XXXVII.

THE deplorable legislative and administrative corruption and abuses which had tasked the energies of Mr. Tilden for the four or five years preceding his election as governor, unhappily were not restricted to the territorial limits of New York city, though their hideous proportions were there first discovered and exposed. They were found to have infected pretty much every department of the public service in the State. Outside of New York city, their most malignant centre was the Canal Department. The expenses of the canal system of the State for the five preceding years had been not only out of all proportion to the receipts, but equally out of proportion to the amount and quality of the work called "repairs," "ordinary" and "extraordinary," for which they were ostensibly incurred. Even before he took the oath of office, Mr. Tilden, at his own expense, instituted a secret but thorough investigation of the work to which these enormous expenditures were attributed; and at an early stage of the session had in his possession conclusive evidence that under every important contract let, at least during the five preceding years, the State had been grossly overcharged, and that, by the systematic collusion of the State authorities, over a million of dollars had been paid out to contractors which not only had not been earned, but, so far as they had been expended on the canals, had worked injury rather than advantage to them. When the Governor had these facts in such a shape that there was no room left to question their accuracy, and no insurmountable obstacle to proving them, he brought the subject to the attention of the Legislature with such fulness and precision of specifications as not only to spread consternation among the parties inculpated, but also to arrest the attention of the whole nation. This document is still known and referred to as "Governor Tilden's Canal Message."

To the Legislature.

THE CANAL MESSAGE.

EXECUTIVE CHamber, Albany, March 19, 1875.

I HAVE received a petition from forwarders, boatmen, and others engaged in transportation on the canals of this State, representing that the depressed state of their business calls for legislation and necessitates a reduction of tolls, and requesting me to look into the condition of the canal commerce, and to make such recommendations to the Legislature as will lead to measures of relief.

Respectful consideration is due to so large and important a class of our business men. They are proprietors of about six thousand boats, which are said to give employment directly to thirty thousand persons, and indirectly to twenty thousand others. They are in the peculiar relation of partners of the State in a vast internal commerce, owning and managing the equipment, while the State owns and manages the body of the canals. The State, therefore, has not only a common interest in the preservation of the joint business, but also a distinct and special interest in the ability of its partners to continue to perform their functions, without which the joint business could not be transacted. It cannot afford to suffer the equipment of the canals to be broken up, to allow a dispersion of the traffic, which, if once lost, will not be easily regained, or to omit any measures of retrenchment in expenditure or economy of administration which will enable it and its partners to meet successfully the increasing competition of the railways with each other and with water transportation.

Impressed with the considerations which induce a liberal policy on the part of the State toward its partners in the internal commerce it has seen fit to undertake, I am, on the one hand, predisposed to every practical and just measure for enfranchising trade and industry and cheapening the interchange of commodities, and, on the other, to listen to the rightful complaints of our people against the extreme burden of our present taxation and the prodigal and wasteful expenditure in connection with the canals, which is one of the main causes of such taxation.

I have, therefore, felt it my duty to devote the intervals of time I could command to a personal investigation of the subject, in order to be able to recommend to you such specific measures as the exigency seems to require, in the direction indicated in the following passage of the Message I had the honor to communicate at the beginning of your

session:

"A careful investigation whether the net incomes of the canals retained cannot be increased, ought to precede a surrender of what little now exist. Ordinary repairs should be scrutinized with a view to retrenching their cost and to obtaining the largest possible results from the outlay. . . . All improvements should be governed by a plan and purpose leading to definite results, and instead of scattering expenditures on imperfect constructions, should aim to complete and make available the specific parts undertaken. Unity of administration and of system, both in respect to repairs and improvements, should be established."

Exhibit A is a comparative monthly statement of the tolls on all the canals for the years 1873 and 1874. Probable income It shows that during the months of October of the canals. and November, and a few days of December which fall within the present fiscal year, in which period about one quarter of the tolls of the year were collected, the decrease of tolls is from $836,123.27 to $638,132.96, or $197,990.31. The decrease is about one fourth of that portion of the tolls. A corresponding decrease for the months of May, June, July,

August, and September, 1875, as compared with the same months of 1874, would amount to $600,000. That would leave the tolls for the fiscal year of 1875 at $2,037,000.

Assuming them to realize $2,250,000, we are next to find the probable effect of the reduction in rates which is now proposed.

Exhibit B is a statement of the effect of the reduction in the rates proposed computed on the tolls of the calendar year of 1874. If a similar computation be made on $2,250,000, instead of $2,637,070, the reduction of receipts to be produced by the lowering of the rates would be $534,832. The gross tolls accruing from all the canals for the fiscal year ending Sept. 30, 1875, would be $1,715,168.

This diminution of tolls presents in a strong light not only the general depression of commerce, but particularly that of the special business of the boatmen and forwarders.

The public mind is apt to be confused by the various Taxation for canal methods in which the complex accounts of purposes during five years from Oct. 1, the State are kept. A careful analysis and 1869, to Sept. 30, 1874. comparison of those accounts enables the following results to be stated in a simple form:

The total amount of the tolls on all the canals during the five fiscal years ending Sept. 30, 1874,

was

The aggregate of ordinary expenses and ordinary repairs during the same period was.

The apparent surplus was

$15,058,361.75

9,202,434.23

$5,855,927.52

Real deficiency, being excess of repairs ordinary and extraordinary over the whole tolls

$10,960,624.84 5,855,927.52

$5,104,697.32

The taxes levied for these purposes during the same period were

$14,789,848.25

All these payments are directly for canal purposes, except $2,552,132.28, which is in reduction of the General Fund debt, and $200,000, which was supplied to the General Fund. These two payments, also, are indirectly of the same character; they merely replace fresh advances made by the General Fund to the canals.

In the five years anterior to the period under consideration, from Oct. 1, 1864, to Sept. 30, 1869, the taxes levied to meet deficiencies in the sinking fund were $1,873,030.54, and the taxes levied for extraordinary repairs, awards, etc., were $6,322,632.52, making $8,195,663.06.

The Constitution (Art. VII. sec. 5) provides that "Every contribution or advance to the canals or their debt, from any source other than their direct revenues, shall, with quarterly interest at the rates then current, be repaid into the Treasury, for the use of the State, out of the canal revenues, as soon as it can be done consistently with the just rights of the creditors holding the said canal debt."

In citing this mandate of the Constitution, it is not intended to revive the illusion that even the most recent advances of the