THE
IIOOSAC TUNNEL CONTRACT.
BY F. W. bird.
I
The Executive Department shall never exercise the legislative and judicial powers, or
either of them : t& the end it may be a government of laws, and not of men.—Massachusetts
Declaration of Rights.
BOSTON:
WRIGHT &■ POTTER, PRINTERS, 79 MILK STREE^ (COR. FEDERAL).
1869.
The Hoosac Tunnel Contract.
" Tlie last agony " is over ; or rather, as there is always
beyond the lowest depth a lower deep, it is changed into the
long agony of tax-paying. Now that the contract is signed,
sealed, and delivered, it is permitted to ns to examine the bond
which, so far as the action of the governor and council can do,
fastens this great burden upon the tax-payers of the State. The
"Memorandum of an Agreement" between "Walter Shanly
of Montreal, and Francis Shanly of Toronto, Canada, parties
of the first part, and the Commonwealth of Massachusetts, party
of the .second part," intrusted confidentially to two or three in¬
dividuals outside of the King before the contract was signed, is
now public property, and invites examination.
The last legislature passed (chap. 333,) " An Act in further
addition to an Act providing for the more speedy completion of
the Troy and Greenfield Railroad and Hoosac Tunnel." This
Act appropriated $250,000 for the completion of said railroad,
" and $350,000 for payment of interest, and further authorized
the governor and council to contract for the whole work of
constructing the Hoosac Tunnel, provided that a contract with
satisfactory guarantees can be made for the completion of the
same within a period of seven years, and at a cost not exceed¬
ing five millions of dollars ; and further provided that in case a
contract should be made by the governor and council for the
completion of the tunnel, there shall be withheld from payment,
under said contract, a sum not less than one million of dollars,
until the final completion of said work, and the acceptance of
the same by the governor and council." These are all the pro¬
visions of this Act which concern the present discussion.
In a supplemental Act (chap. 350,) it was provided that
$250,000 might be expended prior to October 1st, for various
4
purposes therein specified, this amount to be deducted from the
five million appropriation, leaving $4,750,000 to be applied to
the completion of the.tunnel. Sect. 4 is as follows: "The
contract shall provide for payments by instalments as the work
progresses, in such manner that not less than twenty per
centum of each amount due shall be reserved for a final pay¬
ment, on the completion of the same." This Act was drawn
for purposes which do not appear on its surface. Whatever
these were, no ingenuity can torture out of it any modification
of the material requirements of chap. 333, viz. : 1st. That
" satisfactory guarantees" shall be required by the governor
and council "for the completion of the same;" and, 2d,
"that there shall be withheld from payment under said con¬
tract, a sum not less than $1,000,000, until the final completion
of said work "—" said work " referring to the phrase previously
used—" the whole work of constructing the Hoosac Tunnel."
Such are the material provisions of the Acts of the last legisla¬
ture bearing upon fliis matter.
In June proposals were invited by public advertisement, for
the work. I will not here enlarge upon the disreputable at¬
tempt of the commissioners to violate the intentions of the
legislature by providing that the work might be done under
several separate contracts. This attempt, though backed by an
oral opinion of the attorney general in favor of their power so
to do, was exposed and denounced with so much clearness by
prominent members of the legislature, that it was abandoned.
Several bids were made and in due time contracts, based upon
these bids, were successively laid before the governor and
council. Without dwelling upon details, it is enough to state
that no one was finally approved, and for the sole reason that
" satisfactory guarantees " were not provided for the completion
of the work. Some, at least, of the parties were admitted to be
competent and responsible men ; the amount for the whole
work, in one of these bids, was nearly $600,000 less than
the present contractors are to receive; it was stipulated in
all the contracts, that one million dollars should be " with¬
held ; " but the governor, it was publicly announced, insisted
that in addition to this reservation, a deposit should be made
of $500,000 in money or public securities, as a " satisfactory
guarantee " for the completion of the work. None of the
5
bidders met this requirement, and no contract was made. This
conclusion was accepted by the whole community (always ex¬
cepting the Ring,) with relief and gratification. Relying upon
this decision of the governor, and upon assurances freely given
that he would persist in requiring this guarantee, the public
rested easy in the belief that the whole tunnel matter would go
over to the next legislature.
But this, above all other results, the Ring dreaded, and were
determined to avert. The contrivance which- is embodied in
this contract was privately prepared, no competition was invited
by public advertisement, and the first knowledge that the public
had, that a contract was thought of, was derived from the an¬
nouncement in the newspapers, on the 15th Dec., I think, that
a contract had been made, and would be signed on that day.
Nothing was known of the nature of the contract ; the accom¬
plished fact only was announced. Startled by the positiveness
of the statement, so inconsistent with assurances voluntarily
given to me and others, that no contract should be made with¬
out full opportunity for examination and criticism, I applied to
the proper authorities on the 16th, and was informed that the
contract was substantially completed, waiting only for slight
changes of details, and that it would be signed on the next day.
On that day I was notified that final action was postponed till
the day following—the 17th; and that I might appear before
the council at eleven or eleven and a half o'clock of that day.
A copy of the contract was then placed in my hands, under injunc¬
tions of the strictest secrecy. On the 17th nothfhg was done, and
on the 18th I was informed that, owing to the necessity of making
a slight change in the location of the road, near the eastern end
of the tunnel, the matter was again postponed. Meantime, one
other gentleman who had received assurances that no contract
should be made without full time for examination, appeared before
the council on the 18th, and presented such serious objections to
the contract as it then stood, that it became necessary for Mr.
Shanly to visit the tunnel. This I'cquired postponement until
Tuesday, 22d. Learning, then, that the matter was settled,
that a majority of the council would approve, and the governor
would sign the contract, I declined availing myself of the per¬
mission to argue against a foregone conclusion. This recital
seems egotistical; but it could hardly be otherwise, for the
6
reason that, so far as I know and believe, no person in the State,
outside of the parties specially interested in pushing the con¬
tract through, except myself and the gentleman referred to,
ever had opportunity to examine the contract before it was
signed, and then only under the seal of secrecy.
I admit that if it should be found that the contract carefully
protected the interests of the State ; if it rigidly fulfilled the
intentions of the legislature ; if it secured the completion of
the whole work of constructing the Hoosac Tunnel " for the
sum appropriated," with " satisfactory guarantees," and reserv¬
ing $1,000,000 till final completion, the haste and secrecy of
the transaction would be less oty'ectionable. Let us examine
the contract, and see if the provisions are so carefully drawn, in
the line of the interests of the State, and of the intentions of
the Act, as to justify its execution within two weeks of the
meeting of the legislature. •
We shall be aided in understanding the intentions of the
legislature if we review briefly the circumstances under which
this appropriation was made. The House had struck out the
appropriation for the tunnel, retaining the appropriation of
$250,000 for " the completion of said railroad,"-^that is, the
railroad from Greenfield to the eastern end of the tunnel.
This adverse vote—the first they had encountered for six years
—threw the Ring into consternation. A new dodge must be
devised. As a forlorn hope, the contract system was seized
upon. They said to the House, " Two hundred and fifty thou¬
sand dollars will«'complete' the railroad. ^Give us five mil¬
lions more, tie us up as you please, require us to ' complete '
all the rest of the work for that money, and exact guarantees
satisfactory for its completion,—that is, for the completion of
the entire work, except the railroad, to which the $250,000
applies. Granted this sum, we will never ask the State for
another dollar, except for the payment of interest. Five mil¬
lions and two hundred and fifty thousand dollars, will give to
the State forty-four miles of railroad complete, from Greenfield
to North Adams, ready for the cars ; and this thing shall vex
the politics and legislation of the State no more forever." The
House took them at their word. " We will give you $5,000,-
000 ; but this must be the end. This sum, with $250,000 for
the railroad, must 'complete' both road and tunnel. We
7
doubt if a safe and sure contract can be made. You may try ;
but we must take a bond of fate that this shall be the last
dollar. For the sake of getting forever rid of this disturbing
element, of banishing the lobby and the ring from the State
House and from politics, and of finding the bottom of the
Maelstrom, we consent to this appropriation."
It was the expectation of completing the whole work, road
and tunnel, and this alone, that carried the appropriation.
Had the friends of the tunnel, then, stated that they should
make a contract which should construct only a part of the tun¬
nel with 15,000,000, leaving work undone, as I shall show, and
absolutely essential to be done, in order to construct forty-four
miles of railroad fitted for a large traific, which will cost at
least two or three millions of dollars, the appropriation would
have been summarily rejected.
We are now prepared to inquire, whether this contract fulfils
the intention of the legislature ; viz., the completion of the
work.
Walter Shanly, of Montreal, and Francis Shanly, of Toronto,
Canada, agree " to complete the Hoosac Tunnel, with its
central shaft (being a portion of the Troy and Greenfield Rail¬
road,) in accordance with the schedule hereunto appended, and
furnish all materials, and lay down and complete through the
whole length of the tunnel, one railroad track, * * * ready for
use; * * * the whole to be done by the 1st day of March, A. D.
1874, and for the sum of $4,594,268, to be paid, together with
any interest accruing under this contract, by the Common¬
wealth," &c., &c.
Authority is afterwards given to the governor and council to
extend the time of completion to Sept. 1, 1874. Whenever the
contractors, " after full and fair opportunity," have not made
the rates of progress prescribed, and " it shall plainly appear to
the governor and council that the contractors will be unable
to make such rates of progress, upon the average, the governor
and council may, after giving three months' notice, if their de¬
fault continues, put an end to the contract.
" And for the purpose of determining the amount earned by
the contractors, from time to time, as the work proceeds, and
for no other purpose, the following list of prices shall be taken
as a basis of computation." (I copy only the principal items.
8
omitting those which have no bearing upon, and are immaterial
to, the present inquiry.)
East End Section.
For tunnel enlargement,
heading " ...
extension of full sized tunnel.
Central Section.
For sinking shaft, . . . $395 per foot in depth.*
excavating full sized tunnel, . 14 per cubic yard.
West End Section.
For heading enlargement, . . |9 75 per cubic yard,
extending full sized tunnel east, 12 00 " "
clearing out and timbering the
Haupt tunnel and maintain¬
ing the same, . . . 8,500 00
furnishing and laying one track
complete, .... 14,000 00 per mile (for
all the sections.)
These prices, as has been stated, are taken solely " for the
purpose of determining the amount earned by the contractors
as the work proceeds ; " but the contractors are to receive the
engineers' certificates of amounts due, based upon these prices,
for a considerable time ; and the prices will be reduced or
increased as it will be found necessary to complete the whole.
Are these fair prices ? or are they so high that the contractors
can work on this basis and make money until it shall be found
necessary to reduce them, and then abandon the contract ?
I know of no better method of testing these prices than by
comparing them with prices paid Dull, Gowan & Co. for similar
work under the contract made with them by the Commissioners
at East End and at the Central Shaft. Tiie following table
gives the means of comparison :—
* There being 11| cubic yards to one foot of depth, this is equal to $33.62 per cubic
yard.
116 per cubic yard.
9 " "
11 « "
9
Dull, Gowan
<fc Co'a Prices.
Shanlys*
Prices.
Tunnel enlargement, ,
Heading "
Full sized tunnel,
Sinking Central Shaft,
Î8 00
7 00
7 25
25 00
fl6 00
9 00
12 30
33 62
' At the Central Section Messrs. Shanlys' price for full sized
tunnel is fl4 per cubic yard, being 93 per cent, above Dull,
Gowan & Go's price, and at West End the price for heading
enlargement is $9.75, being 39 per cent, above, and for full
sized tunnel, $12, being 66 per cent, above Dull, Gowan & Co.
These gentlemen found they could not go on under those
prices, and asked an advance of five per cent. With this slight
increase they were confident they could fulfil their contract,
and two of the Commissioners werè of opinion that, with this
addition to the prices, they could go through, apd were in favor
of giving it ; but Mr. Crocker opposed it. He has made a con¬
tract ^ith Messrs. Shanly Brothers, paying them an average of
60 to 70 per cent, more than Dull, Gowan & Co. were willing
to take.
Does this contract secure " the completion of the whole
work ? "
As I have already said, the legislature unquestionably in¬
tended that the five million appropriation should complete the
entire work of railroad and tunnel. Had it been understood
that at least two or three millions more would be needed to
put the whole road in running order, the bill would have been
so amended as to secure that, or the appropriation would have
failed. What are the facts ?
The work of the contractors commences at the eastern face
of the tunnel and terminates at the western end of Farren's
contract, with the addition of clearing out the Haupt tunnel,
(so called,) for drainage. Supposing these contractors do all
they have agreed to do, the State will have still a large amount
of work to do. Bridges are to be built across the Deenfield
Elver and the railroad is to be extended to the East End
of the Tunnel, costing $60,000. Mr. Crocker recommends the
2
10
building of a road up the valley of the Deerfield River and over
the mountain, which will cost $20,000. The railroad east of
the mountain is nominally finished ; but it is in reality utterly
unfit to form part of a great commercial line. The location is
bad in the extreme, and must be materially changed to com¬
pete with existing lines. The road-bed must also be con¬
structed for a double track. This will cost at least $20,000
per mile—for 30 miles, $600,000. The same work is to be
done from the West End of the tunnel to the Troy and Boston
Railroad, nine miles, costing $180,000. Furnishing and laying
iron for a double track, 44 miles, at the same price paid under
this contract, $14,000 per mile, will cost $616,000. (I take
this price, but a substantial rail and track will cost nearly
$20,000 per mile. The contraet contemplates, I think, a rail
weighing 56 pounds per yard. No engineer would construct a
railroad in New England for a heavy tratfic with so light a rail
as that.) The equipment of the whole line will cost at least
$850,000. Station houses, shops, side tracks, &c., will cost at
least $150,000. ^ The finishing of the Haupt tunnel will be
very expensive. The original grade has been raised about to
the top of the Haupt tunnel, and the location has been changed
nearly the width of the track southward. Of course the whole
distance, 550 feet of tunnel and 1,000 feet of cut, must be exca¬
vated anew, and the material is such that it must be arched or
made an open cut. Either method would be very costly, amount¬
ing for the whole distance from Farren's work to the point where
the line reaches grade on the western slope of the mountain, to
at least $400,000. That this item is not too high will appear
from the fact that the State has expended $420,962 (See Mr.
Crocker's Report, 1868,) in attempting to arch and in excavat¬
ing to an open cut some 200 or 300 feet between Farren's work
and the Haupt tunnel, costing $14,000 per linear foot ; and
there remain 1,500 or 1,600 feet more to be done of a similar
kind of work, which, at the same rate, would cost over $2,000,-
000. Mr. Shanly saw too clearly the difficulty of finishing this
west end, to consent to its being included in his contract.
West of North Adams, on the railroad owned by the State, is
the 'Vsmall tunnel," some three to five hundred feet long, barely
large enough to allow a train to pass through. This must be
enlarged to full sized tunnel, at a cost (I put it low,) of
$80,000.
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Another item of cost to the State is the interest under the
following agreement of the contract :—
" The Commonwealth shall permit the use by the contractors,
without charge, for the purposes of the work herein speciiied, of
the Dam and Canal, "Water Wheels, Saw Mill, Machine Shop, with
its shafting, lathes, drills, benches and ßxtures, compressors, and
other machinery for power and ventilation, now set up and in use,
with the buildings connected therewith, together with the pneu¬
matic drills, air and water pipes, cross-ties, cars, and drill carriages,
which are now in use for the prosecution of the work : stipulating
that the contractors shall keep all the same, at all times, in a com¬
plete state of repair and elRciency.
"The contractors shall hereafter make such repairs, renewals,
and additions, as shall appear to the officer in charge of the work
necessary for durability or security, or for rapid prosecution of the
wprk."
Tlie cost of these items, as per Mr. Crocker's report of 1868,
page 23, has been 1683,165. The interest on this sum for five
and a half years, compounded at six per cent, is, in round num¬
bers, f250,000. The wear and tear on siieli property, over and
above the repairs, which the contractors are required to make,
would probably be fully ten per cent. Call it five per cent, and
for five and a half years the depreciation would amount to
$215,360. As a matter of fact, this property will not be worth
one-quarter its cost when the contractors return it to the State ;
and if the contractors bought the property instead of borrowing-
it from the State, they would lose the whole depreciation, and
in fairness they ought to meet the same loss in leasing it of the
State.
We have, then, the following table of neeessary expenditures
by the State, over and above this contract, in order to complete
a first-class railroad :—
Bridges over Deerfield River and railroad.
Roads up the river and over the mountain.
Road-bed for double track, &c., east of mountain.
Road-bed for double track, &c., west of mountain.
Rail for double track,
Equipment,
160,000 00
20,000 00
600,000 00
180,000 00
616,000 00
350,000 00
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Station houses, shops, &c..
$150,000 00
Haupt tunnel and open cut, .
Small tunnel.
400,000 00
80,000 00
284,000 00
250,000 00
215,000 00
Interest averaging two years, ,
" on machinery, &c., .
Depreciation "
Total,
. $3,205,000 00
I am aware that the Eing will scout these figures as too
high. But remember that when I estimated, seven years ago,
that the entire work would cost seven or eight millions, the
estimate was pronounced absurd, and yet it has already cost
the State five millions. This contract, with interest, will add
over five millions more. The outside work, as estimated above,
will be over three millions more, making the grand total
over thirteen millions. Judging by the past—for results
have invariably exceeded estimates—the ultimate cost will
largely exceed even these figures. Remember that six years
ago Mr. Brooks estimated the total cost from that time at
$3,218,328 without interest. The interest would add about
another million. Since that time the State has spent over
three millions, including interest, and now eight or ten millions
are to be added. Remember—but it shames me to dwell upon
what everybody seems to have forgotten.
I repeat, the expectation of the legislature was, that this
appropriation would complete road and tunnel, and such has
been the public impression. The Ring knew better ; and while
encouraging this impression, they took care so to draw the Acts
that a strict construction confines this appropriation to the
tunnel. Admitting that this construction is justified by the
letter of the Acts, let us inquire :
Does this Contkact provide for Completing the Tunnel?
I answer, no.
"The Tunnel" proper is the line through the mountain,
from the face on the eastern slope to the face on the western
slope. In every report of every board of commissioners and
\st. The Tunnel is shortened in length.
13
of legislative committees, and in every legislative act, " the
tunnel" has included every foot between these limits. In
the first report of the Commissioners in 1863, (p. 59,) Mr.
Brooks defines " The Tunnel " as being the line between the
east and west slopes of the mountain ; that is, between tlie
" Old Portals ; " the Report of 1867, signed by James M.
SImte, Alvah Crocker and Charles Hudson, contains a profile
of Hoosac Mountain, laying down " The Tunnel" as extending
from the " East Portal " to the " West Portal," including 600
or 800 feet now declared not to be a portion of " The Tunnel ; "
and the Report of 1868, signed by Alvah Crocker alone, gives
the same profile and adopts the same limits to " The Tunnel."
This was the tunnel which the legislature intended should be
completed for five millions. The legislature authorized the
governor and council to make a contract—not for constructing
a portion of the tunnel, but for completing this tunnel.
This tunnel includes the " Haupt tunnel," so called. This
portion of the tunnel commences at the original entrance into the
mountain on the western slope, and was an excavation through
rock just as much as the entrance at the east face. Mr.
Haupt, finding this secondary rock at the western portal not
solid enough to stand, supported 'the roof for about 700 feet
with temporary timbers, intending ultimately to enlarge and
arch it. After Haupt left the work, a part of his excavation,
east of the timbered part, caved in, the rock proving badly
" demoralized," and thé State was obliged to remove this
material and make, for a few hundred feet, at great expense,
an open cut. " The Tunnel" at the west face thus commences
with what fjr convenience, since the open cut was made, has
been called the " Haupt tunnel ; " then, a few hundred feet
originally tunnelled, but subsequently made an open cut ; then
Farren's arched tunnel. But, I repeat, this open cut and tiie
" Haupt tunnel " have always been considered as much a part
of " The Tunnel" as any other portion of the line ; and if, for
instance, " demoralized rock " should be found under the bed
of the river between the east and west summits, or at the anti¬
clinal axis, and that should cave in, it would be just as proper
to treat all west or east of that as not a part of " The Tunnel,"
as it is to separate the part west of Farren's work from " The
Tunnel." And yet this contract does just thai; commencing
14
with the west end of Farren's work and leaving the open cut,
which must be enlarged at great expense, and 500 or 600 feet
of tunnel (" Haupt's tunnel,) west of that to be built by the
State. ,
The omission of this portion of the tunnel from the
contract, devised by somebody for the benefit of the contrac¬
tors, was an after-thought ; for this very work on the open cut
and the "Haupt tunnel" was required to be done under the
contract in the original draft. Under the heading of " Addi¬
tional Work at West End," it was provided, "The parties of
the first part (the contractors,) further undertake to complete
the west end of tlie tunnel and approach thereto, as follows,"
(after specifying 100 feet brick arch, 50 feet stone arch, and
the façade.) " The parties of the first part further undertake
and agree to do the necessary excavation in the approach to
the tunnel, on a plan to be furnished by the engineer or
engineers."
" The quantities of said excavations not to exceed 40,000
cubic yards of earth and 20,000 cubic yards of rock ; and also
to clear out the Haupt tunnel and to provide drainage- and
exit for the excavation from West End working through the
same, and to take up the rails now in the bottom of said tunnel
and deliver the same to the Commonwealth," &c., &c. Then
follow prices for this additional work, (I omit prices of work
required by the final draft.)
" For excavation, 154,000, being at the rate of 45 cents per
yard for earth excavation, and $1.80 per yard for rock. For
foundation and timber work, $9,000."
By what trick of legerdemain these requirements disappeared
from the final draft I know not. They are gone ; and this
work, confessedly necessary, which under the first draft was to
be done by the contractors, and the payment for which was to
come out of the $4,594,268, is taken off their hands and left
for the State to do.
Now, if the requirement " to do the necessary excavation in
the approach to tlie tunnel " meant anything, it meant that the
contractors should " do the necessary excavation " from the
west end of Farren's contract to the west approach—that is, to
the point where the tunnel strikes grade on the western slope
of the mountain ; that is, that they were to do all the work
15
necessary between those points to form part of the completed
tunnel, ready for the rails ; and this would have brought the
contract within the meaning of the Act which required the com¬
pletion of the entire tunnel. Whether Mr. Shanly, in his visit to
the tunnel between the making of the first draft and the adop¬
tion of the final draft, discovered that this requirement involved
a cost which he was unwilling to assume; whether the reported
change of location was devised to dodge the requirement to do
this work, I do not know ; I only know that this work was
omitted at the last moment and thrown upon the State.
The contractors are still required to " clear out the Haupt
tunnel," and thus " provide drainage and exit for the west end
working ; " hut as they would have been compelled to keep
this passage clear or else pump all the water and lift all the
blasted rock through the west shaft, the requirement is no
burden to them.
I have referred to this change of the first draft specially for
the purpose of showing that even up to this late hour all parties
agreed that an honest interpretation of the Act required the
completion of the entire tunnel, and that this meant the entire
line from the eastern to the western slope of the mountain.
The attention of the governor and council was directed to this
point, and upon the assumption that it was intended that the
contractors should " do the necessary excavation in the approach
to the tunnel," and as it was important that this should be
clearly expressed, it was suggested that the following words
should be inserted after the agreement to do the necessary
excavation in the " approach,"—" and to clear out and com¬
plete an open cutting from the west faaçde to the west end of
the tunnel built by Haupt & Co." This would have made per¬
fectly clear what was the evident intention in the first draft to
secure the completion of the tunnel from the east to the west
portal. But instead of thus making the intention of complet¬
ing the tunnel clear by inserting this clause, the requirement
that the contractors should make the necessary excavation in
the approach to the tunnel was struck out! As to the fact that
such was the intention of the legislature, and that such is the
only fair construction of the Act, there can be no intelligent
and honest difference of opinion. A contract thus palpably
violating the law is entitled to no respect from the legislature.
16
and would, unquestionably, upon a simple statement of the facts,
be instantly set aside by the courts.
Not only does this contract fail to complete the tunnel
through its whole length, but,
2d. It reduces the size of the Tunnel.
Looking over the reports for the last six years, we find that
hardly any two engineers agree as to the proper si^e of the
tunnel. In his first report Mr. Brooks says, (p. 52) : " We
would recommend the section of the tunnel to be nearly as
originally designed—say 22 feet wide at the grade line, 24 feet
wide at the widest point, 21 feet high above the track." The
size does not appear to have been definitely settled until the
contract was made with Dull, Gowan & Co. The size of the
section originally adopted was 24 feet high and 24 feet wide.
Under the contract with Dull & Gowan the size was reduced
to 20 feet high and 24, feet wide. This gives a height of 18 feet
above the rail.
It would seem that, in fixing the dimensions of a work of
this kind, a size should be adopted adequate to the probable or
possible wants of railroad traffic for centuries. It will be com¬
paratively easy to widen the tunnel after opening' it for use ;
excavation from the ¿qp will be almost impossible while trains
are running. Colonel Crocker seems to have been impressed with
the necessity of a capacious tunnel before making the contract
with Dull, Gowan & Co. Then a height of 24 feet in the clear
was indispensable-^about one foot more than Mr. Brooks
recommended. How came the reduction to be made ? It may
aid us in answering this question if we examine the bearings
of the reduction upon a contract for completion.
The section originally adopted contained 18^^^ cubic yards
per linear foot ; the section adopted under Shanlys' contract
contains 16^^^ cubic yards per linear foot. Of course a
tunnel of the size of the original section would require the
excavation of two and two-tenths additional cubic yards for
every foot from the east end to the west shaft. This
distance is 22,877 feet, divided into 6,882 feet of enlargement,
and 15,995 feet of full-sized tunnel. The additional amount
of excavation which the original section would require over
tlie new section would be : 6,882 feet, at two and two-tenths
17
cubic yards per foot =15,140 cubic yards, which, at $11.50,
the average price for enlargement under this contract, would
amount to $174,550 ; and 15,995 feet, at two and two-tenths cubic
yards per foot = 35,189 cubic yards, which, at $12.80, the
average price for full-sized tunnel, would amount to $482,825.
The sum of these two amounts is $607,875. It thus appears
that the tunnel, completed of the size of the original section,
would cost $607,375 more than if completed of the size adopted
under this contract.
This reduction of the size of the tunnel-section will appear
more remarkable when we consider that the size of Farren's
arch completed is 26X26—that is, the roof of the arch is six
feet higher than that of the tunnel. ' There has been egregious
blundering somewhere. If the arch is of the right height, the
tunnel is too low ; if the tunnel is high enough, the arch is too
high. So, also, if the original section was of the right size, the
present section is too small ; if the present section is large
enough, the original section was too large. Colonel Crocker
can take whichever horn of the dilemma he prefers.
Security for Completion.
Still more clearly, if possible, does this contract violate the
Act, in relation to the million of dollars to be " withheld," and
the " satisfactory guarantees " to be required.
The first Act, chap. 883, authorized the governor and coun¬
cil " to contract for the whole work of constructing the Hoosac
Tunnel : provided, that a contract wilh satisfactory guarantees,
can be made for the completion of the same within a period of
seven years and at a cost not exceeding $5,000,000 ; and fur¬
ther provided, that in case a contract should be made for
the completion of the tunnel, there shall bo withheld from pay¬
ment under said contract a sum not less than one million dol¬
lars until the final completion of said work and the acceptance
of the same by the governor and council."
Sect. 4 of chap. 850 declares "The contract shall provide for
payments by instalments as the work progresses, in such man¬
ner that not less than twenty per centum of each amount due
shall be reserved for a final payment on the completion of the
same."
3
18
Now it is simply absurd to affirm that this section sets aside
or modifies the positive requirement of the previous Act that a
million dollars shall be withheld. Its obvious intention was to
allow payments by instalments, which was not clearly admissi¬
ble under the previous Act, and the legislature added the
twenty per cent, clause with the purpose of excluding the
intention to interfere with the withholding of a million dollars.
Strictly interpreted,—and every word of such an Act must be
strictly interpreted in the interests of the people,—strictly in¬
terpreted, this twenty per cent. " i-eserved " forms no part of
the million " withheld." The phrase is, " twenty per centum of
each amount due;" but not a dollar of the million withheld is
" due " until " the final completion of the work," and there¬
fore, upon a strict construction, this twenty per cent, reserva¬
tion would be in addition to the million withheld. Without
claiming that such was the intention of the legislature, I affirm
that such is a fair construction of its language ; and I affirm
most confidently that this section does not modify in the slight¬
est degree the requirement of the first Act that a million dol¬
lars shall be withheld.
Does this contract fulfil the imperative conditions imposed by
the legislature ? 1st. That a million dollars shall be withheld
" until the final completion of the whole work of constructing
the Hoosac Tunnel ? " 2d. That " satisfactory guarantees "
shall be given for the completion of the same ?
1st. The Million Dollars are not Withheld.
The terms of tlie contract, upon this, the most important
part, ought to have been so clear, that he that runneth might
read. There was no lack of ability to write plain English.
Mr. E. Ilasket Derby placed his profound legal lore and
scholarly culture at the disposal of the Executive ; Mr. Alvah
Crocker, with his large experience in railroad construction, and
Mr. Tappan Wentworth, with his pettifogging acumen, were
"to the fore" in this business, and attended assiduously even
to the pathetic scene of mutual congratulation and affectionate
embrace, which graced the consummation ; and for engineering
science, were not Mr. Frost, with his world-wide reputation as
a railroad engineer, and Mr. Alfred R. Field, with, in addition
to a similar reputation, his long record of disinterested devotion
19
to the interests of the State,—were not these eminent engineers
at hand to assist the governor and council to protect the inter¬
ests, of the Commonwealth? Unite with these Mr. Charles
Allen, equally unprejudiced with Mr. Field, the official adviser
of the Executive, whose peculiar duty it was to see that the
Commonwealth received no detriment. Surely this array of
learning and skill could have drawn the vital part of the con¬
tract in terms so clear that misinterpretation and misunder¬
standing were impossible. Here it is, and I copy the whole as
a curious specimen of mystification, " darkening words without
knowledge " :—
"Now, therefore, it is agreed that no sum whatever shall be de¬
manded by or paid to the parties of the first part, under and in
pursuance of this contract, until after they shall have earned, ac¬
cording to the certificates of the engineer or engineers, as above
provided, approved by the Governor and Council, the full sum of
five hundred thousand dollars ; but twenty per cent, of each
amount so certified by the engineer or engineers shall be reserved
for the final payment on the completion of the whole work ; and,
for eighty per eent. of each amount so certified, eertificates of the
Commonwealth, under direction of the Governor and Council, and
in form to be determined by the Attorney-General, and approved
by the Governor and Council, shall be issued to the parties of the
first part, in sums of twenty thousand dollars each, setting forth the
facts, bearing interest at the rate of five per cent, per annum from
the time of issuing the same until the time of their redemption, and
they shall be paid in Boston from time to time, in the order of their
issue, as often as it shall appear by the further certificates of the
engineer or engineers, approved by the Governor and Council, that
the parties of the first part have earned so much, that, after re¬
serving twenty per cent, thereof, the Commonwealth will still
retain, in all, the full sum of five hundred thousand dollars which
is covered by said certificates of the engineer or engineers—it being
the intention of the parties hereto that the Commonwealth shall
make no payment which will at any time reduce its security from
the reserved fund of twenty per cent, and from its guaranty fund
aforesaid, below the sum of five hundred thousand dollars. And
the Commonwealth shall, until the completion of the contract,
reserve twenty per cent, of each amount due for work done, accord¬
ing to the certificates of the engineer or engineers, for a final pay¬
ment, without any addition for interest, on the completion of the
20
Avliole work herein contracted for, and its acceptance by the Gover¬
nor and Council; and, subject to the above reservations and pro¬
visions, the Commonwealth shall pay to the parties of the first part,
at Boston, on or before the fifteenth day of each month following
the performance of the work, eighty per cent, of the amount of
money earned by them, as ascertained and shown by the certificates
of the engineer or engineers ; and upon the final completion of the
whole work herein contracted for, and its acceptance by the Gov¬
ernor and Council, &c., &c., then the Commonwealth will pay to
the parties of the first part such further sum as may be necessary
to make up the full amount of four million five hundred and ninety-
four thousand two hundred and sixty-eight dollars : provided, that
no more than three million five hundred and ninety-four thousand
two hundred and sixty-eight dollars shall be paid until the final
completion of the work."
We assume that the intention is : 1st. To reserve a guaranty
fund of $500,000 in work, instead of a deposit of the same
amount in securities, upon which the governor insisted when
previous contracts were under consideration. This, be it ob¬
served, was to meet the requirement by the legislature, of
" satisfactory guarantees " for the completion of the work, in¬
dependently of the million dollars to be " withheld and 2d. To
" withhold " one million dollars.
First, the " Guarantee Fund " is not a " Satisfactory
Guarantee."
To what does it amount ? To only this and nothing more—
that half a million shall be earned before any payment is made ;
but for $100,000 of this amount, conditional certificates of "the
Commonwealth shall be issued to the contractors. These cer¬
tificates are negotiable, the object of the contrivance being to
enable the contractors to raise the money on them in the market.
This reservation is not a guaranty fund in the sense in which
a deposit of securities would be, for the obvious reason that the
Commonwealth issues conditional promises to pay four-fifths of
the amount. If the conditions are fulfilled, that is, if the con¬
tractors complete the work, they become absolute promises to
pay, and i/¿Ae Commonwealth fails to fulfil her part of the con¬
tract, they become equally absolute promises to pay. Suppose, at
any time the contractors conclude that it is not for their interest
21
to go on. The prices paid for vork thus far have given them a
profit of over twenty per cent., so that they can then stop and
make money if they can enforce the payment of these certifi¬
cates. They have only to raise difficulties with the State engi¬
neer which will give them a pretext for declaring that the Com¬
monwealth has broken the contract. An English railway
contractor used to say that he never signed a contract until his
lawyer had discovered a loop-hole. This contract is full of loop¬
holes. An ordinary lawyer will drive a coach-and-four through
a dozen such loop-holes in the passage above quoted. History
repeats itself. Emphatically is this true of the history of the
tunnel. In 1861, differences arose between Mr. Haupt and Mr.
Wiiitwell, State engineer, upon the construction of the law
relating to payments for work. Mr. Haupt stopped work.
Long investigations were had ; one, ex parle ; another, by all
parties. The most eminent engineers and railroad contractors
in the State concurred in opinion that Mr. Whitwell's construc¬
tion of the law was correct. Mr. Haupt, sincerely believing
that he had been wronged, appealed to the legislature. He
has already received f75,000 of his claim. In addition to this,
the State has paid to other parties about $200,000 for work, ma¬
terials, <fec., every dollar of both of which amounts the Slate had
previously paid to the Troy and Greenfield Railroad Company.
Endless questions of a similar kind will arise under this contract,
to be settled only by the legislature or the courts. Who knows
but they will become grave international questions ? These two
subjects of Queen Victoria, one of them a member of the
Canadian Parliament, may appeal to the National government
and the peace of the world be involved !
These certificates are held by third parties. They are payable
on the completion of a certain amount of work. If the contract
is broken by the Commonwealth, they are payable absolutely.
Who shall decide whether the non-completion of the work is the
fault of the contractors or of the Commonwealth ? The contract
provides no method of settling these questions. The holders will
say, " We took these certificates in good faith, relying upon the
fulfilment of its agreement by the State. You have violated it ;
now pay them." In all such controversies, the benefit of the
doubt, if there be any, whether the Commonwealth or the con¬
tractors be in fault, will be given to the holders of the certifi-
22
cates. The result will be, that the State will pay every
dollar of these certificates whether tiie work be completed or
not.
This misnamed guaranty fund is an illusion—a cunningly
devised contrivance to help the contractors and to seem to pro¬
tect the State. It is a repetition of the practice, in which the
Eing have become adepts, of torturing out of the law a con¬
struction which the legislature never intended. If the purpose
were to secure a substantial guarantee fund in work and not
in securities, it could have been easily done, by requiring that
payment for this amount of work should not be made, in any
form, until the completion of the entire work ; payment then to
be made with interest from the time when the work was done.
This would furnish a " guarantee," satisfactory to this extent,
for the fulfilment of the contract.
Remember that the Act was carried through the House by a
very small majority ; and even this majority was secured on the
most unequivocal assurances that five millions would complete
the whole work, and to secure the completion, the legislature re¬
quired one million to be withheld, and, in addition, " satisfac¬
tory guarantees " for the completion. Does this arrangement
give such guarantee ? I appeal to any business man wiio reads
these pages. Would you invest your own money in these eighty
per cent, certificates ? Invest, understand ; not speculate. You
—every Massachusetts man—will assume that the State will
fulfil her agreements under the conti'act. If the contractors
fulfil theirs, the certificates are as good as State bonds.
Would you invest funds for your wife and children in these
certificates with the same confidence as you would invest in the
five per cent, bonds of the Commonwealth ? That is the test
of the confidence you feel in the security given under this con¬
tract for the completion of the work. I agree that if the future
guardians of the State insist upon the rigid enforcement of this
contract, fairly interpreted in the interests of the State, and
if the contractors fail to complete the work, they will suffer
loss to this extent ; but that is not what the legislature aimed
at. It would not secure the whole object of the expenditure—
the completion of the Tunnel ; and its partial completion would
be of no value to the State, unless she carried on the work to
its final completion.
23
This " guarantee fund " amounts to just this—that the State
nominally reserves the payment of f400,000 ; (twenty per
cent, of this half million forming part of the million to be
" withheld,") and for this amount conditional certificates of the
Commonwealth are issued. If the reservation were absolute,
it would amount to only 1400,000 ; with these hybrid certifi¬
cates of indebtedness afloat, in the hands of third parties, sub-
jeet to all the contingeneies of disagreement as to the interpre¬
tation of the contract, the reservation is a delusion and the
"guarantee fund" vanishes,being in no respeet a" satisfactory
guarantee."
What would be " satisfactory guarantees " within the reason¬
able meaning of the Act ? I answer, such security as would
satisfy intelligent business men that the work would be com¬
pleted for this appropriation. Does the individual responsibility
of these contractors furnish this security ? Of this I know nothing
—the public knows nothing. It is fair to presume their means
cannot be very large, or at any rate that they are not willing to
risk them in this enterprise ; otherwise, they would not be obliged
to resort to the eighty per cent, certificates to raise money.
But whatever be the private means of these parties, it is
obvious that they furnish no security to the State. Private
property, owned by two foreigners in Canada, would hardly be
regarded by capitalists as valuable security for the fulfilment of
a contract like this, unless that property was mortgaged in
advance as security.
There are two methods, either of which would be ac¬
cepted by careful business men as a " satisfactory guarantee "
for such a work : 1st. The deposit of cash or securities to an'
amount sufficient, beyond all per adventure, to complete the tun¬
nel, the contractors taking all risks of every description ;
2d. Sureties by outside parties of abundant means to complete
the tunnel in case the contractors failed. If neither of these
could be secured, no safe contract could be made. If we
examine the prices to be paid for work under this contract we
shall find that the " guarantee fund " and the " reserved fund "
combined furnish no adequate security. When the eon-
tractors commence work, they are to be paid according to prices
stated on pages 8 and 9. These prices vary from 28 to 100 per
cent, higher than the prices paid to Dull, Gowan & Co., for
24
similar work. For much the larger part of the work, the price
is 52 per cent, higher than that paid Dull, Gowan & Co. Sup¬
pose they go on one or two years, drawing pay at these prices,
(Dull and Gowan were willing to go on at an advance of five
per cent.,) giving them a profit of 40 to 50 per cent. As
the work advances, " hidden difficulties " present themselves,
and the cost increases. They find they can stop there, lose the
twenty per cent, and make money. Differences of construction
of the contract arise. Availing themselves of one of the many
" loop-holes," they stop. The State will be at disadvantage
upon these questions of difference. The eighty per cent, cer¬
tificates, in the hands of third parties, will be recovered of the
State and payment of the twenty per cent, reservation will
ultimately be lobbied through the legislature. Is this incred¬
ible ? Remember the past !
Not only is there no " satisfactory guarantee " in this mis¬
named " guarantee fund," but
Second: One Million Dollars are not "Withheld."
The provision in the contract relating to this is, that " the
Commonwealth shall, until the completion of the contract,
reserve twenty per cent, of each amount of work done, accord¬
ing to the certificates of the engineer or engineers, for a final
payment, without any addition for interest, &c., &c." But the
whole amount of work to be done is $4,594,268 ; twenty per
cent, of this is $918,853. This, then, is the whole amount that
can be " withheld " under that clause of the contract. But
even of this amount, $100,000 belongs to the " guarantee fund,"
'if there be such a fund ; for the contract previously declares that
" the Commonwealth shall make no payment which will at any
time reduce its security from the reserved fund of twenty per
cent, and from its guarantee fund aforesaid, below the sum of five
hundred thousand dollars." Now, if it is honestly intended to
maintain a guarantee fund of $500,000, twenty per cent, of this
amount cannot be considered a part of the " reserved fund."
This twenty per cent., $100,000, cannot play a double part,—
be at the same time a part of both the " guarantee fund " and
the " reserved fund." This guarantee fund of $500,000 must
therefore be deducted from $4,591,268, leaving $4,094,268, from
which amount alone the twenty per cent, can be deducted for
25
the " reserved fund,"—that is, the amount which the legisla¬
ture required should be " withheld." Twenty per cent, of
$4,094,268 is $818,853. This, then, is the utmost dollar
which can properly be claimed to be " withheld," instead of a
million as the Act requires.
It is said,—for the reputation of that gentleman, I trust
without authority,—that the Attorney-General gave an opinion
that this provision fully met the requirement of the Act. At
the last moment, however, in consequence of a suggestion of
this difSculty made by one of the two persons who were
allowed to see the contract, it seems to have been concluded
that possibly the Attorney-General might have been mistaken,
and the following clause was added at the close of the con¬
tract : " Provided, that no more than $8,594,268 shall be paid
until the final completion of the work." Now, the Common¬
wealth had previously agreed with the contractors that twenty
per cent, only " of each amount due for work done " should be
reserved for a final payment, without interest, and this would
amount, at the outside, to $918,858, leaving $8,675,415 to
which the contractors are entitled, instead of $3,594,268, to
which this clause professes to limit them. Who can reconcile
these contradictions ? The contractors claim that they are en¬
titled to payment for the whole amount of work done except
twenty per cent, reserved ; the Commonwealth claims that this
reservation shall be so increased that it will amount to $1,000,-
000. To secure this fairly, the increase should be divided,
pro rata, over the entire work, applying to the first certificate
of the State engineer equally with the last. Who shall decide
which of the contradictory clauses is to control ? No tribunal
is provided for the settlement of these differences, and the con¬
tractors will find justification in abandoning the contract when¬
ever they find it for their interest so to do.
If the purpose had been to carry out, in good faith, the in¬
tentions of the legislature, there was no necessity of leaving so
important a matter at such loose ends. First, the " guarantee
fund " of $500,000 would have been reserved (no mongrel
" certificates of the Commonwealth " issued, to be hawked
about the market,) to be paid, with interest, on the final com¬
pletion of the work ; second, of the balance, $4,094,268, one
million should have been " withheld," leaving $3,094,268 to be
4
9
26
paid from time to time, in the proportion -which the work done
should bear to the whole work. Instead of some simple plan
like this, we have this complicated and contradictory scheme,
open to various constructions, with all sorts of " loop-holes,"
manifestly giving in no sense " satisfactory guarantees " for the
completion of the whole work.
Cost in Detail under the Contract.
¥
The length of the tunnel, as laid down in all the recent
reports, is 25,586 feet. (In his Report of 1868, Mr. Crocker, on
the profile, changes the hitherto uniform phrase, " length of
Hoosac Tunnel, when finished, 25,586 feet," to " length of
tunnel from east end to pier, 25,031 feet." I don't know where
the " pier " is, as no other allusion is made to such a point.)
For convenience in giving details of the cost, I divide the line
as follows :—
From west end to west shaft, .... 2,710 feet,
west shaft to east end of heading, . . 1,600 "
east end of west heading to central shaft, . 8,480 "
central shaft to east heading, . . . 7,515 "
east heading to east end, .... 5,282 "
The entire new tunnel to be excavated lies between the east
end of west heading and the west end of east heading, viz. :
8,480 7,515 = 15,995 feet. The contract estimates for 5,300
feet new tunnel from east end. This will leave (7,515—5,300)
2,215 feet to be excavated from central shaft east to meet work¬
ing from east end. Dividing the new tunnel between central
shaft and west shaft in the same proportions, the working from
central shaft west will be 2,480 feet, and the working from
west heading east will be 6,000 feet. The new tunnel on the
whole line will be divided as follows :—
Working west from east end, .... 5,300 feet,
from that to central shaft, . . . 2,215 "
from central shaft west,.... 2,480 "
from that to west heading, . . . 6,000 "
Total new tunnel.
15,995 feet.
27
Taking the items of work as specified in the contract and
these figures for length of new tunnel, the following calcula¬
tions are substantially correct :—
East End.
Tunnel enlargement, 4,500 cubic yds., at f 16, . 172,000 00
Heading enlargement, 28,000 cubic yds., at 19, . 252,000 00
Full-sized tunnel, 5,300 feet, 85,100 cubic yds.,
at $11, 985,100 00
Central drain and pipes, 5,600 linear ft., at $18,. 72,800 00
Central Section.
Floor,
Repairing timbering, 588 feet, at $10,
Sinking shaft, 447 feet, at $895, . .
Two iron pipes, each 1,080 feet, at $6,
Sinking sump, 6 feet, at $895, ....
Full-sized tunnel, east, 2,215 feet, 85,888 cubic
yards, at $14,
Full-sized tunnel, west, 2,480 feet, 40,176 cubic
yards, at $14, ......
Central drain and pipes, 4,695 feet, at $18,
$1,881,900 00
$2,000 00
5,880 00
. 176,665 00
12,860 00
2,870 00
502,862 00
562,464 00
61,035 00
West End Section.
Enlargements, 52,800 cubic yards, at $9.75, . $514,800 00
Full-sized tunnel, east, 6,000 feet, 97,200 cubic
yards, at $12, 1,166,400 00
Arching, 4,500 M brick, at $22, .... 99,000 00
Central drain and pipes, 8,800 feet, at $13, . 107,900 00
Central drain only, 1,600 feet, at $4.85, . . 6,960 00
Central drain west of west shaft, 2,710 feet, at $8, 8,130 00
Stone arch, 28,000 00
Façade, 26,000 GO
Haupt tunnel, 8,500 00
Laying track whole line, 41 miles, at $14,000, . 68,000 00
Total,
,680,676 00
28
I believe that the data for these calculations are substantially
correct, and that the result approximates the actual cost, on
this basis of prices, as iieaidy as any calculation can do in so
complicated a problem. The total cost foots up nearly f100,000
more than the amount payable under the contract. By reduc¬
ing the amount of excavation assigned to the central section,
where the price is 814 per cubic yard, and increasing propor¬
tionally the amounts assigned to the east and west sections,
where the prices arc $11 and $12, the aggregate might be
brought within the amount payable under the contract. I
assumed the proportions adopted in the contract, and verified
them by consulting some of the best engineers in the State.
But the calculation proves this—and my chief purpose in
making it was to ascertain whether such is the fact—that the
prices adopted as the basis of computing the amount earned,
leave no margin for increase in case it should be found that
the cost of work increases, and they cannot be reduced for the
purpose of securing such margin without the consent of the con¬
tractors. The contract places the State in this dilemma. The
contractors can continue the work so long as they are sure of
profit. If they find that the cost increases so as to threaten
loss, they can stop, and the State has no remedy. The prices
are excessive. By referring to pages 9 and 25 it will be seen that
Shanlys' prices exceed those under Dull and Gowan's contract
as follows : On 4,500 yards tunnel enlargement, 100 per cent. ;
on 80,000 yards heading enlargement, 28 per cent. ; on 258,000
yards full-sized tunnel, 56 per cent. ; on central shaft, 50,000
yards, 35 per cent. "We are bound to assume that Col. Crocker
considered the prices paid to Dull and Gowan adequate, for he
refused to increase them. If those prices were fair, these are
enormous, and give the contractors wide margins. They can
go on until they find the cost increases, and then stop. It will
be easy to raise questions which will throw the blame of non-
fulfilment of the contract on the State. I do not charge that
such is the present intention, but that the contract furnishes
no remedy for such a proceeding, except in the 20 per cent,
reservation and in the "guarantee fund," represented by cer¬
tificates. Their margins may be wide enough to cover these..
If not, by throwing the blame on the State they will ultimately
recover both reserve and certificates. In either case the con-
29
tractors can get out with profit whenever they please ; the
State is bound.
No greater oversight—to use no harsher word—could be
committed than to make a contract of this magnitude, and with
so many uncertain elements, without providing some mode of
settling differences of construction. It seems more singular
that it was not done in this case from the fact that, while this
contract was under consideration, a contract for filling a portion
of the South Boston Flats was before the Governor and Coun¬
cil; and it was specially urged by the Governor and Councillors
in favor of that contract, that it contained a provision that it
could be annulled at any time by the State on re imbursing the
contractor for actual expenses. If such a provision was neces¬
sary ill that case, for a still stronger reason it was in this.
Changes in favor of Contractors.
It would aid in understanding the one-sided cliaracter of tliis
whole transaction if we should compare, in detail, the first
draft of the contract with the draft finally signed. Here is
one instance of a material cliange in favor of the contractors.
The first draft, under the head of " Additional work at West
End," provides that the contractors shall " complete the west
end and approach thereto, as follows : 100 feet brick arch on
west end of Farren's arch ; 50 feet of stone arch west of that,
botii to be of same dimensions as Farren's arch, façade ; " and
" the contractors undertake and agree to do the necessary
excavation in the approach to the tunnel, on a plan to be fur¬
nished by the engineer or engineers ; " and also " to clear out
the Haupt Tunnel and to provide drainage and exit through
the same, &c., &c." For this work they were to be paid as
follows :—
Brick arch, ....
Stone arch, ....
Façade, ....
Excavation, ....
Foundation and timber work.
Opening Haupt Tunnel,
$13,500 00
18,500 00
25,000 00
54,000 00
9,000 00
10,000 00
Total,
$125,000 00
30
In the contract signed, only these items remain :—
Stone arch, $23,000 00
Façade, 26,000 00
Opening Haupt Tunnel, . . . 8,500 00
Total, $57,500 00
The difference is $67,500, mainly in the item of excavation
omitted, and tliis work, instead of being done by the contract¬
ors and paid for out of the appropriation, is left to be done and
paid for by the State. Why this cliange in favor of the con¬
tractors ? Undoubtedly it was found that the change of location
west of Farren's work, which seems not to have been thought
of when the first draft was made, involved a large increase of
the cost of excavation beyond tlie estimate in the first draft,
and Mr. Shanly's visit in the meantime revealing that fact, he
refused to agree to include that work in the contract. Tiie con¬
tract must be made before the legislature met ; there was not
an liour to be lost; this important item was struck out; the
contractors save $67,500 and the State loses it, and a great deal
more in finishing the " approach" which the first draft bound
the contractors to do.
I might cite other cases of change—some apparently in favor
of the State ; but practically of no avail, as the " loop-holes "
give the contractors the way of evasion—others in favor of the
contractors. Take one instance of the looseness which charac¬
terizes the whole document. Under the head of " work to be
done," at tiie east end, the new tunnel is called, " extension of
full-size section of tunnel ; " at the central section this is
called, " to excavate a tunnel east and west; " at the west end
it is called " extension of a full-size tunnel eastward." It
seems at least singular, that uniform terms were not used to
describe precisely the same kind of work in the different
sections. The attention of the governor and council was di¬
rected to these variations, and they were urged to avoid all possi¬
bility of difference of interpretation, by making the phraseology
uniform—say, " to construct and complete full-sized tunnel."
In contracts of this magnitude, words are things ; and without
intimating fraudulent intention, it is perfectly clear that uni-
31
form and definite description would exclude varying interpreta¬
tion. The two phrases, " extension of full-size section of tun¬
nel" and " extension of full-size tunnel" may mean the same
thing ; if so, but one phrase should have been used ; but either
of these phrases may mean something very different from the
phrase, " to excavate a tunnel;" and the contractors will be
at liberty to put upon this phrase any construction which may
suit their convenience.
The Hoosac Tunnel Matter Settled !
We hear every day remarks like these: "Well, it is a
wretched business, but we know now what the tunnel will cost ;
this mischievous element is out of our legislation and politics,
and the vexed question is settled forever." I agree, a final
settlement might be cheap at five million dollars, if this were
the only mode of settlement, and if this secured consumma¬
tions so devoutly to be wished. Let us see.
Cost of the Tunnel,
Governor Bullock, in his Valedictory Address, gives the cost
of the whole line, " excluding interest," as follows :—
Cost of railway, $1,666,250 GO
Cost of tunnel, ...... 3,002,176 00
Shanly contract, 4,594,268 00
Total cost of tunnel and railway, 50 miles long, $9,262,694 00
Appended to the last report of Mr. Latrobe, (Senate Docu¬
ment, No. 6, 1869,) is a " statement of commissioners on Troy
and Greenfield Railroad and Hoosac Tunnel." The statement
is anonymous, and therefore nobody is responsible for its cor¬
rectness. In this statement, the cost of road and tunnel is
based upon the amount of appropriations by the legislature
deducting interest charged to the same, upon the amount paya¬
ble under the Shanly contract, and upon an estimate (by these
anonymous somebodies,) of the cost of completing the road.
The statement includes nothing for interest, for depreciation of
machinery, for equipment, station-houses, &c., &c., or for
double track ; and its estimates of cost of completing the road
32
Qand tunnel') are of the same character as similar estimates
made by tunnelites for the last ten years. The only correct
method of ascertaining the cost is to take the actual expendi¬
tures to this time, the amount of the Shanly contract, the
amount under Farren's contract, estimated cost of completing
road and tunnel, and the interest, compounded half yearly at six
per cent, on the whole, to the end of the time for completing
the Shanly contract, viz., to July 1, 1874.
Expended previous to January 1, 18G3,
Interest, eleven and one-half years,
Expended in 1863, .
Interest, eleven years.
Expended in 1864,
Interest, ten years.
Expended in 1865,
Interest, nine years.
Expended in 1866,
Interest, eight years.
Expended in 1867,
Interest, seven years.
Expended from Nov. 1, 1867, to Jan. 1, 1869
Interest, six years,.
Paid by State, under chap. 156, Acts of 1862
Interest, from July, 1863, eleven years, .
Payments from Jan. 1 to March 12, 1869, (see
House Doc., No. 157, 1869, p. 2,)
Interest, five years,
Shanly contract, ....
1
Interest on $3,594,268, averaging 2-^
years.
Cost of completing, (p. 12,) .
Paid for Southern Vermont Railroad,
Interest, twelve years, ....
Paid H. Haupt, under Acts of 1867 and 1868
Interest, six years,. . . . .
Paid commissioners from 1862 to 1868, inclu
sive, estimated, as there are no returns.
Interest, from July, 1865, nine years.
1968,862 00
931,173 00
208,000 00
188,032 00
207,000 00
164,544 00
477,142 00
334,667 00
590,904 00
356,787 00
975,514 00
499,268 00
484,302 00
196,000 00
175,000 00
158,200 00
46,667 00
16,000 00
4,594,268 00
571,818 00
3,205,000 00
200,000 00
204,000 00
75,814 00
31,882 00
36,000 00
25,200 00
Total, 115,922,074 00
33
I challenge refutation of these figures. I am aware that my
estimate for cost of completion will be scouted by the Ring as
extravagant ; but I appeal to facts for the last ten years. No
estimate I have ever yet made of future cost has exceeded the
actual cost ; and there has never an estimate been made by the
Ring where the result has not exceeded their estimate, three,
five, ten fold. I here record the prediction, that if this line is
ever completed and put in good running order as a part of a
great commercial road, constructed and equipped to compete
with existing lines, the cost will exceed my estimate.
I repeat, I challenge criticism of these figures. There is not
an item that is not legitimate. Governor Bullock omits inter¬
est. He might as well have omitted cost under the Shanly
contract. The interest is just as legitimate a charge as the
principal. Every dollar of this item has been paid or is to be
paid. Five millions of scrip have already been issued, and the
interest is to be paid by an annual tax. This annual interest
will be doubled before the tunnel is finished, and will, of course,
involve an annual tax increased in the same proportion. It is
—I will not say a cheat—a mockery to tell the people that the
interest on the cost of the tunnel does not enter into the burden
which this swindle imposes. Every railroad company which
keeps honest accounts charges interest to construction, while
constructing the road, as legitimately as cost of rails or road¬
bed.
It tluis appears that the cost, instead of being, as Governor
Bullock states it, 19,262,694, will be 115,922,074 ; that is, these
fifty miles of railroad will cost seven millions more than Gov¬
ernor Bullock estimates, and as much as he estimates the cost
of the entire line, one hundred and eighty-nine miles, from
Boston to Troy ! By just such illusions, successively adapted
to the existing exigency of the swindle, has the State been
drawn into this Maelstrom.
Cost on Auditor's Basis.
A statement of the cost, on the basis of the auditor's report,
(House Document, No. 157,1869,) will show that my figures
are below the facts.
I may observe, in passing, the large discrepancy between the
auditor's statement of actual payments, (not including interest,)
5
34
and the statement by the commissioners of expenditures,
(House Document, 192, 1869, pp. 22 and 23.) The total ex¬
penditures, as stated by the commissioners, from the assumption
of the work by the State to January 1,1869, have been $2,570,-
982. The actual payments, as stated by the auditor, between
tbe same periods, (pp. 2 and 3,) including payments to H.
Haupt & Co., and other small items, and excluding payments
since January 1, have been $3,423,158, exceeding the amount
stated by the commissioners nearly a million dollars ! There
can be no doubt of the correctness of the auditor's figures.
The money is gone—where ? The commissioners ought to
know, and ought to tell us. Their term of service expired
December 24. Their report was sent in March 22. It would
seem that in three months they should have been able to bring
their accounts within less than a million dollars of the auditor's
books.
The auditor's statement is as follows :—
Payments.
"Five per cent. Sterling Bonds issued between April 1, 1858,
and March 7, 1861, £114,500,=|554,180 00
Five per cent. Federal Bonds
issued April 1, 1860-61, . 416,500 00
$970,680 00
Cash payments on auditor's certificates and wai--
rants drawn by the governor or the treasurer
to the commissioners appointed under the Act
of 1862
1862, . . .. $6,480 83
1863, . . . 75,496 55
1864, . . . 466,394 00
1865, . . . 512,046 39
1866, . . . 629,749 99
1867, . . . 843,038 90
1868, . . . 807,185 38
$3,840,392 04
1869, on account of railroad and
tunnel, ..... 46,667 10
35
1868, Claims of H. Haupt and
H. Haupt & Co., under spe¬
cial appropriations, . . f75,814 00
1860-62, Engineers, . . 1,900 47
1860-68, Pay and expense of
legislative committees, . 3,140 00
1868, Engraving and printing
scrip, 1,915 00
Total payments on certificates, $3,469,825 61
Cash payments from the treasury on executive
warrants without auditor's certificates :—
Land damages and other claims authorized
by chapter 156 of the Acts of 1862, . . 152,784 82
Interest on bonds, 711,555 62
Interest on temporary loans made necessary
by failure to negotiate bonds, . . . 273,359 07
Premium on gold, ..... 265,735 08
Exchange for interest on sterling bonds, . 47,587 02
Total payments.
. $5,891,530 22'
Taking the payments as stated by the auditor, and comput¬
ing the interest, we have the following cost : —
Previous to 1862,
Interest,
1862,
Interest,
1863,
Interest,
1864,
Interest,
1865,
Interest,
1866,
Interest,
1867,
Interest,
1868,
, $970,680 00
999,800 00
6,480 00
6,120 00
75,496 00
65,50(r 00
466,394 00
372,800 00
512,046 00
358,400 00
629,749 00
^ 378,000 00
843,038 00
430,000 00
807,185 00
36
Interest,
1869,
Interest, ......
Haupt & Co., and other small items.
Interest, .......
Land damages, &c., ....
Interest,
Exchange and premiums.
Interest, average 9 years,.
Total cost to present time.
Cost of completing Shanly contract,.
Interest, ......
Work outside of contract, (ante, p. 12,)
Total cost, ....
. $338,940 00
46,667 00
16,140 00
82,000 00
34,860 00
• 152,784 00
139,230 00
, 313,322 00
219,300 00
. $9,564,931 00
. 4,594,268 00
. 571,848 00
. 3,205,000 00
$17,936,047 00
If the premium on gold should continue as at present to the
end of the contract, the item of premium and exchange would
add at least another million. The amount now is between two
and three hundred thousand dollars yearly, and is increasing
rapidly as new scrip is issued to meet new expenditures. Sup¬
posing that the cost of premium and exchange, as currency
gradually approaches par, should equal the present premium
for two years, this would add over half a million to the cost,
making the total cost eighteen and a half millions. I think no
reasonable man will charge that my former estimates of cost
have been extratagant.
From this amount the receipts are to be deducted. These
are stated by the auditor to have been, including interest, up
to March 12, $266,058 ; interest five years, $81,350 ; total,
$347,3^18. To this are to be added receipts from the same sources
to the end of the contract, amounting to nearly half a mil- ■
lion more ; making a total of, say $800,000. Deducting this
amount from the total cost, there will remain nearly eighteen
millions as the net cost on the basis of the auditor's report. I
have omitted receipts for premium on scrip sold, for the reason
that this forms no part of the income of the tunnel ; and it may
happen that when the scrip falls due it may cost the State more
to buy the gold than was received for premium on scrip.
It will be observed that the cost on the auditor's basis
â7
largely exceeds my estimates ; for the reason, that my esti¬
mates are based on the commissioners' statements of expendi¬
tures ; the auditor's result is based on actual payments. I
have the right to say, with pride and as a conclusive reply to
all charges of extravagance, that the cost on the basis of actual
payments largely exceeds any estimates I ever made.
Yearly Tax.
Let us look for a moment at the yearly tax to be paid by the
people merely for interest. True, this can be covered up by
resorting to the dishonest and wretched policy of paying inter¬
est by borrowing the money to be paid hereafter. That has
been the policy heretofore ; it should not and cannot continue
much longer. It is bad enough to throw upon posterity the
burden of paying the principal ; the present generation ought
at least to pay the interest, as a partial penalty for its folly in
committing the State to this work.
The auditor states the payments up to this time, after
deducting receipts, at $5,733,967. Interest at five per cent.,
$286,700. Add to this amount for premium and exchange,
say $250,000, and we have $536,700 as the yearly tax which
must be paid unless we continue to fund the interest.
To WHAT PURPOSE IS THIS WaSTB?
It would be some consolation to the tax-payers if this expen¬
diture of fifteen or twenty millions promised any beneficial
results ; if the line when completed would furnish any re¬
munerating income ; or even if indirectly the State would
derive any advantage from it. I will not now waste time in
repeating what I have heretofore proved, that if this line should
be completed, the State, having about fifty miles of road, which
will have cost at least seventeen or eighteen millions, will, at
best, receive a remunerating income on the amount equal to
the average cost of fifty miles of railroad forming a part of a
line with a traffic similar to this and occupying a similar place
in the line. This would be, at the outside, three millions. On
this amount we may expect an income if this line becomes part
of a great line of travel. All over this sum will be thrown
away.
38
I have shown too abundantly that this line promises no indi¬
rect advantages to the State ; that it opens no new traffic ; that
it only ■ competes, at Schenectady, for the traffic which comes
over the New York Central ; and that every item of that
traffic, passenger and freight, would come to Eoston just as
well if the tunnel should never be opened.
A Grkater Swindle in the Future.
In one way alone could this line hope to have any traffic
which could be remunerating, and that is by building a rail¬
road from Troy to Lake Ontario. This purpose is already fore¬
shadowed, and I only allude to it now to warn the people that
tliis follows the completion of this contract. It will then be
found that the line is worthless, and the same tactics which
liave committed the State to this work will be brought to bear
upon committing us to that still more stupendous swindle. It
will be vain to argue that, when that line is opened to Lake
Ontario, the traffic will mainly go to New York, and that even
that which might be brought to Boston must be divided with
the Boston and Albany road. The cry will be, " You will lose
all the tunnel has cost unless you build this ; " and, remember¬
ing how this has been- carried tlirough, and considering the
immense increase of strength which the Ring will receive from
the interests involved in carrying that scheme through, he
must be a rash man who doubts its final accomplishment.
Stop.
Is the tunnel worth finishing ? It will cost, from this time,
as follows :—
Shanly contract,
Interest,
Work outside of contract.
Estimate for premiums and exchange, .
^9,571,116 00
. 14,594,268 00
571,848 00
. 3,205,000 00
200,000 00
Is it advisable to spend nine or ten millions more for a road
which, at the outside, will be worth three millions ? The ques¬
tion admits of but one answer. Then stop. Annul the con-
39
tract. I have shown that it clearly violates the Act authorizing
it. The contractors had fair notice that it would be contested.
They can only claim a re-imbursement of actual expenditures.
Buy them off, if you will. Throw in a million or two—more
than on their most extravagant calculations they could hope to
realize—if thus only we can be freed from this calamitous en¬
terprise. To the connecting railroads the tunnel is worth
something. Let them take it. Give it to them. They assured
us last year that it could be completed for five millions. It
will be worth three millions to them—never to the State. Give
them two millions more, if need be. The day is coming when,
if the State prosecutes this work, the operations of the Lobby
and the Ring will be more audacious, more demoralizing upon
tbe politics and legislation of the State, than they have ever yet
been. " Settled?" We have hardly seen the beginning of the
end.
" Bad faith for the Commonwealth to annul the contract ! "
This comes with poor grace from parties who have broken every
contract with the legislature for twenty years—never fulfill¬
ing their own promises, uniformly perverting the law to give
them something which the legislature never intended to give.
Bad faith ! The contract clearly violates the law, and on
that ground the right of the legislature to annul it is perfect.
But go farther ; to stop all possible complaint, pay all actual,
even prospective, damages. Build a bridge of gold for the
bummers, if thus only we can be rid of them. Even conceding
to the contractors their éxtremest demand, millions upon mil¬
lions will be saved, and thus an end put to this waste of the
hard-earned fruits of our industry, and to the public and private
demoralization inseparable from such swindles.