicated, and the division of responsibility be-
tween the State Engineer and the Superintendent of Public Works
has substantially increased the cost of inspection.
Expensive Engineering.
At the close of business on July 25, 1898, $812,000 had been expended on
engineering, including the amount drawn by the division, engineer for
engineering purposes, the vouchers for which had not then been returned.
* • * * * * * * * * ;*
The act provides that “ none of the work called for by this act shall be
contracted for until the State Engineer shall have ascertained with all
practicable accuracy, the quantity of embankment, excavation, masonry,
the quantity and quality of all materials to be used, and all other items of
work to be placed under contract, and a statement thereof, with the maps,
plans and specifications, corresponding to those adopted by the Canal
Board, and on file in the office of the State Engineer, is publicly exhibited
to every person proposing or desiring to make a proposal for such work/’
In November, 1895, the State Engineer determined that, in order to
comply with the act and make the estimate of quantities and the maps,
plans and specifications therein called for, it was necessary to know the
physical condition of the canals from end to end, and for that purpose to
make an accurate and connected survey throughout their entire length.
*	*	#	*	*	*	*	*	*	*	*
Too great stress can not be laid upon the necessity of an accurate and
sufficient survey preparatory to letting the contracts. Accurate qualities
in the proposal sheets, definiteness in the specifications, and certainty in
plans are the surest safeguards against abuses of all kinds, and these can
be obtained only by accurate surveys and intelligent and careful study
and preparatory work before the contracts are let.
*	*	*	*	*	♦	*	*	*	*	*
We are of the opinion that the expense of the preliminary survey and
engineering was properly incurred, and does not appear to be excessive,
in view of the fact that this preliminary work was preparatory, not only
for the work already done, but for that which remains to be done in the
future. As we elsewhere report the survey was not sufficient, nor
complete, nor was the information secured by it properly made use
of; but the survey itself was necessary and the money expended
in obtaining it properly expended.	*
Part of the expense of preliminary engineering consisted of money paid
to the experts for designs and plans for special work.15
Millions of the People’s Dollars Lost.
There was paid to the Buffalo Engineering Co., for plans,
specifications and estimates for a lift-lock, at Lockport..... $19,079 74
To Stowell & Cunningham, for plans, specifications and esti-
mates for a different style of lift-lock, at Lockport............. 8,811 58
To the Dutton Pneumatic Lock and Engineering Co., for plans,
specifications and estimates for a pneumatic lock at the same
place . . ,...................................................... 14,500 00
Total paid for plans, etc., for Lockport locks ..... $42,391 32
There were also paid to the Dutton Pneumatic Lock and En-
gineering Co., for plans for a pneumatic lock, at Cohoes ....	7,000 00
Total...................................................... $49,391 32
Unauthorized Engineering and Improper Expenditures.
Employment of special and skilled engineering assistance before under-
taking important works is proper and productive of good results. These
plans are undoubtedly of value and we should approve a proper expense
therefor, if we believed that the improvement contemplated by them could
be legally made under chapter 79 of the Laws of 1895, but, as we have
already said, we are of the opinion that a proper interpretation of that act
does not authorize such improvement. This large expense for plans was,
therefore, improper; neither are we satisfied that it was necessary to
obtain complete working plans for three separate devices before choosing
between them.
* * * * * * * *
Canal Leaking Contracts.
We have devoted a large part of our time to this branch of the investiga-
tion. There have been 73 contracts entered into, under the act,
in addition to contract No. 11, Eastern Division, and the work under a
large proportion of them is still uncompleted. It has been physically im-
possible for us, within the limit of time fixed by law for our labors, to in-
vestigate fully the work done under all these contracts. We have been
compelled to pass over some altogether. In making' our selection, we
have aimed to inform ourselves fully upon the methods in use on each
division of the canal, as each division is under separate executive manage-,
ment. We have, then, guided by such information as we have been able
to obtain from outside, and such as could be gleaned from the contracts
themselves, the accompanying agreements for extra work, and the relation
which the preliminary quantities bear to the monthly or final estimates,
attempted to direct our investigation to such contracts as have, by some
peculiar feature, attracted our attention; and from that point we have ex-
tended our examination to include, as far as possible, all other contracts.
sjs	*	*	*	❖	*	*	*	*	*
The contracts are not agreements for the performance of specified
work, neither do they fix the cost at which the improvement; within
the limits of the contract sections, shall he made. They are simply
agreements that work of a certain nature and material of certain char-
acter shall he done and furnished at certain fixed rates. The amounts of
the work to be done and materials delivered are stated in a quantity or16
Millions of the People’s Dollars Lost.
bidding sheet, but the State reserves the right to increase or diminish the
amount of any class of work. The contract, therefore, fixed prices
only, and not the cost of the work.
For the purpose of making the contracts, the canals were divided into
contract sections varying in length from .67 to 22.07 miles. The State
Engineer made an estimate of the quantities of the different classes
of work to be done, and the quantity and quality of the materials to be
furnished to complete the improvement throughout the contract sec-
tions, and exhibited the same on quantity or bidding sheets,
%	*	❖	sj:	*	sj:	sj:	sj:	sj:	*	rfc
With the quantity sheets were prepared and submitted a map of the
section of the canal, and plans of the work to be done, showing graphically
the method*, or sometimes alternative methods, of underpinning and
topping the walls, building foundations and doing other work required.
Specifications, general in their application to all contracts, were prepared,
defining the terms used in the bidding sheet, and establishing the classifi-
cation and specifying the character of the work. The quantity sheet,
plans and specifications were presented to the bidders and proposals
asked. The contractors bid on the quantity or bidding sheet, fixing
the prices at which they would do the work therein specified. Their
prices were then multiplied by the quantities in the bidding sheet, the
amounts extended and added up, and the contractor whose proposal was
the lowest in the aggregate, obtained the contract. If the quantity sheet
does not represent with reasonable accuracy the actual amount of work
to be done, or, if the specifications admit of uncertainty of classification
between the different items, or, if the plans are indefinite, or are made
in the alternative, the contractor’s bid is far exceeded by the final cost
of the improvements, and an opportunity is afforded for unbalanced bids,
for improper classification and other abuses.
Inaccurate Estimates and Plans (State Engineer’s
Responsibility).
Notwithstanding the large sum of money spent in preparatory work,
the quantity sheets, specifications and plans lack accuracy and definite-
ness. The cost of the work under the contracts let has already, and when
they are completed will to a much greater extent, exceed the contract
price. This is shown in the following table of the contracts let (including
contract No. 11, Eastern Division), which shows the aggregates of the
engineers’ estimates, the contract prices, the amounts certified as earned
by the contractors to May 1, 1898, and the engineers’ estimates at contract
prices, of the cost of completing the pending contracts:
Engineers’ preliminary estimates ...........................$7,750,892 86
Contract price ............................................. 7,142,148 88
Allowed contractors to May 1, 1898 ......................... 7,776,793 26
State Engineer’s estimate of cost of completing the contracts
as of May 1 ............................................. 4,264,615 95
Excess, of amount allowed contractors to May 1, 1898, over
contract price......................................... >634,649 88
Excess of total cost of completing the contracts, over con-
tract price , ............................................. 4,899,265 83
The cost of the work up to May 1, 1898, on the contracts which have
been let exceeds the contract price by 9.84 per cent. The total cost of
the work for which contracts have been let, including the estimated17
Millions of the People’s Dollars Lost.
cost of finishing* those which are incomplete, will exceed the contract
price by 69.08 per cent.
The computation of quantities, from the notes and measurements taken
by the surveying parties, was made during the summer of 1896. As early
as July in that, year, it became evident to the State Engineer and Super-
intendent of Public Works that the cost of the work as shown by these
estimates would far exceed the amount of $9,000,000. The State Engineer
then attempted to reduce the estimates, and for that purpose directed their
revision by cutting out everything which did not seem actually neces-
sary to secure the result primarily aimed at by the statute, viz., obtaining
nine feet of water in the Erie and Oswego canals, and seven feet in the
Champlain Canal. ********
As the improvement has progressed, work so cut out has appeared
in an increase of quantities over the preliminary estimates. The en-
gineer’s preliminary estimate of slope wall on the contracts already let
was 543,779 cubic yards, while up to May 1, 425,916 cubic yards had been
built, and it was then estimated that it would require 432,839 cubic, yards
to complete these contracts. The preliminary estimate of vertical wall
was 106,353' cubic yards. The amount built up to June 1, 1898, was
168,735 cubic yards, and it was then estimated that it would take 110,326
cubic yards to complete these contracts.
The value of the preliminary estimate of quantities was also greatly
impaired by the fact that they were made without reference to the
specifications. Until the meaning of the terms used in the quantity
sheet is determined by the specifications, it is absolutely impossible to
determine the quantities with any “ practicable accuracy,” whatever.
Nevertheless, the computation of quantities proceeded before the prep-
aration of the specifications. The assistant engineers who sounded for
rock in the preliminary survey were left to define and classify earth and
rock as they chose, and to make returns of quantities accordingly. There-
after, the specifications were drawn, giving these words a technical and
arbitrary meaning, but no revision of the quantities was made,, nor had
there been sufficient data collected to make such revision. The result
was that quantity sheets contained such amounts of solid or ledge rock
only as the cursory and insufficient tests disclosed, while the specifica-
tions classed as rock, hard pan, which can not be plowed. The meaning
of the term “ embankment” also was changed in the specifications, after
the computations of quantities in the preliminary surveys.
Elusive Earth and Rock.
It is apparent, by the following table, which shows a comparison of the
quantities shown on the bidding sheets with the quantities of work
actually performed, that there never was any ascertainment of the quan-
tity of “ rock,” or “ embankment,” as those terms are defined in the
specifications, or as they were applied by the engineers:
Cubic yards
Amount of rock in quantity sheets ......................... 550,183
Amount allowed to contractors up to May 1, 1898 (including
wet excavation) . ....................................... 740,068
Estimated amount remaining to be excavated ................ 253,501
Amount of embankment in the quantity sheets............*.. ..	729,374
Amount allowed to contractors on May 1, 1898 .................. 1,167,849
Estimated remaining amount of embankment ...................... 615,115
*	*	*	■	*	*	*	*	*	9$C	*	,*18
Millions of the People’s Dollars Lost.
Inexcusable Carelessness.
Another source of error in the quantity sheets was inexcusable care-
lessness. Instances of it are as follows:
On contract No. 5, Western Division, the large amount qf rock returned
in the notes of the surveying party was omitted, and a nominal quantity
of 100 cubic yards inserted.
On contract No. 30, Eastern Division, the rock found in the preliminary
survey was entirely omitted.
On contract No. 4, Eastern Division, the lining for the slope wall was
omitted and a nominal quantity of 70 cubic yards was inserted.
On contract No. 6, Eastern Division, the preliminary survey disclosed
5,000 cubic yards of rock, which, by mistake, was placed in the quantity
sheet at 500.
'Another reason for the lack of accuracy in the quantity sheets is the
presence of nominal quantities inserted for the purpose of obtaining a
price in case it should be necessary to do work of such a character We
regard this practice as wholly indefensible. It is not a compliance
with the law, which requires that the quantities shall be “"ascertained
with all practicable accuracy.” Such quantities are usually small. The
contractors almost invariably bid a high price, because a relatively high
price on a small quantity counts but little in competition with other
bidders; and if it is found necessary to do work of that character, the
State pays for it at a high rate. This is especially vicious when the plans
provide an alternative method of doing the work and the nominal quan-
tity represents the material required for doing such work in accordance
with one of the alternative methods. Nominal quantities, however, ap-
pear frequently in the bidding sheets for the contracts let under this act.
Engineering Neglect.
Another cause of the failure of the quantity sheets and plans to repre-
sent the work to be done was the want of careful study of conditions. In
certain parts of the canal the physical conditions were most unfavorable
to the prosecution of the work. The deepening of the canal at these
points was a serious engineering problem and should not have been un-
dertaken without thoughtful and intelligent study, and yet the plans and
quantities were made for such sections as though there were no reason
to expect any special difficulties.
Money Wasted.
JTor the reasons above stated, the elaborate and costly preliminary
survey produced no proper results and was of but little value. The
bidding sheets and plans did not represent the work to be done. The
uncertainties in the plans and specifications resulted in a constant
struggle by the contractors for allowances for extra work for classifi-
cation and for other advantages. The contracts were supplemented
and extended by agreements for extra or additional work, and allow-
ances were made to contractors for work not specified. The contracts
lack the element of certainty which alone secures economical perform-
ance. The provisions of the law, intending to compel work to be done
by competition under definite contracts, were nullified and the work
went on under a state of progressive demoralization.
*	*	*	.	*	*	*	*	%	x	x „	*
The Canal Board should have Rejected the Plans.
In our opinion, the plans, specifications and estimates failed in their
object, and the provisions of the law that no work should be done untilMillions of the People’s Dollars Lost.
19
quantities were ascertained with all practicable accuracy was substan-
tially uncomplied with.
The contracts were, however, let and the work has been proceeding up
to May 1 of this year, when it was substantially stopped, because of the
practical exhaustion of the fund, leaving the work on many contracts in-
complete. As the contractors had been progressing their work in such
manner as to permit excavation during the season of navigation under
dredging permits, issued by the -Superintendent of Public Works, walls
have been built and underpinned upon many contracts, but the. very
purpose of the improvement in securing the increased depth of water
has not been attained.
Unmeasured Hole in the Ground Takes the Money.
If there is any quantity which could have been definitely ascertained
before the work began, it was the amount of excavation necessary.
There was no reason why the measurements of prism excavation should
not be as definitely known before the preliminary estimate was made
as after the completion of the work, and yet we find a large excess in
the total excavation over the preliminary estimates.
Cubic yds. Cubic yds.
The amount of excavation to May 1, 1898, was.........	-5,967,583
The estimated amount to complete on these contracts
was................................................ 3,706,338
Total excavation of completed contracts.................... 9,673,921
The engineer’s estimate of the necessary excavation, including
earth, rock and masonry, in the contracts let was........... 8,632,317
Excess of excavation over preliminary estimate................ 1,041,604
Or 12.06 per cent, of the estimated amount.
On the Western Division there is a decrease of................ 159,596
Or 4.17 per cent, of the estimated quantity. (Due to contrac-
tion of prism.)
On the Eastern Division the excess is ......................... 246,941
Or 11.77 per cent, of the estimated quantity.
On the Middle Division the excess is.......................... 954,229
Or 35.09 per cent, of the estimated quantity.
In several instances the excavation was not properly estimated. Some
of them are as follows:
On contracts Nos. 5 and 6, Eastern Division, the excavation for slope
wall was not included in the quantity sheet, as the assistant engineer in
charge thought it would be included in the price paid for wall.
On contracts Nos 7 and 13, Middle Division, the same omission was
made, the assistant engineer in charge thinking that the slope wall would
be measured bj~ superficial area; when it was changed to cubic yards
no allowance was made for excavation. Both assistant engineers testified
that this was due to the fact that they did not have the specifications when
they computed the quantities.
On contract No. 1, Western Division, no estimate for excavation for
building vertical walls was included in the quantity sheet, while the
amount was actually over 66,000 cubic yards.
Double-pay Dirt.
It was assumed, when the contracts were made, that where the improve-
ment was effected by both deepening and raising the canal banks, the ma-20
Millions of the People’s Dollars Lost.
terial excavated from the prism could be used in embankment, without
cost to the State, other than that of excavation, and the specifications
were drawn to accomplish that object. Much of the material so excavated
from the prism was used in raising and strengthening the banks in the
nine contracts on the Eastern Division, where the improvement was so
made.
On the Western Division the improvement was effected wholly by
deepening.
On the Middle Division the improvement of the Erie, except on contracts
Nos. 1 and 2, through the cities of Utica and Syracuse, respectively, was
effected by both lowering the bottom and raising the banks. Contracts
Nos. 18 to 27, inclusive, were made in the spring and summer of 1897.
On these contracts there is a great increase of excavation, the engineers’
preliminary estimate being 1,532,370 cubic yards, and the work done,
with the estimated quantity to complete, 2,171,724 cubic yards, showing
an increase of 41.72 per cent.
On these contracts the contractors began building up the banks with
material procured from outside the prism during the season of naviga-
tion, before there was any excavation from the prism of the canal. Under
the specifications all the material used for that purpose was taken from
borrow pits furnished by the State and paid for as excavation. Such
of it as was necessarily hauled over 1,000 feet,'was paid for as embank-
ment in addition to excavation. The reason given for adopting this course
was that the material in the prism was an unknown quantity, and in
the winter time could not be placed on the banks because it was frozen,"
that the silt could not be separated from the harder material and that
the experience of the winter before showed that it was impracticable to
use excavated material.
We do not agree with this and are of the opinion, that the, course
pursued was a wasteful and extravagant departure from the intent
of the contracts and specifications; that such material could have
been found in the prism suitable for the banks and that a great part
of the increased expense, amounting to tens of thousands of dollars,,
was unnecessary and improper.
On contract No. 26, Middle Division, about 45,000 cubic yards were
in this manner borrowed and used in raising the banks. This the State
paid for as excavation at twenty-six cents per yard, or about $11,700.
Of the same material, 34,000 yards was hauled 1,000 feet and paid for
embankment, also, at thirty-four cents a yard, or $11,560. There was
subsequently excavated from the prism and classified as rock, 44,000 cubic
yards of shale and cemented gravel, which would have been suitable
for use in embankment. It, therefore, cost the State in excavation and
embankment $23,260 to raise the banks with borrowed material, instead
of material from the prism. *
On contract No. 18, Middle Division, 47,000 cubic yards were borrowed
for the banks and paid for as excavation at twenty-eight cents per yard,
or $13,160. Of this material, 28,000 yards was also paid for as embank-
ment at forty-five cents per yard, or $12,600.
On contract No. 27, Middle Division, 46,160 cubic yards of borrowed
material were used in raising the bank, at a cost of twenty-seven cents
per yard for excavation, or $12,463. Of this material, 6,100 yards was
paid for as embankment also, at thirty-five cents per yard, or $2,135.
On contract No. 23, Middle Division, 36,000 yards were borrowed for
raising the banks, at a cost to the State of twenty-five cents for excava-21
Millions of the People’s Dollars Lost.
tion, or $9,000. Of this material, 8,500 yards were paid for as embank-
ment also, at twenty-five cents per yard, or $2,125.
On contract No. 20, Middle Division, 28,000 cubic yards of borrowed ma-
terial were used in embankment and paid for as excavation at twenty-six
cents per cubic yard, or $7,280. Of this material, 7,100 yards were paid
for also as embankment, at forty cents per cubic yard, or $2,840.
On the other contracts mentioned, the work proceeded in the same
order, with no attempt to use the excavated material, and the result
was a similar increase in the cost. On the five contracts which we
have analyzed, the material borrowed and used before beginning1 exca-
vation, cost the State upward of $85,000, and the cost in the other five
contracts was probably as great. This entire amount may not have been
wasted, as some of the excavated material may not have been suitable
for towpath embankment, but much of it undoubtedly was.
High Muck-a-muck in Engineering.
The specifications require that, when necessary, the outside slopes of
embankment shall be cleared of all vegetable matter for a depth of six
inches and stepped as directed, to provide for a proper union between the
old and new banks, and that such work shall be paid for as excavation.
This work is called mucking’. Considerable work paid for as excavation
consisted of mucking. Although paid for by the cubic yard it was not
generally so measured. The superficial area alone was measured and it
was assumed that the mucking extended to a depth of six inches.
On contract No. 2, on the Middle Division, this matter of measuring
and estimating the amount of mucking led to a difference between
the resident engineer and the assistant engineer directly in charge
of the work. The assistant engineer had measured the yardage of
mucking and found that it averaged about four inches in depth. He
was directed by the resident engineer to estimate the amount on the as-
sumption that it was six inches in depth; but he refused to do so with-
out written directions, on the ground that he could !not verify the
monthly estimate which would then contain a fictitious quantity. Other
differences also arose between these same parties regarding the classifica-
tion of earth and rock, the allowance to the contractor of 120,000 feet of
spruce timber which was lying in a lumber yard and not separated so that
it could be actually identified, and the use by the contractor of stone be-
longing to the State. Mutual complaints were lodged with thei State
Engineer and the result was the forced resignation of the assistant en-
gineer. . Thereafter, this method of estimating the amount of mucking
continued unquestioned through this division. On certain contracts there
appear to be extravagant amounts of mucking returned. On contract No.
26, there were 19,000 cubic yards of excavation due to mucking. This, at
a depth of six inches, would be sufficient to cover an area of twenty-four
acres, or a strip of land eighteen feet wide of ten or eleven miles in length.
When this fact was shown in the testimony, the resident engineer stated
that it seemed to be an excessive amount and that he could not imagine
how it could be properly done. Thereafter, the assistant engineer sub-
mitted a statement with illustrative cross-section diagrams to justify the
return; but it appears from the explanation that the measurements neces-
sary to obtain such a quantity included not only the outside of the slope
but the surface of the towpath also.
The return of mucking by the cubic yard is, strictly speaking, purely
arbitrary. The effect of this method of measurement necessarily is that
where it is not excavated to a depth of six inches the contractor is paid22
Millions of the People’s Dollars Lost.
for the full amount; hut if it overruns he is in a position to make a claim
for doing work which is not within the terms of the contract.
In investigating the subject of mucking we discovered a clearly de-
liberate abuse of the canal work for political purposes. On two contracts
in and near the city of Rochester the contractors were induced to> accept
and put upon their force' men who came to them with “ tickets ” from
office holders in the city of Ilochester. The evidence of at least one of
the contractors was that he employed as few of these men as possible,
resorting to any available excuse for refusing to employ them; but not-
withstanding, some were taken on. These men were employed in the
latter part of October and set at the work of mucking. The work which
they did was to a great extent unnecessary and consisted of mucking sites
for spoil banks. The testimony is that on one contract about 5,000 cubic
yards of mucking was done, of which at least half was entirely unneces-
sary. This amount was paid for at the price of earth excavation. The
contractors were asked with whom the arrangements were made for em-
ploying the men. One of them could not remember, but the other stated it
was with one of the subgeneral inspectors under the Department of
Public Works.
The Growing Earth.
On contract No. 5, Middle Division, the excess of excavation from the
prism seems unduly great. The assistant engineer in charge explained
that to the extent of G,900 yards, it was due to the difference in the cross-
section measurements made in the preliminary survey and those made
by him during the progress of the work and to an additional extent of
7,815 cubic yards to a difference in the cross-section measurement made
at the opening of navigation, and again at the close in 1897. If this
measurement was correct, then this great amount must have been
washed into the canal during the) summer of 1897.
On contract No. 1, Western Division, the amount of excavation behind
vertical walls was returned at 66,000 cubic yards. The cross-section
diagrams showed that for a long stretch the earth appeared to have been
excavated for a.distance of from four to eight feet horizontally behind
the rear foundation of the walls. No explanation of this large amount
of apparently unnecessary excavation was given except the suggestion
that it might have been caused by sliding quicksand. This explanation
is not consistent with the cross-section of the excavation back of the
base of the wall and the earth standing at about the regular slope. Upon
the same contract it appeared that at certain points the contractor wTas
permitted to dredge in place of excavating dry. He was paid at the price
of dry excavation, which is in excess of the price for wet excavation.
This excavation by the dredge, as shown by the cross-sections, caused
the earth to cave in or slide for a distance of twenty-five feet back of
the walls. The contractor was paid for all this space both in excavation
and embankment. This was an abuse. If he wTas paid the price of dry
excavation for material which he was permitted to take out by dredge,
he should also have been paid for earth which would have stood if the
excavation had proceeded dry.
We were unable to make asi careful an examination of this contract
as we wished, on account of the severe illness of the assistant engineer
in charge.
In computing the quantity of earth excavated behind vertical walls,
the custom prevails of assuming that the earth will stand at a slope ofMillions of the People’s Dollars Lost.
23
one-half to one, or at an angle of twenty-six degrees, thirty-four minutes,
from the vertical line. This does not appear to be the method of measure-
ment generally prevailing, but it is clearly established as to certain con-
tracts. The slope of one-half to one is probably a fair slope if it is nec-
essary to make any assumption whatever; but this method of measure-
ment has undoubtedly resulted in allowing the contractors pay for a
greater amount of excavation than is actually made. Building vertical
walls is usually done in the winter time, when the earth is frozen and
will stand without caving; but where the slope was assumed for the pur-
pose of computing quantity, it was applied in the winter time as well
as in the spring, and it was applied tp portions of the canal where the'
excavated material was classified as rock.
This space behind vertical walls, on an assumed slope of one-half to
one, was also paid for in many cases not only as excavation, but as em-
bankment. There is an inherent “difficulty in measuring the amount of
excavation behind vertical walls. Staking out a slope of one-half to one
is judicious for the purpose of preventing unnecessary excavation; but
it does not follow that the contractor should be paid for this material
whether excavated or not, especially in view of the fact; that where the
condition of the soil was such that the earth would not stand at such
slope, the actual amount of excavation was measured and returned.
This is not a measurement, but is an arbitrary quantity allowed the con-
tractor. If the excavation is incapable of measurement, there should be
nothing paid to the contractor for this work as excavation; but it should
be specified as part of the work necessarily incidental to braiding the
wall.
Triple Pay.
On contract No. 86, Middle Division, it became necessary to construct
a sewer to protect a valuable spring near the banks of the Oswego river.
On account of the general nature of the specifications, they contained
no proyision for sewer construction. The alternative was open to pay
the contractor for sheeting the trench at the price for lumber in the
bidding sheet, or to allow him an assumed slope and to permit him to take
care of the earth at his own expense. The latter course was adopted and
a slope of one and a half to one, which is unprecedented in such cases,
was allowed to the contractor. As a matter of fact, by the use of sheet-
ing, at his own expense, he protected the bank so that the trench was
excavated without any slope whatever. The contractor -was also paid for
i$ek excavation on the assumption that the sewrer, which was made for
holding a tw7enty-fouivinch pipe, was six feet in width.
Unable to Estimate Steal.
The amount which has been improperly expended by the State for
excavation is incapable of definite ascertainment. It is apparently large
and could only be reduced to a certainty by a laborious and careful com-
putation of quantities and examination of many witnesses in con-
nection therewith. Such an examination and computation we have not
had the time nor the facilities to make, and it does not seem necessary
for the purpose of enabling us to make such a report as the act creating
this commission contemplates.
Rock Dissolves in Water and Earth Turns to Rock.
As we have already said, the assistant engineers in charge of the pre-
liminary survey were not informed that the specifications would contain24
Millions of the People’s Dollars Lost.
any arbitrary definition of the terms- earth and rock; and, therefore, so
far as we have been able to ascertain, they generally sounded for solid
or ledge rock only, and inserted the rock so found in the quantity sheets.
Thereafter the specifications were drawn which provided that all ex-
cavation should be classed either as dry excavation of earth, wet excava-
tion of earth, dry excavation of rock, wet excavation of rock, excavation
of masonry. The amounts of wet excavation of earth and rock and of
excavation of masonry were relatively small, and deserve no special con-
sideration.
Dry excavation of earth was, by the specifications, defined to “ include
•removal of all clay, loam, sand, quicksand, gravel, pure, mixed or com-
bined; boulders measuring less than one-half a cubic yard, dry, vertical
wall, slope wall, paving, docking and cribs, timber foundation of all de-
scriptions and hard pan or soft or rotten rock which, in the opinion of
the resident engineer, can be plowed.”
Dry excavation of earth was, by the specifications, to include the re-
moval of all solid or ledge rock and hard pan which, in the opinion of
the resident engineer, can not be plowed, and all boulders measuring one-
half cubic yard or more.
The specifications were presented to the bidders with the plans and
estimates of quantities. As the above definition was established by the
specifications before the bids were made, it is probable that the bidders,
seeking to obtain the contract by competition, modified their prices of
excavation accordingly; and it is possible that the State obtained a lower
average price for earth excavation that wrould have been secured if earth
excavation had included everything except solid or ledge rock. To what
extent this is so can not be ascertained.
The specifications confided to the resident engineers the power of clas-
sifying excavated material and placing it in the earth or rock column.
The substantial test appears to be whether the soft or rotten rock, or
the material called hard pan, can be plowed or not, and this fact is to
be decided by the resident engineers. .
*	*	*	*	*	*	*	*	*	Hi
Our attention was directed to the subject of rock classification early
in the investigation. We discovered that material which had been re-
turned in the monthly estimates as earth had been in subsequent esti-
mates taken from the earth and transferred to the rock column, so in-
creasing the amount of money paid to the contractor. We, therefore,
gave this subject a thorough and close investigation upon all the con-
tracte which we had an opportunity of examining. We have found great
diversity of opinion as to what constitutes classification of this material
by the resident engineers, and as to whether the State Engineer or di-
vision engineers can exercise a controlling influence over such classifica-
tion. The State Engineer asserted that no classification of this ma-
terial was actually made until the final estimates, and that meanwhile
the material might be changed without impropriety, from one column
to the other. We do not concur in this opinion.
*	*	*	*	*	*	4*	*	*	*	*
In some instance* the material which has been once classified by the
resident engineer as earth, in the exercise of his judgment that the same
could be plowed, has been thereafter reclassified on a revision of this
opinion, and placed on the rock column. And we have found that during
the month of April, 1898, just before the work was practically terminated,
a substantial amount of material which had theretofore been includedMillions of the People’s Dollars Lost.
25
in the monthly estimates as earth, was reclassified and returned as rock.
* * * * * * * * * * *
The amount of so-called hard pan and shale rock classified as rock ac-
cording to table furnished by the resident engineers on their respective
divisions, is as follows:
On the	Eastern Division .....................  51,483	cubic	yds.	hard	pan.
On the	Middle Division ....................  151,397	cubic	yds.	hard	pan.
On the	Western Division ..................... 60,365	cubic	yds.	hard	pan.
And............................................. 27,962	cubic	yds.	shale.
Making ia total, not including the shale on the Western Division, of
263,245 cubic yards of hard pan.
It is obviously impossible to determine accurately how much of this
material was improperly classified; but we have been able to reach a
decision in certain cases which we are satisfied is fully justified by the
evidence in' the case.
We give below the result of our inquiry in certain contracts which have
attracted our particular attention, without attempting to summarize all
the evidence taken on the subject.
Eastern Division Contracts,
Contract No. 10 —The quantity sheet contains 10,513 cubic yards of
dry excavation of rock. Upon this the contractor bid 90 cents, as against
a bid for 20 cents for earth. On the estimate of May 1, 1898, 31,610 cubic
yards of rock excavation was returned. This has been increased in the
estimate of June 1, 1898, to 34,610 yards.
A. J. Hines was the resident engineer upon the Eastern Division up
to October, 1897. This contract was one of those let in 1896, and work
upon it was proceeding from the latter part of 1896 until May 1, 1898.
Mr. Himes testified that the contractor was finding fault with the
amount of material which had been classified as rock; that the material
was excavated in the winter time when it was difficult to make a x>roper
classification, and that for the purpose of seeing whether injustice had
been done to the contractor, he had stakes set in the berme bank, mark-
ing the place where the dividing line between the earth and rock had
been fixed in making the measurement of these respective quantities; that
thereafter he went upon the ground with other members of the force
and the contractor and made a test to determine the hardness of the ma-
terial; that part of the material was soft, rotten and disintegrated shale,
and that he found that he was able to spade it up from one to two feet
below the stakes. This clearly shows an improper classification under
the specifications. No readjustment, however, was made in favor of the
State, but, on the other hand, after Mr. Himes left the work, his suc-
cessor, as resident engineer, John G. Tait, made a reclassification, trans-
ferring from the earth-to the rock column from 2,800 to 3,000 cubic yards.
This reclassification was made by raising the line of demarkation between
earth and rock above the point at which it was fixed by Mr. Himes. At
the same session at which Mr. Tait testified to this he produced samples
of material classified as earth and rock, among them a lump of material
classified as rock, about six inches in diameter. This was placed in a
basin of water, in the presence of the commissioners, and in a few min-
utes became soft mud.
Charles Sundstrum, one of the contractors on this contract, testified that
early in the work he put a Syracuse pavement plow with four horses26
Millions of the People’s Dollars Lost.
upon the hard pan, and by putting a man on the beam, he could plow it
fairly well; but as the engineers refused to classify material loosened
in this way as rock, he discontinued the use of the plow, and thereafter
obtained a rock classification.
Contract No. 2—The amount of rock in the preliminary estimate was
4,34.0 yards. Up to May 1, there had been returned 17,370 cubic yards.
The price for rock excavation was $1.60, as against %the price of 22 cents
for earth.
The amount of rock returned on the monthly estimates of February 1,
1898, was about 300 cubic yards, and on that of March 1, 6,300 cubic
yards. Of this amount about 2,500 cubic yards were added by trans-
ferring to the rock column material which in previous monthly estimates
had been classified as earth. The material so classified was the total
amount of excavation from a certain section of the prism. The material
so classified was taken out during the months of January and February,
and it does not appear that the contractor claimed that it should have been
classified as rock until a month or two later. Thereafter the assistant
engineer classified material of this character as rock, upon his, own re-
sponsibility. The material so transferred from earth to rock consisted of a
large body of boulders, some of which had already been classified as rock
because containing over one-half a cubic yard. The material was, un-
doubtedly, difficult to remove, but this classification allowed to the con-
tractor as rock, boulders which were less than half a cubic yard in
contents.
Contract No. 4 — The preliminary quantity sheet showed 905 cubic
yards of rock. On May 1, 1898, there had been excavated 11,426 cubic
yards. The price for rock excavation was $1.25, and for earth 24 cents.
This was one of the first contracts let upon the Eastern Division. The
work began in December, 1896. The contractor .claimed classification
early in February, 1897. On the 4th of that month the State Engineer,
the division engineer, the resident engineer, the first assistant engineer
and the assistant in charge went over the work and examined the ma-
terial. The State Engineer directed the allowance of the hard pan
claimed, after it was demonstrated by an actual attempt that it could
not be plowed. On February 27, the first assistant told the resident that
the division engineer wished him to allow the contractor 2,000 yards of
rock. He replied that he felt sure there had been 500 yards excavated
and that amount was inserted without actual measurement, in the Feb-
ruary estimate. In the March estimate, rendered April 1, 1,000 cubic
yards were inserted. Of this, 228 yards were actually measured; 170
yards was a percentage of certain excavated material; 343 yards were
measured, but the resident engineer was not fully satisfied to classify
it as rock. This amounts to 741 yards and the estimate was made 1,000
yards without further data.
On April 6th, the resident engineer wrote to the State Engineer a letter
containing the following statement:
“ On April 3d I met Mr. Flynn, one of Gallo & McNiece’s bondsmen.
(Mr. Flynn was the representative of the Fidelity and Deposit Company,
of Maryland, a surety company.) We looked at the material being ex-
cavated by a derrick machine, and he said that 75 per cent, of it ought to
be classified as hard pan. He admitted it could be plowed. That is the
test prescribed, but said it was very hard material and asked if I couldMillions of the People’s Dollars Lost.
27
not help them by being liberal in the classification. There seems to be
an idea that I can make the amount of hard pan whatever I like. I have
classified as hard pan only such material as can not be readily plowed with
four horses.”
State Engineer Orders Earth Turned to Rock.
On April 12th the resident engineer received the following letter from
the first assistant engineer:
“ April 12, 1897.
“ Dear Al.— Mr. Adams wants you to allow Gallo 3,000 cubic yards as
far as the machine has gone. The entire cross-sections amount to 8,000
yards. Twenty-five per cent, of this he has classed slit, dirt, earth; that
would leave 6,000 cubic yards; allow 50 per cent, of that, 3,000 cubic
yards, for the month. Please sign estimate in blank. Jack has gone home
this P. M. Will see that it is deducted from the earth excavation, etc.
“Yours, etc.,
“ T. G. L.”
A Willing Subordinate.
The resident engineer called upon the State Engineer and protested that
the estimate be accepted without his signature. This was refused. The
resident then went back upon the work and figured up 2,149 yards of
material which was blue clay excavated while frozen. He then signed
an estimate, April 15, 1898, containing 3,000 cubic yards of rock, con-
sidering first that he was justified in carrying out the directions of the
State Engineer after protest; second, that more hard pan and some rock
had been excavated from the 1st to the 15th of April; third, that the
possible classification of the 2,149 yards last mentioned might increase
the amount of hard pan; fourth, that the amount of the monthly estimate
was only approximate.
On May 1, 1897, the resident engineer was requested to increase the
rock to 6,000 cubic yards. He obtained from the assistant his measure-
ments, and from his own knowledge* divided the material into three
columns.
In the first column he put material similar to that which had been there-
tofore classified as rock.
Cubic yards.
This amounted to ........................................... 2,908
In the second, blue clay.................................... 3,625
In the third, material excavated between station 0-10, which he
did not see taken out ..................................... 5,037
He allowed all in the first column.......................... 2,908
Fifty per cent, of the blue clay.................’.......... 1,812.5
Twenty-five per cent, of the third class   ........:........ 1,259.25
Total........................................................... 5,979.75
This, with some rock actually measured, aggregated 6,372 cubic yards,
which amount was inserted in the estimate of May 1, 1897. This amount
includes all that, had been theretofore classified as rock.
There was no proper attempt to plow the material. It was excavated
by a steam shovel. The contractor testified that it was “ gluey and sticks.”
Some blasting was done and the holes for it were made by driving a bar28
Millions of the People’s Dollars Lost.
in with a sledge. It was the opinion of the resident engineer that the
material could he plowed and'the classification was effected by thei con-
trolling influence of the State Engineer. The division engineer defended
the classification by showing from computations made from the con-
tractor’s force account and the monthly estimates, that even with the
allowance of rock, the contractor was losing money; the State Engineer
claimed that the material should properly be classified as rock and that
the resident was in error.
We are, however, of opinion that the classification of this material as
rock was improper. ¥e have reported at length the facts in the case,
for it occurred early in the progress of the work, and, in our opinion,
was an unfortunate precedent, which, in all probability, influenced
improper classification on other contracts.
Contract No. 5 —There was no rock upon the preliminary quantity
sheet A supplemental agreement, bearing no date, was; made to pay
the contractor $1.50 per cubic' yard for dry excavation of rock; the price
for earth excavation was BO cents. Under this agreement, the contractor
excavated 5,850 cubic yards of classified material.
The first time that a substantial amount of rock was returned upon
any monthly estimates upon this contract was on the estimate for the
month of August, 1897. The resident engineer, Mr. Himes, was instructed
to classify as rock a portion of the material which the contractor had
been excavating during the month of August, by dredging; and having
no other way to get at the amount, he reached it by allowing a sufficient
yardage of rock to make the earnings of the dredge in August equal to
the amount earned in July. This was not a classification of the material
on the judgment of the resident engineer, but was imposed upon him by
the influence of his superiors in office.
On the 24th of March, 1898, the assistant engineer was directed by let-
ter to include in his estimate 3,552 cubic yards of rock excavation, being
as stated “ the rest of hard pan on the hard pan stretch.” This was sub-
sequently done. The way in which the amount of rock allowed on this
contract was arrived at was as follows:
The total amount of the excavation between certain points, 4,700 cubic
yards, was determined to be hard pan. Of this Mr. Himes had allowed
1,148 yards, determining the amount by the earning capacity of the
dredge, leaving 3,552 cubic yards. Other excavated material, consisting
of old aqueduct masonry, concrete and wall, in amount 1,152 cubic yards,
was classified as rock, making a total of 5,852 cubic j^ards. This' material
was not measured, as this term is understood in engineering art. A large
part of it was not and could not be classified as rock under the specifica-
tions, and the remainder, according to the opinion of the resident en-
gineer who had charge during excavation, was not properly classified
as rock.
Contract No. 19—-The amount of rock on the quantity sheet was 2,500
yards, and the amount returned to May 1, 1898, was 2,500 yards. The
price for the same was $1, against 28 cents on earth.
On the March estimate, 100 yards of excavated material had been re-
turned as rock. On the April estimate, 2,500 yards were returned. Six
hundred cubic yards of this were taken out in April; the remainder had
been excavated in the January preceding and returned as earth. In the
month of April, by the direction of Mr. Tait, the resident engineer, the
total amount of yardage of excavation between certain sections was re-
turned as rock. This material was excavated by a steam shovel, a por->Millions of the People’s Dollars Lost.
29
tion of it having been loosened by blasting. The boles were made in
it by bars driven in by a sledge. There was no special measurement
of the material for the purpose of ascertaining the amount of hard pan.
An inspection of the cross-section diagrams showed that the bottom of
the canal at this point was in the form of an inverted arch, indicating that
the material had been worn out of the center of the canal and heaped up
on the sides by the action of boats and propellers in passing. This amount
of yardage was added to the rock column, but was not deducted from the
earth.
Rock and Earth at Will.
Generally speaking, there were no actual tests made on the Eastern
Division to determine whether the material could be plowed or not.
Middle Division Contracts.
Contract No. 1 — The amount of rock appearing on the quantity sheet
is 18,500 cubic yards. On May 1, 1898, there had been excavated 55,480
cubic yards. The price for rock excavation was $1, and for earth excava-
tion 27,cents.
On the monthly estimate of May 1, 1897, the total amount of earth
excavation was 55,800 cubic yards, and of rock excavation 39,000 yards.
On the estimate of June 1, the amount of earth returned was 48,356 cubic
yards, and rock, 49,813 cubic yards. During that month earth excavation
had decreased 7,744 yards, and rock had increased 10,318 yards. The
total amount of all excavation during the month was 3,338 cubic yards
only. The increase in rock to the extent of about 8,700 cubic yards was
due to a classification of material as rock which had been returned as
earth in previous monthly estimates, because -the contractors made no
claim at the time of excavation that it should be classified as rock.
Of this material, 1,709 cubic yards were excavated between stations
50 and 55, the amount being ascertained by taking the total area of
station 50 and averaging it with 0, at station 55, and 649 yards was fof
excavation behifid adjoining walls; 3,328 yards had been theretofore meas-
ured and returned as earth because not yet classified; and 3,035 cubic
yards was an arbitrary allowance made to the contractor. The allowance
to the contractor was made at a meeting in Utica of the parties interested,
at which the State Engineer, the resident engineer, the contractor and
others were present. The cross-section diagrams of the rock so allowed, ■
as they appeared upon the books of the assistant engineer, were not made
from measurements actually taken in the field, but they were constructed
from estimates or assumptions that the amount of hard pan so repre-
sented had been actually excavated.
Contract No. 2 — The amount of rock on the quantity sheet is 100 cubic
yards, which represents' actual rock found in sounding. The amount
returned on May 1, 1898, was 26,922 cubic yards, of which 24,970 yards
were classified material.
Questions arose regarding classification on this contract, as early as
September, 1896. The ’contractors having plowed certain material near
station 712, claimed a rock classification which the assistant engineer
insisted should not be given. The resident engineer, however, having
the power of classification, maintained that it should receive a rock clas-
sification. On December 29, the State Engineer, with others of the en-
gineering force, went into the prism of the canal and examined this ma-
terial; and when called as a witness, testified that in his opinion it was
earth. This material had been returned as earth, and subsequent to Jan-30
Millions of the People’s Dollars Lost.
nary, 1897, it was deducted from earth and carried into the rock column
by direction of the resident engineer.
Syracuse Mud (Rock).
While we were in session taking testimony in the city of Syracuse,
there were presented to us specimens of the material which had heen
classified as rock on this contract. As the result of the examination of
such material, we are convinced that a large portion- of the material
classified as rock upon this contract was earth, and should have received
an earth classification. Some of the material appeared to he lumps of
clay which had heen taken up when wet and wrapped up in paper.
They were so soft that they were molded into shape \>y the paper in
which they were wrapped. Some of the specimens of fine material were
clay, some were clay, mixed with gravel, and some were shale rock.
Contract No. 3 — The amount of rock in the quantity sheet was 3,000
cubic yards. The amount excavated to May 1, 1898, 'was 15,130. The
price for rock was 95 cents, as against 26V2 cents for earth. Three thou-
sand yards were at one time returned as earth and subsequently re-
classified as rock. Most of the hard pan classified as rock was taken
out with picks and shovels. Much of the material was so classified after
excavating, and the amount was determined by taking the elevation on
the berme bank where this material appeared, assuming that such eleva-
tion was maintained across the prism and estimating the amount ac-
cordingly.
Contract No. 4 — The quantity sheet contains 4,500 cubic yards of rock,
and up to May 1, 1898, there had been excavated 20,536 cubic yards. At
least, 12,500 cubic yards* of the rock on this contract was cemented
gravel classified as rock. It was loosened by picks and excavated with
shovels. Early in the progress of the work the material was excavated
for the full width of the canal, to a certain point in, the prism, and from
that point continued for some distance along the toe of the towpath
slope in order to permit underpinning the slope wall. All of this excava-
tion was returned as earth. Subsequently, the excavation proceeded over
this same section upon the berme side and the excavated material was
called cemented gravel and classified* as rock. At places piles were driven
from one to three feet in the cemented gravel to secure a. bearing for
the support of the banks.
Contract No. 5—The quantity sheet contains 7,000 cubic yards of rock,
and the amount excavated to May 1, 1898, was 17,310. Between certain
stations the total amount of yardage between the old and new canal
bottoms was classified as rock. A portion of the material classified as
rock on this contract was actually plowed in excavation, and a part was
loosened by picks. Some of the rock returned was not actually measured,
but the amount was estimated.
Contract No. 26 — The amount of rock in the quantity sheet is 12,000
cubic yards. The amount excavated up to May 1, 14,000. The price of
rock excavation was 60 cents a cubic yard, as against the price of
26 cents for earth.
This contract was made in 1897 and the contractor who had also se-
cured contracts 3, 4 and 5 testified that he made this bid on rock in view
of the fact that his experience during the winter before on his other
contracts showed that it could be excavated more easily than he antici-
pated. It is probable that the liberality of the classification on the
preceding contracts had an effect in inducing this low bid on rock.Millions of the People’s Dollars Lost.
31
About 1,500 yards of material returned as rock in the estimate of
February 1, 1898, bad been once returned as earth. Most of the material
was not actually measured. The amount was determined by taking the
height on the slope of the berme bank, after excavation, and the
cross-section of total excavation at the middle of the prism. Between
certain points all the excavation between the old and new canal bottoms
was allowed as rock. Five thousand cubic yards of cemented gravel which
was excavated in January and February, was classified as rock for the
first time in the estimate of May 1, 1898. There was no measurement at
all of this material; but all material for half a foot above canal bottom
was allowed as rock, although when excavated the contractors made
no claim that it should be so classified. On the 26th of April the con-
tractor and the resident and assistant engineers drove along the bank
of the canal in a wagon. The resident engineer, as they went along,
sent the assistant engineer into the prism of the canal to hand up speci-
mens of the material, and upon an examination so made determined
the classification. Between certain stations he directed that 50 per
cent, of the material excavated be classified as rock. Between other
stations the contractor was allowed two feet above grade, or all the
material between old and new bottom. A portion of the material
between these stations had already been classified as rock, and the
resident engineer then directed that the remainder be so classified.
Contract No.. 19 — The amount of rock in the quantity sheet was 500
cubic yards. The amount excavated on May 1, 1898, was 26,102. The
price for rock was $1.25, against 30 cents for earth. A large amount
of this material was so classified by the resident engineer, after hav-
ing been once returned as earth. There was no attempt to plow it,
but it was loosened mostly with picks. It was with the greatest diffi-
culty that we obtained definite information as to< the location of the
material classified as rock on this contract. In fact, after a laborious
and exhaustive examination of the assistant engineer and the qse of
his own memoranda of measurements and cross-section diagrams, we
were unable to learn from him the location of rock taken out from
month to month. Some days after he reappeared with a tabulated state-
ment containing the information. Upon the field-book of this engineer
we found memoranda to the effect that there was no hard pan between
certain points, followed by memoranda of directions received from the
resident engineer to give a rock classification.
In connection with the work on this, contract we find for the first
time on this division a written direction as to classification. It was
in the shape of a letter from the first assistant engineer to the engineer
in charge of this work, to the following effect:
“ Dear Sir.— Mr. Morris this afternoon classified as rock all material
located in the following places: All hard material from the* bridge to
the steam derrick. At Station 612 allow at least six inches, and more
if it was there. You know how much there was better than anyone else.
At Station 517 allow all hard material as rock.”
Substantially the whole material classified on this contract was ce-
mented gravel and hard pan. It was not measured otherwise than by
ascertaining its elevation on the berme bank of the canal after excava-
tion and carrying it across the prism at a uniform elevation, except
where it intersected the line of the cross-section made for the purpose of
measuring the total excavation.Millions of the People’s Dollars Lost.
32
Contract No. 23 — Four thousand yards of material were, on the 25th
of April, 1898, by direction of the resident engineer, classified as rock
for the first time. The material had been taken out months previously
and returned as earth. On that date the resident engineer went, with
the assistant engineer, over the work. The assistant engineer .informed
him of the localities where classification had been given, and the resi-
dent engineer then gave instructions for further classification. The 4,000
yards so reclassified were measured arbitrarily by allowing” one foot on
the sides and carrying the elevation to a point where it intersected the
line of the cross-section of total excavation.
Contract No. 25 — The material classified as rock was excavated with
pick and shovel. Five hundred yards, classified by the assistant engineer
as earth upon his own responsibility, was subsequently reclassified as
rock by the direction of the resident engineer.
Contract No. 27 — The amount of rock on quantity sheet on this con-
tract was 2,000 yards. The amount excavated to May 1, 8,300-. Price,
$1 for rock, against 27 cents for earth. The greater part of the material
returned as rock was classified material; some of it blue clay, some red
clay and shale, and some cemented gravel. One-fourth of it was ex-
cavated by picking and the rest by picking and plowing. A drainage
ditch in the prism of the canal was made with a plow.
Western Division Contracts.
Contract No. 12 — The preliminary estimate for rock on this contract
is 4,800 yards, the amount excavated on May 1, 1898>, 12,660 cubic yards,
and the price for rock excavation, $1.50, against 27 cents for earth. A
large proportion of the rock was Medina sandstone; part, however, was
classified material, called “ Red Horse.” The question of classification
of the “ Red Horse ” arose early in the work. Measurements of it
were made, the classification reserved until spring, and in the mean-
while 25 per cent, allowed as rock. Subsequently the resident engineer
made a personal examination of the material and made a rock classifica-
tion, including the other 75 per cent. This increased the rock quantity
2,600 cubic yards.
Contract No. 10—The amount of rock in the quantity sheet is 16,000
cubic yards. The amount excavated up to May 1, 1898, is 31,090. The
price of rock is $1.25, as against 26 cents for earth. Of the amount so
returned as rock, 9,310 cubic yards were classified material. The classi-
fied material was taken out with picks and shovels, and no attempt was
made to plow it. Of the classified materiai, 5,430 yards had been
returned as earth In the estimate in the months of January and Feb-
ruary. The quantity was computed from its ele.vation upon the berme
bank after excavation, assumed to extend across the prism except where
intersected by the cross-section of total excavation. At the time this
material was excavated no request was made for measurement or classi-
fication. Subsequently, on the 20th of April, an examination was made
of the material as disclosed on the berme bank, a rock classification
given, and the quantity measured or estimated in the way pointed out.
Contract No. 9 — There was no rock on the quantity sheet on this
contract, and, therefore, no price fixed for it, but upon the 22d day of
April, 1898, an agreement was made to pay contractors for rock excava-
tion at $1 per cubic yard. Under such agreement there was 18,618 cubic
yards of classified material returned as rock.
The classified material was excavated from time to time from theMillions of the People’s Dollars Lost.
33
beginning of the work in December, 1898, to the opening of navigation in
1898. The first measurement for the purposes of rock classification was
made in March, 1898. About half was taken out after actual measure-
ments, and the remainder was estimated by determining the elevations
of it upon the banks and the sides of cuts which were made by the
steam shovel with which it was excavated. The contractor made no re-
quest for measurements until about three months after the excavation
was begun. Some of the material was loosened with picks, some by
blasting, and some a cross-plow drawn across the prism of the canal by
steam power.
Contract No. 5, governing the improvement of 17.Id miles of the Erie
Canal — Halbert P. Gillette was the assistant engineer in charge of the
survey section which included this contract. The field work for the
surveys was completed about the 1st of May, 1896. The assistant engineer
assigned two of the chainman to sound for the character of the material.
They took three soundings at'each station across the bed of the canal,
using an inch and three-quarter rod and a sledge, and kept a record of
the soundings, which they returned to the assistant engineer, who entered
it in a note-book. A computation of the records of the soundings made
by the chainman shows about 20,000 cubic yards of rock. About the
1st of May the levelers’ sheets containing the rod readings for the pur-
pose of plotting the cross-section diagrams and computing the total amount
of excavation, were returned to the office of the division engineer in
Rochester, and the work of making the computations begun. These
sheets did not contain, as such sheets usually did, the records of the
soundings for rock; neither was there any regulation requiring this.
On May .11, the assistant engineer wrote to the division engineer a
letter, of which-the following is a copy:
“Pittsford, May 11, 1896.
“ J. P. Little, Esq.:
“ I herewith send condensed reports of soundings taken, on section No.
5. I also ship box of spikes by freight to you.”
“ Yours truly,
“ H. P. GILLETTE.”
This letter inclosed sheets containing records of the soundings for
rock, and disclosing the presence of rock. It was received in the division
engineer’s office about the date it was written. The testimony is that
the letter and its contents were forgotten or mislaid and were- never
brought to the attention of any of the engineers who' were computing the
quantities. The bidding sheet, as made up, contained a quantity of 100
cubic yards of rock, inserted by the division engineer, to provide for
the contingency of finding boulders which should measure more than
half a cubic yard of contents.
When the contract was advertised, the contractors, Grannis & O’Connor,
visited Fairport, where the contract is located, and learned by a cursory
examination, that there would be a large amount of rock to be excavated.
They, therefore, made a bid of $3 per cubic yard for rock excavation and
23% cents for earth. One of them testified that he bid high for rock and
low for earth, because he knew that rook would greatly overrun the
estimate. They were the lowest bidders, and received the contract, se-
curing a price of $3 per cubic yard for rock excavation, which was the
highest price for dry excavation of rock on the canal, In view of these34
Millions of the People’s Dollars Lost.
facts, the bid was an unbalanced one and was intended to be by the
contractors.
t Up to the 1st of May,' 1898, the amount of rock excavation was 19,380
cubic yards, and the cost of this to the State was $58,140, as against the
cost figured upon the quantity sheet of $300. According to the engineer’s
estimate of the amount required to complete this contract, there will be
15,000 more yards of rock excavation, making about 35,000 cubic yards
altogether, which will cost $105,000. We are of the opinion that a
classification of a portion of this material was not made according
to the true intent of the specifications, because it might have been
loosened by plowing, more economically than by blasting; yet, not-
withstanding this, there was a large amount of material which could
be and was properly classified as rock. The omission from the bidding
sheet of the rock found in the sounding was the result of inexcusable
carelessness, and caused serious loss to the State.
The Furnaceville Iron Company were among the bidders upon this
contract, and their bid for rock excavation was $1 per cubic yard. Their
total bid upon the quantity exhibited was greater than that of Grannis
& O’Connor by $422.50, but the cost of the work done at their prices
would be much less than at the prices of Grannis & O’Connor.
For this work done up to May 1, 1898, Grannis & O’Connor
received.................................................. $267,169
The same work done at the prices of the furnaceville Iron Com-
pany would amount to ........................................ 232,294
A difference in favor of the Furnaceville Iron Company of____	$34,875
Grannis & O’Connor appearing to be the lowest bidders on the de-
fective quantity sheet, were not such, in fact; and this blunder so re-
sulted in awarding the contract to contractors who were not the lowest
bidders.
On contract No. 13, H. C. Allen & Co. were the successful bidders at a
price of 40 cents for rock. The character of the rock on contract No. 13,
was similar to that on contract No. 5. If the rock quantity in the bidding
sheet had shown the rock in the canal as disclosed by the soundings, the
bid secured by the State would, in all probability, have been materially
less than $1 and the saving to the State upon the amount already ex-
cavated would have been upwards of $40,000, and if the contract should
be completed and 15,000 cubic yards more excavated, the saving to the
State would be at least $70,000. '
Superintendent Aldridge Could Have Stooped the Steal.
We believe, also, that the Superintendent of Public Works could have
protected the interests of the State if he had stopped the excavation of
rock on this contract, after an amount bearing some reasonable relation
to that in the quantity sheet had been taken out.
In investigating the subject of rock classification we have found great
difficulty in determining whether the classification was properly made.
We have made use of every means of informing ourselves within our
power. We have examined specimens of the material when presented
to us. We have examined witnesses directly upon the character of the
material. We have informed ourselves of the instrumentalities made useMillions of the People’s Dollars Lost.
35
of in its excavation, whether dredges, steam shovels, picks-, plows* or
blasting. We have inquired as to the methods of measurements, whether
made in the regular way by cross-section before excavation, by estimates
based on the elevation of the material found in the banks after excava-
tion, by taking a percentage of the total excavation or by allowing the
total yardage of excavation between certain stations, without any de-
duction for silt or earth. We have examined the cross-station diagrams
of rock excavation to learn therefrom whether the classified material has
been disturbed by passing boats and propellor wheels. And we have in-
quired whether the contractors made claim for classification at the time
of excavation, or accepted their pay on an earth classification and sub-
sequently claimed that the material should be reclassified as rock.
We are of the opinion that the engineers misapprehended the mean-
ing of the specifications regarding earth and rock classification. All
excavated material is classified either as earth or rock. The test of
classification is whether it can be plowed. There are two recognized
methods of loosening material for excavation — one in plowing and
another, blasting. If a contractor were working for himself, so that
the work would be done most economically, he would plow or blast,
according to which method is cheaper.
True Test of Rock and Earth.
The true test, under proper interpretation of the specifications, is
whether the material can be lossened more economically by plowing
or by blasting. If the first, it is earth, and if the second, rock. This
leaves no place for any quibble about the kind of plow or the number
of horses. If by any kind of plow, or by any mumber of horses, the
material can be moved more cheaply by plowing than by blasting; it not
only can be plowed, but by any contractor working intelligently for
himself, it would be plowed. Such material is earth under these specifi-
cations. But as the material found in the prism of the canal varies
in hardness from mud or silt to solid rock, some of it is of such a nature
that it is somewhat uncertain whether plowing or blasting would be
the cheaper way of moving it. In most cases the classification is ap-
parent and by an intelligent and honest man can only be made in one
way; but there is a debatable ground where there is room for honest
difference. In such cases it is necessary that the decision should be
vested in some person and the resident engineer is chosen for that pur-
pose. The specifications are not intended to give the resident engineer
arbitrary power to classify material as he sees fit. The actual classifica-
tion depends on whether the hard pan or shale can be plowed; and it is
the duty of the resident engineer to determine that fact and to enforce
that test.
When the contractor made his bid on earth and rock he was not bidding
on the “ opinion ” of the resident engineer, he was bidding on his own
judgment as to whether the material could be plowed. It is of no im-
portance, and the fact should not be considered, that the excavation of
the material costs the contractor more than the price he bids for earth.
He made his bid with his eyes open, in view of the practical test pre-
scribed by the specifications; and applying the test strictly is not only
treating him justly, but it is treating him as he should have expected
to be treated when he made the bid.
We found, however, on all the divisions material classified as rock
which was loosened by picks, and which undoubtedly could be more
Cheaply plowed than blasted*36
Millions of the People’s Dollars Lost.
On the Western Division we are of the opinion that according to the
proper interpretation of the specifications there was improper classifica-
tion on contracts Nos. 5, 9, 10 and 12.
On the Middle Division a very large proportion of the material returned
as rock was earth, under the specifications. Much, if not all, could be
plowed, and some was actually plowed. On some contracts, notably
contracts Nos. 1, 2, 3, 4, 5, 19, 23, 25, 26 and 27, the classification seems
to have been made without any regard to the tests prescribed by the
specifications, and was a violation of the duty which the resident en-
gineer owed to the State.
On the Eastern Division, we are of the opinion that there was im-
proper classification, especially on contracts Nos. 2, 4, 5, 10' and 19. On
this division we find cases where the resident engineer was overruled
"by the State Engineer when he should have been upheld. It is difficult
for the engineering force to perform their duties as against the con-
stant pressure from the contractors, even if properly and actively
supported by their superiors in office. If, instead of such support, they
are snubbed and overruled when too active in enforcing the rights of
the State, the result is demoralizing. So far as we have learned, the
only instance in which the engineers have been brought in collusion
with the heads of the Department occurred in cases where they were
too tenacious of the rights of the State.
* *********
Earth Still Growing.
This class of work overruns more seriously than any other specified
in the quantity sheets, as is shown by the following table of embank-
ment work on contracts already let:
Summary for all Divisions.
Cubic yards. Cubic yards.
Quantity of embankment, May 1, 1898. 1,167,849
Estimate of embankment necessary to complete..	615,145
Total embankment ..................................... 1,782,994
Preliminary estimate of embankment .................... 729,374
Excess over preliminary estimate ...................... 1,053,620
The cost of embankment on May 1, 1898, upon all the contracts was:
For the Eastern Division .................................. $47,510 00
For the Middle Division ................................... 226,174 00
For the Western Division............,...................... 150,202 00
Total .................................................. . $423,886 00
The term “ embankment ” has been given an arbitrary meaning by the
specifications; and the practical interpretation of the engineering force
is such that it has wholly lost its proper meaning.. The amounts in
many of the quantity sheets have no relation whatever , to the amounts
in the final estimates. For illustration, on contract No. 1, Middle Divi-
sion, the amount in the quantity sheet was 1,000 cubic yards, the amount
in the estimate of May 1, 1898, was 85,100 cubic yards. On contract No.
2, the same division, the quantity sheet contained 100 cubic yards of
embankment, and up to May 1, 1898, there were 95,500 cubic yards.Millions, of the People’s Dollars Lost.
37
This fact suggests the true explanation, viz.. That work was classified
and paid for as embankment which was not within the contemplation of
the engineers who computed the quantities for the bidding sheets. The
meaning of the term has been changed three times. When the pre-
liminary survey was begun it was understood according to its ordinary
meaning. When the specifications were formulated, it was limited to
mean only embankment work when the material used was hauled 1,000
feet, unloaded from scows, or handled twice in connection with excava-
tion and back-filling around masonry structures and foundations. When
the work began the term was enlarged by interpretation of the specifica-
tions to include material excavated and hauled a thousand feet to be
wasted and excavated material, handled twice in the work.' The reason
for the great' overrunning of embankment quantities on contracts Nos.
1 and 2, Middle Division, and on many other contracts, was caused by
paying the contractors for hauling the material over 1,000 feet to the
spoil banks. The contractors, in all probability, did not expect to re-
ceive this compensation when they made their bids. The variations
in the amounts of the bids on this class of work seems to show that the
specifications were not understood alike by all bidders. The prices bid for
embankment varied on the Eastern Division from eight cents per cubic
yard on contract No. 16 to 80 cents per cubic yard on contract No. 8; on
the Middle Division, from 15 cents on contract No. 16 to 60 cents on
contract No. 1; on the Western Division, from 20 cents on# contracts
Nos. 4, 14 and 15 to 45 cents on contract No. 1.
On each division the contracts containing the highest price for em-
bankment, show the greatest overrunning of quantities in that class of
work. In all cases embankment price is additional to excavation. No
embankment is ever paid unless the contractor has already been paid
excavation price upon the same material.
Eastern Division Contracts.
Contract No. 8 — Governing the improvement of 1.3 miles of the Cham-
plain Canal. Whalen & Higgins, contractors.
Under this contract there was paid over one-third of all the money
that was paid for embankment on the Eastern Division. The bid was
an unbalanced one, upon its face, as we have shown, and the contract
should not have been let. The quantities for this section of the canal
were computed by John G. Tait, who, as assistant enginner, was in
charge of the survey section. His quantities were computed before the
specifications were made, and, in the first instance, contained no em-
bankment whatever ; but he was directed to> insert as embankment in the
quantity sheet, one-half of the necessary puddle material. This, he did,
and the bidding sheet contained 5,640 yards of embankment. At the
same time he inserted the material to be used behind vertical walls,
and the remaining half of the puddle material as lining.
This contract section of the canal extends through the village of
Waterford. When the assistant engineer saw the specifications he
reached the conclusion that embankment would largely overrun, because,
in his opinion, there was no place within 1,000 feet available for spoils
banks. No changes, however, were made on the bidding sheet, and the
proposals for the contract were advertised for and received.
Some time before this an appropriation had been made by the State
for building a culvert at Second street, in the village of Waterford, a
point about 1,100 feet distant from the canal. The appropriation was not38
Millions of the People’s Dollars Lost.
sufficient to provide material to properly grade, a highway over the cul-
vert, and the suggestion was made by certain of the citizens of Water-
ford, among them the section superintendent of the canals, in the em-
ploy of the Department of Public Works, that the material excavated
from the canal should be used for that purpose. This suggestion was
acquiesced in by the division engineer, and it was generally understood
that the excavation from the prism should be so used.
After this contract was advertised, certain of the contractors, visited
the locality for the purpose of investigating the condition of the work
to be done. They saw the assistant engineer, who told Whalen & Higgins,
and other firms of contractors, that the quantity of embankment would
largely overrun. Whalen & Higgins were also told of the proposal to
waste the material on the Second street culvert.
In their interest the distance from the canal to the culvert was meas-
ured, and found to exceed 1,000 feet. With this knowledge, they made
a bid of 80 cents for embankment and 40 cents for lining, the price
for embankment being the highest, and the price for lining being the
lowest upon any contract awarded.
Illegal Contract.
When the bid was opened and examined by the Superintendent of
Public Works and the State Engineer, this unbalanced feature was
noticed and commented upon; but the State Engineer advised its ac-
ceptance, giving the assurance that embankment would not overrun,
and the Superintendent awarded the contract to Whalen '& Higgins.
As a matter of fact, embankment overran 5;640 cubic yards in the bid-
ding sheet to 21,129.5 yards; and lining, upon which the bid was low,
was decreased from 12,540 cubic yards in the quantity sheet to 6,849.3
cubic yards.
During the progress of the work the question of locating spoils banks
for the excavated material arose, and a certain abandoned side cut
was found within the Blue Line, which was made to receive 5,000 or
6,000 cubic yards. The question of hauling the material to the Second
street culvert was discussed and the State Engineer directed that it
should not be done; but that spoils banks within 1,000 feet should be
located and appropriated to receive the material. A careful examination
of the locality was made, the spoils banks were located, surveyed and
duly appropriated, but were, however, never used.
Jobbery and Fraud.
About the time when the spoils banks were being surveyed, the con-
tractors began hauling material to the Second street culvert without
the direction of the engineers. When this fact was made known to the
resident engineer, he required the assistant engineer to notify the con-
tractors that if they persisted in hauling the material to that point it
would not be paid for as embankment. Such direction was given in the
following letter:
“ December 19, 1896.
“ Messrs. Whalen & Higgins, Waterford, New York:
“ Dear Sirs.— You are hauling waste material from the canal excava-
tion to the Second street culvert without instructions to do so, and I
am instructed by the resident engineer to notify you that such material
will not be paid for as embankment.
11 Yours truly,
“ JOHN G. TAIT.”Millions of the People’s Dollars Lost.
39
On December 21, 1896, the assistant engineer received the following
letter from the Deputy State Engineer, which was written without the
knowledge of the State Engineer:
“ Albany, December 21, 1896.
“ Subject, Waterford culvert.
“ A. J. Himes, Esq., Resident Engineer:
“ Dear Sir.— Mr. Whalen of Whalen & Higgins called to-day and showed
me Mr. Tait’s letter, notifying him that the waste material now being
hauled to the Waterford culvert was being so done without instruction, and
I believe Mr. Tait’s letter was written according to your directions.
I infer that Mr. Smith has, for some reason, failed to inform you as to
the State Engineer’s decision in this matter, that decision is that for the
present, at least, part of the material on that contract, which must neces-
sarily be paid for as embankment, shall be hauled to the Waterford
culvert, and you will, therefore, please see to it that the contractor’s opera-
tions in this respect are not interfered with, while I will see that you
have full instruction soon.
“Yours very truly,
“ H. ROBERTS,
“ Deputy State Engineer.”
The resident engineer withdrew his opposition to moving the material,
the contractor exerted himself and in a short time hauled to the Second
street culvert 8,080 cubic yards of excavated material. He was paid for
doing this at embankment price, $6,464.
The division engineer, when examined by us, produced elaborate
figures showing that the spoils banks actually located would not have
received all the excavated material, and that the letter of the Deputy
State Engineer was meant to apply to such surplus only. But the facts
remain unquestioned that the contractors were told that embankment
would overrun, and that the spoiled material was to be hauled to
Second street culvert; that they made an unbalanced bid for the pur-
pose of profiting by this knowledge; that the bid was accepted with
knowledge of these facts; that the State Engineer, although he tried
to prevent this abuse, failed in doing so, and that notwithstanding
these facts, the contractors were paid for the overhaul without question.
The quantity of embankment for which the contractors were paid is
made up as follows:
1.	Overhaul.................................................... 8,080
2.	Gravel behind vertical walls ............................... 3,694
3.	Puddle under timbers, vertical walls ....................... 255
4.	Puddle in front of sheet piling ............................ 349 •
5.	Puddle behind shejet piling ................................. 25
6.	Puddle in canal bottom, minus lining........................ 8,712
7.	Puddle in waste weir cut off ...............................*	15
Total.......................................................... 21,130
The amount paid for embankment was $16,904.
In addition to the embankment due to overhaul, a large? amount to-wit:
8,712 yards, was puddle material in the canal bottom.
In our opinion, at least as to a portion of the material, there is no
warrant for this classification in the specifications. The specifications
in regard to classification of material puddled, are as follows:40
Millions of the People’s Dollars Lost.
“ The material puddled will be paid for as excavation, embankment or
lining, as the case may, be, but no allowance will be made for shrinkage.”
The reason given for this classification by the assistant engineer was
that the puddle material consisted of old puddle and gravel and clay
found in the excavation and handled twice, or hauled 1,000 feet. The
old puddle was put to one side during the excavation, piled in the canal
bottom and on the towpath, and rehandled into place for puddling. In
our opinion the classification as embankment of portions of this material
because it was so handled twice, was not justified by the specifications.
The clause in the specifications which contains the words “handled
twice ” is expressly confined to such material as is handled twice in
connection with excavation and back-filling around masonry structures
and foundations.
It is difficult to imagine a case where a contractor could properly bid
more for embankment than for linihg. The specifications contain pro-
visions inserted for the purpose of securing classification as embank-
ment instead of lining, evidently upon the theory that embankment price
must necessarily be less. On this contract these provisions have been
made use of to give the contractor the higher embankment price. The
puddle material found in the excavation, which cost the contractors noth-
ing, was paid for as embankment at 80 cents, while that which they were
obliged to go outside and bring in was paid for as lining at 40 cents.
The same assistant engineer was in charge of construction work on the ad-
joining contracts Nos. 8 and 9. On contract No. 9, where the lining price
was higher than embankment, the assistant engineer returned the back-
ing for slope avails as lining, while on contract No>. 8-, where embank-
ment price was higher, he returned the backing for slope walls as em-
bankment. This erroneous classification of material behind slope walls,
however, was corrected by the division engineer.
The result of an unbalanced bid is well illustrated by this contract.
Among the contractors to make proposals for the contract was the Troy
Public Works Company. Their bid, being apparently $4,858 higher than
that of Whalen & Higgins, was rejected. The bid of the Troy Public
Works Company was properly balanced, and if the work had been done
at their prices it would have cost the State $4,773 less than at Whalen
& Higgins’ prices. Although Whalen & Higgins appeared to be the
lowest bidders on the quantity sheet, they were not the lowest bidders
upon the work actually done. The effect of the unbalanced bid practi-
cally resulted in a violation of the spirit of the constitutional provision
requiring that the work shall be done by the lowest bidder.
Two State Officers Assist to Profit Contractor.
We are of the opinion that a portion of the money paid Whalen &
Higgins was improperly paid and that the wrong was the result of
the act of the Superintendent of Public Works in awarding the con-
tract containing an unbalanced bid, and of the engineering depart-
ment in straining the specifications in such a manner as to enable the
contractors to profit thereby.
We find also other cases of puddle material paid for as embankment,
on this division, in addition to excavation, on the theory that it was
handled twice. The amount of this is comparatively small and it is practi-
cally impossible to determine it. Back filling behind vertical walls has
also been paid for as embankment in the majority of cases, sometimes
without reference to the question whether it was handled twice or not.Millions of the People’s Dollars Lost.
41
Middle Division Contracts.
Much of the increase of embankment quantities on the Middle Division'
was caused by beginning the work on certain contracts by raising the
banks with borrowed material before beginning excavation. This has
been considered under the head “ Excavation.”
Long Haul Pays Best.
On contract No. 1, through the city of Utica, the amount of embank-'
ment in the quantity sheet is 1,000 cubic yards, while the quantity up to
May 1 is 85,100. This amount wk almost wholly made up of material
hauled over 1,000 feet and wastecl^Che* price for embankment was 60
cents per cubic yard, and the cost of embankment on May 1, 1898, was
$51,060, as against $600 bid by the contractor. On December 10, 1896, a
written agreement was made between the contractors and the State
Engineer, to the effect that the contractors would be paid embankment
price for all excavation except material to be used in the work between
Station 83, near Clay street, and Station 166, near Breeze street, amount-1
ing to about 64,000 cubic yards, the actual amount to be determined as
the work progressed. The agreement provided that this should be a
final determination of the whole question of embankment price for over-
haul. The agreement was made after the location of spoils banks; and
yet, subsequently, the contractors made a claim for embankment price
for material excavated from a portion of the prism which was not within
the limits specified in the agreement, and the claim was allowed. The
exact amount of this was not shown in the evidence, but it amounted to
over 10,000 cubic yards, which, at_60 cents per yard, amounts to over
$6,000. The reason given for this allowance notwithstanding the agree-
ment was that the situation of large buildings and the topography of the
adjoining country rendered the point of deposit of the material inacces-
sible, except by a circuitous route to the west over the towpath, and
that the distance measured by this route was over 1,000 feet. These
conditions existed when the agreement was made, but it was claimed
they were overlooked.
Contract No. 2 —The amount of embankment on the quantity sheet is
100 cubic yards. The bid was, 38 cents. The amount of embankment on
May 1, 1898, was 95,000 cubic yards, and the cost to the State $36,290
as against a contract price of $38.
This contract is through the city of Syracuse, and the improvement,
as is the case in all contracts through important towns, was effected by
deepening two feet. There was, therefore, no actual embankment, ex-
cept the amount nepessary for filling behind vertical walls. The en-
gineer who computed the quantities for the preliminary estimate', made
no provision to pay for overhaul as embankment, because he thought that
the price for earth excavation would include taking care of the material.
The contractors removed the excavated material by a locomotive and train
of cars upon a temporary track made in the prism, in order to reach the
spoils banks. At one point they were paid embankment for depositing
this material on a spoils bank almost opposite the place of excavation.
When we first examined witnesses on this subject, the reason given for
paying embankment price for material spoiled at this point was that the
track was run over a switch to get out of the prism and upon the bank,
and that measured over the switch the material was hauled over 1,000
feet. Subsequently, this excuse was abandoned and the reason was
stated to be that the engineers interrupted the work at this point and42
Millions of the People’s Dollars Lost.
thereafter paid embankment price as compensation for rebuilding the
track. Another portion of the material was also paid for as embank-
ment, because the spoils, bank was over 1,000 feet* from the point of
excavation, measured by the route adopted by the contractors to reach it.
This route was used by the contractors because they could not cross a
railroad track which lay between the canal and the spoils bank, with their
temporary tramway.
There was evidence of an effort on the part of the contractor on this
contract to secure as long a haul of their material as possible, in order
to earn embankment prices as well as excavation.
On this division we found instances where material was classified as
embankment because handled twice in excavating. On contract No. 3,
where there was excavating at the toe of the slope in order to underpin
the slope wall, 8,330 yards of the excavated material was thrown out
into the prism and thereafter taken away and put on spoils banks within
1.000	feet. For this the contractor was improperly allowed embankment
price of 20 cents per yard, or $1,666, in addition to excavation.
On contract No. 2, embankment was improperly paid under like con-
ditions.
Profitable Ashes and Cinders.
On contract No. 4, ashes and cinders used in making embankment be-
hind slope walls were paid for as excavation and embankment, although
not hauled 1,000 feet.
Western Division Contracts.
On contract No. 1, the preliminary estimate for embankment was
50.000	yards. The total was 200,449.2 yards; the price 45 cents, and
the total cost to the State for embankment $94,252, as against the con-
tract price, for the amount on the quantity sheet, of $22,500. The greater
proportion of this excess was due to overhaul for the purpose of spoiling
the material; a portion of it was back-filling behind vertical walls. The
improvement of contract No. 1, at Buffalo, was also effected by deepen-
ing two feet. The problem of obtaining spoils banks in the city of
Buffalo was a difficult one. Before proceeding with the work an agree-
ment was made defining the stations between which the embankment
price would be paid as fixed by the agreement irrespective of the point of
actual disposition of the wasted material.
We have found in our investigation that uncertainty exists in the
practical interpretation of the meaning of the word “ embankment.”
In some instances the difference between embankment and lining has
been, ignored. For instance, on contract No. 7, Eastern Division, there
were places where the bank had*settled, and, for the purpose of raising
and strengthening it, 10,432 cubic yards of material was used. The
specifications provide that where embankment exceeds necessary excava-
tion, the deficiency of material shall be supplied from borrow pits fur-
nished by the State and. paid for as excavation only, unless hauled 1,000
feet. The price of earth excavation in this contract is 25 cents, and of
embankment 20 cents. This material was excavated from the bed of a
stream which was surveyed for the purpose of appropriation as a borrow
pit, if necessary, if paid for as excavation and embankment, it would
have cost the State $4,694. As a matter of fact,, it was classified as
lining at 60 cents per cubic yard, and cost the State $6,259. Either this
classification was wrong and thereby the State paid for this materialMillions of the People’s Dollars Lost.
43
$1,565 more than, should have been paid, or it is impossible to determine
by the specifications whether material shall be paid for as lining or as
excavation and embankment.
In. our opinion the classification was wrong. The reason given for.
this classification was that the contractor was compelled to haul the
material so great a distance that the combined prices of excavation and
embankment would noe fairly compensate him. This does not excuse
classifying the material as lining. It should, according to the terms of
the contract, have been classified as excavation and embankment.
More Triple Pay.
We find instances in which ditches were dug and were paid for as
excavation, then broken stone placed in the ditch was paid «for as
lining, and filling the ditch was paid for as embankment. These were
not large amounts, but, in our opinion, the contracts between the parties
did not contemplate paying for work of this character either as embank-
ment or as lining.
We are of the opinion that a proper interpretation of the specifications
does not admit the payment of embankment price for material which
is hauled over 1,000 feet and wasted. We have given this subject care-
ful attention, because uniformly on all the contracts the embankment
clause has been construed to permit payment to the contractors of em-
bankment price for spoiled material if hauled over 1,000 feet.
Under these specifications the word “ embankment ” has its ordinary
meaning; it means material which enters into the canal banks, including
back-filling behind vertical walls and bridge approaches. The specifica-
tions were framed for the purpose of limiting the amount which the State
should be compelled to pay for such embankment. The contractor is
required to do embankment work without other compensation than ex-
cavation price, unless the material is hauled 1,000 feet or unloaded from
scows, or handled twice in connection with excavation and back-filling
around masonry structures and foundations. In such cases only em-
bankment price is added to that of excavation.
The specifications provide that the State may require surplus material
to be placed at any point outside the limits of the bluei lines that the
engineer may direct, provided the average haul in such case shall not
exceed 1,000 feet. The only permissible meaning of this provision is
that the State shall furnish a place for the contractor to waste his ma-
terial within 1,000 feet. Under the specifications the engineer has no
right to require the contractor to haul his spoiled material more than
1,000 feet. No provision whatever is made for compensation to the
contractor if the engineer does require this overhaul, and the interpreta-
tion of the specifications which permits the payment of embankment
price in such case is unwarranted. It seems inconsistent to pay the con-
tractor embankment price for hauling material 1,000 feet for the purpose
of use in constructing embankment and not to pay him for like work
when the material is wasted; but the specifications so provide; and the
contractor made his bid and accepted the contract thereon. The con-
tractors were entitled to have spoils banks furnished them within 1,000
feet, but not to receive embankment price if they were required to haul
further.
. An inspection of the quantity sheets shows that this seemed to have
been the understanding of the persons who computed the quantities, for
there nowhere exists any quantities in the preliminary estimates euffl-44
Millions of the People’s Dollars Lost,
ciently large to permit the payment to the contractor, as embankment
for overhaul of spoiled material. If the Superintendent of Public Works,
upon whom the duty rests, fails to furnish spoil banks where the material
can be wasted without such overhaul, a condition arises which is. not
within the contemplation of the parties to the contract; and if the over-
haul becomes necessary, compensation therefor bearing some relation to
the cost of the work should be made by special agreement. Justice in
this respect could be reached by apportioning the amount paid to the
distance of the overhaul on some equitable basis. It is not and can not
be reached by arbitrarily paying the contractor an amount which he
bid for a different class of work. Applying this interpretation of the
specifications would exclude, payment for anything as embankment, ex-
cept for embankment work, when the material entering into the bank is
necessarily hauled 1,000 feet, or unloaded from scows, or handled twice
in connection with back-filling around masonry structures and founda-
tions.
High at First, Low Later.
Under specifications like these, the only way in which an intelligent
and proper bid can be obtained is to locate the spoils banks before, bids are
invited, or to require the contractor, especially in contracts through large
cities, to take care of excavated material at his own expense. In this
way the contractor might be apprised of the work which could actually
be required of him and make a bid which is properly balanced and bears
some relation to the work to be done. With nominal quantities of em-
bankment in the bidding sheets, and strained and unwarranted inter-
pretation of the specifications, we find evils similar to those which grow
out of unbalanced bids. The bidders who appear to be* the lowest on the
bidding sheet are not actually the lowest, and the contract is not let
to the lowest bidder. On contract No. 1, Middle Division, T. J. Dwyer
& Co., appear to be the lowest bidders on the bidding sheet and obtained
the contract. As a matter of fact upon, the work actually done, the Troy
Public Works Company were lower. On the quantity sheet:
The Troy Public Works Co. bid................................... $143,036 00
T. J. Dwyer & Co...............................................	125,520 00
Difference in favor of T. J. Dwyer & Co................ $17,516 00
On the amount of work actually done to May 1, 1898, excluding extra
work:
T. J. Dwyer & Co. receive ................................. $267,545 45
If the work had been done by the Troy Public Works Com-
pany, at their prices, it would have amounted to........... 229,516 15
Difference in favor of Troy Public Works Company..........	$38,029 30
On contract No. 1, Western Division, the Donnelly Contracting Company
appeared to be the lowest bidders, and obtained the contract. As a mat-
ter of fact, computed on the work actually done, the bid of the Barber As-
phalt Paving Company was lower. On the quantity sheet:
The Barber Asphalt Paving Company.......................... $417,160 00
The Donnelly Contracting Company............................ 349,955 00
Difference in favor Donnelly Contracting Company........	$67,205 00Millions of the People’s Dollars Lost.
45
On the amount of work actually done to May 1, 1898, excluding extra
work:
The Donnelly Contracting Company receive ................ $615,157 88
If done at the prices bid by the Barber Asphalt Paving Com-
pany it would have amounted to............................ 612,217 12
Difference in favor of Barber Asphalt Paving Company ..	$2,940 86
The greater part of the money paid for embankment was improperly
allowed under the proper interpretation of the specifications.
Lining.
The specifications for lining are very indefinite. A contractor might
bid a price for which he w'ould furnish gravel or broken stone, but it
is difficult to say how he could intelligently bid upon “ such other selected
material as shall be approved by the engineer,” and yet that is the general
specification for lining. Under the heading of embankment, we have
pointed out one case in which we believe that material was improperly
paid for as lining. In certain cases the officials of the State have at-
tempted to justify the use of cinders in the place of gravel behind slope
walls, on the ground that the specifications permitted the use of any
other material selected by the resident engineer as lining, although the
specifications call for gravel lining on this class of work. This was done
on contract No. 2, on the Middle Division, where a large amount of slope
wall was built against a backing of so-called cinders. The effect of this
was to enable the contractor to do the work more cheaply, as the cinders
were obtained near the canal, whereas, he would have been obliged to
purchase the gravel and haul it a long distance into the city. While
good cinders may make a good lining for slope wall as poor gravel, yet
the question of the proper separation of the cinders and ashes is contin-
ually arising, and it did arise on contract No. 2, on complaint of one of
the inspectors of the Public Works Department. This complaint was
made both to the engineers and in writing to the Superintendent of Pub-
lic Works. It did not, however, result in the prompt discontinuance of
the use of this material for lining for slope wall. Cinders were also used
for lining for slope walls on the Jordan level contracts on the Middle
Division. According to the testimony of another one of the Superintend-
ent’s inspectors, the ashes and cinders were not properly separated, but
that he permitted them to be used because it had been done with the
approval of his superiors in office before he was assigned to that work.
The general inspector of the Superintendent’s office testified that as soon
as he learned of the use of this material for lining, he stopped it. But
the testimony is conclusive that it was used to a considerable extent and
after the Superintendent’s office had notice of it.
Air Space Taken at Board Measure.
The bidding sheets often contain items of “ piles delivered,” and “ piles
driven;” and,, in some cases, “piles at foot of wall delivered,” and “piles
at foot of wall driven.” To a great extent these were quantities not
based upon a prior determination of the extent to which they would be
used, but inserted to secure a price if needed during the progress of the
work. The method of separating “ piles delivered ” and “ piles driven,”
•is adopted for the purpose of requiring the State to pay for the piles46
Millions of the People’s Dollars Lost.
brought upon the work by the contractor before they are used. This
practice has led to abuses, and in our opinion, piles should t>e paid for
only as they are actually placed in the work.
On contracts Nos. 2, 3 and 4, Middle Division, the contractors bid nine
and ten cents per lineal foot for “ piles at the foot of walls delivered.”
At the specified length of eight feet, they cost the State 72 and 80 cents.
Under these specifications, the State officials permitted the delivery of rail-
road ties, in many cases, seconds, and worth not more than 50 or 60 per
cent, of the price paid to the contractors, and no actual use was found
for these piles during the progress of the work. On contract No. 2, the
plans provided alternative methods of protecting the foot of the walls
by either driving piles or by concrete underpinning. The contractors
brought railroad ties upon the work and were allowed and paid for them
by the State as “ piles at foot of walls delivered.” Thereafter, the method
of underpinning the walls by concrete was adopted, and the piles were
not, and have not, been used. There were but 3,260 lineal feet of such
piles delivered, for which the contractors were paid $320. On contract
No. 4, 3,000 railroad ties, accepted as “ piles at foot of wall delivered,”
costing the State $2,160, were delivered and have not been used. Rail-
road ties and fence posts have also been accepted under this specifica-
tion on other contracts.
According to the specifications, the price for timber and plank includes
all the expense necessary to properly place* it in the work, and it isi to
be paid for as measured in the work. The plans show different uses for
it, such as sheet piling, foundations for walls, etc.; and the specifications
expressly provide that the price paid for timber and planks of any quality
shall cover such amount of either as may be required for sheet piling
driven in the work ready to use. On contract No. 1, Middle Division, the
contractors bid $20 a thousand for an amount of 75,000 feet board measure
of spruce timber and plank exhibited on the quantity sheet, and 10 cents
a lineal foot for “piles at foot o£%^valls driven.” On contracts Nos. 1-8
and 19, Middle Division, the bid was $22 a thousand for a quantity of
50,000 and 20,000 feet board measure of spruce exhibited on the quantity
sheets respectively, and 13 cents a lineal foot for “ piles driven.” During
the progress of the work, it became necessary, in the opinion of the en-
gineers, to drive triple lap sheet piling. This is composed of three layers
of two-inch plank nailed together in such a manner as to form a tongue
and groove, and so afford a barrier against the passage of water. Neither
the plans nor the contracts made any provision for triple lap sheet piling,
and there were no . prices bid by the contractors which were meant to
apply to this class of work. An oral agreement, however, was made to
pay the contractors for the material necessary to construct such sheet
piling at the price bid for spruce timber and plank in place and for driving
the same at the price bid for driving bearing piles on contracts Nos. 18
and 19, and at an agreed price of 20 cents a.lineal foot on contract No. 1
The only additional work necessary to make the sheet piling was spiking
the planks together and sharpening the piles so. made. By this application
of prices found in the quantity sheet to a purpose which was not in the
contemplation of the parties, the contractors were paid twice for putting
the material in the work. This was attempted to be justified by the
claim that the cost of putting triple lap sheet piling in the work was
greater than for a single piling; but there was a difference of opinion
among the witnesses examined upon this subject. Under this arrange-Millions of the People’s Dollars Lost.
47
ment, triple lap sheet piling was driven to the following extent, and at
the following cost:
Contract No. 1:
About 500,000'feet B. M. spruce, at $20 .............. ......... . .$10,000 00
77,580 lineal ft. piles driven, at 20c................. 15,516 00
Total..................................................... $25,516 00
Contract No. 19:
570,212 feet B. M. spruce, at $22.............................. $12,544 00
108,060 lineal feet, at 13c. .................................. 14,047 80
Total........................‘............................ $26,591 80
Contract No. 19:
About 900,000 feet B. M. spruce, at $22......................... $19,800 00
170,900 lineal feet, at 13c.............................. 23,217 00
Total ....................... ............................ $43,017 00
The measurements we have' given on contracts Nos. 18 and 19 are those
revised, as below stated.
When the triple lap piling was driven on contracts Nos. 18 and 19, the
assistant engineer in charge of the .work measured the amount of timber
contained in each pile and its legnth, and returned the result in the
monthly estimates. According to this method of measurement, the con-
tractors received, at the prices so fixed, compensation for the actual amount
of work done and material furnished. Some time after this wrork was
done, the resident engineer instructed the assistant engineer to aban-
don that system of measurement, and, after the piles were driven, to
draw a steel tape along the top and estimate that the contractors had
driven one pile for every 10 inches so measured. This readjustment of
measurement substituted a guess for the actual quantity; and on con-
tract No. 18, increased the quantity of spruce about 50,000 feet B. M.,
increased the lineal "feet of piles driven about 9,000, and increasing
the cost to the State fo the extent of about $2,200. The sapie system of
remeasurement on contract No. 19 cost the State, according to the evidence,
at least $600. This was a gross abuse. It resulted in paying the con-
tractor for all the spaces between the piles so that the less accurately the
work was done the more.the contractor received. The resident engineer
attempted to justify this measurement by saying that the plank used were
of different widths, and that the State Engineer directed this manner of
measuring, so that the contractor might not receive a benefit from driving
piles made of material which did. not measure up to the required width.
This explanation is unsatisfactory. The State Engineer gave no such
general direction, but confined- his direction to a single place where the
contractor was using timber of insufficient width. The resident engineer,
howrever, applied this system of measurement to all the work of this char-
acter on the contracts, thus making the contractors a present of the sums
of money above stated. On other contracts on this division where the
system of accurate measurement favored the contractors through the use
of material which was not ten inches in width, such system of accurate
measurement was adopted and the contractors paid accordingly.48
Millions of the People’s Dollars Lost.
The same method of paying the contractors for the material used in
making triple lap sheet piling was adopted on other contracts. The prac-
tical result was to pay for the work of spiking the planks together at the
price which the contractors bid for putting the material in place, and then
to pay, in addition, a further price for driving, either determined by the
price appearing on the bidding sheet for driving piles or fixed by special
agreement. This custom prevailed quite extensively on the Middle Divi-
sion, and was applied on one contract on the Western Division.
The condition of the soil through which the canal was built on the
Jordan level was of such a nature that great trouble was experienced with
sliding and moving banks, and after various attempts to find a remedy, a
plan was devised of driving piles at the toe of the slopes and in the center
of the prism and connecting or bracing the same with struts extending
from the toe of the towpath slope to the toe of the berme slope, so that the
whole bottom of the canal was, for a distance of about 4,000 feet, grid-
ironed with struts and braces.
About 598,000 feet of hemlock timber was used in building this strut
work. The contractors received the price of $16 per M feet, according to
the binding sheet for the timber, and were paid for putting it in the work
by force account with ten per cent, profit allowance. This work was not
contemplated in the plans, nor the contract. By paying the price on the
bidding sheet for the material the State lost about $4 per 1,000 feet. In the
same way 4,050 feet of hemlock, used for struts at the Newport bridge,
21,720 feet of spruce used for triple lap sheet piling, and 109,000 feet of
spVuce used in cribbing and docking were paid for at the contract price,
and the work of putting them in place was paid by force account.
On contract No-. 4 the contractors bid ten cents a lineal foot for piles
delivered and fifteen cents a lineal foot for piles driven, upon the quantities
of 500 feet respectively in the bidding sheets. The final quantities of piles
delivered was 277,290 lineal feet, and of piles driven 392,000 feet, which
included both the bearing piles and the triple lap sheet piling.
As the work progressed the contractors refused to continue delivering
piles of the lengths called for by the State officials at the price shown on
the bidding sheet and an extra agreement was made for pile protection to
the banks, in which the price of piles delivered of thirty to thirty-five feet
in length was fixed at sixteen cents per lineal foot, and of piles of forty to
forty-five feet in length at twenty-one cents per lineal foot, and of piles of
forty-five to fifty feet in length at twenty-eight cents per lineal foot.
This is an illustration of the fact that prices obtained upon nominal
quantities are considered binding on the 'State, but not always on the
contractors. Nearly all of the triple lap sheet filing and strut work was
done upon high prices obtained on nominal quantities.
Early Delivery and Early Pay for Material.
The custom has obtained of paying the contractors a relative price for
material delivered, although no such provision is contained in the con-
tracts or specifications. The object of it, apparently, is to make an advance
to the contractor, so that he will be better able financially to carry out his
contract. As most of the material called for in the quantity sheet is to be
placed in the work without additional expense to the State, the amount of
the bid does not represent the cost of the material only, but alsoi the cost of
putting it in the work. An expedient has therefore been adopted of pay-
ing the contractor what is called a relative price fixed by the engineering
department. If the contracts are completed and no material is so paid forMillions of the People’s Dollars Lost.
49
except that used in the work, this produces no damage to the interests of
the State.
Unused Material Paid For.
But in the present case we find, now that the improvement has been
stopped for want of funds, that large amounts of material paid for at the
relative price remain unused.
As appears by the monthly estimates for May 1, 1898, the cost
of such material on the Eastern Division was .............. $16,708 57
On the Middle Division .  ................................... 59,319 48
On the Western Division .................................... 63,362 95
Total...................................................... $139,391 00
, This consists of a slope wall stone, vertical wall stone, timber planks,
and all material of the kind mentioned in the quantity sheet; and SO' far
as this improvement is concerned, it is lost. Some of it is now being used
by the superintendent of Public Works in ordinary repairs of the canal
and improvements of a nature not contemplated or provided for in the
nine million dollar act.
Since the 1st day of May the measurements of the amount of this ma-
terial have been readjusted as between the State and the contractors, with
the effect of substantially increasing the amount.
We see no reason why the contractors should be paid for deliver-
ing this material before it is placed in the work, as contemplated in
the contract. In many cases it appears that the relative price paid is
greater than the actual value of the material. The purpose and object of
the contract was not to produce the delivery of unused material upon the
banks of the canal, but was to receive from the contractor completed
work. The specifications provide that the timber and lumber, delivered
as per bills, and not used, will be paid for at the market rate, but the
payments made to the-contractors for slope wall and vertical wall stone
and other materials seem to be made without any justification other than
prescription.
Extra or Additional Work in Violation of Law.
The Constitution of the State of New York provides that;
“All contracts for work or materials on any canal shall be made with
the persons who shall offer to do or provide the same at the lowest price,
with adequate security for their performance. No extra compensation
shall be made to any contractor, but if from any unforeseen cause, the
terms of any contract shall prove to be unjust and oppressive, the Canal
Board may, upon the application of the contractor, cancel such contract.”
Following this, chapter 79 of the Laws of 1895, provides:
“No alteration shall be made in such map, plan or specification or the
plan of any work under contract during its progress, except with the con-
sent and approval of the Superintendent of Public Works and the State
Engineer, nor unless a description of such alteration and such approval be
in writing and signed by the parties making the same, and a copy
thereof filed in the office of the State Engineer. No change of plan which
shall increase the expense of any such work or create any claim against
'the State for damages arising therefrom shall be made, unless a written
statement, setting forth the object of the change and the expense
thereof, is submitted to the Canal Board, and their assent thereto, at a
meeting when the State Engineer was present, is obtained.”so
Millions of the People’s Dollars Lost.
The intent of the law governing the performance of canal work in this
State is that it shall be regulated entirely by the terms of a contract.
The people have gone so far as to> incorporate in their organic law a pro-
vision that the work shall be done by contract, and a prohibition against
making extra compensation to the contractor.
If the agencies through which work is done were perfect better results
could probably be obtained by day’s labor and purchase of material in the
open market than through contractors. This method would involve the
continual exercise of the discretion and judgment of the administrative
officers. But the experience of the past has been such that the
people by constitutional provision and legislative enactment have
taken away as fully as possible all discretionary power from their
officials.
It would not do, however, to construe these laws so strictly as to exclude
any possible agreement for additional work of an incidental character;,
for, so long as the work is carried on by human agencies, there will be de-
fects and omissions in the contract, which are due to the inability of the
human mind to foresee every possible detail or complication which may
arise during the progress of the work. Work incidental to the contract,
but not specified, may become necessary, and it mulst be done, or the
work oif improvement stop. So arises the necessity for agreements for
additional work. In our opinion, the work is done by contract if it be
substantially so performed, although as incidental to the performance,
there may be instances in which work outside the terms of the contract
itself must be paid for. The necessity for extra or unspecified work, in-
cidental to the general plan of improvement, can be learned only as the
work progresses, and it was not the intent of the people or the Legislature
that the improvement should be stopped bjr contingencies which had not
been fully foreseen and provided for. It is not believed that payment for
additional and necessarily incidental work is “extra compensation to the
contractor” within the meaning of the constitutional prohibition.
The total cost of the work, including all certified estimates to June 1,
1898, under the contracts proper, is:
Upon the Eastern Division ..................................  $1,785,761	28
The cost of additional work under special agreement is ....	120,181	72
On the Middle Division the cost of contract work is...........	3,525,560	41
And the cost of work under special agreement is................. 330,810	35
On the Western Division the cost of contract work is........	1,708,893	16
And the cost of work under special agreement is................. 373,828	81
Cost of contract work on all divisions by certificates to
June 1, 1898 .............................................. .	7,020,214 85
Work done under special agreement .................•........ 824,820 88
These figures illustrate what has been said in regard to the insuffi-
ciency of the work preliminary to the letting of the contracts.
In addition to the work which is called “ extra work ” and is shown on
the above table, a large amount of work was done which was not in. the
contemplation of the parties to the contract, and, therefore, not within
the contract itself. Whenever it has been found desirable to. do work
not shown on the plans, and prices for a like class of work were found in
the quantity sheet, the work has been directed and done without
written agreement or the approval by the Canal Board. The triple
lap sheet piling and strut work above mentioned is an illustration of this.51
Millions of the People’s Dollars Lost.
We find that a method of saying the old slope wall by ramming, after the
frost is out, has been adopted on a large number of contracts. There is no
provision for this class of work in the contract. The contractor’s com-
pensation was determined by his force account with 10 per centum allow-
ance for profits; but he was not so paid. He was paid for building such
an amount of slope wall as, at the price in the bidding sheet, would equal
that amount. This was done so generally that written directions to adopt
this method of doing the work and paying for it were formulated and sent
to the assistant engineers. This money, amounting to many thousands
of dollars, was paid to the contractors for the construction of slope
wall, whereas, none whatever had been constructed. *****
On contract No. 5, Western Division, the sum of $6,459.60 was paid to
the contractor for wages of labor, team work, cobble stones and gravel,
for repairing slope walls where piling was driven. This was then turned
into yardage of slope wall and lining, and the contractor was paid for it,
under those quantities. Incidentally, this involved paying the contractors
for 1,109 loads of gravel at the contract price of eighty cents, although that
price included the necessary labor to put the gravel in the . work, and in
addition, 10 per cent, profit allowance. We find ditches dug without
special agreement and paid for as excavation lining and embankment; and,
generally, anything which in the progress of the work seemed necessary
when prices were found in the bidding sheet, or could be warped to fit it,
was directed and done without the formality of any special agreement, or
even of direction in writing.
The right to increase quantities has not been construed to authorize a
reasonable increase only, but an increase to such an extent as to exceed
the amount of work really contemplated by the contract. The use of nom-
inal quantities with their high prices has facilitated this to such an extent
as to become an abuse. Quantities in the bidding sheet so small as to
deserve no attention in letting the contract, and as to admit of high prices
without affecting the amount of the contractor’s bid, have been stretched so
that they become leading quantities in the final estimates. Even when
agreements called for by the act of 1895 have been made and approved by
the Canal Board, payments thereunder at prices contained in the bidding
sheets do not appear as “ extra work,” but as work done under the main
contract. In this manner, culverts, waste-weirs, bridge abutments and
other structures have been repaired and rebuilt, and the cost returned
under the contract proper, although the work was done by special subse-
quent agreement.
Cost of Irregular Work Unknown.
For these reasons, the amount which the foregoing table shows to have
been paid under special agreements is only a small part of that actually so
paid. The remainder is returned in the certificates as if paid under the
contract itself. The amount separated and returned as “ extra work ” Is
only that which was naid for at a price not contained in the bidding
sheet.
The State officers have failed to realize that the contracts should he
construed as confined to quantities contained in the bidding sheets,
with reasonable variations; but have treated the contracts as if they
fixed prices only and had nothing to do with the amount of work
actually done, leaving that to be developed as the improvement pro-
gressed. This conception of the relation of the contractor to the State
is not in accordance with the constitutional provisions governing canal52	Millions of tlie People’s Dollars Lost.
work. The spirit of the Constitution can be obeyed only by making!
a contract which specifies the amount of work to be done within reason-
able limits as well as prices.
Agreements fixing prices for incidental, unspecified work, or work re-
quired by changes of plans, can be made with one party only, and are not
the result of competition. The prices obtained upon them, as a rule, are
higher than prices obtained by competitive bidding.
Variable Market Prices.
A great majority of the contracts under consideration contain special
agreements for such work, and many of them contain large numbers of
such agreements. The average price of Portland cement concrete on all
the contracts let oh the Eastern Division of the Erie canal was $5.88 per
cubic yard; on the Champlain canal, $7.25; on the Middle Division of the
Erie canal, $5.25; on the Oswego canal, $5.60, and on the Western Division
of the Erie canal, $5.58. A large number of extra agreements for Portland
cement concrete were made, and the prices thereon varied from $5.75 per
cubic yard on contract No. 5, on the Western Division, which was the
lowest, to $8.25 on contract No. 4, on the Eastern Division, which was the
highest. By far the greatest number of such agreements were made at $6
per cubic yard.
The average price of spruce lumber and plank in place on the Eastern
Division of the Erie canal was $25 a thousand feet board measure; on the
Middle Division of the Erie canal, $18.88, and on the Middle Division,
Oswego canal, $18. Three extra work contracts, involving the use of
spruce, were made. The prices were $18, $20 and $21, respectively.
The lowest price on dry excavation of rock on the canal was forty cents
per cubic yard and the highest price $3 per cubic yard. Extra agreements
for rock excavation were made on contracts Nos. 5, 8 and 30, on the
Eastern Division, No. 16 on the Middle Division and No. 9 on the Western
Division. The prices, under such special agreements, were $1 on contract
No. 9 on the Western Division, $1.50 on contract No. 5, $1.60 on contract
No. 30 and $2 on contract No. 8, Eastern Division. On contract No. 16, on
the Middle Division, the price was fixed for dry excavation of rock in
trench at $3 per cubic yard, notwithstanding that, according to the bid,
the contractors agree to excavate rock at $1.25.
The average price for excavation of masonry on the Eastern Division of
the Erie canal is $1.02 per cubic yard; on the Champlain, $1.08; on the
Middle Division of the Erie, ninety-seven cents; on the Oswego, ninety--
seven cents, and on the Western Division of the Erie, $1.14. Four extra
agreements were made fixing the price for excavation of masonry; three
of them at $1 a cubic yard, and one at $1.50 a cubic yard, and one at $2
a cubic yard.
The average price of puddling on the Eastern Division of the Erie
canal was thirty cents per cubic yard; on the Champlain canal, fifty-eight
cents; on the Middle Division of the Erie canal, thirty-two cents; on the
Oswego, fourteen cents, and on the Western Division of the Erie canal,
thirty-nine and seven-tenths cents. Three contracts for puddling were
made upon the Eastern Division at thirty-five, forty and sixty cents, re-
spectively, and one upon the Middle Division, at thirty cents.
The extra agreement for puddling on contract No. 6, on the Eastern
Division, in which the price was fixed at sixty cents, was made after the
resident engineer had protested against that price in a written communi-
cation to the State Engineer, saying:Millions of the People’s Dollars Lost.
53
“ Messrs. Lauer & Hagaman wanted sixty cents per cubic yard for
puddling; they do not pretend that it is worth sixty cents, but ask it to
help them out, saying that they have a very unprofitable contract. On
contract No. 3 they agreed to do extra puddling for thirty-five cents per
cubic yard.”
*	$	*	❖	*	H*	*	*	*	*	*
“ Extra work ” was also to a great extent done upon force account, al-
lowing the contractor the actual amount of money that he paid for labor,
teams, etc., and adding to this 10 per cent, for profit. This
force account, however, wvas not always fixed _ at the prices
paid by the contractor, for the use of teams, steam pumps and other
machinery was paid for at agreed prices. In most of the cases the agree-
ment was to pay to the contractors fifteen cents an hour for labor. This,
in some cases — notably for a portion of the work done upon contract No.
4, Middle Division — was in excess of the price actually paid by the con-
tractors. The contractors upon that contract paid for the greater part of
the labor during the year 1897, twelve and one-half cents per hour, and
were allowed fifteen cents. The contractor’s representative claimed, in
testifying, that that was the actual cost of labor, because it included lodg-
ing, the use of shovels, etc., which he afforded his workmen; but upon fur-
ther examination it apeared that the laborers paid the contractors for
their lodging. The money paid on force account can not in the nature of
things be expended with proper economy. The laborers are employed
and paid by the contractor, and, as the contractor has charge of them, and
as his allowance for profits increases as the amount paid for labor is in-
creased, there exists no motive on his part for economical work.
In certain cases contractors have proceeded with their work without
•any special directions, and thereafter have made claims for allowances,
on the ground that work not required by the contract had been done.
The Superintendent of Public Works and State Engineer have constituted
themselves judges upon the contractor’s claim, and practically made
awards against the State. -
Such claims, in some cases, were made for work which seems to be in-
cluded within the specifications for bailing and draining. Such specifica-
tion is as follows:
“Bailing and draining — Under this specification will be included the
removal of ice, snow'and water and furnishing the necessary materials
and labor for constructing suitable coffer-dams approved by the engineer,
and also the furnishing and operating of the necessary machinery and
appliances for thoroughly draining the work during its construction, and
the removal of the same when directed. The contract price for this item
will include every item of cost of work above mentioned, not only for
the prism of the canal, but for the foundations of any and all structures
requiring building and rebuilding, cleaning culverts, waste weirs and
aqueducts, in ditches and drains, or for any other structui*e or cause that
may arise during the progress of the work.” *	*	*
On contract No. 5, Middle Division, under this specification the contract-
ors bid $1,000 in a lump sum for bailing and draining. During the month
of March, 1897, there were severe storms, and the water in the brooks car-
ried under the canal by composite culverts Nos. 61 and 62, rose so high
that it forced the covering off the culverts and flooded the work. The con-
tractors made a claim for the cost of the bailing and draining caused by
this flood and they were allowed the sum of $1,105 on force account.
Thereafter, they made a claim for damages caused by the flood and the54
Millions of the People’s Dollars lost.
claim was allowed to the extent of $2,830. The explanation of this item
made by the State Engineer, for the purpose of explaining the allowance
of this amount and obtaining the approval of the Canal Board, was, in
part, as follows:
“ Repairing damages caused by breaks in culverts Nos. 61 and 62. Early
in March these culverts burst their coverings and flooded the prism to a
depth of between three and four feet, stopping all work. Runaways
erected by the contractor for removing the excavation were carried oft.
The drainage ditches filled. Temporary coffer-dams were carried away or
broken and the prism excavation delayed so that it was impossible to
finish this season.”
We have been unable to learn how the extent of this damage could
be represented by a force account, giving the details of the number of
hours of superintendent, foreman, laborers, engineers, timekeepers, watch-
men, pumps, etc., made use of. Notwithstanding the statement in the
explanation that the break in the culverts prevented the work being fin-
ished that season a greater number of men were employed after the break
than before, and the work was not actually completed by the 1st of May,
1898. At the same time, claims for hauling material from one part of the
work to the other, amounting to $342, and for moving a pile driver,
amounting to $96, were allowed.
On other contracts we find that claims for extra work have been allowed
after the work has been done-. As an instance, on contract No. 1, Middle
Division, there was allowed the contractors, T. J. Dwyer & Co., the sum of
$1,402.50 for rehauling 1,450 yards of broken stone and sand from the
westerly part of the contract to the easterly part. The contractors’ claim
was that the material was hauled to one part of the contract for the pur-
pose of being used in the work there, and that the State required him to
stop work at that point and proceed at another. In our opinion, the whole
system of making allowances for work already done without being pre-
ceded by the agreement required by the act of 1895, is wrong, and that
neither the State Engineer nor the Superintendent of Public Works has
been given judicial power to determine the validity of such claims. They
should be left to the tribunal created for such purpose.
On contract No. 1, Western Division, the excavation of the material was
to be made dry. Before opening navigation, an agreement was made
permitting the contractor the keep the canal drained and continue the
work to June 11, on condition that the contractor would tow such boats as
were necessary to Black Rock. On or before June 11, it was found that
additional work, caused by falling in of walls and bridge abutments, must
be done before opening the canal for navigation, and that the contractors’
general work was delayed by difficulties in obtaining spoils banks. The
canal was not opened for navigation on June 11, and the contractor was
thereafter
Allowed for use of pumps, coal and labor in working the same.. $12,911 50
For damming Genesee street sewer .................. 393 59
For damming sewer at Georgia street................ 132 30
And for tugs used in towing boats................ 7,285 00
Total........................................................$20,722 3955
Millions of the People’s Dollars Lost.
The evidence showed that the contractor was proceeding with general
contract work as well as extra work, in the canal so drained at the ex-
pense of the State.
On contract No. 4, Middle Division, the contractors’ bid aggregated
$154,471. Up to May 1, 1898, the work had cost the State $581,878.95.
The greatest part of this was really extra or additional work.
Over Jordan Level.
This contract section is part of the Jordan level. The difficulties in canal
construction at that place are historical and well known. They were en-
countered when the canal was constructed, during its enlargement, and
whenever special work has been done. The soil through which the canal
runs contains deposits of marl and clay, which, when wet, have not con-
sistency enough to sustain embankment or any artificial structure. The
surrounding country is swampy and above the level of the canal which re-
ceives the drainage of Bitter creek and much surface water.
The engineers who had charge of preparing plans and specifications for
the work on this level knew of these facts; and the difficulties known to
exist, furnished one of the reasons why the Jordan level was put under
contract as early as possible. No provision, however, was made for pro-
tecting the canal by proper draining before beginning the work; no special
study was given to the situation and no engineering skill was brought to
bear upon the subject. The quantity sheet was made up, general specifica-
tions used, ordinary plans prepared, and the contract was let as if the con-
ditions were most favorable for canal building. The contractors bid $3,000
for bailing and draining. They began the work by damming Bitter creek
and the surface water which had been running into the canal, flooding the
adjoining country and saturating the banks so that the water began forcing
its way through the bottom of the canal and through the banks into the
prism. They then began to excavate and load the material on the
saturated banks. The result was that the bank began to settle and
slide forward, forcing the soil out and up into the prism. This was re-
excavatad several times until the measurement of the quantity was com-
pletely lost. The contractors tried to get rid of the water by cleaning out
and deepening lateral ditches, but failed. Meanwhile, different expedients
were tried to protect the prism. Sheet piling was driven, when this was •
found insufficient, eight foot piles, and when these failed, bearing piles
were driven. This did not avail. The sliding continued carrying down at
one point alone about 1,000 feet of the new slope wall. Meanwhile the
State took up the work in aid of the contractors by constructing at its
own expense, but through the contractors, a permanent ditch to divert
the water in another direction. The material which had been heaped on
the bank was removed further back and, as a last resort, the elaborate
method of building a timber frame work for that part of the canal was
devised and applied. Piles were driven and the bottom of the canal grid-
ironed with struts and braces as before described.
The work became so demoralized that within three months after it
began, the contract was practically lost sight of and the work was carried
on by special agreements and by allowances of claims for extras.
The following rough estimate of the work which caused the additional
expense was made by the assistant engineer when on the witness stand:56
Millions of the People’s Dollars Lost*
Side ditches......................................................$45,000 00
Piling to protect bank............................................ 100,000 00
Strut work................................................... 116,000 00
White Bottom brook culvert........................................ 6,000 00
Extra slope wall .;.............................................. 80,000 00
Extra vertical wall................................................ 6,000 00
In addition to Ibis the cost on May 1, overran the contract by
Over...........................................................$70,000 00
Of this increased cost $113,707 was paid upon force account, and much
wras paid by way of allowance for extras. In work carried on like this,
the State officials are,, to a great extent, at the mercy of the contractors.
Claims for allowances begain in April, 1897. These went back to the
month of December, 1896. They included for that month alone small
items so numerous as to fill twenty sheets of paper and aggregating $753.18.
The claims for January, 1897, amounted to $5,665.10. The amount of
the claims for February was $8,029.51. The amount of the claims
presented for March was $8,010.88, and for the month of April
$15,236.80. The total amount of the claims so presented in April, 1897,
was $37,694.84. The amount allowed, adding 10 per cent, contractor’s
profit, was $32,972.23. None of these claims for extra work was ever
definitely presented until April, 1897. They were presented in the shape
of many hundred different items, all .upon force account. They included
claims for cleaning out and digging ditches, for excavating earth which-
had theretofore been allowed upon measurements which were claimed to
be defective, for re-excavation from prism, for moving pile drivers, for
erecting and repairing dams, for taking out and replacing old timber, for
cleaning the State ditch, for taking out old piling, for taking out timbers
and resetting the same where the bank had caved in, and for many other
things.
It has been impracticable for us to pass separately upon the justice
of these claims, as their number is so great. The State officfals had
no certain way of determining whether the amount of the claims was
accurate or not; much of the work was not done pursuant to directions
by the engineers and none of it under written directions. The State
Engineer and Superintendent of Public Works assumed to> pass upon
the question of the justice of these claims, to determine the amount,
to adjudicate the liability of the State for the same, and to pay them.
Other allowances were made on all sorts of claims as the work pro-
ceeded, and at last an enlargement was effected under which a great part
of the work was put in charge of a representative of the Department of
Public Works. This work continued, nominally under the contract, with
payments of 10 per cent.- for contractors’ profits, but actually under the
control of the Superintendent of Public Works.
Total Cost Practically Wasted.
We are of the opinion that if proper engineering skill had been
brought to bear on the subject, and special plans provided for protect-
ing the canal while the work proceeded, a great part of the cost on this
contract could have been saved. It also seems that when conditions are
such that the work is not being carried on under the contract, but is
practically all done under special agreements, the State officials are justi-
fied in terminating the contract.Millions of the People’s Dollars Lost.
57
Illegal Use of Canal Improvement Fund.
According to the testimony of the State Engineer, the preliminary esti-
mates'at first contained provisions for rebuilding and renewing structures,
such as bridge abutments, waste-weirs and culverts; many of these were
cut out by him on the ground that they were not apparently an essential
part of the improvement as prescribed by law. A large number of these
structures have been repaired or rebuilt under agreements for extra work,
or under increased quantities appearing in the quantity sheet.
But in addition to this, large sums ©f money have been spent for pur-
poses which have no relation, to the improvement.
Local State Favoritism.
Contract No. 3, Western Division, -governs the improvement of a
section of the Erie canal from the head of Lockport locks to station 328,
near McDonald’s culvert, a distance of 5.83 miles. West of the
locks at Lockport, for a distance of upward of 13,000 feet, the canal passes
through a solid rock cut, where it had a depth of about nine feet before
the improvement. On the 25th day of January, 1826, a lease was made
between the canal commissioners, of the first part, and Richard Kennedy,
of the town of Lockport, and Julius H. Hatch, of the city of New York, of
the second part, leasing unto the parties of the second part “ all the surplus
waters which, without injury to the navigation or security of the canal,
may be spared from the canal at the head of the locks in the village of
Lockport, to be taken and drawn, from the canal at such place and in
such manner, and to be discharged into the lower level at such place and
in such manner as the said canal commissioners shall from time to time
deem most advisable for the security of the canal and for the convenience
of the navigation thereof.”
A yearly rental of $200 wras reserved for the use of this water, and the
canal eommisioners reserved to themselves and the Legislature “the
right to limit and control, or wholly resume, said waters, and all the
rights granted by the said lease, whenever, in the opinion of the said
canal commissioners, or of the Legislature, the safety of the canals or its
appendages, or the necessary supply of water for the navigation of the
canal shall render such limitation, control or resumption necessary.”
At the village of Lockport there were situated five combined locks,
through which the level of the canal was lowered about fifty-eight feet.
From Lake Erie east to Montezuma marsh, a distance of about 150 miles,
the canal is fed by water drawn from Lake Erie and Tonawanda creek.
The amount of water used in lockage at Lockport is not sufficient for the
purpose of feeding the canal below, and it is necessary to conduct the
water from above the locks by sluiceways to the level below. This water
can be utilized for generating power on its passage from the upper to the
lowTer levels, without injury to the State, and the lease was intended to
give the parties of the second part therein mentioned the right to such
use of the water. The amount of water carried around the locks and
used in passing, small at first, has gradually been increasing, until before
this improvement began there was delivered at the head of the locks at
Lockport about 49,000 cubic feet a minute, and the velocity of the flow
of water through the rock cut had become so great as to seriously impede
navigation. About 30,000 or 31,000 cubic feet per minute only were re-
quired for feeding the canal below Lockport, and the remainder, about
18,000 cubic feet per minute, flowed from the canal below the locks into a
stream known as the Eighteen-Mile creek. The water so drawn from the58
Millions of the People’s Dollars Lost*
canal into Eighteen-Mile creek is used for milling purposes, and a large
industry has been here developed which depends for its water solely upon
the canal.
In 1859 the rights granted by the State in the lease above mentioned
were vested in a corporation known as the Lockport Hydraulic Power
Company. This company leases the right to use the water flowing around
the locks to mills, and to the city of Lockport, and has derived from such
source at times an income of $20,000 per year. The water is carried from
the upper to the lower level by a mill race on the south side of the canal
and by a tunnel built through the rocks on the north side. It is delivered
into the prism of the canal below the rocks in sufficient quantity to feed
the canal to the Montezuma level and to supply the numerous mills on
Eighteen-Mile creek.
The water for. the Eighteen-Mile qreek was originally taken from the
south side of the canal and carried under the canal into the creek; but the
draft to the side of the canal became so great that this method was aban-
doned and an opening twelve feet square was made in the bottom of the
canal. The water passes through this opening, is raised to the level of the
canal in a fore-bay, and flows down the Eighteen-Mile creek, being con-
trolled by a gate at the fore-bay The mill owners on Eighteen-Mile creek
pay the State nothing for the use of the water, and have no vested right
.to 'it.
Aldridge Continues the Wrong and Further Impedes
Navigation.
When the State Engineer began to make plans for the improvement of
this portion of the canal he employed an expert on the subject of water
supply to make computations and draw plans for an improvement which
would supply the additional amount of water required by the canal as
enlarged under this improvement, and maintain the existing condition of
things. The additional amount of water required to feed the enlarged
prism was 6,000 cubic feet per minute; and three times as much water was
diverted down Eighteen-Mile creek as was necessary to supply this in-
creased demand. It wTas the plain duty of the Superintendent of Public
Works to so control the flow of this water as to supply the increased
needs of the canal. Nevertheless, plans were made which provided for
increasing the depth of the canal through the rock cut above Lockport so
as to permit the continued diversion of water down Eighteen-Mile creek,
and at the same time supply the additional demands of the enlarged prism
and check the velocity of the water through the rock cut above. The
amount of rock excavation required to attain this increased depth was
upward of 311,000 cubic yards and was included within contract No. 3
above mentioned. The price obtained upon rock excavation on this con-
tract was very low for the character of the rock excavated, being eighty-
three and one-half cents per cubic yard; and the cost for rock excavation
alone at the contract price, of so deepening the prism of the canal to thir-
teen feet, would be about $92,000. It, therefore, would cost the State, at
the price for rock on contract No. 3, $92,000 to maintain the flow down
Eighteen-Mile creek. On the 22d day of March last, on account of default
of the contractors, the contract was terminated by the Superintendent of
Public Works and the Oanal Board. If the improvement is completed,
the contract will have to be readvertised and relet, and the price for rock
excavation will probably be much greater. .Completing the work accord-
ing to this plan will involve the StateJn an expense estimated to exceed59
Millions of the People’s Dollars Lost.
$125,000, for the benefit of the mill owners.at and near Lockport. The
canal has already been deepened according to this plan for about 2,200 feet
through the rock cut, at a cost of from $20,000 to $25,000. There is about
4,000 horse power obtained and utilized by the Lockport Hydraulic Power
Company from the water flowing around the lock to the canal below; for
this ttie State receives $200 per annum. About 4,000 horse power in addi-j
tion is produced by the water diverted down the Eighteen-Mile creek
during its fall of 175 feet in Lockport. For this the State gets nothingJ
At the rate of $5 for undeveloped horse powTer, the value of the use of the
water is about $40,000 per annum.	.
We do not feel called upon to report as to the propriety of spending
a large amount of money to maintain the milling interests in and near
the eity of Lockport, for which the State gets little or no return; but we
are of the opinion that the money appropriateed for this specific canal
improvement should not be expended for that purpose, and that such
expenditure is improper.
On contract No. 2, on the Middle Division, there was a wide water on
the canal containing three acres, more or less. The Superintendent of
Public Works devised the plan of filling up this space and utilizing it for
a State shop. Accordingly, a vertical wall was built upon piles in front of
it, supported from the towpath bank with strut work laid across the bottom
of the canal, and the open space filled with excavated material. Plans for
this work were prepared and approved by the Canal Board, and an agree-
ment made with the contractor that he should be paid at contract prices
for the work done, except for bearing piles for which a price was fixed of
eighteen cents per lineal foot for “bearing piles delivered,” and twelve
cents per lineal foot for “bearing piles driven.” The cost of reclaiming
this site for a State shop was $23,810.
On the same contract, No. 2, a ditch, called the Solvay ditch, by the wit-
nesses, was dug for the purpose of permanently protecting the canal
against the drainage of water therein. The cost of this ditch was $7,300.
Neither of these improvements had any relation to the plan of im-
proving the canal prescribed by chapter 79 of the Laws of 1895.
From time to time the Superintendent of Public Works has required that
the towpath be excavated to subgrade and reline, and has enforced his re-
quirements by threatening to withhold his approval of the work as a
whole, unless done. The amount of money expended for such purposes is
uncertain, but it reaches many thousands of dollars and is properly work
of ordinary repairs to the canal. During the progress of the work the
superintendent was active in requiring that the canal be put in repair
generally, and in so doing has required a large amount of additional work
to be performed which was not strictly a part of the improvement, and
which has added largely to the amount of money expended. It is uncer-
tain how much of the money used in carrying out this improvement
was devoted to work which should have been done from year to year
as ordinary repairs.
State Material Given Away.
The specifications provide that all material which is suitable for any
portions of the new work must be used therein, and the contractor will be
charged therefor at the prices fixed in the specifications.
Some of the bidding sheets contained estimates of the quantity of ma-
terials to be furnished by the State and some did not. The following is
the amount of such materials owned by the State and charged against the60
Millions of the People’s Dollars Lost.
contractors at the specified prices, as nearly as can be ascertained from the
engineer’s certificates:
Eastern Division.................................................. $17,429 54
Middle Division . ................................................ 48,71113
Western Division.................................................. 22,798 19
Total...................................................... $88,938 86
The greater part of the material so charged back is slope and vertical
wall stone. There has been, as appears, a saving to the State by using the
old stone; but it has been at the expense of the quality of the work, and
resulted in a saving to the contractors probably as great as to the State.
At the prices which the contractors in many cases receive for slope 'wall,
they get upward of $1.50 per cubic yard for the stone after deducting all
cost of building the wall. The stone in the old wall is mostly cobble or
field stone, while the specifications call for quarry stone. When the old
stone is used, the wall is not as good; the State saves by using it, the
specified price of eighty cents per yard, and the contractor saves upward
of seventy cents. It seems that if contractors are furnished stone by the
State, equitable considerations would require that they be paid a fair price
for building the wall only, and not a large profit on the stone furnished
by the State also. This could be attained in most cases with greater ac-
curacy by charging for the stone at a price varying with the price for the
completed wall, and not a fixed unvarying price, the same on all contracts.
On the Eastern Division, directions were given to omit from the monthly
estimates returns of the material furnished by the State. Some of the
contractors made the extravagant claim that they should not pay for such
material, because the amount was not estimated in the quantity sheet.
The State officials have asserted their intention of including this material
in the final estimates, and at that time deducting it from the payments to
the contractors. Reference to some of the final estimates has shown that
this has been done; but we are satisfied that the omission from the monthly
estimates was unjustifiable. The contractors have no right by law to re-
ceive more than 90 per centum of the total amount earned until final ad-
justment of the contract, but if material furnished by the State is omitted
from the monthly estimates, they do actually receive more.
We find a disposition to indirectly make allowances in cases where it is
thought that contractors are suffering hardship, by not charging them with
material furnished by the State. On contract No. 7, Eastern Division,
vertical and slope wall stone belonging to the State, of the value of $1,736,
as determined by the specifications, was used by the contractor. This
amount should have been charged to him, but instead, it was allowed him
to reimburse him for expense and damage caused by flooding the work
from an old feeder used as a sewer in the city of Ilion. There is nothing
in the contract, specifications or power of the State Engineer justify-
ing this allowance; the amount was arbitrarily fixed and the man-
ner of making the allowance irregular. Another such case occurred on
contract No. 2, Middle Division. On that division, also, concrete was
made with cobblestone instead of broken stone, and the contractors on
several contracts were permitted to appropriate the stone for that pur-
pose, without being required to pay for it.
On contract No. 1, 'Western Division, a large amount, probably about
300,000 cubic yards, of marketable broken stone, was produced in exca-61
Millions of the People’s Dollars Lost.
vating. About 6,500 yards of this was used by the contractor for crib
filling and charged back to him at fifty cents per cubic yard. The rest
of the stone has been given to the contractors by the State officials. A
small part of it was used by the contractor in the vertical walls on the
contract; some of it was used by the contractor on a government contract
at Dunkirk; some on a contract with the New York Central Railroad in
Buffalo; some of it was sold to the Buffalo Dredging Company for use on
contract No. 2, at eighty-five and ninety cents per cubic yard, delivered
crushed, some of it still remains at the spoils banks.
When the rock was excavated, about half of it was placed with exca-
vated earth upon spoils banks furnished by the State, and about half
was kept separate from the earth and placed on spoils banks furnished
by the contractor.
The contractor was given permission by letter from the Superintendent
of Public Works, dated September 14, 1897, to appropriate the stone from
the spoils banks furnished by the State.
Upon this contract spoils banks were located by the State authorities*
and a written agreement based on such location was. made between the
State Engineer and contractor governing the payment for overhaul as
embankment. Certain difficulties were encountered in attempting to use
the spoils banks so located, and an arrangement was made with the State
Engineer that the contractor might separate the stone, place it upon its.
own spoils bank, and take the stone as compensation for furnishing the
spoils bank. An offer to purchase the stone was made by a third party
to the State Engineer, was disregarded and the stone given to> the
contractor, the Donnelly Contracting Company.
This was attempted to be justified under the following clause of the
. specifications:
“ All the surplus earth and rock not required for any use whatever by
the State in any portion of its work, which might otherwise have to be
deposited in spoils banks, may be used by the contractor for any pur-
pose whatsoever, when the State Engineer so directs, and in.such cases
the prices named for the excavation of the material will cover all the cost
of its removal.”
Even if this clause could justify giving away this great amount of mar-
ketable broken stone, when the State was paying $1.35 per cubic yard on
the adjoining contract for loose stone filling in cribs, the requirements of
this clause were not complied with. The price named for excavation alone
did not cover the cost of the removal of the stone, for the contractor was
also paid for placing a part of it on the spoils bank.
We are of the opinion that the gift of this stone was unwarranted
by the contract or specifications.
Damage Claims Made Effectual by Aldridge.
According to the terms of the contracts, the time for their performance
expired on or before May 1, 1898. As a general thing, those made in 1896.
were to be completed by May 1, 1897, and those made in 1897, by May 1,
1S98. Of the thirty-one made in 1896, about twelve only were completed
at or near the stipulated time. The time for the completion of the re-
mainder has been extended by the Superintendent of Public Works. Such-
extensions of time entail upon the State large additional expense for in-
spectors and engineers necessary to supervise and lay out and measure up
the work as it progressed. In many cases the requirements of additional
or unspecified'work has been so great that extensions of time were ren-
dered necessary. In other cases there were no reasons why the work62
Millions of the People’s Dollars Lost.
should not have been completed, except considerations of economy or con-
venience to the contractors. The stipulations limiting the time for com-
pletion of the work having been practically a dead letter, and extensions of
time granted whenever asked for, except upon contract No. 3, Western
Division., The cost in additional engineering is a large but indefinite
quantity. For illustration, on contract No. 2, Middle Division, it is roughly
estimated by the assistant engineer in charge at $15,000.
Few of the contracts let in 1897 are completed. It is probable that
serious claims for damages for interruption of the work may be made
by the contractors. We have no intention of expressing an opinion upon
the validity of such claims; but it would'appear that a defense might have
been found in the fact that the contractors are all in default for want of
performance within the stipulated time. Nevertheless, the Superin-
tendent of Public Works has seen fit to grant to all contractors who
liave applied therefor, written agreements extending the time for such
completion, some of them granted after the work was ordered stopped.
We believe it be our duty, in concluding this branch of our report,
to express our opinion upon the amount of money improperly ex-
pended in the manner pointed out; and, after careful consideration,
we have fixed the amount at not less than $1,000,000.
The Proportion of Work Included in Contracts. .
The proportion of the improvement provided for by the act of 1895, in-
cluded in the contracts let and that not included therein, is shown, so far
as mileage is concerned, in what has heretofore been stated. The pro-
portion of the expense included and of that not included in the contracts
we ascertain by comparing the total amount expended upon the work,
adding thereto the amount necessary to complete the work on contracts let
but not completed, with the total amount estimated by us at the cost of
•doing the work upon contracts which have not been let, as follows:
Expended upon contracts (approximate) ....................    $7,867,924	36
To be expended to complete contracts______:..................  4,731,600	00
Total............................................       $12,599,524	36
Amount estimated for work not let............................  8,900,000	00
Grand total (done and to be done).....................  $21,499,524	36
The cost of the work included in the contracts is, therefore, 58.5 per
•cent, of the estimated cost of the entire work, and that of the work not let
is 41.5 per cent.
We deem it proper, however, to state here, that the proportion which
the cost of the work done bears to that of the entire work is much smaller,
as shown by comparison of the money expended with the entire cost, as
follows:
Money expended............................................... $7,867,924 36
Cost of the entire work (estimated).......................... 21,499,524 36
Proportion of cost of work done to total cost, 36.6 per cent.
$ * * $ * • * $ $ $ *
$14,000,000 More Wanted.
It is plain from what has been stated in this report, that the amount
provided by chapter 79 of the Laws of 1895, will be insufficient to complete
the enlargement and improvement of the canal.63
Millions of the People’s Dollars Lost.
The amount that will be required depends upon the care and ability
of those having charge of the preparation and execution of the work,,
the letting of contracts and the execution of the work, the nature of
the specifications provided, the extent of the work itself, the care with
which it is planned, and the quantity sheets compiled. It has been
impracticable for Mr. Cooley and Mr. North to make such surveys as
would enable them with engineering accuracy to determine the character
and extent of the work, the conditions to be met and the plans necessary.
Assuming, however, that the work progresses under the same conditions
that have so far obtained the data at hand are sufficient to satisfy
not only Mr. Cooley and Mr. North, but the commissioners, that the com-
pletion of the improvement will cost not to exceed $13,651,600. This
does not include engineering, to cover which 10 per cent, should be
added; nor does it cover advertising or inspection by the Department
of Public Works.
* * * - * * * & * * * *
When the people voted to supply $9,000,000 for the improvement of the
canals they were led to believe that amount sufficient for the work.
The entire sum has been expended and the improvement is not one-
half done. They have demanded that they be informed why the money
has not sufficed for the improvement, and how their funds have been
expended. We have given such information as to expenditures as a
diligent investigation has brought forth. They have also demanded that
they be told finally what money will be needed to complete the work they
have sanctioned, and we have replied with all the definiteness possible.
The result is surprising to those unacquainted with the facts. The cost
of improving the canals will be about two and one-half times what the
people wTere told would be necessary, while the facts we have ascertained
and reported account for the improper expenditure of at least a million
dollars, exclusive of moneys paid out for ordinary and extraordinary re-
pairs, which amounted to not less than $1,500,000. It is proper, therefore*
that we state such causes as have contributed to produce this great
excess, in addition to those we have presented, the latter relating only to
the expenditure of money. This necessitates a preliminary review of the
inception and progress of the improvement, including estimates of cost.
The People Deceived.
Before the convening of the Constitutional Convention in 1804, it was the
general impression, founded on no definite estimate, that to deepen the
canals and lengthen the locks would cost from seven to nine million dol-
lars. That convention asked for an estimate and the State Engineer and
Surveyor furnished one; the figures given by him were $11,573,000. This
estimate was very defective. *	*	* It was merely the best guess
which the State Engineer could give, based upon such facts as he had at
hand. After the Constitutional amendment had been adopted by the peo-
ple, the Legislature proceded to put the amendments to the Constitution
into force and embodied in the act passed for that purpose an amount
which it was understood generally would cover the expense, $9,000,000;
this amount seems to have been arrived at upon consultation between the
State Engineer and the advocates of the canal improvement, and does not
seem to have been based upon any definite estimate whatever, but
upon the general idea that the advantages of the proposed improvement
could be obtained with the sum named, by leaving out a great deal of
Work that was included in the engineers’ first general estimate. We do*
not understand that this sum included the heavy expense of pneumatic64	Millions of the People’s Dollars Lost.
lifts at Lockport and Cohoes, nor even the improvement of the locks at
those points, and it is certain that it did not include and care for the
needed changes at Newark and Little Falls. It was, in fact, an amount
fixed without sufficient data and upon the theory that there would he no
unusual difficulties, and that the best plan was to do the work as cheaply
as possible. This idea is entirely erroneous, and when applied to works
of this character, always results in misleading. The estimate of the State
Engineer furnished the Constitutional Convention did not include vertical
•or slope walls and necessarily did not include many items of expense
which the actual condition of the canals made necessary.
At the commencement of the work under the act of 1895, the State
Engineer’s Department made estimates for the work based on their pre-
liminary surveys, which resulted in figures that, in 1896, showed plainly
that the cost would be at least $13,500,000, without any provision for
engineering expenses, advertising or inspection. These estimates the de-
partment at once proceeded *to cut down, with the idea that they might
bring the expense within $9,000,000. This should not have been done. Cut-
ting estimates in this way can never result in the saving of money, if the
estimates are based upon a reasonable knowledge of the conditions, for
such estimates wTill show the work necessary to be done; and cutting out
any part of the work simply results in reducing the apparent cost, but not
the actual cost, and this must have been known to the State Engineer. As
the work progressed, it became evident that all prior estimates were too
small, and another one was prepared. This.amounted to about $16,000,000.
In considering the question of the entire improvement, as represented by
■money actually expended and that which we estimate as the cost of com-
pletion, it must be kept in view that the large excess over what was
generally understood would be sufficient, is due, in addition to waste-
ful expenditure, to the actual cost made necessary by the conditions, and,
as included in our estimate, proper expenditure for the restoration of the
towpath and of structures which properly should come under the head of
ordinary repairs.
* * * v * * * *
Damage Claims Additional.
We further call attention to the fact that the Superintendent of Public
Works continued letting contracts after it was apparent that the money
remaining available was totally insufficient to complete them. This has
left long stretches of the canal in an incomplete condition and has involved
the State in serious; questions of liability to contractors.
♦	*-.*■*	*	*	*	*	*	sjs	Hs
We return herewith a transcript of all the evidence taken by us, to-
gether with the exhibits referred to therein.
All of which is respectfully submitted.
Dated, Albany, July 30, 1898.
GEORGE CLINTON,
Chairman.
FRANKLIN EDSON,
Secretary.
SMITH M. WEED,
DARWIN R. JAMES,
FRANK BRAINARD,
A. FOSTER HIGGINS,
WILLIAM McEOHRON,
Commissioners.