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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
repairs

Extraordinary
repairs and
new work.

Total.

Income in
excess of dis-
bursements.

All disburse-
ments in
excess of
income.

Income in
bursements
excess of dis-
for ordinary
repairs.

Disbursem'nts
for ordinary
repairs in ex-
cess of in-
come.

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
89.72
369 93

215 40
89 72
369 93

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.

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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
1,478,506 08

$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:

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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

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