A A 3 9 3 ; 5 | 9 ! 3 i State of Tennessee, Prison operations From December 1, 1898 to December 1, 1900 THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES STATE OF TENNESSEE. PRISON OPERATIONS FROM DECEMBER i, 1898 TO DECEMBER 1, 1900. RKPOKT OF J. W. ALLEN, AUDITING ACCOUNTANT, TO HON. BENTON McMILUN, GOVERNOR. 1 )\TK, JAM'ARV 2.|. Published 1>\ authority late Joint Resolution No. ■ Puhi.ishim; 1 1 1 \- u 1 1 STATE OF TENNESSEE. PRISON OPERATIONS FROM DECEMBER i, 1898 TO DECEMBER i, 1900. REPORT OF J. W. ALLEN, AUDITING ACCOUNTANT, TO HON. BENTON McMILLIN, GOVERNOR. DATE, January 24, 1901. Published bj authority of .Senate Joint Resolution No. — . < .cisi'i.i. \ ii\ mi \ 1 1 Publish i\<. Co. vasiivm.i.i € • f 1 •* • • * 4 , • ■ | * • • * ; ••••«• t ed U V REPORT. X ash vi Li. k, Tenn., January 24, 1901, Hon. Benton McMillm, Governor, Nashville, Tenn. Dear Sir: Having been appointed on November 27, 1900, to investigate and audit the books and accounts of the State Prison, f roan December 1, 1898, to December 1, 11)00, I make the following report: Cross earnings, two years $748,92S 30 Expenses of operations, two years 506,939 88 i— .Net earnings, two years $241,988 42 >- December 1, 1898, to December I, 1899: 85 Gross earnings $313,709 69 Expenses of operations 220,382 00 —j Net earnings $ 87,327 69 December 1, 1899, to December 1, 1900: m Gross ( arnings $435,218 61 > Expenses of operations 280,557 88 o Net earnings $154,660 73 .MAIN PRISON. O Cross earn in us, h\o years $278,817 08 Expenses of operations, two years 215,133 L9 Net earnings, two ,\ cars $ 33,383 39 uj 2 December l, 1898, to December l, L899: _» Gross ( arnings $129,684 13 bxpenses of operal ions 111,700 lo Net earnings $ 17,984 03 I j i eember i, L899, to December l. L900: Gro 9 earnings $119,132 65 Expenses of operations 133,732 79 N.t earnings 15,399 86 448926 _4 — BRUSHY MOUNTAIN. Gross earnings, t wo years $470,111 22 Expenses of operations 261,506 69 Vet earnings $208,604 53 December I, 1898, to December I, 1899: Gross earnings $184,025 26 KxpcnseS of operations 114,681 60 Net enmings $ 69,343 66 December 1, 1899, to December 1, 1900: Gross earnings $286,085 96 Expenses of operations 146,825 09 Net earnings $139,260 87 The foregoing' is a general summary of the results of my investigation, a detailed statement of which, by months, amounts, and accounts, in tabulated form, numbered nu- merically as to the Main Prison, and alphabetically as to Brushy Mountain, is hereto attached and made a part of this report. MAIN PRISON. Statement 1. This statement shows total disbursements, gross and net earnings, by amounts and accounts, from De- cember 1, 1898, to December 1, 1900. Gross earnings $278,817 08 Expenses of operations 245,4:;:; 19 Nei earnings, two years $ :;:'>,;ss:; 89 Vouchers issued by the Prison Commissioners are sight drafts upon the State Treasury; therefore they constitute the: expenditures of the State Prison. From December 1, 1.898, to December 1, 1900, vouchers have been issued as follows 1 : Red vouchers $2.:0.161 54 While vouchers 15,271 65 Total $245,433 19 — 5 — December 1. 1898, 10 December 1, 1899s Red vouchers $10:>.ti7^ :.'; White vouchers 6,022 18 Total $1 11,700 40 December l. J899, to December l. 1900: Red vouchers $124,483 27 White vouchers <),24 ( .» 52 Total $133,732 79 These amounts constitute the expenditures of the Main Prison given in this statement. White vouchers arc ge i erally issued on account of moneys expended and charged to the Building Fund ; but the records and books show that this fund was not only exhausted on December 1, 1898, hut that the account had been overdrawn at that date in the sum of $7,8(55.80, the details of which are given in an- other statement in this report. Th prison was completed, and tin- Legislature, at its extra session in L898, appro- priated $25,000.00 for the completion of the factory build- ings. This being done, all expenses incident to the proper keeping thereof, including all cost of new or additional machinery, improvement, equipment, or construction ren- dered necessary by the wear and tear of the old oi by the increase ot business, constitute a charge against the gross earnings and should be paid therefrom. This is the prac- tice of all large corporate enterprises, and no other prac- tice has heretofore been known in correct bookkeeping. The gross earnings of convict labor in this statement is the net amount charged to contractors after deducting any credits or rebates that may haive Keen given by tin Prison Commissioners. There was do charge made against Pee- bles & Cockril] and Taut lor the labor received by them. Inn wa- discovered in checking up the Time Register. The earnings from the sale of old prison material is aim ply the amount of the cost of convict labor engaged there in getting out the -tone to reimburse the prison manage- ment. The earnings from the I'nited States Government — 6 — is an extra, earning of 25 cents per day paid for the hoard of its prisoners. Other miscellaneous earnings are the cash receipts from the sources indicated. The net credit or earning on "Acounts Receivable," etc., is credited to the earnings, of NWember, 1900, and should also he applied to the credit of convict labor. It is arrived at in the fol- lowing manner: Accounts Payable, December 1. 11)00 $16,220 88 Less Accounts Payable, December 1, 1898.... 12,151 '.hi .Net addition to expenditures $ 4.068 98 Accounts Receivable, December 1. 1000, man- ufacturing department $ 1,119 03 Accounts Receivable, December 1. 1900, farm (including- car of wheat in transit) 1,969 04 9,213 i-:; bushels of wheat in warehouse, at TO een ts c.,449 36 1'iiited States Government, cash and trans- portation advanced 847 59 Total gross credits $10,385 02 Less Accounts Receivable, December 1, 1898, manufacturing department $ 584 96 Less Accounts Receivable, December 1. 1898, farm 1.049 77 Total deductions $ 1,634 i.'i Net credit, to earnings $ 8,750 29 Net additions to expenditures as above given, or charge vs. earnings 1,068 98 Net earnings $ 4,681 31 The warehouse receipts show that 4,354 10-60 hushels of this wheat were deposited in the warehouse of the Lib- erty Mills on September 6, L900, and that 4,859 10-nf) bushels were deposited in the warehouse of the Tennessee Milling Company on August 27, 1900. \'o further credits are allowed for " Supplies on Hand," from the fact that the amounts on hand in the regular run of business from month to month or from year to Near are generally offset by the other, and this is especially trus where the; situation is in such proximity to market, and — 7 — where it is not essential to purchase in largsp quantities or mare than is Qeccessary for one month's consumption. The net earnings given in this statement are derived as follows : EARNINGS FROM CONVICT LABOR. Foundry Tennessee Harness Company .. Houston Tola' loss $22,202 81 Xcl earnings from convict labor $ 4,687 49 Board United States prisoners 19,924 75 Ren1 1,076 39 R< nl of bricli plant 5,300 00 Royalty ii brick 1.065 53 Gate re «ipts L307 63 Gat* receipts, old prison 22 10 Total nel earnings as per statement $33,383 89 Statement '. This statemenl shows total convicts main- tained and worked, average per workiug day of each, total ■ of operations, gros? and uel earnings, and loss, by months, al Vain Prison, from Dec mber 1, 1898, to De- cember 1. 1900. Ii! . mi r, i. 1898, i » Deci mber l. is<.>9: Total gross earnings $129,684 t3 Total expenses of operations 11 1,700 10 Ne\ earnings $ 17.984 03 — 8 — Average Dumber of convicts in prison each work- ing day 1000 Average number of convicts working each work- ing ( I :u 8.">S Average gross earnings ]>er day for each worker. . . 48 Average cost per day for each worker 41 Average net earnings per day for each worker 07 Average gross earnings per day for Those working on contracts .4584S Avei'age cost per day for those working on con- tracts .42298 Net earnings per day by those working on con- tracts .03550 December 1, 1899, to December 1, 1900: Total gross earnings $149,132 05 Total expenses of operations 133,732 7'.t Total net earnings $ 15,399 86 Average number of convicts in prison each work- ing day 1034 Average number of convicts working" each work- ing day 890 Average gross earnings per day for each worker. . . 51 Average cost per day for each worker 45 Average net earnings per day for each worker 0(5 Average gross earnings per day for each worker on contracts, including Accounts Receivable credit .48200 Average cost per day for each worker on contracts .50580 Average loss per day for each worker on contracts .0238 Statement S. This statement shows red vouchers issued ai Main Prison, by months, amounts, and accounts, from Deeembei 1, L898, to December 1, 1900, each year sepa- rately. Statement .'/. This statement shows white vouchers is- sued at Mahi Prison, by months, amounts, and accounts. from December 1. 1893, to December 1. 1000, each .year sepa lately. December I. 1898, to December 1, 1899: Red vouchers $105,678 27 White vouchers 6 022 13 Total vouchers issued $111,700 -JO — 9 — December 1. 1899, to December 1. L900: Red vouethei s $124,483 21 White vouchers 9.-49 •'>-' Total vouchers issued $133,733 TiT Total' vouchers issued, two. yeaus $345,433 19 These statements cheek up with the books, with the ex oeption of a few errors amounting in the aggregate to about $90.00 (which have all been corrected ), and constitute the expenditures of the Main Prison. ShifniK'itls ■'> and <>■ These statements show total cost r. maintain and operate, gross and net earnings on convict Labor at .Main Prison from December 1, 1898, to Decem- ber 1. 1900, giving each contractor and each year sepa- rately. I'.ri'nilicr 1, 1898, lo December I, L899: Gross earnings all contractors, convict labor $108,478 09 Expenses of operations 99,760 64 Net earnings $ 8,717 45 Total gain $ 15,040 01 T©1 a] loss 6,328 56 Ret gain $ 8,711 i: December I, L899, to December I, 1900: Gross earnings all contractors, convid labor $116,331 15 Expenses of operations 120,363 1 1 \.-t loss $ 4,029 96 Total gains $ 11,844 32 Total losses 13,87 i :> .\(i log . December I, 1899, to December I, 1900 $ 4,029 96 Wi gain, December 1, 1898, to December I, 1899 8,717 15 \i-t earnings convid labor, two years $ 4,681 19 The gross earnings in these two statements comprise tli<' total charg( s to the various conl ractors or lessees of convict labor after deducting all rebates and reductions allowed by 1 1 j - ( loanmissionerB on labor, and some items of expend] hires credited upon their respective accounts nn-1 vouch — 10 — ered. Tn. computing: the cost of maintenance ami opera- tions chargeable to the earnings of convict labor, I have treated the farm and manufacturing; department as a part and parcel of the Main Prison. The object of the manu- facturing- department is to manufacture clothing for the convicts upon the presumption that the cost of clothing could be materially lessened thereby. For that reason the cost, of the manufacturing department, less receipts on ac- count of the sales of clothing, etc., constitutes the total cost of clothing furnished by the manufacturing; department. The object of the farm is to furnish supplies ami food for the prisoners upon the presumption that they can be fur- nished cheaper or for less money than tin v could b- pur- chased; therefore, the cost of the farm, less the sales, con- stitutes the net cost of the supplies, haulage, o'<\, fur- nished by the farm. There are a few sale*, as shown by the cashbook, on account of supplies and other materials charged to maintenance account, These, with other re- ceipts, on account of board, transportation refunded, etc., should be deducted from the amount expended for main- tenance as per voucher record, in order to get the net cost of maintenance. The net cost of maintenance as per voucher record, added to the net cost of the farm ami the net cost of the. manufacturing department, gives the tot il cost of maintenance. The cost charged against the earn- ings of convict labor in these statements is as follows: December 1, 1898, to December 1, 1899: Cost of maintenance, voucher record.... $38,823 8? Less board and miscellaneous cash re- ceipts and moneys refunded 1,042 60 Net cost of maintenance, voucher record $37,779 27 Cost of farm, voucher record $2: j >..';9o 92 Less farm receipts, cash 8,919 80 Net cost of supplies furnished by farm, exclusive of labor 14,476 12 — 11 — i i si of man ufacturing" department $10. -497 00 Less manufacturing department re- ceipts, cash 1,977 36 \ct c ■.■-1 of clothing furnished by manu- facturing department* exclusive of la- bor 8,519 70 Total cost of maintenance $60,775 09 This cost is distributed to workers as follows: Convict labor, contractors $53,186 26 Convict labor, on prison operations 7,203 74 Con-viel labor, on old prison buildings... 385 09 Total $60,775 09 The cost of convict labor on operations of prison on account of repairs, improvements, etc., loss tlio cost oif labor used cm theold prison buildings, which constitute 3 the onlv earnin.Q from that source, should be then redistributed to the cost of convict labor furnished to contractors or lessees, which, added to the cost shown bv voucher record on ac- count of prison operations, makes the total cost as follows: Maintenance $5:5,1 Si; 26 i-i of prison operations, convict labor 7,20.') 74 1 > -! of operations, red voucher record 32,963 42 o Total red vouchers $93,353 i Total white vouchers 6,022 13 Total cost to maintain and operate contract labor $99,375 55 Total cost to maintain old prison labor 385 09 Total net COfit of COnviol labor $99,760 64 Decembt r L, 1899, to l>eci mber !, 1900: Cosl of maintenance, voucher record ... $40,542 15 Less miscellaneous cash receipts for board, transportation refunded, etc... 2,426 92 Net cost of maintenance, voucher record $38,115 23 Cor1 of farm, voucher record $27,774 66 I.' farm receipts r,62 I 28 \.t cost of supplies, etc., furnished by fa iin. exclusive of labor $20,150 38 — 12— . Cost of manufacturing department $21,524 71 Less manufacturing department receipts 3,330 48 Ne1 cosl of (Nothing - furnished by man- ufacturing department, exclusive of la- bor $18,204 2:> Total cost of maintenance $76,4(19 84 This cost is distributed to workers as follows: Convict labor, contractors $65,167 60 Convid labor, prison operations 10,172 :;2 Convict labor, on old prison buildings... 1,129 92 Total ^6,469 *4 The cost of convict labor on account of prison opera- tions, less llio cost of labor used on old prison buildings, which constitutes: the only earning from that, source, is then redistributed to the cost of convict labor furnished the various lessees oi contractors, which, added to the cost shown I » > the voucher record, makes the total cost as fol- lows: Maintenance $ 65,167 60 Cost of prison operations, convict labor 10,172 :12 Cost oi operations, red voucher record :>4,641 75 Cost of old prison labor 1.129 92 Total red vouchers $111,111 59 Total white vouchers 9,249 52 Total net cost of convict labor $120,361 11 Neither the books of the Main Prison or the report of the Commissioners show the true condition of affairs. They do not treat the moneys expended on account of the farm or the manufacturing department as a ]>■ irt- of the expenses of the prison. They simply treat such part of these expenditures as arc furnished in supplies, as an ex- pense, at such valuation as they choose to put upon them, thereby showing a fictitious profit, which runs through the entile system of calculations, and which has no place what- ever in correct bookkeeping. Neither do. they treat all ex- pense-: of operations as an expense, but only such part of — 13 — same as they see fit, and the balance expended on those accounts seems to be offset by such increases in inventories as the exigencies of the occasion demand. Tn their trial balances for fc899 thev charge only $87,618,66 of red vouchers against the earnings of contract labor, when they should have charged $99,7-60.64. In their trial balances for L900 they charge only $92,119.23 of red vouchers against the earnings of contract labor, when they should have charged $111,111.59, which leaves $31,134.34 mi red vouchers alone to be offset bv fictitious earnings and in- creases in inventories that should not exist. If a fanner buys a plow and charges it to his operating account, and then at the end of the year credits himself with it, the effect would be the same as if he had never charged it. The fact that he has the plow on hand may reduce his ex- penditures for the next year, but the cost of that plow cer- tainly belongs to the operating account of the year in which it wae purchased. CONTRACTS. The prison management has so arranged it that at some -< asons of the year the convicts at the Main Prison work nine and nine and one-half honrs per day. while at other seasons of the year thev work ten and ten and one-half honrs pel- day. The average day's labor for the year is ten h< ur-. If a convict becomes t< o ill during the day to work, be i- excused by the physician, and such time as he actually work-, counting ten hours per day, is charged upon the rime Register againsl the contractors. The Time Register contain- only such net time a- the convict i- engaged at work, and is, therefore, the basis of distribution of conviel labor. The net time shown by the Time Register is then -npp- -ei| tn be posted on the ledger a- a charge to each con tractor or lessee of conviel labor at the rate or rates speci lied ill t lie collt ract. — 14 — BOX FACTORY. Statement 7. This statement shows the total number of days and rate per day charged to the box factory for con- vict labor, by months, at the Main Prison, from December 1, 1898, to December 1, 1900; also total number of days shown to have been worked by the Time Register, the net charges constituting 1 the gross earnings to the State. Gross earning-s, two years $ 4,898 52 Cost, two years 6,199 61 .Net loss, two years $ 1,301 09 .X umber of days' labor received 13,328 75 N umber of da\ s charged on account 12,081 10 Number of days not charged 1,247 65 Number of days allowed free under contract 1,226 Number of days to be added to account 21 65 There seems to be no regular legally drawn contract ex- isting between the State and this company. They seem to have been operating under an agreement made on January 31, 1898, between John II. Trice and W. H. Morrow, on the part of the State, and I. Wingard, the manager, where^ by the State was to receive 35 cents per capita, for the first six months, and 40 cents per capita for the remaining period, which may be extended to March 1, 1903. I find in the papers a letter from Hon. W. A. Garter, one of the Prison Commissioners, dated September 26, 1900, to Mr. Wingard, calling his attention to the fact that, under the agreement then existing the State was losing money. This resulted in a, new contract being made, whereby the State now receives 45 cents per day for the labor employed. Under this contract they are entitled to two extra men free, or 1,226 days for the two years. This leaves 21.65 days still unaccounted for that should be charged to their ac- count. Under this contract from twenty to twenty-five mei). are worked. — 15 — CHAIE AND CAR IMAGE COMPANY. Stat< ment 8. This statement shows the total number of davs and rate per day charged to the Nashville Chair and ( arriage Company for convict labor at the Main Prison, by months, from December 1, 1898, to December 1, 1900, also total number of days worked as shown by the Time Register, the net charge coaistituting the gross earnings to tiie State. Gross eai dings, two veurs $20,380 76 ' ! . 1 wo years 24,219 ..4 \'e; loss, two years $ 3,832 r >s Number of days' labor received, time register 51,301 Number of days charged on account 45,302 .51 Number of days not charged 5,998 49 N umber of days allowed free under contract 1,226 Number of days that should be added 4,772 !'i which, at the average price of 45 cents per day, makes $2,147.62. This contract bears date of February 8, 1898, and ex- pires March 1, 1903 ; it provides for the employment of from twenty-five to ninety-nine convicts, divided into two classes, for which r 'lay for the second class, each day to count !• i hours, and two helpers each day allowed free of charge FIZEE& CO. Statement 9. This statement shows the total number of days and rate iter day charged to Fizer & Co. for convict labor ai the Main Prison, by months, from December 1, 1898, im December 1, 1900, also total days worked as shown by Time Register, the net charge constituting the 38 < arnings to the State ; also total rent for Brick Plant and Royalty. Gros - eai nings, two j ears $12,884 i I ist, two years L3,597 95 \h loss io State, two \ ears $ 713 65 — 16 — Number of days* labor received. Time Register 29603 Number cf days' labor charged to account 2G07S \ umber of days' labor not charged 3525 I find no provision in the contract, allowing the labor not charged. This contract hears date of February 9, 1898, aiid expires March 1, 1001, and while in operation employs from thirty to sixty men at a rate of 75 cmts per day for first class, 55 cents per day for second class, and 30 cents per day for boys and " deadheads." In March, 1898 and 1899, and in June, 1899, credits of $101.13, $138.37. and $500.00, respectively, were allowed for brick and for building; kiln®, etc., in violation of the express prt> visions of the statute requiring all expenditures to be voiK-hcrel and paid for out of the State Treasury. In June, 1809, a credit of $250.00 was. given them as a re- duction on labor, for which I find no provision in the con- tract. Net earnings to the State, as shown by this state- ment, on account of Royalty on brick amount to $1,065.53 for the two years, and net earnings to the State on account of rent of Brick Plant amount to $5,300.00 for the two years. FOUNDRY. Statement 10. This statement shows the total number of days worked as per Time Register, material produced, with rate charged for same per one hundred poundsi to Duncan & Co., operators of th- foundry, by m mths, from December 1. 1S98, to December 1, 1900, tic net charge constituting the gross earnings to the State. Gross earnings, two years $-!<>. :: \i\ "/.; Cost, two years 31,112 >'■>'.' Net earnings to State, two years $ 9,234 10 Number of days' labor furnished, time register 07,-410 This contract boars dat" of June 26, ISO", and expires March 1, 1903. It provides for employment of ninety- nine men. and for the payment to the Stat"' of t>5 c nt- — 17 — per hundred pound- for first-class castings, and 50 cents per hundred pound- for second-class castings, the mini- mum price fto lie paid per month being $ 1,500. 00. The ledger account of this company contains a charge for :>0<>.- 175 pounds of third-class material for the two years at 10 cent- per hundred pounds. T find no- provision in the ■ con- rr;iet covering this. In November, 1809, a credit of $134vl8 was allowed for discount, and $793.04 allowed and charged to "profit and loss." In December, 1 S • 1 1 > , a credit of $1,242.14 was allowed on Foundry production. The earnings reported in this statement are net, after de- ducting these credits. I find no provision in the contract providing for these credit-. HOSIERY COMPANY. Staiemenl 11. This statement shows the total number of days and rate per day charged to the Rock City Hosiery Company for convict labor at the Main Prison, by months, from December 1. L898, to December 1, 1900, each year separately, also number of days furnished as shown by the Time Register, the total net charge constituting the gross earnings to the State. Gross earnings, two years $ 55,396 OS 66,378 o:, V-: 1 ss * 10,98] 97 y mber at days' labor furnished, Time Register 143,403 N imber of days' labor charged to account 141,526 94 \ uin'iiiT i {' days' labor n< I charged to account L',874 06 Th( lab r not charged i- no1 allowed free under any pro vision oi i ke conl raol that I can find. Th< convicts charged to the Hosiery Company are oper- 1 under two contracts — one for as many as ninety-nine <• uvicts for manufacturing hosiery, and one for from oty t< fifty convicts for coloring and dyeing hosiery, etc. The original contract with Leo Kaufman bears date — 18 — February 12-, 1897, but was modified March 1, 1899, by providing for the payment of 42 cents per day per con- vict instead of 10 cents per dozen for men's and women's hose, and ".} cents per dozen for children's hose. The con- tract with Isaac May, made March 7, 1899, provide© for the employment of from twenty to fifty convicts at 40 cents per day, and expires March 1, 1003. I find no provisions in the contract for the employment of the convicts shown in this statement at the; rate of 28 cents per day. In March, 1809, this company received twenty-eight days' ex- tra work, which was not charged. Tn November, 1900, a credit of $057.06 was given this company on their labor account for an economic boiler, in pursuance of an agreement that seemed to have been made March 13, 1899. This boiler seems to have been pur- chased by the Hosiery Company from John P. Dale, De- c mber 12, 1898, foi the sum of $645.00. If it was right for the Commissioners to purchase this boiler, their failure t' pay for the same by voucher is in violation of the statute providing that all expenditures for the Prison shall be paid out of the State Treasury. TENNESSEE SHOE MANUFACTURING COMPANY. Statement 12. This statement shows the total number of days and rate per day charged to the Tennessee Shoe Manufacturing Company for convict labor at the Main Prison, by months, from December 1. 1898, to December 1, 1900, each year separately, also number of days' labor furnished as shown by the Time Register, the total net charge constituting the gross earnings to the State. 'J ross earnings, two years $ 42,178 15 ( (ist, two years 47,40!) 70 Loss, two years $ 5,291 55 Number of (lays' labor furnished, time register 102,025 Number of days' labor charged to account. 97, SSI Number of days' labor not charged 4.144 — 19 — I find no provisions in The contracts allowing more than three h( Ipers free to Goodbar- and two helpers free to Yerkes, aggregating for the two years 3,130 days, leaving no n ■ • * a balance of 1,014 days unaccounted for. The convicts operated by this company are under two contracts — one with Goodbar & Co. for the manufacture of shoes, and one with II. C. Yerkes for the manufacture of shoe findings. Each contract bears date of February : >:> >, 1898, ae.d ex- pires March 1, 1901, and calls for the employment of as maii\ as ninety-nine men at the rat : of 10 cent- per day for the first year, and 4,"> cents per day for the second and third years. They have options to extend contracts to March 1, 1903, by paying 50 cents per day. TEXXESSEE HARNESS COMPANY; Statement IS. This statement shows the total number of days and rate per day charged to the Tennessee 1 Harness ( '< m pane for convict labor at the Main Prison, by months, from December 1, 1898, to December 1, 1900, each year separately, also total number of days' labor shown to have been furnished by the Time Register, the net charge consti- tuting the gross earnings to the State. Gross earnings, two years $27,18-J 23 I t 20^157 62 Ne1 earnings $ 7,026 u Number of days' labor furnished, Time Register 13,117 Number E days' labor charged U,618 5 Numb* r of days' la Inn- no1 charg'ed l. 198 5 The nnnihei- of days not charged are allowed free under the com rack This contract bears date February 23, L898, and ex- pire- March L, L901 ; il provides for the employment of fifty convicts at the rate of 60 cent- per da.} for the firsl year, and 70 cent- per day for the second year. This com puny hae the privilege under the contract of renewing or — 20 — extending it to March 1, 100:3, by paying 80 cents per day. They seem to lie working; about an average of six men per day at the rate of 25 cents per day, for which I find no provision in the original contract. INMAN. Statement 1-k- This statement shows the total number of days and rate per day charge 1 G. W. Nixon., assignee, for convict labor furnished at Inman. Term,., by months. from December 1, 1898, to December 1, 1900, each year separately, the net charge constituting the gross earnings to the State. Gross earnings, fourteen months $14,889 98 Cost, fourteen months 9,134 3fi Net earnings, fourteen months $ 5,755 62 Number of days' labor furnished. Time Register 21,017 Number of days' labor charged to account 18,689 10 Number of days' labor not charged 2,327 90 Average per day 6 3S The men not charged were cooking- and in the hospital and doing' other work around the camp, and seem to be allowed in the contract. The convicts at Inman seem to have been worked under one or more modifications of an old contract dated June 16, 1896. This contract was made and entered into be- tween the Board of Prison Commissioners and the Ten- nessee Coal, Iron and Railroad Company, and provided for the payment by said company to the State of 25 cents per ton for the labor performed by the convicts in mining- iron ore. This contract was, a few days after its execu- tion, transferred to George Nixon by said company, the company agreeing' to take the output of the mines from him at 60 cents per ton, the said Nixon to furnish oils and other necessaries for mining purposes. The Legislative Committee of 1897, after reviewing these and other facts, on pages 10 and 11 of their report, stated that 25 cents per — 21 — ton was not fair and just to the State, and that unless the State was paid at least 30 cents par ton the contract should be discontinued. The result of this investigation seems to have been a change in the contract from the payment of 25 cents per tun to 05 cents per day, which was afterwards increased to 75 cents per day; and when the convicts were taken away from the camp in January, 1900, the State was receiving 90 cents per day for those working-. In May, 1900, a credit of $14S.T3 was allowed on this account. sufficient to balance it, and charged to profit and loss. I find no provision in the contract covering 1 this. There was no separate account kept as to the cost of the convicts at Inman, and the charges of cost against the earnings at Ionian are based upon the cost of maintenance and opera- tions at the Main Prison. The Commissioners might with tin' same propriety have kept Brushy Mountain operations in the same manner. Sliid'tneid 15. This statement shews all miscellaneous earnings from convict labor at the Main Prison from De- cember 1, 1898, to December 1, 1900, by months, also the net earning of 25 cents per day each for board of United States prisoners. Total miscellaneous earnings $ 44G (12 :• a] earnings from board of United States prisoners. 19,9?4 ~~> FARMING OPERATIONS. >l'■•"■ ( ash receipts 7,624 28 Balance $20,150 38 As to whether the farm ia or is not making any money, no one can tell. The net coat is charged to maintenance account, and it is to be presumed that by its operations the cost of prison supplies is materially lessened. The eo t of labor from December 1, 1898, to December 1, 1899, amounted to $4,602.21 ; while from December 1, 1899, to December 1, 1900, it was $6,226.0-4. Farming operations for the past two years, including the Morrow farm, re- quired an expenditure of $61,999.13, and I submit whether or not that outlay of money should produce greater or less results than are herein perceptible. In checking up- the farm books, I find that, the farmer lias kept an account, of his transactions and has reported the same promptly to the authoritiesj. On December 14, 1898, he purchased twenty- three sacks, of bran for $24.15, out of the proceeds of the sales of wheat, amounting to $209.27. The cost of this bran was never vouchered, as required by law. This trans action was reported by him as it occurred, and a voucher should have been issued for the bran by the prison manage- ment instead of handling the transaction as they did. The practice of buying and selling beef cattle and hogs seems to exist to some extent in farming operations, amounting in tlic two years to $4,886.21. ACCOUNTS PAYABLE. Statement IS. This statement shows Accounts Payable, Main Prison, December 1, 1900. Total amount, $16,- 220.88. — 23 — ACCOUNTS RECEIVABLE. Statement 19. This statement shows Accounts Rec iva- ble, Main Prison, December 1, 1900, Total amount, $25,- 663.83. ACCOUNTS RECEIVABLE I FARM). Statement 20. This statement shows Accounts Receiva- ble, Main Prison, Decembei 1. L900, farming dp. 'rations. Total amount, $1,969.04. PAY ROLL. Statement 21. This statement shows the pav roll for .Main Prison for November, 1900, giving amounts due i , ch and salary received per month. Total for November, $2,151,65. CASH RECEIPTS. Statement 22. This statement shows the total cash re- ceipts ol th< State Prison from all sources, by months. amounts, and accounts, from December L, 1898, to Decem- bei i. L900, each year separately. Decembei L, L898, to December l. L899... $306,650 35 bei 1. L899, to December 1. L900. . . 415,552 96 Total cash receipts $722,203 31 EXPENSES OF OPERATIONS. December l, L898, to December I. L899... $226,382 00 Di Li ber l. L899, to December I, L900... 2S0,55'< 38 'I ota] expendil ures $506,939 ss ■ i cash receipts over expenditures $215,263 13 Th cash receipts, together with the $100.90 on hand Decembe] 1. L898, amounting in the aggregate to $722,- 304.21, were paid into the State Treasury from December 1. L898, to I ).•(■(•!, iIhm- 1. L900; while the books of the State Comptroller and Treasure r show the sum of $722,321.13 to have been paid in. This l< aves a balance of $16.92 paid — 24 — into the State Treasury by the Prison Commissioners more than the eashbook shows should have been paid. This is an amount received that was never credited, so far as I have been able to ascertain, or charged on the eashbook. TIME REGISTER. Statement 23. This statement shows the total number of days maintained, average per working day, and how and by whom the convicts were employed at the Main Prison, by months, from December 1, 1898, to December 1, 1900, each year separately. December 1, 1808, to December 1, 1899: Average number convicts in prison each working 1 day 1,006 Total (lavs maintained 314,872 Total days working oa contracts 2',\~>,'2'.'A 5 Total days working on prison operations 33„564 Total (lays cooking, etc 46,073 December 1, 1899, to December 1, 1900: Average number convicts in prison each working day 1,064 Total days cooking-, etc 54.015 Total days working on prison operations 41.135 Total days working on contracts 237,184 Total days maintained 332,934 This statement is the basis of distribution of both the earnings of convict labor and the cost chargeable thereto. COST OF NEW PENITENTIARY. Statement 2Jf. This statement shows various appro- priations made by the Legislature for building and erect ing the new penitentiary at Nashville and the prison at Brushy Mountain, and the various amounts expended therefor. Total cost to December 1, 1S9S: Main Prison $554,375 57 Brushy Mountain 200,275 69 Genera] expenditures 40,899 22 Total $795,550 ! S Total appropriations 787.684 68 Amount overdrawn. December 1. 1898 $ 7,865 80 — 25 — In this statement credit is given for all appropriations claimed. While the appropriation for $36,867.14 is treat- ed regularly as such, because it was included in the ap- propriation bill of 1897, it was never intended that this amount should he added to the original appropriation of $600,000.00 made for the purpose of building and erects Lug the State Prison, and its incorporation in the appro- priation bill was through a misapprehension of facts in c< amection therewith. The cost of the outer wall of the Main Prison was $36,- 867.11, tlif details of which are as follows: Neely A: Smith $27,872 05 Stockades, tools, etc 1,198 :.4 Freight, X.. ('. & St. L. Ry. Co 2,814 5S Blacksmithing, etc 300 I iates •••••- ' • Towers 243 00 Guard wire 125 00 Excavations 2,969 42 Foundations 295 50 Architect and supervision 716 36 Cotal $36,867 14 These amounts were paid from time to time to the vari- ous parties entitled thereto pending the construction of the outer wall. After its completion the Prison Commission- ers drew tip another voucher, made payable to themselves, for $36,867.14, the i-'i- 1 of i he outer wall, for which Comp- troller's warrant NTo. 1 1 7 7 '. » was issued on December 18, 1896, with ;i view of passing the same into the Treasury of the State to the credit of the Building Fund. The re- sult i- that two voiieher- were issued by the Prison Com tnissioners covering the same services performed for th • Stan-. The Comptroller would never have issued his war- rant fo] this voucher, had he been in pos-essioii of all the facts : and had the State Treasurer recognized it. the eiffecl would have been the same as it the <•< i-t of the outer wall — 26 — had never been charged to 1 the Building Fund, as required by law. I am informed that the books of the Comptroller's office show that this warrant is still outstanding. If so, it is an outstanding obligation of the State, and should be immediately looked up and canceled, and due record there- of made upon the legislative journals. The report made by Mr. Nixon for the Board of Prison Commissioners, of date of June 30, 1900, showing a bal- ance undrawn of $8,039.27 on the Building Fund account, is incorrect. WARDEN'S BOOKS. The books of the Warden have all been checked, and he has promptly reported and paid over at the end of each month all gate receipts and other miscellaneous collections made by him to the Prison Commissioners, except that the books of ex-Warden W. H. Gammon show that lie still owes r !: State the sum of $84.48 for a portion of his collections in June, 1899. BOOKS. The books kept at the Main Prison are wholly inadequate and not in keeping with the great volume of important business transacted. The eashbook is one of original en- try. On the debit side it is charged with the payments of moneys, and on the credit side are placed the amounts paid into the State Treasury. This is not as it should be. There should be a bonk of blank receipts, numerically numbered. A receipt should be given for every cent paid in, stating from whom and on what account received. This should then be posted to the eashbook as a charge against Cash, The credit side of the eashbook should contain the disburse- ments of the prison, posted there from the voucher records. At the end of the month these amounts should be abstracted by accounts and posted to a general ledger containing these accounts. The total charges on these accounts then added together constitute the total cost of prison operations for — 27 — that mouth, and should balance with the voucher rec- rds. This general ledger should contain no individual accounts. There should also be a ledger containing all in- dividual accounts, to which should be posted from the Time Register the c< nviet laboi and any or all other matters per- taining to prison operations necessary to properly conduct tin : Lisiness. In classifying; the accounts for which mon- eys are expended, every dollar expended on the Foundry Building or Harness Company Building, or any other building, fin- repairs or otherwise, should be charged di- ectly I i the operations of thai department, thereby de- creasing as much as possible the moneys to ha distributed pro raia between all operative accounts upon the basis of the number of convicts employed in each. This would place h contracl more directly upon its own merits and would 1 th< officials in charge bo keep directly in touch with the result of the operations of each cent ract at the end of each month. As the books are kept now, all expenditure- arc prorated equally. This does injustice to some com; ract- ors, while it helps others. The cost of the manufacturing department, less the sales of thai department for each month, constitutes the cosl of clothing furnished, by that department. This cost should then be distributed between the State and Brushy Mountain on the pro vale basis, bear- ing in mind, also the difference in the durability of the clothing at the two places. Brushy Mountain should then be charged with, and should un for, that pan of the c <•! clothing. The balance of the cosl of clothing furnished by the manufacturing department should then be added to the clothing bought, and, charged directly fco thai account on the voucher record, and distributed with other supplies, etc., to the maintenance account. This would absolutely eliminate all fictiti profits from th books on this ac- count. The cosl of the farm, less the 3ales or receipts, constiti e the cosl of the supplies furnished by the farm. This cost, no more or less, should then b added to the monevs •' — 28 — pended for other supplies, as shown by the voucher record, and distributed to the maintenance account. The total cost of maintenance, less any moneys refunded, etc., should then be distributed pro rata to the various prison operative accounts, according to the department in which each convict is engaged at work. Then the cost or moneys expended for prison operations, both for labor and amounts paid for by voucher, less any amounts that may have been expended and charged directly to any special account, should be distributed pro rata to the various lessees or contractors of convict labor and charged to the department in which the convict is working. These distributions can all ba made properly by journal entry and can, all be traced back to the voucher record ; and when posted to the ledger account, the total charge on the debit side of the account, constitutes the cost of that department to the State for the month, year, or other given period. Vouchers should issue from a voucher book, numbered numerically, the original entry be- ing upon the stub thereof, instead of being issued first, then numbered, and. then, entered upon the voucher record. The individual ledger should contain, among others, the ac- counts of all lessees or contractors of convict labor. The total number of convicts charged up to these ac- counts should balance with the total number of convicts shown to have worked there by the Time Register. If the State gets nothing for some of the convicts furnished its contractors, they should be charged up to them just as though a stipulated sum was being paid. In this way the books are always in balance with the convicts in prison as well as in balance with moneys expended or received. BRUSHY MOUNTAIN MIXES. Statement "AA" shows the total expenditures and net sales of coal and coke and various other receipts from De^ cember 1, 1898, to December 1, 1900. The total expendi- tures amount to $201,506.69 and constitute every cent ex- — 29 — pended, from the rations furnished the laborer cutting the coo] bo the collection of the earnings and placing; them into the State Treasury. The sales of coal and coke and other miscellaneous receipts, amounting to $470,111.22, consti- tute the gross earnings for the time mentioned, exec] it the sum of $44,945.52 is still uncollected, and is included in the statements showing Accounts and Bills receiv- able. These accounts, in my opinion, are all good, and arc treated as earnings in this report. By deducting the expenditures from the gross earnings it will be seen that these magnificent properties have yielded to the State with- in the past two years the sum of $208,604.53 net earnings, or $104,302.26 per annum: or from December 1, 1898, to December 1. 1899, $69,343.66, and from December 1, 1899, to December 1, 1900, $139,260.S7. Statement "A" sho>ws gross earnings, expenses of opera- tions, and net earnings by months; also total convicts in prison, average for each working day, total working, and average per working day from December 1, 1898, to De^ cember 1, 1900. The convict who works not only has to pay al! the expenses of the mines, but has to support those who are in the hospital, cooking, etc., who arc not earning any money ; therefore it costs to maintain and oper- ate workers 82 cents per day. The gross earnings for each worker is $1.48 per day, and the net earnings is 66 cents per day. Statement "BB' shows expenditures distributed be- tween co;i] and coke.' the net side- of each in tons, and amounts and eos1 and -ale price per ton. Coke operating expenses $111,293 99 Coal operating expenses L50.2G l is Total expenditures as per Statemenl "AA" $261,498 !T Coke sales $222,692 05 Coke ••N|„-ns.'s li l,293 99 \'-i earnings, coke $111,398 06 — 30 — Coal sales $242.-:]:: 79 Coal expenses 150,204 4S Net earnings, coal . $ 92,619 31 These earnings, added to other miscellaneous earnings in Statement "AA," together with the difference in invoice of coal and coke on hand December 1, 1898, and December 1, 1900, constitute the net earnings ($208,604.53) given in Statement "AA." In distributing the cost of operations between coal and colv at mine- where both products arc produced, it is the general custom to divide it so that coke shall pay one-third and coal two-thirds, upon the assumption that it takes two tons of coal to make one ton of coke; but owing to the supe- rior quality of this coal, one ton produces .42 of a ton. of e. In this distribution coal at cost of mining and all coke accounts are charged to coke; one-third of the amount expended for salaries, general expenses, and blacksmith- ieg; one-half of the amount expended for insurance, haul- ing water, and waterworks; and two-thirds of the anion 'it expended for building and machinery, repairs and machin- ery. These amounts, as a whole, come within a fraction of amounting to 42 per cent of the entire cost of expendi- tures, leaving 58 per cent to be charged against the cost of coal. This is the same rule as that applied by the man- agement of ,the mines, except that the moneys expended for machinery and waterworks were not treated as a charge against the earnings of either coal or coke. This statement also shows that the average sale price for coke for the two years was $2.15 per ton, while the average cost price was $1.07; the average sale price for coal was 78 cents per ton, while the average cost price was 49 cents per ton. Statement "B" shows total coal production, total gross sales (including amount charged to coke), tons and amounts, errors in invoices, differences in weights, etc., allowed, and net sales as shown in Statement "A." — 31 — It will be observed from this statement that the Gross sales of coal for the two j'ears amounted to $244,635 87 Add errors in invoices, etc., and local sales L,95S 23 Add anion nt to coke ovens 60,725 53 Total $307,319 6:i I.. 3S errors in invoices, difference in weights, etc .1,770 31 Total net coal credits $303,549 32 Less invoice. December 1, 1898, coal on hand 192 ST Balance $303,356 15 Add invoice, December 1, 1900, coal on hand Is 25 Total gross earnings, coal, two years $303,374 To Total tons on hand, December 1, 1898 753 70 Total output, tons 486,513 55 T >tal 187,267 25 Tons coked 180,01 Tons sold 307,221 35— 4S7 226 35 s on hand, December 1. L900 40 90 Statement "(' ' -hows total coke production, gross saijes in ton- and amounts, errors in invoices, differences in weights allowed, and net sales from December 1, 1898, to December 1, 1900. This statement shows ■> i'l.il'ji - sales of coke to be $224,915 68 Add errors in invoices, etc 2,001 52 Tola! gross sales $226,91 ; 20 Less errors, etc., and difference in weights allowed 4,225 15 Total net sales $222,692 05 I.- - invoice, December L, 1S98 $ 222 02 Less cos1 of coal coked 60,725 53 Total deductions 60.941 \et sales to credil of coke, two years $161,74-4 50 Add invoice, December l. L900 1,843 44 I tal gross earnings, two years, from coke $163,587 9-1 — 32 — which amount, with difference in invoices deducted, leaves $161,966.52, as given in Statement "A." Tons coke on hand. December 1, 1898 303 80 Tons coke production, two years 104,499 30 Total 104,803 10 Tons sold 103,002 70 Tons on hand, December 1, 1900 1,200 40 This statement also shows the average amount of coke that each ton of coal will produce for each month, the aver- age for the two years being 42 per cent. The $4,225.15 charged against the gross sales of coke is practically all on account of claims made by the Dayton Coal and Iron Com- pany and the Citico Furnace Company for differences in the weights of coke at the State mines and their own. The charges on coal account for same purposes for the two years amount to only $3,820.69, although twice the amount of coal was shipped. In arriving at the net earnings from coke, the operating expenses of coke and that part of the cost of coal added constitutes the charge against the net sales of coke; and for eoial, coal operating expenses, less that charged to coke for coal, constitutes the charge against: the net sales of coal, not including that charged to coke. Statements "D" and "E" show total expenditures, by months and accounts, from December 1, 1S98, to December 1, 1900. December 1, 1898, to December 1, 1899 $114,681 60 December 1, 1899, to December 1, 1900 146,810 87 Total, two years $261, 49S 47 This is an itemized statement of expenditures, by months and accounts, of the total expenditures reported in State- ment "AA." Statement "F" shows the cash receipts, by months and account®, except that the receipts' from coal and coke' are — 33 — given as a whole, there being no way in which they could be divided. December l. 1898, to December 1, 1899 $176,735 68 December 1, 1S99, to December 1, 1900 279,957 2] Total, two years $456,692 89 Statement "Q" shows total expenditures for labor, total amounts paid for same in coal, rents, etc., included in state- ment of earnings, and net amount collected from the State of Tennessee by voucher. Total, December I, 1 s '.»>. to December 1, L899 $32,977 24 Total, December 1. 1899, to December 1. 1900 36,901 63 Total, two years $69, SSI 87 Less stoppages, rents, etc 2,544 39 Net amount collected from State $67,336 9S Statement "II" shows price paid per ton for coal and O !-.«•. by months, from December 1, 18!'>s, to December 1, L900, the object being to show the price per ton paid by regular coal and coke contractors and the regular market price. Statement "J" shows Accounts Receivable, December 1, 1900. Total am. Mint. $44,755.17. Statement "•/ '" shows Bills Receivable and Accounts Payable, December 1, L900. Bills Receivable $10,811 >; Accounts Payable 8 22 Statement " l\" show- name- of employees and salaries _/ paid for month of November, 1 !•<)(), the pay roll amounting to $3,420.83. Statement "L" shows amounts paid for freighl bo II. L. Cory, cashier, an materia] and supplies received from De cember I, l v '- lv . to December !, 1900, by months. TotaJ, $] L019.10. — 34 — Statements "M" and "N" show total amount drawn from the State Treasury, by months and accounts, by voucher, from December 1, 1808, to December 1, 1900. December 1, 1898, to Dec-ember 1, 1899 $115,217 74 December 1, 1899, to December 1, 1000 144,916 87 Total, two years $260,134 61 This is $1,372.08 less than the amount expended. Statement "0" shows total amount expended for labor and the distribution of the cost of same to coal and coke operating" accounts. December 1, 189S, to December 1, 1800 $32,97 7 24 December 1, 1800, to December 1. 1000 36,904 03 Total, two veins $69,881 S7 Statement "P" shows total amount expended for feed- ing, clothing;, guarding, and other maintenance accounts, and the distribution of the cost off same to coal and coke operating accounts. December 1, 1898, to December 1, 1809 $ 48,950 HO December 1, 1809, to December 1, 1000 57. 131 41 Total, two years $106,081 77 Statement "Q" shows amounts comprising the total ex- penditures for maintenance, distributed as stated in States merit lt P." Total amount for two years, $106,081.77. •Statement "B," shows total amount expended for timber and ties, which is distributed to coal and coke operating accounts. Total for 1899, $1,379.92. Statement "S" shows total amount expended for carpen- tering, and the distribution of the same to coal and coke oper a ti n g a ccou nts . December 1. 1898, to December 1, 1899 $1,724 93 December 1, 1899, to December 1, 10(H) 1,815 45 Total, two years $3,540 38 — 35 — Statement "'/" shows total amount expended for team account expense®, and its distribution to coal and coke operating accounts. December 1, 1898, to December 1. 1899 $ 6,095 36 December l. 1899, to December 1, 1900 9,232 ';: :al. two years , $15,327 63 Statement "I shows total amount of supplies eon slimed, and the distribution of their cost to coal and coke operating accounts. December 1, 1898, to December 1. 1899 $37,042 99 De mber 1, 1899, to December 1, 1900 49,625 12 Total, two years $86,668 11 Statements "M," "N," "0," "P," "Q," "R," "S" "T" an I "! ' represent the distribution of the voucher record, amounts expended for labor, supplies consumed, mainte- nance, carpentering, timber and tics, and team expenses, t< the various coal and coke operating accounts consti- t in ing the total expenditures of the mine.- for the two years, as given in Statements " D" and " E." For instance, Statement " E " show- total expended for building and ma- chinery repairs. ember 1, 1899, to December I, 1900 $6,779 93 - comes fr< m i in distributj n ot the fol- j « ing account s: Team Account, Statemenl '* T " $ •" 50 .Maintenance Account, Statement " I'".... 122 :il ( ;i 1 1 . ntering Account, Statem< nt " S ". . . . 151 67 - !>]il\ Account. State nt " U " L.526 02 I.-, i ■ , Account, Statemenl " (.» " 1,070 25 Vouch' ord, Statemenl "' N " 3,598 is -\ I'otal $6,779 93 This same tide applies to all oth r accounts included in table of expenditur *, and checks with the I k> at the mines, except in one op two instances, when there is some . rossentrv on the boo] -. :r< litina one accounl and charging — 36 — another, which outs no figure in the totals. In this account $27.00 is not checked, for the reason that it was for some old brick used from Bi-Pioduet of coke operations, and ha 1 already been charged to that account and paid for; there- fore, to again charge it here would constitute a double charge for the same expenditure. Statements "V" and " W" show the total number of con- victs in prison, average per working day. and how they wer • worked each working day from December 1, 1898, to De- cember 1, 1900. December 1, 1898, in December 1. 1899: Total days 173,515 To1 :tl days cooking 1 , hospital, etc 24,977 Total days working 148,5 Number of working days in the year - ; 1 ■ Average number of convicts in prison each working day 551 December 1. 1899, to December 1, 1900: Total days 191,20 i Total days cooking, hospital, etc 22,239 Total days working 168,968 Numbei of working days in the year :;I " Average number of convicts in prison each working day 61 1 Number of convicts in prison, December 1, 1000 G'M - EXPEXDITUEES. The statement^ of expenditures, both as a whole and by months, arc the amounts shown to have been expended by the books of the mines. These expenditures are all treated as a charge against the earnings of coal and coke, for the reason that other coal companies, railroad company, manu- facturing company, and every other gigantic enterprise, after bavin- been constructed, equipped, and turned ovei to its operators, charges to. and pays out of, its gross earn- ings all cost of operations, including new or additional construction, improvements, and equipments (including the replacing of old machinery with new) rendered neces- sarv bv increased business or by natural wear and tear. — 37 — To do otherwise would compel the management to ask an- nually for mi increase of the capital stock of the companv to pay for such "betterments" as it might choose to ex- clude from its operating! accounts, which n< one with any business sagacity whatever, having any int< resl in the con tinuation of the existing management, would dare do; The report- of the management of the mines from month to month or the report of the Commissioners to the Gov- ernoi do not give a clear, frank statement of its opera- tions. It simply charges coal and coke with such amounts as its management sees fi.1 to term "operating accounts," omitting as a part of the cost thereof an amount which is termed " betterments." These expenditures for " better- ments " amount to about $60,000.00 for the two years, and in the trial balance are added to the amounts heretofore expended on those accounts, thereby preventing its detec- tion, unless the trial balance for the previous year, month. oi i thei period embraced was at hand. In other words, no on< can take the trial balance of the mines for the year 1 s '. ,s or Hi; year L899 alone and tell what has keen expended by the mine- for that year withoul the trial balance for the year previous. If the Mast Tennessee Commissioner did not know these fact-, having this department in special charge, he should have known ihem; and whatever may havt l- on the rea-on for not including all expenditures of the mine- a- a charge against coal and coke from month t i month, it ha- had the effect of depriving the ( 'oiiinkssioiner- a1 Xa-hville nf intelligent action in the consideration od coal and coke contract-, who in all probability, had they ! 1 1 n in |)o--i --imi of all the facts, would have insisted upon higher prices being paid for coal and coke than those ob taim d. PAY ROL1 . Upon examination of the distribution of labor account, it will be seen thai the sum of $69,881.87 ha- been &x-. pencled for the two years, while the voucher record show-- — 38 — only $67,336.98 to have been expended. The difference. $2,544.89, is an amount paid in rent:-, board, supplies, etc., and not, vouehered. This is in direct conflict with the law requiring all cost of prison operations to be drawn from the State Treasury, and the payment into the Treas- ury of all moneys collected. This same practice has been indulged in with Mr. Wiser, who has charge of the Deep Well operations, in the wav of supplies, etc.. being de- ducted from his voucher, which is also contrary to law. These and all similar practices, if any there be, should be discontinued at once. ELECTRIC HAULAGE PLANT. Upon reference to Statement " E," showing the expendi- tures, by months and accounts, from December 1, 1899, to ! December 1, 1900, it will be observed that the electric haul- age plant was placed in the mines in June, 1900, at an ex- pense in the aggregate of $13,650.59. Whatever might be the good results to be accomplished by this plant in the future, it certainly has boon the cause of a loss to the State for the first six months' operations. By reference to Ta- bles " E " and " C," giving the coal and coke production by months, it will he seen that for the first six months after being installed the production of coal was 26,949 tons less than for the six months previous, which, at the average price of 96 cents per ton obtained, amounts to $25,871.04; and that the production of coke was 6,937.95 tons less than for the preceding six months, which, at $2.83, the average price obtained per ton, amounts to $19,634.98, making a total difference to the State on that account of $45,505.43. DEEP WELL. By reference to the waterworks account in Statements "D" and "E," it will he observed that $11,311.56 was expended in the past two years on account of waterworks. The bulk of this expenditure is for well boring, which — 39 — seems to have been rather extensively prosecuted. I under- stand that these well-boring operations up to December 1. 1900, haw cost the State the sum of $13,770.59. Of this amount, $5,237.58 is the cost of Well No. 1, which was abandoned in Xovemher, 1809, and charged off to Profit and. Loss. Well No. 2, uu to December 1. 1900, was about 2,900 feet deep, and cost the State the sum of $8,533.01. The cost of hauling water from December 1, 1898, to December 1, 1900, as shown by these statements, was $985.75, the interest upon the amount expended being nearly sufficient, at the rate of 6 per cent, to pay for it. I knew nothing in regard to the object sought by the mine management in expending so much money for boring this will. Imt have been informed that pending it- operations the genera] manager, who has since resigned, obtained a large number of leases involving mineral rights in a large number of tracts of land near, adjacent to, or surrounding the State's mines. These leases. I am informed, were taken in the name of himself and associates, and are re- corded in the office of the Register of Morgan ( 'onntv. As to who his a-sociates are, I do not know. The amount of money expended for this well would pay for all the water needed by the State, at the rate it has been paying, for twenty-six years. GENERAL MANAGER AS CASHIER AXD TRUSTEE. There is a custom prevailing at the mine- for the gen era] manager to issue to himself vouchers for th pay roll, vouchers for freight, and vouchers for the traveling ex- penses of bhe Eas1 Tennessee Commissioner ; also to re serve ou1 oif the pay of each guard $25.00, which he keeps and deposits in hank as " Trustee," in order to proted the State againsl the payment of any reward it might have to pay for an escaped convict. As for the pay-roll voucher, thai can be conveniently handled only in thai way; Imt —40 — these other matters add complications in checking the books that are unnecessary. Arrangements could be easily made with the bank at Harriman, where the deposit is kept, to advance the money, if necessary, to pay the freight vouch- ers. As to the expenses of the East Tennessee Cbmmis? sioner, if he is entitled to any expenses, except while awav from Nashville or the mines on official business, he could draw his own voucher in his own name. These expenses, from September 1, 1800, to December 1. 1000, am unt t i the sum of $323.00. The State could be made the trustee for the fund reserved out of the guard's salary by reserving the $25.00 from the pay roll. When the guard quits, this amount could then be added to the amount due and paid. FREIGHT RATES. In checking up the expenditures my attention was called to the large amount paid for freight on supplies shipped to and from the mines, By referring to Statement " L," it will be seen that the cost of freight on material and sup- plies received at the mines from December 1, 1898, to De- cember 1, 1000, amounted to $11,010.10. The rates are in some instances very excessive, and particularly is this true in the case of the Harriman and Northeastern Rail- road Company. From the best information I can get in dissecting the freight bills-, the Harriman and Northeast- ern Railroad, running from Harriman to the mines (twen- ty miles), received of the total amount paid the sum of $2,709.37 for the year ending December 1, 1900. That road also received $723. GO from the State on account of passenger traffic of convicts and guards for the same period. I understand that its minimum rate per ton on coal and coke shipped from the mines is 17.2 cents. This being- true, the revenue derived from the State's mining opera- tions and accruing to said road for the year ending Decem- ber 1, 1900, was not less than the following amounts: — 41 — Freight on supplies, etc $ 2,709 31 Passenger traffic 723 60 ( oft] and coke. 199,510 to, is. at 17.:.' 34,316 60 T< : i a I $37,749 6G This income, capitalized at 6 per cent, represents a valu- ation <•] $641,833.00, which is much more than the road i- at presenl bonded for. It charges the State 35 cents per ton for coal and coke hilled to Harriman, while it charges 17.2 cents, or a fraction over, for coal hilled be- yond Harriman. 1 understand, also, that it charges the Crooked Fork Coal Company, also situated at Petros, only 30 cents per ton for coal shipped to Harriman, thereby dis- criminating againsl the State to the extent of 5 cents per ton. The rates from Petros or Brushy Mountain Mines •lie following points are as follows: Atlanta, Ga $1 30 per ton. Rome, Ga ] io Dalton, Ga 1 in Macon, G a 1 ,:, Barnesville, (i;t 1 75 M'i Let ta, Ga l 30 Acworth, Ga 1 30 Aiiioisia. Ga 2 05 Savannah, Ga 1 95 Chattanoog-a, Tenn 65 akfort, K\- 1 25 Runtsville, Ala 1 20 Florence, Ala 1 4."> Harriman, Tenn Oakdale, Trim L7.7 Dayton, Tenn 50 Nashville, Tenn l 65 There is practically none of the State's coal sold at Nash ville owing to prohibitory freight rate-. 1 1' the State co 1 I get a rate of $l.'»o per ton, to Nashville, the same as the Kentucky mines get, it would be of material benefit to the State's mining operal ions. The ETarriman and Northeastern Kailroad is honded for $300,000.00. It was aold under foreclosure sale in July, \ — 42 — 1895, for $200,000.00., but was afterwards, restored to the holders of its bonds. The road's rate, T learn, has at times in the past been 10 cents per ton; and from the fact that it furnishes no cars and is at but little expense, there is no reason why the rate should not be 10 cents now. COAL OUTPUT. Tbere is no check on the amount or the number of tons of coal produced at the mines. Instead of the output of the mines being the basis upon which other calculations are made, it is arrived at by adding the amount on hand at tbe end of the month to the number of tons sold and the num- ber of tons coked, and subtracting from these totals tbe amount on hand at the end of the month previous. COAL AND COKE CONTRACTS. Tabulated Statement " H " contains the names of the larger contractors for coal and coke and the prices per ton, as well as the names and prices per ton of some other pur- chasers buying in smaller quantities, presumably at the market price. R. O. Campbell, George P. Howard, R. W. Graves, and the Fulton Bag and Cotton Mills consumed the bulk of the coal output sold ; while the Dayton Coal and Iron Company and the Oitico. Furnace Company prac- tically consumed the entire, coke output from December 1, 1898, to February 1, 1900. After that date the Alabama Consolidated Coal and Iron Railroad Company, the North Alabama Coal and Iron Company, the United States Oast Iron Company, and the Chattanooga Furnace Company consumed the bulk of the coke output. COAL. By comparing the prices paid for coal, as shown in this statement, by George P. Howard, R. W. Graves, and the Fulton Ba,g and Cotton Mills, with Statement " B," show- ing the average price per ton obtained by the State, by — 43 — months, ir will i> i bserved that while at the date- o \ which their contracts were made the parices agreed to be paid seemed reasonable, at the same time during the existence of thes ■ contracts they obtained coa] for a much less sum than the average prices obtained by the State. From April 1. L899, to April 1. L900, R. W. Craves and the Fulton Bag and Cotton Mills paid 65 cent- per ton, while George P. Howard paid 66 cents per ton. The average price- per roii received by the State for those months wen as follows : April. 1899 56 cents. May, - til) " June, L899 59 " July. 1899 61 " August, L899 67 " mber, 1899 71 " October, L899 76 " X rember, 1899 80 " December, L899 S7 " .January. L900 98 " lary, L900 92 " March, 1900 91 " COKE. CONTRACT of DAYTON COAL AND IRON COMPANY. Tin first contracl with this company begins March 1, 1898, and expires March 1, 1899. It calls for 1,500 tons of forty~eight-hour furnace coke per month, of 2,000 p mid- each, at the rate of '$1.2.') per ton. \o< be weighed upon the Commissioner's scales al the mines. If these weights are found to be incorrecl by the weighing of the scales of the company at Dayton, Tenn.. the -mne is to be '•• erected in monthly statements. The company had the ion to extend, and did extend, this contract, at, its expi- ration on March L, L899, to March 1. 1900, except thai the rate p< r ton to be paid to the State was based upon the mar kel price i ' \'<>. '■'> foundry pip iron. The bas p Lee for shall be $1.25 per ton, and the base price for No. 3 — 44 — foundry pig iron $7.50 per ton. When the average price for No. 3 foundry pig iron for any one month shall be 50 cants per ton more at the furnace of the company than the base price herein named, the price of coke is to b .■* advanced the sum of 4 cents per ton,. In order to arrive at the facts as to Xo>. 3 foundry pig iron at the furnace, the president of the company is required to furnish on honor and in confi- dence to the manager of the mines a statement of the price obtained for said grade of iron each month. A second con- tract calling for 1,500 tons of coke more per month, was made December 22, 1898, upon the same basis as the first, together with its extensions, except that the base price for coke was $1.35 per ton instead of $1.25 per ton. If strikes or other causes compel the stoppage of one or both furnaces, the deliveries are to be suspended upon notice given bv the company, and continue during the period of interruption of operations, but upon removal of the cause the deliveries of coke are to be resumed. CONTRACT OF CITICO FURNACE COMPANY, CHATTANOOGA. This contract provides for the purchase of not less than 480 nor more than 600 tons of furnace coke per week, at the rate of $1.25 per ton of 2,000 pounds. It bears date of January 1, 1898, and expired January 1, 1899. Op- tion to renew for one year from January 1, 1899, to Janu- ary 1, 1900, was given, and the contract, was renewed upon the same sliding scale based upon the price for Xo. 3 foun- dry pig iron, as provided for in the contract with the Day- ton Coal and Iron Company, except that it was also baaed upon the freight rate of 55 cents per ton from Petros to Chattanooga, Team. In the event this rate was advanced, the price to be paid for coke should be reduced not exceed- ing 5 cents per ton. In the. event the furnace company shall be shut down, the company shall not be obligated to receive, said coke. There is no provision in this contract in regard to correction of weights. Jc — 45 — The price per ton charged upon the books of the mines was $1.25 , and at the end of each month a sufficient amount was charged to these accounts to make the rate as I have re ported it in Statement " BE," and the amounts added upon the Ledger by journal entry. I had no authority to inves tigate the books of the Dayton Coal and Iron Company or tlic Oitico Furnace Company; therefore, I cannot tell whether the average prices reported to have been obtained by them for No. '■'> foundry pig iron, on honor and in confi- . to the manager of the mines, were correel or not. These extra or additional charges, with the total amount, are as follows: April. 1899 $ 599 30 May. 1 >'.» : j 225 59 .luin . 1899 2 6 60 July, 1899 506 75 August, 1899 840 September, 1899 610 82 October. 1899 658 " _ November, L899 1,262 s? Januarj . L900 297 71 V> bruary, 1900 ' 90 March, 1900 265 38 Total $5,837 00 A large amount of this increase in price per ton was off- set by shortages in weights claimed and allowed, as shown in statement " C," as a reduction against the gr - sales of coke In Mav. L900, a claim of $2,467.84 againsl the Citico Furnace Company was compromised for the sum od $ 1:67.8 I.'"' Taken as a whole, the Stale received but little, if any, benefit, so fax as these contracts arc concerned, upon the phenomena] increase of the price of pig iron from $7.50 per ton to aboul $18.50 per ton during their existence. While the Stale has made a greai deal of money upon coke for the past two years, it would have made at least 75 cents per ton, or aboul $50,625.00 mure, had these contracts never existed. In the evenl coke bad gone down, these com ♦ This may i»- intended foi J2.000.00. Original memorandum broughl from mini A — 46 — panics could have declined to receive it and could have escaped liability therefrom under these contracts by simply suspending operations at one of their furnaces. The Ala- bama Consolidated ( !oal and Iron Company had a contract- dated March 16, 1900, and expiring- "December 31, 1900, calling for four cars of coke daily at $3.40. When coke went down about September 1, last, I understand that they suspended operations and quit taking it. Under these con- tracts the companies had no chance to lose. BOOKS. The books of the mines are well kept. Statement's - M " and " X " show upon what accounts th ■ moneys are drawn from the State Treasury, by months and accounts; while Statements "AA," " D," and " E " show the various mine operating accounts upon which they were expended. This is done by a system of distribution, and it is very in- teresting to check up the work. There should, however, be a check at the Main Prison upon these mines; and in order that that may be done, all the cost for supplies, labor, maintenance, timber and ties, team and carpentering ac- counts — which, with the voucher record, compose the dis- tributive accounts — should be distributed and closed at the end of each month. These amount- should then be bal- anced with the voucher record, and their report should so show. These amounts, less the cash receipts for board, miscellaneous supplies, etc., should constitute the cost of coal and coke, distributed in the manner now followed. I can see that the treatment of all supplies purchased as con- sumed would at times make the cost price of coal and coke a traction more than it otherwise would be, but that is far more preferable than to have these accounts stan ling open and their cost distributed at the pleasure of the manage- ment. Every entry upon the books from December 1, 1898, to December 1, 1900, has been checked, except the postings of — 47 — the sales ledger to individual accounts. To do this proper- ly and verify the charges will require the services of two men for thirteen days, working ten hours peT day. This should hi 1 yet done. I found no trace of the investigating committee of two years ago, so far as the hooks arc con- cerned, save the checking of the cash-book. OUTST A XI ) I N G WARKANTS. The following arc the unpaid or outstanding vouchers of the Stare Prison, except such as were issued and now held by individuals prior to December 1, 1898: .MAIN PRISON. 1 >e< i ruber l. IS9S . to I lecember I, L900: No. 15546 Ellis Harper (held for settlement) * 165 21 ,0 V. ( . <£ St. L. i;.v. Co 4 30 i W. H. Gammon, Warden 82 92 7177 Overton & Bush 5 00 7259 J. B. Cage (held for settlement) 45 85 7565 T. .1. Mooney ~'T 34 7671 I.. G. Tate 108 55 791 ; John Van Range Co 4 00 $555 \Y. II. Hartford 18 28 8579 Ross-Mayer Manufacturing Co .'! 77 8619 Duncan & Co 14 7 8 - I.. II. Hitchcock 53 SO 8741 Vasliville Si reet Railway Co 04 ::u SflSO K. .1. II. Wail 14 17 ! .1. L. Molt 4:; 72 8821 W. II. Hart lord 277 5] 8815 Nashville Street Railway Co 85 85 8829 I'.. I'. Ninon 1 75 D. C. Scales 133 L5 I.. (.. Tate 270 35 Total s l - i: ' 1 '" i:i;l SHI MOUNT \i\ PRISON. HELD i:v I \ni VI i»i ai.s. December I, 1.898, to December i. L900: L0824 .1. E. ( ai r & Son I 20 12014 Nat. J. Scotl I ~ ; 12115 J. W. Wells & Bro i H •'■ — 48— • 12177 Tennessee Milling Co 8 71 12190 Chattanooga Foundry Co 24 00 12228 Frank Schurbert 24 69 12238 A. 15. Cooper 14 80 12244 Mountain City Manufacturing -Co 15 20 12247 Ross-Mehan Foundry Co 47 OS 12257 Knoxville Iron Co 87 07 12267 Lookout Boiler Manufacturing Co 31 25 12277 H. & N. E, Ry. Co 160 05 12283 E. T. Lumber Manufacturing Co 38 42 L2288 Chattanooga Car & Foundry Co 92 4S 12293 H. L. Cory Co 399 50 Total held by individuals $ 1,093 68 IfELIi BY PKISQS COMMISSIONERS. issued prior to December 1, 1898: 10478 Prison Commissioners, on account of farm $ 226 00 10350 Prison Commissioners, on account of farm 247 10 10-114 Prison Commissioners, on account of farm 123 90 1592 Prison Commissioners, on account of farm 67 02 1754 Prison Commissioners, on account of farm 440 25 1791 Prison Commissioners, on account of farm 10 00 1904 Prison Commissioners, on account of farm 48 60 1942 Prison Commissioners, on account of farm 7 14 10029 Prison Commissioners, on account of farm 37 10 10056 Prison Commissioners, on account of farm 86 00 10128 Prison Commissioners, on account of farm 84 20 10472 Prison Commissioners, on account of manufacturing" department 323 2S 10143 Prison Commissioners, on account of manufacturing department 550 00 1792 Prison Commissioners, on account of manufacturing department 769 25 1261 Prison Commissioners, on account of manufacturing department 7,841 69 — 49 — 10296 Prison Commissioners, on aceounl of manufacturing department 915 35 10177 Prison Commissioners, on account of manufacturing department 144 00 ! Prison Commissioners, on aceounl of manufacturing departmenl 58 80 10411 Prison Commissioners, t' maintenance of convicts 12 77 L73S Prison Commissioners, on aceounl of maintenance of convicts 40 00 Total held by commissioners is- sued prior to \)i-mu\n-\- l. 1898. . - 1,252 37 [ssned from December I, 1898, to December I, 1900: 11534 Prisoi < missioi ers, i a aceounl of ii. ai ntenance $ 103 U'.> 1 171 l Prison Comi i rs, on account oi maintenance 33 '.».'! — 137 62 10545 Prisoi Commissioners, on aceounl of farm "I s 01 : Prison Commissioners, on aceounl i F farm 00 L0964 Prison Commissioners, on account of tarn, 50 11065 Prison Commissioners, on aceounl of inn 7670 f — 50 — 11216 Prison Commissioners, on account of farm 549 99 11294 Prison Commissioners, on account of farm SI 00 11608 Prison Commissioners, on account of farm 76 15 12070 Prison Commissioners, on account of farm 619 20 Prison Commissioners, on account of f:mn 3 00- 1,69164 I Prison Commissioners, on account of 1. manufacturing' department 553 45 10546 Prison Commissioners, on account of manufacturing- department 10,1 51 10615 Prison Commissioners, on account of manufacturing- department 230 20 10682 Prison Commissioners, on account of manufacturing- department 301 80 1075S Prison Commissioners, on account of manufacturing department 1,234 00 10S16 Prison Commissioners, on account of manufacturing department 938 91 10987 Prison Commissioners, on account of manufacturing- department 626 52 11064 Prison Commissioners, on account of manufacturing- department S29 45 11124 Prison Commissioners, on account of manufacturing department 406 00 11282 Prison Commissioners, on account of manufacturing department 955 10 11381 Prison Commissioners, on account of manufacturing department 471 45 11444 Prison Commissioners, on account of manufacturing- department 695 84 11573 Prison Commissioners, on account of manufacturing- department 701 10 11063 Prison Commissioners, on account of manufacturing department 368 60 11704 Prison Commissioners, on account of manufacturing- department 488 96 11740 Prison Commissioners, on account of manufacturing department 116 30 11801 Prison Commissioners, on account of manufacturing department 1,253 23 11876 Prison Commissioners, on account of manufacturing department 1,040 60 — 51 — L19S3 Prison Commissioners, on accounl of nranufacfairing department is 11 Commissioners, on accounl of manufacturing department 338 L5 I a < ommissionei s, on accounl of manufacturing departmenl 182 Ti lllT'.t Prison CommissionerSj on accounl od manufacturing departmenl 786 70 i Prison Commissioners, on accounl of manufacturing departmenl ':'.'. 13 78 Total for Brushy Mountain 9 83 Total for all Of the vouchers outstanding for Brushy Mountain, $34,- 876.15 are in the hands oi the Commissioners and held by them. The effecl of their withholding these vouchers has .i that the books of the ( !omptroller and Treasurer show 1<-- expenditures and less receipts from prison operations than really exist. These vouchers, under their sys tern of bo eeping, should have been entered upon the cashbook when received, the proper accounts credited, the Comptroller's warrants issued therefor, and the amount turned into the State Treasury to th< credit od thi Main Prison They were never entered on the c.ashltook, but ra to have been ere lited, nevertheless, bo the accounts of farm and manufacturing department. This action places tin- books of the .Main Prison oul of balance, thciv- fore, to that exti nt. For the pasl two years these vouchers amount i" $15,453.04, which, if properly credited and stripped from whatever fictitious profits exist, would hav< i I the earnings of the Main Prison probably $10,000.00. I know nothing aboul their being beld l> the Commissioners until I checked up the vouchei record with the record of payments made by thi State Comptroller. The position occupied !>\ tliese vouchers i- the -aim a- if iIk State Comptroller, in receiving payable warrants with other moneys to be credited to thi accounl of a Clerk or Trustee, would simply pass into the Treasury the cash and withhold the warrant-, and then credil tin accounl od the — 52 — Clerk with both. Then the hooks of the Treasurer would show that the Comptroller had not passed into the Treasury all of his receipts to the extent of these warrants. From the fact that these vouchers are sight drafts upon the State Treasury, and from the further fact that they were not entered on the cashbook, thev could have been used by any one having access to them without detection, unless, per- haps, the investigating committee would, at the end of the two years' business, check them ut> with the record in the ( fomptroller's i ffice. These vouchers should lie taken to the Comptroller's office, pavable warrants issued therefor, and the same passed into the Treasury of the State, in order that the books of the Treasurer and Comptroller may show the State Prison operations, as required by law. coxcirsiox. In conclusion. I will state that in this investigation I have been treated with kindness and courtesy by all prison officials, clerks, and employees, and have been materially assisted by Mr. F. M. Johns, of Rutherford County. I have been thus explicit and have reported in such detail with the hope that von may be more able to discharge the intricate duties devolving upon you in connection with the State Prison and its management with that degree of in- telligence its importance demands. Very respectfully, J. W. ALLEN, Auditing Accountant. UNIVERSITY of CALIFORNIA AT LOS ANGELES LIBRARY UNIVERSITY OF CALIFORNIA LIBRARY Los Angeles This book is DUE on the last date stamped below. HV 32 1901 A42