UNION LEAGUE CLUB. ALLEGED FRAUDS DEPARTMENTS CITY GOVERNMENT Remedies Proposed. BURR NEW YORK: PRINTING HOUSE. 1884. i£x iGtbria SEYMOUR DURST When you leave, please leave this hook Because it has heen said "Ever thing comes t' him who waits Except a loaned hook." \ \ I RY AJICHITI CTURAL WD I l\l ARTS LIBRARY Giftoi SEYMOUR B. Durst Old York Library UNION LEAGUE CLUB. ALLEGED FRAUDS IN DEPARTMENTS OF THE CITY GOVERNMENT. Remedies Proposed. NEW YORK : BURR PRINTING HOUSE. 1884. tSox so Digitized by the Internet Archive in 2013 http://archive.org/details/allegedfraudsindOOu UNION LEAGUE CLUB. REPORT OF THE COMMITTEE ON POLITICAL REFORM. The Club at the December meeting (1883) passed a reso- lution that the Committee on Political Reform consider and report what action, if any, on the part of this Club, " with regard to the investigation and punishment of fraud in the various departments of the City Government may be useful to promote reform in municipal affairs." It will be seen that this resolution is not confined to the alleged frauds in the Department of Public Works, but to those of all the departments, and thus embraces the entire subject of City Government. The City of New York is the commercial emporium, not merely of the State, but of the whole Union, and the interest felt in its government is, therefore, general. To see that it is well governed is a duty which no good citizen of New York can neglect. Although the City received its first charters long before the adoption of the State Constitution, it has now no rights of an independent character, except so far as some fran- chises or its private property are concerned. Judge Denio, in delivering the opinion of the Court of Appeals in the case of Darlington v. The Mayor, declared that the City was incapable of holding any private property, or any which the State might not control. Judge Denio left this point somewhat in doubt by observing that if the Legislature should take from the City property standing in its name and apply it to the purposes of another locality, he would not say that this might be done. Whatever doubt there may be on this particular point, there is none whatever, that, as to all public questions, the City is merely a part of the political machinery of the State for carrying into effect its powers of government. The State is absolute in this respect. The City of New York to-day is badly governed in all its branches. It is in the hands of a majority composed of many of its worst citizens, most of them tax-eaters. Chief among these are the licensed and unlicensed keepers of grog- shops, numbering together eight or nine thousand establish- ments, each one exercising over voters a greater influence in producing misgovernment than does each of the few hun- dred reliable churches in the City exercise in producing good government. The complexion of the Board of Aldermen elected in November last shows how far we have gene from the possi- bility of good government. The Board consists of twenty- four members. Of these all but seven or eight represent the party of tax-eaters. Its President occupies the respon- sible post, of being a member of the Board of Estimate and Apportionment, which consists of only four persons. It is a matter of difficulty that the other members of the Board place a check upon what the Aldermen require, through their representative. Mr. Asten, one of the members of the Board, has been zealous in resisting this influence. The City of New York has been in such hands for many years, and the rate of taxation to-day (2.29) now exceeds the rate of interest which can -be earned by call loans, and very nearly equals what can be earned upon Government bonds to purchasers of them at the premium now charged. The rate of taxation amounts practically to an annihilation of a large amount of the property held by tax-payers. Every addition to the rate tends to diminish income. The question becomes one of great interest, how soon the tax on real estate will equal the possibilities of its income. This year the rate will be increased, or the valuation of taxable property augmented to prevent that result. No one accustomed to good government expects that the Aldermen of the City will exercise their powers to secure such a blessing. Their action is wholly in the opposite direction, and of course influences many of those officials whose confirmation is due to them. The Commissioner of Public Works was nominated by Mayor Cooper and confirmed by the Board of Aldermen. 5 This was in December, 1880. It was freely charged at this time that many of the Board were either paid or expected pay for this service. It was well known that Mr. Thompson had no single qualification for this post. During the year 1882 he expended the enormous sum of six millions and upward. This expenditure, it may be supposed, was made under no greater scrutiny than was exercised by the late Comptroller in the alleged Carroll frauds. During the years 1881, 1882, and 1883, notwithstanding an unparalleled expenditure by this officer, it has pro- gressed without disturbing either the present or late Comp- troller, or the present or late Mayor, officers relied on for supervision. During nearly the whole period of three years, what are called unbalanced bids have been accepted by the Department of Public Works, for works involving a large expenditure, and the provision of the charter requir- ing publication and submission to competitive and sealed bids, when the amount exceeds $1000, has not been com- plied with. A single case will show very clearly what is meant by un- balanced bids. For regulating, etc., Ninety-fifth Street for a short distance, bids were called for on an estimate that there were to be excavated in cubic yards 1930 of earth and 21,540 of rock. A firm which treated this estimate as rea- sonably correct, bid for each cubic yard of earth 30 cents, and of rock $1.25, amounting, on the basis of the estimate, to $33)909- This firm was evidently not one of tlfe favored, and the bid was fair and reasonable. Another bidder, who evidently supposed that the estimate of work to be done, made by Mr. Thompson's department, of rock excavation was excessively large, and that of earth excessively small, bid $13.95 per cubic yard for earth, and one cent per cubic yard for rock, amounting, on the basis of the estimate, as. entered in the books of the office, to $28,318.65 ; but he was not the man. Another, better informed, bid per cubic yard for earth $8, and per cubic yard for excavating rock one fourth of a cent, amounting, on the basis of the esti- mate, to $15,676.29 ! This bidder carried off the prize. He was paid, up to the 14th of November last, $30,801 75, 6 and vastly more will have to be paid. Up to that date he had earned §40,002.50, and the work is still unfinished. At one fourth of a cent per cubic yard for 21,540 of rock, the total would be only $53.85 At $8 per cubic yard for 1930 of earth, the total would be $15,440. These amounts seem like a complete satire on business methods. It will be well at this point to see how the Court of Appeals views such variations from reasonable prices. In 1873 the Department of Public Works built a sewer by day's work. The Leake and Watts Orphan Home applied to the courts for relief, on the ground of fraudulent prices. The Court of Appeals during last year (92d N. Y. Reports) held as follows : ** An expenditure of $14 per cubic yard for rock excava- tion, which should have cost but $4, and $7 per foot for pipe, which should have cost but $1.50, and $25 per lineal foot for brick sewer, which should have cost but $4.55, shows not merely a case of improvidence and extravagance, but very satisfactorily that there was either gross fraud, imposition, mistake, or irregularity, and fully justifies the finding of the Court at special term." The assessment was reduced to the just amount. In 1873, after the exposure of Tweed's frauds, the com- mittee of seventy citizens proposed legislation with a view to their prevention, and by the 91st section of the new charter the Legislature enacted that when the expenditure for supplies exceeded $icco " the same shall be by contract under such regulations concerning it as shall be established by ordinance of the Common Council . . . and, unless otherwise ordered, by a vote of three fourths of the members elected to the Common Council ; and all contracts shall be entered into by the appropriate Heads of Department, and shall, except as herein otherwise provided, be founded on sealed bids or proposals made in compliance with public notice duly advertised in the City record, said notice to be published at least ten days, and all contracts, when given, shall be given to the lowest bidder." This clause was amended by the 57th section of the con- solidation act of 1882, Chap. 410, to take effect March 1st, 7 1883, by striking out the part in italics and inserting " if the Head of Department shall not deem it for the interests of the City to reject all bids y he shall, without the consent or ap- proval of any other department or officer of the City Gov- ernment, award the contract to the lowest bidder.'' The contract mentioned, at the extraordinary rate of $8 per cubic yard for earth excavation, worth about 30 cents per cubic yard, was made by the Commissioner of Public Works after the amendment giving him power to reject bids took effect. Independently of the amendment, unbalanced bids might have been rejected on the ground that on their face they exhibited the fraud held by the Court of Appeals in the case quoted, to have existed, when a much smaller difference between the amount alleged to have been paid, and what should have been paid, arose. It must be evident that the system which promotes unbalanced bids can arise only in departments improperly managed. They permit a mode, the most certain, of reaching and rapidly diminishing the property of citizens. The pretence that it has not been largely accomplished, founded on data not within reach of private citizens, will be treated with distrust by those who know that such methods are not resorted to except for pur- poses of plunder. Nor will this opinion be at all changed by the ground taken at this late day by Mr. Thompson, for it will be regarded as an afterthought that he caused borings to be made after the bid for grading, etc., part of Ninety-fifth Street came in, and that the original estimates were con- firmed. It will have been seen that by the terms of the act of 1873 and of 1882 all Heads of Department are compelled to resort to competitive bids after advertisement, in case the quantity of an article purchased amounts in price to over one thousand dollars. In respect to coal the Board of Education and the Health Department obtain their supplies in the manner required by the statute. In 1881 and 1882 there are over forty in- stances in which the purchases of coal by the Department of Public Works come a little short of $1000 in each instance* 8 In one case, on May nth, 1881, the Department purchased from one person, but under separate requisitions, 411 tons, amounting to $1939.50, which amount it divided to steam- pumping stations as follows : $949.50 for that at High Bridge, and $990 for that at Ninety-seventh Street and Ninth Avenue, thus treating the purchase as being two pur- chases, instead of one. This matter is highly important, as it amounts to the assertion of a principle of conduct applic- able to other daily transactions. By the 95th section of the charter of 1873, re-enacted in 1882, it is provided that any officer of the City Government or person employed in its service who shall wilfully violate or evade any of the provisions of the act, or commit any fraud upon the City, or convert any of the public property to his own use, or knowingly permit any other person to convert it, or by gross and culpable neglect of duty allow, the same to be lost to the City, shall be deemed guilty of a misdemeanor, and, in addition to the penalties imposed by law, on conviction shall forfeit his office, etc. There can be no doubt that in each purchase amounting to between $900 and $1000, the sum was adjusted at under $1000, owing to the limitation fixed in the statute. Barges or boats must have been selected to carry no greater quan- tity. Whether convenient or not, or profitable to the City of not to comply with this act, it is clear that it was Mr. Thompson's duty to make contracts for the much larger quantity required at the pumping stations, with the lowest bidder, after giving to all coal dealers the opportunity to put in their bids. There would be no chance ' for unbal- anced bids in such a case or for any favoritism. These methods call for the employment of numerous sagacious voters, so that every considerable tax-payer has to carry an office-holder on his back, bent mainly on consid- ering how he can relieve the tax-payer of his surplus, and most skilfully evade public scrutiny. There is another highly important matter, which should receive legislative notice. In February, 1871, in the height of Tweed's power, he induced the Legislature to pass an act entitled " An act to 9 provide a further supply of pure and wholesome water for the City of New York." Tweed was then Commissioner of Public Works, and, disdaining to be controlled, he caused the Legislature to bestow upon him an unlimited power of expenditure in the construction of '* aqueducts, reservoirs, dams, sluices, canals, and appurtenances." All payments were to be made on the mere certificate of that officer, and on his requisition alone the Comptroller was to raise the amount on bonds of the City. The powers were imperial. It happened, however, in the progress of fraudulent legisla- tion at that session that an act for consolidating the debt of the City into bonds at six per cent, if in gold, or seven per cent, if in legahtender notes, was about being passed, and so that their negotiation might not be prevented, the power to issue bonds under the first Tweed act was limited to one million dollars per annum. On the same day, April 6th, 1871, the consolidated act was passed. After Tweed became disgraced, the enormous imprudence of the two acts for his benefit as Commissioner of Public Works was seen, and by an act passed in 1877, Chapter 445, the Tweed acts were in effect repealed. In 1879, however, these two Tweed acts were stealthily revived by an extraordinary expedient in legislation. The repealing act of 1877, by changing its title and repealing Section — , was made to renew the two Tweed acts, and they now remain in full force and effect in the hands of Hubert O. Thompson as Commissioner of Public Works. The revival was accomplished during the term of his prede- cessor, just previous to the adjournment of the Legislature in June, 1879. N° newspaper in New York drew public attention to this iniquity, and it was unknown except to the accomplished individuals who engineered it through the Legislature. It is not probable that the Legislature knew what had been done. This Club had sent up its printed remonstrance against other expected legislation, and through its committee was in correspondence with members, but no knowledge of the revival of the Tweed act reached them until after the adjournment. It is under this act that Hubert O. Thompson is engaged IO in expending one million dollars per annum, without other scrutiny than was applied to the coupon frauds. The pres- ent Comptroller issues new bonds on the mere requisition of Mr. Thompson, and makes payments on his mere certifi- cate at the rate of a million per annum, without calling, in trumpet tones, for the repeal of the act. It authorizes the Commissioner to construct " aqueducts, reservoirs, dams, sluices, canals, and appurtenances without limit as to num- ber." He is now building the aqueduct from the Bronx under it, and he may go on during his official life in such expenditures, and so may his successor. Indeed, Mr. Thompson may commence the Quaker Dam, if he thinks proper, under this power. The surveys made there have no other authority. The repeal of this Tweed act, and plac- ing the Bronx project under the power of the Aqueduct Commissioners, is necessary. What remedies are proposed for these enormous evils of misgovernment ? One remedy, much relied upon, arises from the act passed May 4th, 1883, entitled " An act to im- prove the civil service of the State of New York." One section of it applies especially to cities having a population of over 50,000. It is hoped that by placing the bulk of subsidiary officers under the protection of a well-established civil service, the battle now waged to fill their positions with the political adherents of the party which succeeds, may be discontinued. Great confidence is felt in this measure. As it will effect a great change, some of the provisions of the act may well be presented. This act, which took effect on the first of this month (January, 1 884), by the first section authorizes the Governor to appoint three commissioners, only two of whom shall be adherents of the same party. They are to aid the Governor in preparing rules for open competitive examinations, for testing the fitness of applicants for office, and subsequently to see that they are carried into effect over the whole State. Section 8 provides that the Mayor of cities having a pop- ulation of over 50,000 is authorized to prescribe such regula- tions for the admission of persons into the civil service of the city as may best promote its efficiency and ascertain II the fitness of candidates in respect to character, knowledge and ability for the service they seek to enter . . . and with power to establish regulations for the conduct of appointees. These regulations are not to extend to any elective officer or to those seeking to enter the police, health, fire, educational, or law departments of any city, nor to any officer having the custody of public moneys, for the safekeeping of which any head of an office has given bonds. Each of the boards or the officer at the head of each of such departments, is given like authority to that exercised by the Mayor, over applicants seeking to enter such depart- ments, which authority is to be exercised after consultation with the Mayor. All examinations to be public, and the commissioners appointed by the Governor are to report the result. Officers soliciting or receiving political contributions or assessments are subjected to fine and imprisonment, as guilty of a misdemeanor. After the 4t.l1 of January, 1884, no officer or clerk is to be appointed or promoted until he shall have passed such ex- amination or is specially exempted from it by the act. No elective officer and no person employed merely as a laborer is subject to this provision. The Mayor of New York, on the 15th of December last, adopted regulations as prescribed by the act, and they may be found in the City record of the 26th of that month Schedules A, B, C and D are contained in it, by which the classes of employes are divided as follows : A. Confidential deputies of officers and commissioners and stenographers. B. Clerks, copyists, recorders, book-keepers, and others rendering clerical services. C. All persons not being laborers or workmen not in- cluded in A and B. D. All persons employed as laborers or day workmen. Three boards of examiners are to be provided, each to consist of three persons, only two of whom shall belong to the same political party. One board for positions in schedule B, one for positions in schedule C, except nurses, 12 attendants, and orderlies for hospitals, asylums in the De- partment of Public Charities and Correction ; one for such excepted persons. Those in schedule A are to be appointed without examination. The compensation of examiners and of a clerk to act as the secretary of the several boards to be fixed by the Board of Estimate and Apportionment, " and the said Boards of Examiners shall be allowed, with the approval of the Mayor, to employ assistants and incur ex- penses not to exceed in the aggregate $2500 per annum." Those in schedule D are not to be examined, but all changes under it and all appointments under schedules A, B and C are to be reported and recorded by the clerk, who is to be in the Mayor's office when not engaged for the exam- ining boards. The Mayor reserves the right to appoint the examiners and to substitute others in their place with power to " detail or«employ" such clerk. The defect of the Mayor's regulations appear in the con- trol which he reserves over the appointment and removal of examiners and of their clerk. It will readily be seen that the act may be used as a means of perfecting the discipline and strength of a dominant party. It will be in the power of the Legislature to give to the examining boards and their clerk a less precarious tenure, and to give to the laboring class facilities for reaching employment in the City inde- pendently of Aldermen, who will be able, as heretofore, to force their servile nominees upon officers who employ labor- ing men. The workings of the act will 'be watched with great interest. It will require years of effort to secure the benefits which it may ultimately accomplish. Mr. William S. Andrews, a Democratic representative from this City, proposed the following addition to Section 9 of Art. 8 of the Constitution, and it was adopted by the Legislature of 1882, and will be up for concurrent adoption by the present Legislature. " The Legislature shall not pass any special or local bill affecting the local or municipal government of a city, nor shall the Legislature provide for the filling of any municipal office now existing, or hereafter to be created, otherwise than by popular election or by appointment of the Mayor, 13 with or without confirmation of the highest legislative branch of the municipal government." The question, what measures shall be adopted for the future government of the City, is one as to which there are wide differences of opinion. Universal suffrage is of course to continue. That of the City, connected as it is so largely with grog shops, must, for a long time, be essentially bad and dangerous. That of the State at large, founded as it is largely on the agricultural interest, is far safer. The result of the election last November clearly shows the superiority of the voters in the State over those of the City. The number of grog shops in the State, as compared with the other instrumentalities which influence voters, is not large enough to poison the suffrage, and it would seem to be the part of wisdom not to pass this amendment to Section 9 of Art. 8, for the present at least. We need relief now from the abuses which prevail in most, if not in all, the depart- ments of the City Government, and it will be in vain to ex- pect it, as long as the Commissioner of Public Works is clothed with an expenditure which enables him to influence the election of mayors, comptrollers, judges, and other officials.' The State has not satisfied public expectation as to what it should do in the government of cities, because it has but little experience in this object, and the Republican party, through some of its officials, has always been ready to join dishonest Democrats in dividing the spoils. While reform is for the present entirely hopeless as a permanent policy to be derived from the City, it is not so in the State at large. If respectable citizens shall make a proper effort to this end, the State can be more readily influenced to bestow upon us the benefits and blessings of good government, than can a voting population, in which every tramp, every gambler, every thief, and every vagabond is enrolled on one side. This Club, which in its origin gave its whole influence to the right determination of all the great public questions of the time, and became famous throughout the Union for its patriotism, can now win the confidence and esteem of the Nation which it helped to unite, if it will secure for the Union the example of a city governed with wisdom and virtue. In that case New York will be the true metropolis of our great country. The adoption of the following resolutions is recommended : Resolved, That in the judgment of this Club the well-known and no- torious facts concerning the management of the Department of Public Works renders it one of the first duties of the present Legislature to make a thorough investigation of the Department, and to take such action thereon at this session as the facts thereby ascertained shall warrant. Resolved, That Chapter 56 of the laws of 1871, entitled "An act to provide a further supply of pure and wholesome water for the City of New York should be limited in its operation to the completion of the Bronx River Aqueduct, reservoirs, and appurtenances. Resolved, That the completion of the Bronx River Aqueduct, reservoirs, and appurtenances should be committed, with full and ample powers, to the commissioners appointed under and by virtue of Chap. 490 of the laws cf 18S3. Resolved, That the amendment to Section 9 of Article 8 of the Constitution of this State, agreed to in 1S82 by a majority of the members elected to each of the two houses, ought not, in the judgment of this Club, to be agreed to by a majority of all the members of the present Legislature. Resolved, That the thanks of the Club are due to Thomas B. Asten, one of the Board of Estimate and Apportionment, for his vigorous efforts in limiting the amount which may be raised by taxation in 1SS4. f S. M. Blatchford, GEO. B. BUTLER, Secretary. Chairman. At a meeting of " The Union League Club," held at the Club House January 10, 1884, the above report and reso- lutions, which had been printed and, at the meeting, dis- tributed, were read by Mr. Butler, and, on his motion, the report was accepted, and the resolutions — voted on sepa- rately — were adopted ; the report and resolutions to be printed and sent to the members of the Legislature and to the members of the Club. ALBON P. MANN, Vice-President. D. MlLLIKEN, JR., Secretary. REFORMS IN MUNICIPAL GOVERNMENT. REPLY TO THE NEW YORK TIMES. To the Editor of The Tribune. Sir : The amendment to Section 9 of Article VIII. of the Constitution, proposed by a city Democrat, and now before the Legislature for concurrent action with that of 1882, provides as follows : First, " The Legislature shall not pass any special or local bill affecting the municipal government of a city ;" Second, " Nor shall the Legislature provide for the filling of any municipal office now existing or hereafter to be created otherwise than by popular election or by appointment of the Mayor, with or without confirma- tion of the highest legislative branch of the city government." Neither can be adopted alone. The New York Times supports both and attacks the Committee of Political Reform of the Union League Club, of which I am chairman, for opposing agreement to it by the Legislature. In this the com- mittee was supported by the Club. The adoption of the first branch of the amendment would prevent any but general laws, applicable alike to all cities. Test the wisdom of this by a single case. The present charter (Chapter 403 of the Laws of 1882) re- quires that each of the twenty-four Aldermen shall reside in the district for which he is chosen. In the First Ward, for instance, vast numbers of our citizens do business on a large scale at their offices or stores, but they reside in the fashionable Wards. No one of them, therefore, can be nominated in the district where his office is situated, and the nomination and election of an Alderman is left to the persons who reside there. It is unnecessary to describe them, for they are well known. Their nominee is of the class of his constituents. Some of the important men who transact business in the Ward desire to have the charter so changed that the nominee for Alderman may be selected from among those who have places of business in the dis- trict, but reside elsewhere in the city. They think that the district might be carried by great exertions if the change were made, and that a great benefit would result. Now, if the constitutional amendment were in force no such change could be made by the Legislature. It would be " a special or local act affecting the municipal government of a city." This the amendment prevents. A general law applicable to the whole State, providing for such a change in the election of Aldermen, would be impolitic, because in most other cities it is proper and necessary to have each representative in their respective Boards of Aldermen a resident of the locality he represents. Other citizens think that if our twenty-four Aldermen were elected under a general ticket — the nominees to be selected from any portion of the city — each party would choose nominees of a higher grade. This change could not be accomplished if the constitutional amendment were in force. Take the case of the Commissioner of Public Works for another instance. This officer is charged, first, with encouraging in all contracts for excavations a system of unbalanced bids, by which contractors in collusion with engi- neers amass heavy fortunes ; and second, with hourly evading the positive provision of the charter requiring a contract made with the lowest bidder on sealed bids after public advertisement, if the amount of a purchase exceeds $1000. The Club resolved that these methods of management should un- dergo legislative investigation, and that such action should be taken as the case should be found to warrant. These methods of management need to be remedied by legislation. Suppose the amendments were in force that the Legislature shall not pass any special or local bill affecting the municipal government of a city. What could be done ? The Commissioner could not be legislated out of office, however richly this was deserved. That would affect the municipal government. It would equally affect the municipal government to require that no contracts or purchases should be made by him, without the con- currence of some firm and reliable head of some other department, if such can be found. True the laws provide a mode for the removal of this officer by the Mayor for cause, after investigation (the approval in writing of the Governor to be obtained before such removal takes effect), but the Mayor, as is alleged, declined to investigate. These out of hundreds of instances which may be presented, indicate that the first branch of the proposed constitutional amendment is precisely what the Commissioner of Public Works would prescribe. Home rule, if feasible at all, must be preceded by a charter prepared by the best citizens. A proper local government must exist before an imperative and practically unchangeable constitutional amendment shall be adopted. If adopted in advance of such provision, great confusion would result. Disaster would also follow, except to the party which is heavily reinforced by large emigra- tion and quick naturalization. The Commissioner of Public Works, with his great influence over Mayors, Judges, and legislators, and with no other power over him than might be exercised by a home government — for which, owing to defective legislation, we are wholly unprepared — would be supreme. GEO. B. BUTLER, Chairman Committee of Political Reform, Union League Club. New York, January 12, 1884.