ing off one-quarter of their former amounts; and the forwarders, boatmen and others engaged in transportation, were appealing for a reduction in the tolls, in order to enable them to continue their business. On an investigation, induced by this emergency, it was found that in the preceding five years the State had levied taxes of between eleven and twelve millions of dollars for extraordinary repairs besides deficiencies in the sinking fund, thereby imposing a burden of almost three millions a year upon the tax-payers. And upon inquiry as to how these vast sums had been expended, it appeared that much had been for objects of no real utility; that many of the contracts had been obtained by sham biddings in evasion of the law, and there was reason for suspicion as to the durability and value of the work. REFORM. In this condition of things, I proposed a reconciliation between the discontented tax payers and the distressed transporters by a thorough reform in the service and the system, which should remit taxes, reduce tolls, and increase the efficiency of the canals. INVESTIGATING COMMISSION. The first step was to obtain the information necessary to enable remedies to be devised and wisely applied. The commission appointed under the joint resolution and statute, consisting of Messrs. John Bigelow, Daniel Magone, Jr., Alexander E. Orr and John D. Van Buren, Jr., immediately after their organization, made such personal inspection of the most important parts of the canals as was possible before the water was let in for navigation; and after that was done, they proceeded to investigate many of the contracts for work on the canals and the transactions connected with them. I shall not outrun the public sense of the great and onerous service which these gentlemen have given to the State when I say that they have executed the trust reposed in them with unswerving and impartial fidelity, and with distinguished intelligence and ability. The frauds are not the simple case of embezzlement of public money, or a cheat in the payment of taxes, but are to be traced through the complicated work of construction, and are sheltered by the complicity or connivance of officials whose duty it is to protect the State. The truth has to be discovered and the proof obtained from unwilling and sometimes unscrupulous witnesses. The primary object is to reform the system and establish every possible security against a recurrence of the evils. While security for the future is of transcendent importance, indemnity for the past is to be sought. Civil and criminal redress is to be enforced. If it is a matter of toil and difficulty to make the investigations effectual, it is infinitely more so to conduct the actions in the courts to their conclusion, in cases so numerous and complicated. It will be necessary for you to make a special appropriation for aid to the Attorney-General. INCOME AND EXPENSES OF CANALS. The income and expenses of the canals for the fiscal year ending September 30, 1875, are shown by the following table: and new work during the fiscal year ending September 30, 1875. STATEMENT showing the tolls received on each canal, and the total expenditures for ordinary and extraordinary repairs DISBURSEMENTS. CANALS. Income tolls. Ordinary Extraordinary Total. Income in All disburse- Income in Disbursem'nts Erie Canal $1,709,374 72 $803,985 09 $673,098 77 $1,477,083 86 $231,290 86 $904, 389 63 Champlain Canal. 110.893-17 135,942 51 243,343 89 379,286 40 $268,393 23 Oswego Canal $27,049 34 45,057 69 99,014 95 10,325 96 109,340 91 64.283 22 Cayuga and Seneca Canal. 53,957 26 13,616 07 27.927 12 9,796 88 37, 724 00 24,107 93 14.311 05 Chemung Canal 1,717 32 23.230 41 3.076 58 26,306 99 24,589 67 21,513 09 Chenango Canal. 2,909 63 24,537 41 3,077 49 27,614 90 24.705 27 21,627 78 Black River Canal.. 7.214 64 44, 846 17 44,846 17 37,631 53 37.631 53 Genesee Valley Canal. 12,406 26 97,841 33 9,151 18 106,992 51 94,586 25 Oneida Lake Canal. 85,435 07 21,348 55 21,348 55 21,348 55 Baldwinsville Canal. Oneida River Improvement 215 40 94,50 94 50 Seneca River Towing Path 89 72 Cayuga Inlet. 369 93 120 90 215 40 Crooked Lake Canal. 126 09 7,396 80 7,396 80 7,270 71 7.270 71 $1,902,990 64 $1,264,721 79 $973,313 80 $2 238,035 59 $231,871 41 $566,916 36 $905,064 68 $266,795 83 19 Total disbursements on all canals in excess of tolls, $335,044.95. Tolls in excess of disbursements for ordinary repairs, $638,268.85. REAL INCOME. It will be seen that the income is stated at $1,902,990.64, and the explanation is made at the Auditor's office that as the receipts are a month later than the earnings the computation includes the receipts of September, 1874, and excludes those of September, 1875. As the former month yielded $166,341.10 more than the latter, except for this mode of computation the result would be $1,736,651. The estimate in my special message of March 19th, founded on the data there given, was $1,715,168. The calendar year 1875 gives only $1,584,018. CORPARATIVE STATEMENT, 1874 AND 1875. The following is a comparative statement of the revenues and expenses for the fiscal years 1874 and 1875, furnished at the Auditor's office: Statement showing the aggregate receipts and payments on account of the ordinary expenses of the canals for the last two years. 74,070 63 61,759 65 Reserve balance of appropriation for concreting the sixteen locks and retrunking the upper and lower Mohawk aqueducts... 52,859 01 Total expenses for the year. Net receipts .. .... $1,469,466 83 $1,467,315 95 458,679 68 This statement shows a falling off in the toll receipts of the last fiscal year, as compared with those of 1874, of $1,021,977.28; decrease in payments of $2,150.88, and a loss in net receipts of $1,019,826.40 the net revenue being $625,610.70 short of the requirements of the sinking fund, under article 7, section 3 of the Constitution; the amount required being as follows: - It is to be noted that the expenses during all the present year, except the last two months of navigation — that is, up to September 30, 1875 — were under the appropriations of 1874. The reductions effected at the last session did not begin to operate until October 1, 1875. The diminution in business caused by the bad condition of our domestic trade, the growing diversion by the completion of railways and the reduction of tolls, all operated from the beginning of navigation, or five months out of the seven of the season earlier than the reduction of expenses. The falling off of income in the last two months of 1875, as compared with the last two months of 1874, is less than the reduction in ordinary expenses and repairs for the fiscal year commencing October 1, 1875. FUTURE MEASURES. In this state of things it is obvious that our first measure should be to ascertain completely, and without unnecessary delay, the financial condition of the canals; the state of the contracts yet outstanding for extraordinary work, in order to determine what ought to be stopped or abandoned, and what ought to be continued, and the means applicable to any expenditure they may require. A second measure is the careful and thorough investigation of ordinary expenses and repairs, for the purpose of keeping them down to the lowest point consistent with the efficiency of the canals. A third measure relates to the disposition of such laterals as are not necessary as feeders. It will be recollected that at the last session, in view of the complicated questions incident to this subject, requiring legal engineering and business skill, and much devotion |