558 



NEW YORK. 



consent of the Senate, a commission of four 

 members to investigate the alleged frauds in 

 making contracts, and in the general manage- 

 ment of the canals ; and an act was passed 

 empowering the Commissioners so appointed 

 to compel the attendance of witnesses. The 

 Commissioners appointed were John Bigelow, 

 of New York ; Daniel Magone, Jr., of Ogdens- 

 burg; Alexander E. Orr, of Brooklyn; and 

 John D. Van Buren, Jr., of New York. They 

 met at Albany, and organized for their work 

 on April 12th. The next five or six weeks, 

 before the water was let into the canals, they 

 spent in making a personal inspection of the 

 work done under various contracts. Their first 

 report to the Governor was made on August 

 2d. This was devoted largely to work done 

 by H. D. Denison on the Erie Canal between 

 Port Schuyler and the lower Mohawk Aque- 

 duct. It showed fraudulent estimates, false 

 measurements, and charges for excavations 

 and embankments that were never made ; the 

 amount allowed for work never done being 

 $150,337.02. It was also shown that while 

 the law expressly provided that only five per 

 cent, should be expended for vertical walls, 

 nearly ninety-five per cent, of the cost was 

 incurred upon them, and that no slope-wall 

 had been laid. The total appropriation re- 

 quired for the entire work, according to care- 

 ful estimates, was a little under $83,000, which 

 was only one-sixth of the amount expended 

 on an uncompleted and vastly inferior work. 

 The Commissioners found that no surveys, 

 maps, or estimates, were ever made before this 

 contract was let ; and that, while the official 

 minutes of the Canal Board indicate that 

 "maps, plans, and estimates," had been sub- 

 mitted to the -Canal Commissioners, and were 

 adopted subsequently by the Canal Board, as 

 a matter of fact the Candl Commissioners never 

 took any action upon the matter until the 

 Canal Board had authorized the letting of the 

 work. Denison, who was in reality the high- 

 est bidder, was made to appear the lowest. 

 He simply bid very low prices for three of 

 the major quantities, and enormously high 

 prices for two of the minor ones. After the 

 contract was signed, the conditions were com- 

 pletely changed. One material was substi- 

 tuted for another, and then charged as " extra 

 work" at its full value. From 1,500 cubic 

 yards the engineer's estimate the rock ex- 

 cavation increased to 54,021 cubic yards, and 

 the embankment from 1,100 to 73,460 yards, 

 and in either case Denison's price was from 

 fifty to seventy-five cents greater than the 

 average of all other bids. 



During the investigation of the case, Mr. 

 Denison refused to produce his books before 

 the Commissioners, and was committed to the 

 jail in Albany for contempt. He was released 

 on writ of habeas corpus by Justice Leonard 

 of the Supreme Court. An appeal was taken, 

 and in November a decision was rendered in 

 favor of the commission, declaring that it was 



lawfully created ; that it was vested with au- 

 thority to issue subpoenas, to enforce the at- 

 tendance of witnesses, and to compel the pro- 

 duction of books and papers ; and in case of 

 disobedience or refusal it was authorized to 

 proceed as if it were a court of record." The 

 order of the justice was reversed, and the 

 relator remanded to the custody of the Sheriff" 

 of Albany County. In the mean time suit had 

 been brought in the Supreme Court against 

 Denison, Belden & Co., for restitution of money 

 fraudulently obtained. An order of arrest and 

 attachment was issued on August 9th, and the 

 case was pending at the close of the year. 



The investigation of the commission con- 

 tinued during the summer and fall, and twelve 

 successive reports were submitted to the Gov- 

 ernor, the twelfth bearing date December 

 25th. These show a vast amount of fraud in 

 the making and executing contracts for re- 

 pairs on the canals. Among the results of 

 the investigation were the arrest and arraign- 

 ment at Buffalo on criminal indictment of ex- 

 Canal Commissioner Alexander Barkley, Ca- 

 nal Appraiser Thaddens C. Davis, and Messrs. 

 George D. Lord, Lewis J. Bennett, and Wil- 

 liam II. Bowman, for conspiracy to defraud 

 the people of the State of $36,855 in connec- 

 tion with a contract with John Hand for 

 dredging at Black Bock Harbor. George D. 

 Lord was accused of accepting a bribe for fa- 

 voring the claim of Mr. Hand, while a mem- 

 ber of the Legislature. The accused were 

 held for trial under bail for their appearance 

 at the proper time. Indictments were also 

 found, in Niagara County, against William 

 McRae, superintendent of section ten of the 

 Erie Canal, for malfeasance in office ; against 

 Charles Molyneux, his clerk, for forgery; 

 against P. H. Lumeen, foreman, and McRae, 

 for forgery ; and against Robert S. Patterson, 

 another foreman, for perjury. 



In the eighth report of the investigating 

 commission, it was shown that Francis S. 

 Thayer, Auditor of the Canal Department, 

 had taken advantage of the necessities of a 

 creditor of the State to purchase his claim of 

 $35,000 for $31,500 after obtaining from the 

 Attorney- General assurance that an opinion 

 would be given in favor of the validity of the 

 claim. In the twelfth report it was stated that 

 the Auditor had been in the habit of withhold- 

 ing his audit on claims, for no apparent pur- 

 pose but to purchase them ; and to purchase 

 them, too, before auditing them, with money 

 borrowed on the security of such claims, from 

 the Troy City National Bank, which, for the 

 more successful prosecution of this traffic, had 

 been made a depository of canal funds through 

 his influence and at his special instigation. 



It appeared from the testimony that from 

 December 7, 1874, to July 2, 1875, he had pur- 

 chased drafts and certificates against the State 

 to the number of fifty-eight, representing in 

 value $318,343.81. After purchasing these 

 claims he audited them himself, and received 



