No. 98. " J ', •^ > ;'' f In Assembly 9 February 21, 1887. COMMUNICATION From John B. Yates, relative to the lotte- ries. Samuel Starkweather, Esq. Chairman, Sfc. SIR — in answer to the enquiries of the committee, I beg leave to state, that the managers of the New- York State Lotteries- appear from the tenor of the questions still to be regarded as public agents, and accountable not only for their conduct as managers, but for the profits of their operations. While we express an entire willingness to state any facts connected with our operations, and to submit to any proper examination of our conduct of whatsoever charac- ter it may be, and from whatever source it may originate : yet we beg leave respectfully to say, that if any citizen of the state of New-York, can have rights constitutionally inviolable, such rights must be as securely held by us, as by any other; and we confidently suggest, that the only tribunal before which such rights can be fairly investigated, and an efficient adjudication made, is the judiciary of our country. No legislative enactment can impair the obliga- tion of an anterior contract, made under the law as it then was, whether such contract shall have been made in p.^suance of a state grant, with considera- tion and advantage to the state or not. If such grant has been exceeded, or its conditions have not been performed, there is an established common law proceeding, by which that fact may be ascertained, and no outrage committed on any individual rights. Even this language may perhaps be considered by some as unnecessarily strong. I am however yet to learn, and much more must be experienced, before I can be made to believe that in our community, under the laws and civil institutions of the country of my birth, any good or favoura- ble feelings of my fellow-citizens, are hazarded by the independent assertion ®f our rights. Since the fall of 1818, when I first acted as a state manager in the present lotteries, the attacks upon the board of managers, and sometimes with peculiar violence on me personally, have been annually repeated ; and since April 1823, the time when Mr. Mclntyre and I commenced under the law of 1822, they have not been remitted. The documents accompanying the Jour- nals of the house for those years, will exhibit the various statements and com- munications made on this subject. In March 1824, within one year after we commenced under this law, an anonymous communication was made to the Speaker of the house, and referred to a committee of which Mr. Whiting of On- tario was chairman; a copy of the answer made by me, and the report of the committee, I herewith send you. The year following, in our endeavours to prevent abuses, we incurred the displeasure cf some of the venders, and were again obliged to vindicate our conduct. You will perceive by the report of the Comptroller and Secretary, what is **ie sit uation of the lotteries as appears by the papers and books in their offices- ( 2 ) of last winter. In relation to the sale of tickets not authorised by the laws of this state, I aver that we have always avoided selling them, with the exception of those for the sale of the estate of Mr. Jefferson. Those foreign tickets, as they are called, in which we are interested, were purchased from us within the ptate where we had a right to sell them, and in which w e have lottery contracts. Efforts have been repeatedly made by us to exclude foreign tickets from the slate altogether; and we have not onl^ expressed our willingness, but an anxi- et) that the law should be so framed, that evasion shall not be possible. It', however, in consequence of any le:al defect, the law cannot be enforced, our situation becomes particularly embarrassing. The tickets ol lotteries in w hich we have no interest are thrown into the market at reduced prices; and we can- not sell those of this state : It is therefore our wish, and decidedly for our inte- rest, that they should be excluded, if it can be done effectually. This may be accomplished more certainly by a moderate penalty, with sufficient care that no want of form shall offer the hope of escape, than to be enforced by any se- vere penal sanction disproportioned to the offence, which will always increase the difficulty of conviction. Relative to the subject of licenses for the sale of our own tickets, there is much to be said. There is either a power to require it, and to impose so heavy a de- mand as to amount to a prohibition, or there is no power to impose it at all. It is not however my design in this communication to investigate any question of law, but merely shew the reasons why it would be impolitic to alter the amount demanded for a license in New-York, or require a license elsewhere. In 1 819, when the lottery law was revised, the sum of 8500 was required for a license in the city of New-York, $100 for the other cities, and I think $50 for the rest of the country, for each office annually, exclusive of the managers and their agents from whom none was required. The consequence was, that the sales were confined to four offices in New-York, and so few in the countrv. that it was impossible to go on with any hope of success; and the following year, the tax for license in New-York was reduced to $250, and the country tax repealed ; and I believe the same result will again be produced, if the pro- posed measure to tax high for a license be finally adopted. I am satisfied that this source of income, to the institutions /4 the deaf and dumb, and the New- York free school, will be in a great measure, if not entirely lost ; for we will he obliged to appoint agents, unless there shall be licensed venders sufficient to do the requisite business. I appeal with confidence to any of the gentlemen con- nected with those institutions, whether all has not been done that was in our power, to constrain the persons who purchased from us, to take out a license, or at least to pay the sum required for that license, to the treasurer of the in- stitutions. We have avoided the appointment of agents in New- York for this ex- press purpose. There is another circumstance that will reduce the number of venders in New-York and in the country. All their sales hereafter will be con- fined to one set of lotteries; their ability to pay a heavy license duty, will be less than it now is; and even at the present price of license, I doubt whether the business can support more than eight or ten offices. We have been frequently under the necessity of giving v liberal credit in the disposition of our tickets. This necessity has occasioned us frequent and heavy losses ; and the terms of our contract are such, that all those losses, together with such as shall arise from tickets on hand, must first be borne by us to the full extent of our ability to pay; and if we are unable to meet (hem, then by the institutions for which we act. It is therefore impossible for me, or either of us to say what will be our situation, when the term of our contract shall be end- ed. The same inquiry was made in 1823, and the language of my communi- cation then, has been verified much sooner than I apprehended. From what we have already suffered, the prospect is not promising ; and unless our busi- ness can be transacted with greater safety than it has been hitherto in this ( 3 ) state, we might rather never have engaged in it. It is a fact, that we are now great losers by our contract with the institutions. In answer to the questions contained in your memorandum, I bv% leave further to state, that the three first questions are answered by the reports made by the literary institutions last year and this year, and 61ed in the office of the Secre- tary of State, a copy of which I annex to this communication, which questions are, 1st. How many lotteries have been drawn under the act of 1822, and when ? 2d. The amount of the scheme price of the tickets in each class, and how many, and what proportion of the tickets you sold, and for how much ? 3d. The time of drawing of each lottery ? The other questions are not answered by any report of the institutions or our- selves, because they are not properly within the limit of legislative or any oth- er inquiry, except between the contracting parties or creditors, relative to the es- tate of bankrupt debtors. We feel however an anxiety, that with regard to our affairs, all should be known. I therefore proceed to answer them to the extent of what information is now in my power. The questions are, 4th. The amount ofcharges on each lottery or class, as made by you, upon what those charges were made, and all and every drawback or other cause, for which the amount to be paid over as the neat proceeds thereof, has been in any way reduced ? 5th. How much you have paid over to the literary institutions as the neat proceeds thereof, and when ? These questions, it will readily be perceived, cannot be fully answered, w ith- out a reference to, and miuute examinations of our books throughout, from the commencement of our operations. In a concern extended as ours is, the amount of annual expenditure is very great Our regular expenses are fully equal to 8 1000 per week, and we cannot, with a due regard to the accuracy, responsi- bility and character of the persons employed, and safety to ourselves, lessen them. It would be exceedingly difficult, and perhaps not possible, to divide accurately the expenses appropriate to any one set of lotteries from the others. We have indeed attempted such a division on our own books for our own satis- faction, withno expectation, however, that this would ever become a subject ot examination, unless, in consequence of misfortune, those books should pass into other hands. This part of the question, therefore, 1 am so utterly unable to answer, removed as I am from books of account, that I must necessarily pass it over with what I have said. The answer to the latter part of this question, and the whole of the last, are so intimately connected, inconsequence of our contract, that they must be answered together. The amount due the public institutions interested in the literature lotteries, as will appear from the Comp- troller's report of 1822, was 8322,256 81. The act to limit the continuance of lotteries authorised said institutions either to assume conjointly, or to appoint one of their number to assume the management, hazard the losses, and become responsible for the prizes of said lottery. Some of the institutions declining a participation either in whole or in part, in so hazardous an undertaking, sold out their entire interest therein. The other institutions agreed to Bet apart the same per centum allowance, formerly made bylaw for supervision and manage- ment, as a residuary fund for the indemnification of such institution as should, in behalf of the rest, consent to assume the supervision of said lottery, and be- come responsible for the expenses to be incurred, the hazards run, and the los- ses sustained, in conducting the same, whether arising from an ultimate failure ( * ) on the part of the persons contracting therefor in the 6ale of tickets granted or in the payment of prizes drawn. Under these circumstances, the trustees of Union college assumed the management, and became responsible for the claims that existed, or that might arise thereafter against the literature lottery ; and we contracted with the said trustees for the whole amount of tickets au- thorised to be sold and drawn therein. We stipulated to pay for the printing and preparation of tickets, and to pay all the prizes as the same should be drawn, and to pay to the said trustees, in behalf of the institutions interested* the sum of $276,090 14, together with the lawful interest annually accruing thereon, within the time limited by law for finishing said lottery. The whole amount of compensation to which we are entitled by this scale of computation for our labors, expenses, hazards and losses, is four per cent upon the publish- ed schemes. I cannot say from memory what amount has been actually paid over to the institutions. It is however extremely unpleasant to be obliged to add, that so great has been the embarrassment which we have experienced, and the losses have been so appalling, that we have been obliged to call on the in- stitution for assistance in the payment of prizes to a much greater amount than has been deposited by us to the residuary fund set apart by the institutions in- terested as aforesaid for that purpose. Every effort in our power will and must be made to refund the amount thus supplied for the payment of prizes, and in the end to save harmless the institutions, if possible, which assumed the respon- sibility. But whether this will be the case, or how soon, if ever, depends on future events, many of which no effort of ours can control. Exclusive of the amount for the institutions, is the sum authorised to be raised by law, and which was transferred to the corporation of New- York, for the erection of a fever hospital. This is now vested in us by transfer from them. Finding, after we had made this contract with the city of New-York, that we had assumed more than we were able to perform, in 1824 I petitioned in behalf of my partner and myself, for longer time to pay the amount required to be paid into the treasury for this trannsfer, with interest annually. The report of Mr. Warren, the chair- man of the committee to whom that subject was referred, will be found in the Journal of that year, page 171. The request was deemed reasonable, and a bill for that purpose passed the Assembly, but was rejected by the Senate. We were therefore compelled to borrow the money elsewhere, and this grant is now pledged for all its value, and we must provide for the interest on it semi-annual- ly. In addition to these engagements, in consequence of the law of last winter, authorising the corporation of Albany, with the consent of the literary institu- tions, to unite the sale of their lands with the money lotteries yet to be drawn, we contracted with them to unite them with our other contracts, and conduct the whole, which we agreed to do without any deduction from their value, or other compensation. These lands are appraised, in the aggregate, at a sum exceeding §250,000, and this we have contracted to do within the time allow- ed to finish the money lotteries only. So that in no event, and under no circum- stances, can the lotteries extend beyond that limit of time. Having thus given as full an answer to your questions as the circumstances in which I am placed will allow, and as full and yet succinct an account as I thought the na- ture of our business required, permit me to draw your attention to the effect which must necessarily be produced by these continued attacks. In the va- rious lotteries drawn in this state since 1822, there have been remaining on hand about 50,000 tickets, and in one single instance only, if my recollection be correct, did those tickets draw in prizes a sum equal to their cost to us ; and in most classes we have unfortunately met with great losses from this cause only, besides losses from bad debts to an immense amount, especially last year, when all the profits of our operations were swept off* by the large New- York' class. But for the prompt and efficient aid of our friends, and one particular- ly, Mr. James of this city, we must have stopped payment, and been ruined, and very probably injured many of our friends. I am told, in the class drawn on the 3 1 st of last month, upwards of 5000 tickets remained on hand, and we lo6t another large sum by the class. This was owing to the effect produced by the recent course pursued towards us. In addition to this effect, we have,- ( fi ) and must continually have, a large amount of money standing out in the hands of men who cannot bear the losses arising from repeated and unexpected dis- couragements. The burthen of their losses must be borne by, and may ulti- mately destroy us. It becomes therefore important that the public, as well as we ourselves, should know what our rights are. If we have any, let us be pro- tected by them. I have hastened this communication before I could hear from New- York, since receiving the interrogatories. What I have, however, been enabled to state from recollection, and the documents I could procure here, will, I hope, prove sufficiently satisfactory. I will now therefore only add, if every ticket in each class had been sold without loss, and the institutions fully paid, our compensation could not have exceeded four per centum on the whole amount. This is a less commission than is usually allowed in regular mercantile business of far less labor and ex- pense, and no comparative hazard. To say nothing of the enormous losses in- curred on actual sa|es, the fact is that a large amount of tickets in almost every class has remained on our hands unsold; thus reducing, as I have before said, the actual commission received to a far less per centage, and connected with other losses, sweeping off the whole. Notwithstanding the clamor that has been raised against our extravagant profits, and the frequent legislative inqui- ries to which we have been called to reply, I repeat the declaration, and if le- gally required, can satisfactorily prove, that from this laborious, porp'exing and perilous business, pursued by us with unremitting assiduity, for some years un- der our contract, we have not yet realized a single dollar of profit ; and but for the avails of more advantageous contracts made in other states, and for the timely assistance received from the institutions, and from personal friends in this state, we must, with all our supposed extravagant gains, before this, have been involved in irretrievable ruin. With the greatest respect, I am your obedient servant. J. B. YATES. Many. February 19th, 1827. ( 6 ) Documents accompanying lY\c pxcccoAng Uo\\\m\\\\icatton. A certified copy of the amount of tickets at their scheme price in all the classes drawn, up to the 31st January, 1826, in the lottery under the act to limit the continuance of lotteries, passed April 5th, 1822, which schemes are all formed by fixing the amount of money actually to be paid out in prizes and the number of tickets to be contained in the class, the dividing of the amount of prize money it) the class by the number of tickets given, the price of tickets estimated at their scheme price. The authorised selling price of the tickets is such an advance price that fifteen per cent, being deducted therefrom, the re- mainder will be equal to the scheme price. 1 WHEN DRAWN. No. of class. Whole No- of tickets in each class. Amount of tickets in each class, esti- mated at scheme price. Amount oftickets in each class, estima- ted at their autho- rised selling price. No oftickets in each class un- sold. Amount oftickets in each class actually sold and drawn, estimated at scheme price. 1823, May 20, l 6,545 $44,506 $52,360 $44,560 00 (t July 23, 2 19,600 83,300 98,000 239-L 4,1/0 8 82,283 72 July 26, Albany, 1 4,060 10,353 12,180 355 9.447 75 it Oct. 15, 3 19,600 91,630 107,800 91,630 00 u Dec. 3, 4 19,'W) 1 16,620 137,200 5084 113,593 68 1824 , Jan. 7, 5 19,600 83,300 98,000 83,300 00 « Alar. 17, 6 34,220 145,435 171,100 1171 144.935 63 it June 16, 7 34,220 232,696 273,760 «23| 227,094 50 it Aug. W, 1 34,220 145,435 171,100 145.435 00 u Oct. 20, 2 34,220 115,435 171,100 127 144,895 25 ti Dec. 15, 3 34,220 145,435 171,100 180 144,670 00 1825 , April 16, 4 34,220 145,435 171,100 145.435 00 u 'July 20, 1 34,220 232,696 273,760 1,613 221,727 60 U Sept. 20, 2 45,760 194,480 228,800 6.925 165,048 75 1826, Jan. 19, 3 14,190 482.460 567,600 2,623| 393,269 50 Total, • • • 15 388,495 82,299,216 $2,704,96o| 13,512! 82,157,272 38 I hereby certify that the foregoing is a true copy of the amount of tickets at their scheme price, in all the classes of the aforesaid lottery, up to the time stated ; and that the statement of tickets remaining unsold in each class, is a true copy of a return made from the books of John B. Yates and Archibald M'latvre, March 8th, 1826. JONAS HOLLAND, Register of Union College. A certified copy of the amount of tickets at their scheme price, in all the classes (not before reported,) drawn under the act to limit the continuance of lotteries, up to the 31st ot August, 1826. When the consolidated lottery com- menced under the act of April 7th, 1 826, the schemes of which classes enumerat- ed in this certificate, are formed in the manner slated in the certificate filed on the 8th day of March, 1826, in the office of the Secretary of this State. WHEN DRAWN. Number i»f class. Whole No. ot tickeU iu each class Amoujit of tickets in each class esti- mated at scheme price. Amount ot tickets in each class estima- ted atthoir uutho- , rised selling price. No. of tickets in each class unsold. Amount tit tickets in each class actually sold and drawn, estimated at scheme price. 1826, Feb. 22, •« Apnl 5. il June 1, « July 19, " August 30. 1 2 3 4 5 34,220 31,220 31,220 34,220 31,220 $116,348 87,261 145,435 116,348 87,261 $136,880 102,660 171,100 136,880 102,660 5,561 585' 2,734 2,897§ 4,799| $114,630 00 100,903 50 157,430 00 125,290 00 88,261 50 Total,. . . 5 171,100 $552,653 $650,180 16,57711 $586,521 00 ( 7. ) 1 hereby certify that the foregoing is a true copy ol the amount of tickets at itieir scheme price, in all the classes of the aforesaid lottery, for the time above stated, and the statement of tickets remaining unsold in each class, is a true copy of a return made from the books of John B. Yates and Archibald M'ln- tyre. January 1827. JONAS HOLLAND. jr. 1 ' Jf