based upon erroneous and untrue assumptions of facts, and for causes which we had no knowledge of, which have only been developed by ex-parte evidence, taken in secret. But we do not stop here. In asking for proposals for public works, materials and supplies, this board, and every other board in this State and country, adopt, prescribe and publish to the world the rules, regulations and conditions upon which and under which such proposals will be received and acted upon.

These rules, regulations and conditions were framed to subserve and protect the public interests, and not those of the contractors, and we are quite free to admit we have at all times adhered to these regulations in acting upon proposals and awarding contracts, but that adherence was not more strict and critical in December last than on other and former occasions, nor were the rejections of informal and defective bids more numerous at that letting in proportion than at others; nor were the causes of rejections different. This board may have rejected proposals for immaterial departures from the regulations, because we could not always determine when it would be safe for the interests of the State to open the door to miscellaneous and promiscuous proposals, and beside, while acting upon the bids offered we had no right to prefer an informal and defective proposal because it was the lowest, to one that was formal and in all respects legal, although higher in price. We could reject the one for defectiveness and the other for excessiveness of price, and advertise anew for proposals.

Were the prices on which the December contracts were awarded by this board excessive or disadvantageous to the State? This board did not think so then, and does not think so now. We shall endeavor to dispose of this branch of our subject with the best light in our possession. We cannot determine precisely what price would be an adequate compensation to keep up good navigation upon a section of the canal for one or five years, and therefore we shall not make any pretensions in that direction. All we shall say is, we can approximate, bringing to our aid all the light and experience we have. The first question we shall discuss is, were the new contracts more beneficial to the State than the old, and were they more onerous to the contractors and to what extent? We say they were both. The new contracts impose upon the contractors every labor and

service and the furnishing of every material needful or necessary to keep up and maintain good navigation upon the canals, the prospective security of the canal banks and mechanical structures without any additional extra pay or other compensation than that specified in the contract. In this the State obtained a great advantage, as will be seen before we dispose of this subject. The new contracts are subject to be recalled at the pleasure of the Legislature, the old ones were not; the new contracts require the contractor to pay $7,000 on and for every break or breach in the canal during the life of the contract; the old contracts only required the payment of $4,000. The new contracts impose upon the contractor the payment of all damages arising to the State or an individual by reason of the negligence, default or misconduct of the contractor-the old ones did not, and the State has often been called upon to submit to or pay such damages. In November, 1866, the board experiencing the injurious effects of the system upon the interests of the State under the contracts as they had been running and then stood, determined to effect a reformation if in its power. During the period of about nine years the State had paid to the contractors, extra on their contracts, $369,073.09, besides $492,241.32 for repairing breaks, mainly owing to Legislative generosity. A three-fold system of expendi tures existed, first, by the Commissioners; second, Superintendents; and third, through the contractors. This board could not repeal the contract law, but we could confine the expenditure to that channel, and we did, so far as the new contracts are concerned, and if permitted intend to pursue it. The payments made for repairs on the canals during the twelve years preceding the 1st of October, 1866, in the aggregate, were as follows:

By a carefully compiled table from the books and papers in the Canal Department, we show there was expended by the [superin tendents of repairs upon the several sections of the canals, the year next preceding their being let by contract, $796,390.35. This

covers periods when there was less than $100,000 paid for repairs of breaks, and periods too when the paper currency and gold were at par, and the standard prices of labor and material used on the canals were fifty per cent below what they now are or have been the last four years. The expense of common, mechanical and team labor, and the prices of timber lumber constitute the charges for repairs over the risk assumed by the contractor. In whatever aspect we may place this question, the State must pay in proportion to the cost, whether the work is done by contract or under the supervision of superintendents under the immediate charge of the Commissioner. There is not and cannot be any escape from these conclusions. What folly for us to think and act upon the theory that a paper dollar now will pay for as much work and material as a gold one, or that canal work can be done as cheaply now as in 1859 and '60. The main point involved in this discussion is, have we, as a contracting board, paid or agreed to pay excessive prices; this is the charge made, and this we meet with a direct negative. On the first of October, 1867, all the sections on all the canals, except the Oneida Lake Canal, were under contract for repairs at prices that require payments from the Treasury to $595,042.00 in the aggregate, and $201,318.35 less than the costs under the superintendents upon an equality of currencies; or estimating the currency now worth $0.75 on the dollar in gold, we now pay $446,282.00 for what cost the State in currency at a gold standard $796,390.35. On this exhibit can this board be justly charged with inattention to the interest of the State, or should it be arraigned for criminal complicity in awarding contracts at excessive prices. But let us bestow a moment's consideration to questions that have given rise to this proceeding and correspondence. The aggregate of the new contracts awarded in December exceeds the aggregate of those which expired $79,526.30, and falls short of the amount expended by the superintendents on the same sections before the repairs were let $54,094.84. But if we reduce the aggregate of the new contracts $260,202.00, to the value of the currency in 1859 and '60 the difference less would be $119,094.00. We do not perceive a better rule of guidance in determining the matter of excessiveness of prices than to inquire what the same services has heretofore cost, though we concede that rule should not be inflexible, for one person may engage to perform the same services and equally well for a less sum than another; compe[CON. No. 135.]

2.

tition open and fair, is the policy of the law. When the lowest bid is considered the board must decide whether it be too high or excessive, and then we call in aid a comparison of prices. We have no evidence that a party whose proposal is informal or defective will take the contract at the price named, but the exact contrary, for he may and can say, when the contract is tendered, my "papers were defective and not in accordance with your regulations. I don't want the contract, and you cannot compel me to take it," which is true.. What then? We could not award the next lowest bidder without annulling the former award for defectiveness in the papers.

Although the present members of the board are not responsible either for the introduction or continuance of the system of repairs by contract, but have repeatedly objected to it, we cannot fail to know or hesitate to declare that in our judgment there is no more corruption in the system of repairs by contract than there is in a system that hands over to Superintendents the entire supervision of repairs, and invests them with the powers of estimate and disbursement. To what minimum of cost is it necessary, expedient and proper to reduce the expenditure for repairs in order to maintain good and successful navigation upon the canals? We know that there are four sections upon the Erie canal that are now under contract at an annual aggregate cost of $27,352.00, on which were expended in one year before 1859, when under the charge of superintendents, $81,217.88. We do not believe that the proper repairs of these four sections can be maintained for $27,000 a year, nor do we think they should cost $81,000.

We consider it to be our duty to have this work of repair well. done at the lowest price that fair competition will bring it, and in this we have in no instance failed. And on this point we challenge a fair and open investigatlon, and the development of truth.

In respect to the contract for repairs of section number one, Erie canal, on which the committee have bestowed much attention, we desire to submit a few special remarks. All the repairs on this section cost $103,482.11 in 1865, and in 1866, $92,842.06, which are an excess of $28,324.18 over the two years compensation secured by the present contracts. Is this excessive? A like excess of expenditure for five years would carry the cost up to $70,810.45.

We do not hesitate to express our firm conviction that the new contracts are fifty per cent more onerous upon the contractors, and one hundred per cent more advantageous to the State than the expired contracts, so far as the canals are concerned, provided the contracts are fully executed and carried out, and we can only act as a board upon the assumption that they will be.

Of the alleged combination of the contractors at the December letting, supposed to be proved by the statements submitted by the committee, we take leave to say it was wholly unknown to the board, and to each individual member of it, until after all the contracts were awarded, except that upon section eleven, Erie canal, and this we aver, each for himself.

We challenge the production of proof to contradict this position. The parties concerned in any such arrangement very well know that an exposure of any such proceeding would have resulted in nothing short of an entire rejection of all the proposals, to be followed by another advertisement.

We have no desire to enter upon the grave part of the subject that has given rise to this proceeding, nor any pleasure in referring to it.

It is well known the alleged testimony or statement taken by the committee was in ex parte and in secret; no person called before the committee to testify was permitted to know what his testimony was as taken, nor was any witness allowed to see his own testimony after it was written out from the stenographer's notes, before it was published to the world. The questions put were direct and pointed, and a categorical answer demanded, and no explanation allowed. Any person who will read this testimony attentively cannot fail to see that the committee were intent upon the discovery of some crime or of fense, and then upon hunting up a criminal to father it instead of seeking to develop and bring out the whole truth wherever it might reach or whoever it might implicate. One of the members of this board when examined before the committee in respect to the December lettings, discovered from the questions put and the answers required, that much wrong would be done from the course pursued; propounded certain questions to the committee to be found at page seventy-six of the printed statements and received the following