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#Post#: 1908--------------------------------------------------
Politicians Involved in Monstrous Erie Canal Fraud
DIR By: Michael Caswell
Date: December 17, 2021, 3:43 pm
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HTML https://en.wikipedia.org/wiki/Canal_Ring_(New_York)
Canal Ring (New York)
From Wikipedia, the free encyclopedia
This article is about a historical event. For waterways, see
Canal ring.
1853 Map of New York canals emboldened, center: the Erie Canal;
other lines: railroads, rivers and county borders
The Canal Ring was a group of corrupt contractors and their
political supporters in the 1860s and 1870s who defrauded the
State of New York by overcharging for repairs and improvement of
the state's canal system. It consisted largely of a group of
loosely organized Democratic and Republican Assemblymen and
State Senators, led by Jarvis Lord in the Assembly and William
Johnson in the Senate. The firm Belden & Denison made the most
money from the scam, though numerous contractors were involved.
They were chiefly organized along the route of the Erie Canal;
in Syracuse, Rochester, Buffalo, Lockport, and Oswego. Frauds
peaked in 1872, with "Appropriations for Extraordinary Repairs"
rising to $4.1 million.[1]
Then Governor of New York Samuel J. Tilden began targeting the
ring in 1874. In March 1875, he released a report detailing
frauds carried out. This served as a direct appeal to the
people, and so aroused public opinion that the legislature was
forced to authorize the governor to appoint a canal commission.
The reports of this commission resulted in a marked diminution
in the appropriation for canals and the indictment of several
officials for defrauding the State. His handling of the Ring is
credited with helping Tilden secure the Democratic nomination
for president in 1876.[1]
Background
See also: Erie Canal
The Erie Canal was first proposed in the 1780s, then re-proposed
in 1807. A survey was authorized, funded, and executed in 1808.
Proponents of the project gradually wore down opponents; its
construction began in 1817, and opened on October 26, 1825.[2]
In a time when bulk goods were limited to pack animals (a
250-pound (113 kg) maximum[3]), and there were no railways,
water was the most cost-effective way to ship bulk goods. It was
the first transportation system between the Eastern Seaboard and
the western interior of the United States that did not require
portage.[citation needed]
It was faster than carts pulled by draft animals and cut
transport costs by about 95%.[4] The canal gave New York City's
port a large advantage over all other U.S. port cities and
ushered in the state's 19th century political and cultural
ascendancy.[5] The canal fostered a population surge in western
New York and opened regions farther west to settlement.[6]
Though the Erie Canal and associated feeders were highly
successful for several years after opening, overbuilding and the
Panic of 1837 marked the end of highly profitable years.
Increased competition from railroads and other canals further
contributed to decline in profits.[7] In 1851, contracts under
the $9 Million Act were divided among Democratic and Whig
contractors. In 1854, a board of three commissioners was
established to award contracts for the maintenance and repair of
the canal.[8]
More competition forced the canal to lower rates, resulting in a
decline in revenue. The canal saw a boom in prosperity with the
outbreak of the American Civil War in 1861, which continued
throughout the war and for a brief time after. After the
Atlantic Cable was completed in 1866, however, the canal began
to lose tonnage again. By 1869, railroads finally surpassed the
canals in terms of tonnage, and the routes financial troubles
were compounded by the Long Depression beginning in 1873. It
registered a net loss of $265,610.70 in 1875.[9]
Canal Ring
The Canal Ring made money by charging low prices for major
works, but extremely high ones for minor things, in what was
termed an "unbalanced bid". Under the system, contractors could
also not complete all of the work they agreed to in a contract
without punishment. In 1862, the enlargement of the canal was
deemed finished in an effort to curb corruption, but new
improvements were soon necessitated by the increased traffic due
to the Civil War.[8]
Many New Yorker's felt corruption was a major cause of the canal
system's troubles. In 1867 at the state Constitutional
Convention, Erastus Brooks alleged canal contracts of being
awarded to the highest bidder.[1] A commission was established,
consisting of James Gibson, Henry C. Murphy, Charles Stanford,
William Bristol, William S. Clark, George W. Millspaugh, and
counsel Henry Smith.[9] It concluded there were "gross and
monstrous frauds",[1] and the Canal Commissioner, Robert C.
Dorn, was impeached.[10]
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