That since the adjournment of the legislature the Committee in a body
visited the tunnel and railroad in June, and again in October, and they
continued their examination of the condition and progress of the work by
sub-committees in the months of July, August, September, November and
December; (one of the examinations being exclusively devoted to the
operations on the railroad which were commenced late in October;) the
others to the tunnel and the various structures and mechanical
operations connected therewith, including an examination of the existing
contracts, and an inquiry into the general organization adopted to carry
out the laws and purposes of the State in regard to the enterprise.
The Committee have also examined the records and the doings of the
directors of the Troy and Greenfield Railroad from the organization of
the corporation until the surrender of the railroad to the State, and
have made extracts from the records to show the financial condition of
the corporation, its dealings with the contractors for constructing the
road and tunnel, and also the embarrassed condition of the contractors
and corporation from 1855 to 1861, which finally led to the practical
abandonment of the contract on the part of Messrs. H. Haupt & Company,
and the surrender of the road to the State under the mortgages which had
been given to secure the loan advanced by the Commonwealth in aid of the
road and tunnel. These extracts from the records, with extracts from
some of the laws passed upon the subject of the railroad and tunnel,
together with remarks of the Committee upon the legislation of the
State, the doings of the directors, and their efforts and those of the
contractors to prosecute the enterprise being too long for the body of
this Report, will be found in the Appendix at A. And a synopsis of the
action and condition of the corporation at the time of, and previous to
the surrender of the road, and the relation of the contractors to the
corporation and to the State, will be stated before entering upon the
particular description of the condition and progress of the work the
present year, as observed by the Committee.
The charter of the Troy and Greenfield Railroad was granted in 1848,
authorizing the construction of a railroad from a "point on the Vermont
and Massachusetts Railroad, at or near Greenfield," to the line of the
States of New York or Vermont, to connect with any railroad that might
be constructed from or near the city of Troy in New York. Its capital
stock was limited to $3,500,000. Authority was given in the charter to
contract with any contiguous railroad leading from either of the
above-named States, for the use of the same or any part thereof, or for
operating the two roads conjointly, or for hiring such other railroad,
or for letting their own railroad to the owners of any other road which
should compose a part of the railroad line between Troy and Boston, of
which the Troy and Greenfield Railroad should be a part.
The corporation was organized June 1, 1848. April 11, 1849, the
directors voted an assessment of three per cent. upon its capital stock,
and this assessment was the only one that was substantially collected,
and on the first day of October, in the same year, they voted to put the
construction of the road under contract as soon as sufficient
subscription should be obtained therefore, commencing at Pownal,
Vermont, and Greenfield. In January, 1850, $2,203.94 had been received
into the treasury, and $2,203.57 had been expended with the approbation
of the president of the corporation, leaving in the treasurer's hand
$0.37.
Sundry assessments was voted from time to, time, the last vote being in
May, 1852, amounting in all to 75 per cent. upon the subscriptions, but
they were rescinded in July, 1858, and a new series of assessments were
afterwards made which the Committee understand were as unproductive of
beneficial results as were the former, upon which only partial payments
had been made by a portion of the subscribers.
A contract for constructing the road was made with Messrs. Gilman and
Carpenter in October, 1850. At the close of the year 1850, stock to the
amount of $250,800 had been subscribed, of which $72,000 was payable in
land damages, and $50,000 was taken by the contractors.
At this period in the history of the corporation, with $138,800 of
available cash subscription, of which three per cent. had been paid, the
corporation applied to the State for aid by a loan to enable it to
prosecute the enterprise it had assumed, and this application was
continued without success until 1854, when the legislature passed the
Act authorizing a loan of $2,000,000, upon conditions which are
particularly set forth in the Loan Act, (see Appendix A and B,) which,
modified by subsequent legislation, discloses the policy of the State in
granting its assistance to the undertaking.
It is proper to state, that at the time this loan was granted, there was
no prospect of opening this line of travel by individual efforts, and
the amount of the loan, taking into consideration the then assumed
estimates of its probable cost, shows that the State assumed to defray
the cost of an enterprise to the completion of which available
individual means had proved inadequate.
In 1855, a contract for the construction of the road and tunnel was made
with E. W. Serrell. The capital stock of the corporation was fixed at
$1,500,000. This contract was changed two or three times, and finally
ended in one executed by H. Haupt and Henry Cartwright. For an account
of these changes, and of the votes and transactions of the directors and
the contractors, reference is made to Appendix A, where the same will be
found in detail.
Upon a careful examination of these votes and transactions, the
Committee come to the conclusion that the financial embarrassments of
the corporation from the year 1855, when the first contract with E. W.
Serrell was made to the time of the suspension of the works under the
last contract with H. Haupt & Co., are apparent. And it is also apparent
that during the same time, the contractors assumed, to a very great
extent, the control and responsibility of the enterprise.
Under the first contract, and on the day of its acceptance, the
direction of the engineering operations within the tunnel was left with
the contractor; excepting measuring for estimates and the final
acceptance of the work; and on his subscribing $600,000 to the capital
stock, $800,000 (less the new subscriptions,) was added to the contract
prices for the work.
Under the second contract with Serrell, Haupt & Co., the directors voted
to substitute bonds for stock in payment of the work until 2,000 feet of
the tunnel was completed, and to pay the discounts and losses to which
the contractors might be required to submit, not exceeding fifteen per
cent. per annum; and also, to issue to the contractors bonds to the
amount of $100,000 in addition to payments. Said bonds were to be sold
or pledged by Haupt & Co., to enable them to raise means to carry on
their operations under the contract.
On the dissolution of the firm of Serrell, Haupt & Co., in July 1856,
Serrell resigned his office as director and was chosen consulting
engineer. At the same time, W. A. Galbraith, one of the contractors in
the following contract, was chosen a director. Thereupon a new contract
was made with H. Haupt, W. A. Galbraith, C. B. Duncan and Henry
Cartwright. Under this contract the estimates were to be made by the
company's engineer. In July, 1857, the records show that no payments had
been made the contractors for more than a year, and that the work could
be carried on only by the continued efforts and personal credit of the
contractors.
In February, 1858, the contract was again changed, and Messrs. Haupt and
Cartwright engaged with the corporation to complete the road and tunnel.
At this time, the records show that no payments had been made under the
previous contracts "for more than two years; that the work could only be
carried on by the continued efforts, increased expenditures, and
personal credit of the contractors."
By a provision of this contract, any revenue arising from the use of the
road, or any portion of it, was assigned to the contractors until their
claims upon the company were adjusted; and the payment of all the
company's debts was to be deferred until that of the contractors was
satisfied; and Haupt & Co. agreed to maintain the organization of the
corporation, pay its bills for printing, and advance therefore a sum not
less than $500,000.
The same year the Rensselaer Iron Company was allowed a lien on the iron
delivered to the contractors until the same was paid for. In 1859, H.
Haupt relinquished his pecuniary interest in the contract, and was
appointed chief engineer of the corporation. (See Appendix A, page 62.)
These transactions in which the contractors participated, (one of whom
was on the board of directors,) show conclusively that they were fully
apprized of the condition of the corporation, from the date of their
first connection with the work to the time of its "suspension," no claim
during the whole period having been made by them against the
Commonwealth for any work done for the corporation.
The existence of the mortgages to the State were of course well known to
the contractors. They were given in pursuance of laws passed by the
legislature, and for security of the payments received by the
contractors for their services. The right of the Commonwealth to take
possession of the railroad under the mortgages, must have been well
understood. Further, the corporation, in surrendering the road to the
State, did no injury to the contractors, for the act of surrender did
not take place until after the contractors had suspended work upon both
road and tunnel, and practically abandoned the enterprise; thus leaving
to the State the alternative, either to take possession of the work and
complete the road and tunnel, or to abandon it; and, in addition to the
loss of the advances already made, forego the anticipated benefits of an
additional avenue for Western traffic.
The treasurer's books do not show any settlement between Haupt and
Company and the corporation. The account standing upon the ledger shows
a large balance against the contractors; but the Committee are informed
that subsequent to May 30, 1863, a settlement was made upon the basis of
Mr. Stevenson's report (see Appendix A,) and that Mr. Haupt received, in
conformity with the contract of H. Haupt & Co. with the Troy and
Greenfield corporation, payment for all labor done and material
furnished by said H. Haupt & Co., for the corporation, and that all
matters between the parties have been adjusted.
Although the accounts between the contractors and the corporation are
understood to be settled, it may be interesting to examine the account
of the Commonwealth with the enterprise and compare the value of the
work done by the contractors at the time of its abandonment by them,
with the payments made to them therefore, from the treasury of the
State.
The amount paid from the State treasury for work
and materials upon the tunnel, $170,131 95
Amount paid upon the road west of the tunnel, 50,000 00
Amount paid upon the road east of the tunnel, 505,256 92
-----------
$725,388 87
Amount earned by contractors under
the contract upon the tunnel, $129,475 00
Amount earned by contractors under
the contract, upon the road west
of tunnel, 50,000 00
Amount earned by contractors under
the contract, upon the road east of
tunnel, including temporary work, 410,204 00
-----------
589,679 00
-----------
$135,709 87
Overpayment in reckoning sterling exchange, say, 44,000 00
-----------
Overpayment when the work stopped in July, 1861, $179,709 87
Further payments made upon the work by the
State from July 1861 to January 1867, 140,226 95
-----------
Total amount paid more than earned, $319,936 82
From the foregoing statement it appears that the contractors with the
Troy and Greenfield Railroad corporation, have received from the State,
three hundred and nineteen thousand nine hundred and thirty-six dollars
and eighty-two cents more than the value of the work which the
corporation surrendered under the mortgage, and that the State has lost
that amount of money in its efforts to assist in the construction of the
work. It is proper to add as the judgment of the very intelligent
chairman of the commissioners (Mr. J. W. Brooks,) from whose statement
to the Committee the foregoing figures are taken, that the loss to the
State in the transaction by the failure of Messrs. B. Haupt & Co., to
perform their contract in a proper manner, will reach the sum of three
hundred and fifty thousand dollars. (See statement, Appendix C.)
The Commonwealth having taken possession of the road and tunnel, and by
the legislation of 1862 and 1863 undertaken their construction with the
free consent of the corporation, the directors by an appropriate vote,
expressed their concurrence with the proceeding, and their reliance upon
the "good faith of the legislature" to complete the enterprise which had
exhausted the resources of its immediate projectors. The last act of the
corporation, as appears by the records, was the choice of officers in
August, 1865, when Alvah Crocker was chosen president and Wendell T.
Davis, clerk and treasurer.