J S LQ3Q A /3 ative Document (1982) No. 107 STATE OF) NEW YORK LaMM^HMM*WMW IC-NRLF REPORTS OF THE M7 3M7 New York State Joint Legislative Committee to Investigate the Affairs of the City of New York 1921-1922 ALB AsN Y J. B. LYON COMPANY, PRINTERS 1922 DOCUMENT* Legislative Document (1922) No. 107 STATE OF NEW YORK REPORTS OF THE New York State Joint Legislative Committee to Investigate the Affairs of the City of New York 1921-1922 ALBANY J. B. LYON COMPANY, PRINTERS 1922 H ,' *J 1 ! . ; i; : I C THE COMMITTEE SCHUYLER M. MEYER, Chairman. SIMON L. ABLER, Vice-Chairman. THEODORE DOUGLAS ROBINSON, Secretary. MAXWELL S. HARRIS, THEODORE STITT, FREDERICK KAVANAUGH, WALTER W. WESTALL, BERNARD DOWNING, CHARLES D. DONOHUE, SOL ULLMAN, MAURICE BLOCH, JOHN R. YALE, PETER J. McARDLE, CLAYTON R. LUSK, Ex-officio. JAMES J. WALKER, Ex-officio. ELON R. BROWN, Counsel. LEONARD M. WALLSTEIN, Associate Counsel. SAMUEL A. BERGER, Associate Counsel. ALEXANDER OTIS, Associate Counsel. FRANK LORD, Associate Counsel. PERRINE & NICHOLS, Accountants. SPENCER PHENIX, Special Assistant. A. D. H. SMITH, Special Assistant. In charge of the field work of various phases of the investiga- tion were: FREDERICK RIPPON, WILLIAM BULLOCK, CLARENCE KING, MAURICE DEUTSCH, PAUL C. WILSON, WINTHROP D. LANE, LEO J. MCDERMOTT, JULIAN I. MASKS, [Hi] 596306 JOINT RESOLUTION CONSTITUTING THE NEW YORK STATE JOINT LEGISLATIVE COMMITTEE TO IN- VESTIGATE THE AFFAIRS OF THE CITY OF NEW YORK ADOPTED APRIL 15, 1921. WHEREAS, It is the common report that the revenue of the City of New York is insufficient to meet the requirements of the public schools and other municipal departments, and the general financial status and the credit of the city are in a perilous position; and WHEREAS, It is the common report that such financial condition of the city is due, in part, to inefficiency, waste and corruption in various departments of the city government, and WHEREAS, It is also the common report that the personnel and the current administration of various departments of the govern- ment of the city has been demoralized and subjected to practices prejudicial to the public interest; and WHEREAS, It has been repeatedly stated in public reports and as matters of public information that the financial difficulties of the said city, and the inefficiency and waste in the administration of its government are due, in part, to duplication and defects in the structure of its government under existing laws, and WHEREAS, There is and for a long time has been an insistent and widespread demand by citizens of such city that the legis- lature inquire into all such matters for the purpose of enabling the legislature to correct such abuses, cure defects and afford relief to such city so far as the same may be done by law, and WHEREAS, It is the duty and function of the state to lend such assistance as it can to secure to such city and its citizens residing therein honest, efficient and economical local government; now, therefore be it Resolved (if the Assembly concur), That a joint legislative committee is hereby constituted, to consist of five members of the senate to be appointed by the temporary president of the senate and six members of the assembly to be appointed by the speaker of the assembly, with power and authority to investigate the general financial condition of the city of New York, the causes [v] vi JOINT RESOLUTION thereof, and the remedies therefor, and to inquire and examine into all and singular the aforesaid matters and allegations, and to inquire into the accounts, the structure and the methods and manner of administration of any and all the departments, bureaus, offices, boards and commissions of the government of the city of New York, and of the boroughs thereof, and of the counties geographically included within said city and into every matter and thing that affects or has affected the present, past or future conditions surrounding or in any way bearing upon or relating to the financial condition of said city, the structure and the admin- istration of the municipal government thereof, and of the govern- ment of the counties geographically included within said city. The investigation of the committee may include every other mat- ter and thing not specifically mentioned in this resolution relevant to the general question of ascertaining and improving the financial conditions of said city and the structure and the administration of the government thereof, and of the counties geographically included therein, as though the same had been expressly specified therein. Further resolved. That such committee be hereby authorized to sit in the city of New York, or elsewhere within the state, and conduct the investigation herein described during the session of the legislature and during the recess or after the adjournment with the same power and authority it would have were the legis- lature in session to choose a chairman from among its own mem- bers, to employ a secretary, counsel, accountants and such other assistants as may be needed, to take testimony, subpoena witnesses and compel the production of books, documents and papers, to have the assistance and cooperation of the officers and employees of the city of New York and of the counties included geographic- ally within said city and access to and examination of all records, books, papers and documents of said city and counties and of any and all departments, bureaus, offices, boards or commissions thereof, and otherwise to have all the powers of a legislative committee. The committee may at any time and from time to time by resolution of a majority of its members, be subdivided into sub-committees of such number as it may by majority determine, which sub-committees may sit at the same time and place or at different times and places in the state of !N"ew York during the session of the legislature, during its recess or after the adjourn- ment, each such sub-committee to appoint its own chairman and JOINT RESOLUTION vii to act by majority vote of its own members and to administer oaths and to issue subpoenas requiring the attendance of witnesses and the production of books, papers and documents and to do all other acts and things that may be done by the committee as a whole or that may be delegated to it by the full committee. Further resolved, Whenever in its judgment the public interest demands, the committee may determine that a person shall not be excused from attending and testifying before said committee or before any sub-committee thereof, or from producing books, papers or documents before the committee or such sub-committee in obedience to its subpoena on the ground that the testimony or evidence, documentary or otherwise, required of him may tend to incriminate him or to subject him to a penalty or forfeiture; but no person so attending and testifying or producing such books, papers or documents, who has duly claimed excuse or privilege which would be sufficient except for this provision of this resolution and which said excuse or privilege has been expressly denied by the committee, shall be subjected to prosecu- tion or to any penalty or forfeiture for 01 on account of the transaction, matter or thing concerning which he may as afore- said testify or produce evidence, documentary or otherwise, before said committee or sub-committee in obedience to its subpoena. Further resolved, That said committee shall report with all convenient speed, but not later than February 1, 1922, the results of its investigations to the legislature; and that such committee shall also report, from time to time, such results of its investi- gations as relate to or bear upon the finances and the structure of the government of the city of New York, and the counties geographically included therein, to any commission now or here- after created by law for the study and general revision of the) Greater New York charter, and the acts amendatory thereof or supplemental thereto, or other acts relating to the government of said city. Further resolved, That the sum of one hundred thousand dol- lars ($100,000), or so much thereof as may be necessary, is hereby appropriated from and out of the contingent fund of the legisla- ture for the necessary expenses of said committee and to be paid on vouchers approved and audited according to law. CONTENTS FIRST REPORT PAGE First Report of Joint Legislative Committee 3 I. Financial 5 II. Division of Authority between the City and the Legislature . . 6 III. Adherence to Precedents 7 IV. Limit of Delegation of State Authority to the City 8 Minority Report 10 SECOND REPORT Report on the Department of Docks 13 Profiteering in Wharfage 15 Losses on Long Term Leases 17 Losses on Staten Island Piers 18 Lack of Zoning and Warehouses 19 City Wastes its Property 20 Unsound Dock Finances 21 Excessive Cost of Policing Docks 22 The Port a Matter of State and National Concern 23 Growth of Port 24 Recommendations 1 24 Exhibit "A," Assessed Value and Gross Revenues of the Dock Department Properties, 1920, by Borough and District Segregation. 27 Group I, North River, Battery to Fifty-ninth Street 27 Group II, East River, Battery to Fifty-ninth Street, Manhattan ... 28 Exhibit "B," Table Showing Rates of Wharfage Charged by 24 Lessees of City-owned Piers, Compared with Berth Space Leased. . 29 Exhibit " C," Table Showing Rates of Wharfage Charged by Steve- dores and Intermediaries for Public Pier Wharfage, for which the City Received Prescribed Rates, as Shown 29 THIRD REPORT Report and Recommendation on the Board of Education 33 A. Inadequate School Accommodations 33 B. Fire Hazards 34 C. Negligent Administration 35 Unsound Legislation 36 1. Complicated and Antiquated Provisions of Law Requiring the Co-operation of Many Other Branches of the City Government in Building Operations with Resulting Delays, Often Amounting to a Veto of a Building Project 37 2. Statutory Powers Properly Belonging to the Board of Education Now Vested in Bodies or Officials Nominally Subordinate to the Board but in Fact Superior in Respect of Such Powers 39 t frequent Changes and Conflict of Laws Governing the Administra- tion of Schools 38 Finances 39 i-Political Board of Education 41 [ix] . x CONTENTS Recommendation on the Board of Education Continued PAGE Appendix, Education Under the Greater New York Charter 45 Education Under the Provisions of Chapter 786, Laws of 19d7, as Amended through 1921 50 1. Reduction in Size of Board of Education from 46 to 7 Members 57 a. Inadequate School Accommodations 59 Statement Showing the Corporate Stock Authorizations and Cash Expenditures from January 1, 1910, to June 30 1921 .' 66 b. Fire Hazards in Schools 67 Authorizations and Expenditures for Fire Prevention Work as of August 10, 1921 63 c. Failure to Repair Fire Damage to Board of Education Build- ing : 71 d. Incomplete By -Laws and Delayed Minutes 73 2. Possibilities of Conflict Between the Board of Education and the Superintendent of Schools, Relative to Respective Powers 75 3. Possibility of Conflict Between the Board of Education and the 'Municipal Authorities Relative to their Respective Powers 78 4. Failure to Concentrate in Clear and Unmistakable Language Full Responsibility for the Proper Administration of the Public School System either on the Municipal Authorities, the Board of Education or the State of New York 86 5. Limitation of the Powers of the Board of Education 86 6. Great Increase in the Powers of the Superintendent of Schools 86 7. Perpetuation of the Board of Superintendents 86 8. Perpetuation of the Bureau of Compulsory Education, School Census and Child Welfare 87 9. Conflict Between Section 1102 of the Charter, Which Was Not Specifically Repea^d, and the State Education Law, Rela- tive to the Disposition to be Made of the City's Share of the State School Moneys, the Former Providing that Such Money be Credited to the City's General Fund for the Reduction of Taxation and the Latter that it be Credited to the Board of Education 88 10. Increase from 3 Mills to 4.9 Mills in the amount Which the City is Required Annually to Appropriate for the Use of the Board of Education 89 11. The Inclusion Within the State's Educational System, of City Boards of Education of the City of New York and the Subordination of the Municipal Authorities to the State in Matters of School Administration 94 Development of Public Education in the State and City of New York Prior to 1897 96 Historical Development of the Educational Section of the State Constitution 96 Dutch Colonial Period 98 English Colonial Period, 1664-1776 98 Education Under the First Constitution, 1777-1821 99 Education Under the Second Constitution, 1822-1846 102 Summary 105 The EvoHition of Public Education in the Present City of New York 107 The Former City of New York 107 Brooklyn .....! 116 Queens and Richmond 119 CONTENTS XI FOURTH REPORT PAGE Report of the Finances of the City of New York, March, 1922 123 Abuses in Financial Management 124 (a) Revenue Bonds 125 (b) Special Revenue Bonds 125 (c) Tax Notes 12)6 The Abandonment of the " Pay-As-You-Go " Policy 136 Tax Limit Exceeded 138 Debt Limit Exceeded 140 General Consideration on the Tax Limit and the Debt Limit 142 Manifest Financial Reforms 142 State Taxes 143 Financial Requirements of City 144 Necessity of Constitutional Amendment 144 Recommendations for Relief 144 Exhibit "A," Showing Growth of Net Funded Debt Less Sinking Fund Since Consolidation 146 Exhibit " B," Showing Cost of Administration, Debt Service, Tax Deficiencies, State Taxes and Total Budget Since 1910 146 Exhibit " C," Showing Budget Total, General Fund Revenues Deducted and Amount of Tax Levy 147 Exhibit " D," Schedule of Real and Personal Property Assessments Since 1918 147 Exhibit " E," Schedule Showing Yearly Per Capita Cost and Average Per Capita Costs Under the Various Administrations 148 Exhibit " F," Statement Showing the Amount of Uncollected Taxes as at December 31, 1921, Classified as to General Character of 'Property Against Which Taxes are Levied 150 Exhibit " G," Schedule Showing Monthly Outstanding Balances of Corporate Stock Notes, Special Revenue Bonds and Bills of the Period December 31, 1917, to June 30, 1921 151 Exhibit " H," Schedule of Special Revenue Bond Authorizations During Year 1920 155 Exhibit "I," The Story of the City's Sinking Fund Transactions During 1920 15 Exhibit " J " 162 Report on the City of New York, Made for the New York State Legislative Committee to Investigate the Affairs of the City of New York 165 Exhibit " K," Memoradum by Counsel for the Joint Legislative Committee on Constitutional Limitation of the Taxing Power of the City of New York 167 Exhibit "L," Memorandum by Counsel for the Joint Legislative Committee on the Constitutional Limitations of the Debt Incurring Power of the City of New York 171 FIFTH REPORT Report and Summary of the Evidence Concerning Mandatory Legislation, Department of Police Licenses, Markets and Public Welfare 187 Mandatory Legislation Affecting the City of New York 189 Appropriations which are Completely Mandatory 189 Prevalence of Mandatory County Legislation 189 Items which -are Partly Mandatory 189 1902 General Repeal of Mandatory Charter Provisions 190 Ancient and Obscure Mandatory Statutes 190 Banket Repeal of Mandatory Legislation Recommended 191 Exhibit 1. Mandatory County Salaries 191 Exhibit 2. Mandatory County Salaries 207 Exhibit 3. Brown Bill of 1916 giving city authority over county salaries . ^08 xii CONTENTS Summary of Evidence Concerning Mandatory Legislation Cont'd. PAGE Exhibit 4. Mandatory Salaries in 1921 Budget 210 Exhibit 5. Brown Bill of 1916 giving local authorities over all city salaries excepting teachers and elective officers 212 Political Interference with Police Administration 214 Hylan Recommends Solovei 215 The Experiences of Deputy Commissioner O'Grady 218 From Assistant Secretary Sinnott, May 10, 1919 220 From Executive Secretary Kelly, January 23, 1920 220 From Grover Whalen, June 18, 1918 220 From Grover Whalen, May 10, 16, 18, October 25, 1918 221 Illegal Police Reinstatements 222 Act of 1907 222 Amendment of 1915 222 Abolition of Board of Review 222 Ordinance of July 2, 1918 222 Executive Board Created 223 Advisory Committee Appointed 223 The " Functus Officio " Opinion 223 Illegal Reinstatements 224 Reinstated after " Functus Officio " Opinion 224 Reinstatement after Dismissal Affirmed 224 Reinstatement after Hearing Denied 225 Maher Case . . 226 Demoralization of the Quartermaster's Division 227 Private Cars Maintained by Police Department 233 1918 Police Games 236 Speculation and Money Making by Police Officials 240 Richard E. Enright 240 Edward P. Hughes 241 Dominick Henry 241 John F. Dwyer 242 The Apartment House Transaction 243 The Hotel Van Cortland Hotel De France 245 The Wire Tapping Case 246 (Division of Licensed Vehicles of Department of Licenses 248 The Routine of a Taxi-Driver's Application 250 The Administration of the Department of Markets 255 The Establishment of the Department 255 The Rules 256 The Rules Administered 256 The Haslot Case 257 The Heineman Case 257 The Woolsey Case 261 Kahn-Kloeblein Case 263 The Katenkamp Case 268 The Turner Case 272 The Case of Barnet Cohen 273 The Lewis Cases 275 The Michels-Telephone Company Case 278 Market Supervisors 2S2 Sale of Army and Navy Food Supplies 283 Department of Public Welfare Kings County Hospital Job 284 FIRST REPORT NEW YORK STATE JOINT LEGISLATIVE COMMITTEE TO INVESTIGATE THE AFFAIRS OF THE CITY OF NEW YORK December 19, 1921 [1] FIRST REPORT OF THE LEGISLATIVE COMMITTEE December 19, 1921. To the Charter Revision Commission: The committee deems it advisable at this time to report its conclusions as to some basic changes in the charter of the City of New York. The principal legislative powers of the city are now vested in the Board of Estimate which is composed of the executive or administrative officers of the city. The Committee proposes that the executive or spending power be separated from the appro- priating power, and for this purpose recommends: (a) That a Board of Finance of nine members be elected by the city at large for six years, three to be elected every other year. (b) That the members, although elected by the whole city, be resident, as follows : Three in Manhattan, three in Brooklyn, and one in each of the other boroughs. (c) That the Board of Estimate and Apportionment and the Sinking Fund Commission be abolished, and all the powers of both boards over city finances be transferred to the Board of Finance. (d) That the Board of Finance, either upon the recommenda- tion of the Mayor, or upon its own motion, have the power to abolish, modify or consolidate the various departments of the city. (e) That the Board of Finance have the power of confirma- tion over appointments to the Board of Taxes and Assessments, whose tenure of office is to be fixed like members of the Board of Education. (f ) That the Board of Finance, on the request of the Mayor, or on its own motion, have the power of removing city officers by a two-thirds vote for cause. (g) That the Mayor transmit a budget for the support of the entire city and of county governments to the Board of Finance, and have the power of veto over the Board of Finance, subject to being overridden by a two-thirds vote. (h) That the office of President of the Board of Aldermen be abolished at the end of the term of the newly-elected incum- [3] 4 * Iis-vESti&A*ci6: -OF ' AFFAIRS OF NEW YORK CITY bent, the Board of Aldermen retaining its present powers and, like the Board of Finance, choosing its own presiding officer. (i) That for the purpose of insuring complete financial con- trol of the new Board of Finance, all mandatory legislation fixing charges on the city or the counties for services of a purely local nature be repealed, and that further legislation of this character be effectually restrained by constitutional enactment. (j) That the Mayor, Comptroller and Borough Presidents retain their executive and administrative powers unimpaired. The new board should be chosen at the annual election in 1923, and prepare its first budget for the year 1925, since the budget for 1924 would be prepared before they come into office. The Committee are of the opinion that if this plan be adopted it will First. Separate the appropriating power from the spending power the legislative from the executive. When a city rivals States in population, objections to uniting these powers in States applies to the city. Such powers were united in small munici- palities on the analogy of business corporations, but in large cor- porations there is usually a division of such powers; Second. Furnish an opportunity for the city to become articu- late to speak directly and exclusively on the financial issue every two years. The duties of the new board will be financial. Parliaments and Legislatures are mostly concerned with appro- priations. A vote for Mayor or Comptroller, etc., under the present system, gives no means for such an expression, and is usually given with the express purpose of securing some expendi- ture without providing any check on the amount available, or supervision over its expenditure in the sense that States and Nations have checks over expenditures through the appropriating power ; Third. From the dignity and authority of the body, and, owing to its limited membership, from the dignity and authority of the several members, and also by reason of its freedom from administrative duties, attract the best class of candidates avail- able. It is hopeless to induce persons of high qualifications to undertake local administration by piecemeal. Nothing less than general control over the finances of the city will successfully invite such talent. The election by the city at large of the members of the Board of Finance, besides tending to unify the sentiment of the city on the principal question relating to city government, will be the best means of securing candidates of capacity and character. REPORT OF JOINT LEGISLATIVE COMMITTEE 5 Fourth. By creating a legislative body, promote and invite a more extensive delegation of powers of local legislation, includ- ing the abolition, modification and combination of departments, and require a repeal of mandatory State legislation of a local character; it will also, from its nature, be a powerful factor in shaping legislation affecting the City of Albany. Fifth. Through the power of confirmation of members of the Board of Taxes and Assessments, and the fixed tenure of office, make them more independent of official interference in the per- formance of their important public duties and prevent the man- ipulation of the board to meet the necessities of an extravagant administration. The power of removal for cause will operate as a check on malfeasance in city offices. Sixth. Inspire civic interest and activity by recognizing the due sense of municipal importance, power and responsibilities of which the citizens of such a city must be conscious, and nourish public spirit and develop intelligence on the fundamental matters of finance and expenditure, which are not now in any adequate way brought home to the voter when he gives expression to his views by the ballot. Seventh. Furnish an opportunity, now lacking, to the admin- istrative officers of the city to give adequate time and attention to administration. The urgent reasons for a change in the system of city govern- ment now in force are apparent, and may be summarized as follows : I. FINANCIAL The maintenance of the city in a sound financial condition, with a credit equal to meeting its public necessities, is of the first importance to the municipality and its citizens and to the State. The city debt has increased every year since the city was organized. The gross funded debt in 1898 was $344,000,000, of which $212,000,000 had been incurred for non-revenue pro- ducing purposes. This debt (exclusive of general fund bonds) had increased in 1921 to $1,246,000,000, of which $835,000,000 was non-revenue producing. In addition to this, the city carries a temporary debt of approximately $100,000,000, which is not computed in determining the debt limit. The tax levy has kept pace with the growth of the debt. The budget in 1898 was $77,000,000 and in 1921 $345,000,000, while the per capita charge for taxes has risen from $23.12 in 1898 to $59.77 in 1921. 6 INVESTIGATION OF AFFAIRS OF NEW YORK CITY The tax-roll has increased from upward of $3,000,000,000 in 1898 to $10,186,207,279 in 1921, the rate of increase being reasonably uniform from 1904 to 19'21, when the real estate assessment jumped from $8,626,000,000 to $9,972,000,000 in an attempt to keep within the debt and tax limit. The exact increases are not yet obtainable for the year 1922, but the pre- liminary estimate furnished the Comptroller by the Department of Taxes, places the 1922 assessment at $10,500,000,000. Without taking up now the pending questions relating to the debt limit and tax limit, it is beyond controversy that the city is using its entire taxing power for ordinary expenses, in the face of urgent needs for essential public service schools, rapid transit, docks, markets and a marginal railway. Instead of furnishing evidence of the city's financial soundness, the rapid rise in assessments indicates the exhaustion of the city's credit, and a manipulation of the taxing power to conceal it. It may be added that in 1921 the city found it necessary for the first time to resort to the doubtful expedient of basing its tax limit on the current assessment rather than on the assessment of the year before, as heretofore practiced in other cities of the State, and the present budget indicates that the same doubtful expedient of increasing the taxing power will be resorted to in 1922, in an attempt to keep within the constitutional tax limit. The Comp- troller has publicly advised the Board of Aldermen of the neces- sity of cutting $10,000,000 out of the appropriation for schools to keep within such increased limit. Such a showing gives no promise of recovery under the present municipal organization, but foreshadows financial disaster. II. DIVISION OF AUTHORITY BETWEEN THE CITY AND THE LEGISLATURE It is apparent from the number of amendments to the charter since its re-enactment in 1901 that it is not laid down on reason- ably permanent lines. As appears by the session laws the charter has been amended or modified by 1,666 separate laws, exclusive of general laws affecting the whole State. There were 116 such laws in 1920 and 82 in 1921. Many of these statutes fix salaries of city or county officers; 52 such statutes have been passed in the last four years. Five hundred and five bills amending the charter have been vetoed by the Mayor since 1907, and with the bills introduced but not passed by the Legislature, form a vast REPORT OF JOINT LEGISLATIVE COMMITTEE 7 mass of legislation claiming the attention of the Legislature. This legislation, whether passed or not, results: (a) In a constant disturbance of municipal finance and admin- istration, frequently creating uncertainty of purpose and policy in the conduct of the city government. (b) In causing a feeling of resentment and dissatisfaction over State interference with matters that are purely local in their nature. (c) In dividing powers of municipal control in the city between municipal authorities and the members of the Legisla- ture from the city, who generally control such legislation. This results in frequent differences between the city authorities and the Legislature, and through his power of approval and veto of city bills, between the Mayor and the Board of Estimate. The Mayor is thus enabled from time to time to secure legislation affecting the government of the city through the Legislature which he could not obtain through the Board of Estimate. (d) In an equally unfortunate effect on the State, as the Legislature is thus occupied unnecessarily with local affairs to the exclusion or detriment of general legislation. These conditions are the cause of general dissatisfaction, and not infrequently such dissatisfaction is directed toward the State government, although such legislation could not be enacted with- out the active support of city members of the Legislature and thf consent of the Mayor. The present system has worked badly and calls for basic change* in the charter and in the relations of the city to the State. Other- wise present evils will not only continue but become a greater menace to the public welfare. III. ADHERENCE TO PRECEDENTS Present conditions are undoubtedly due to a too close adherence to municipal precedents which, by reason of the size of the city and its organization, are more or less inapplicable. They have preserved the form but discarded the substance of such municipal organization by depriving the taxpayers, as such, of any par- ticipation in the city government. This city exercises much wider authority than is exercised by London, Paris or Berlin. There is an inherent unsuitability in attempting to fit the institu- tions of a village or of a city of ordinary population to a munici- pality greater in population than any State in the Union, except 8 INVESTIGATION OF AFFAIRS OF NEW YORK CITY New York, Pennsylvania and Illinois; wealthier than any State in the Union, except the State of which it is a part; with an annual budget exceeded by few Nations, greater than the three largest States in the Union combined, and without a parallel where such appropriations are made by executive authority ; with a variety of responsibilities in government of great public impor- tance; and having some problems unknown in other munici- palities by reason of county organization. On the other hand, changes should be made only for the pur- pose of correcting conditions, and not to establish a Utopia, or to vindicate any theory of government. The present system is not bicameral, since the functions of the present Board of Esti- mate and Board of Aldermen are not joint, but chiefly separate. This will be true also of the Board of Finance and the Board of Aldermen, and there will be no more reason for abolishing the Board of Aldermen which furnishes a means of popular expression on matters of peculiarly local concern, after the Board of Finance is established, than before. IV. LIMIT OF DELEGATION OF STATE AUTHORITY TO THE CITY Under our system of government, two classes of powers are delegated to the city, those which are of purely local concern, and those embracing matters which are of State-wide importance, like the police, education and the local administration of justice. The Committee is of the opinion that the powers of the city over matters of purely local concern should be increased, and legisla- tive interference with the exercise of such powers should be further and effectually restrained by constitutional enactment. Such enactment should also include a provision giving power to the new Board of Finance, in conjunction with the Mayor, to veto legislation. The restriction as to interference with matters of a purely local nature may be much stricter than in matters of State-wide interest. While a municipality may be permitted to mismanage its own peculiar interest, it cannot be permitted to prejudice those of others or to violate principles of justice in dealing with its own citizens. Considered in its broader aspect, there can be no real conflict of interest between the State and city in changes in the charter. It is the duty of the State, of which the city forms so great a part, to secure for the city the greatest degree of autonomy consist out with safety, financial soundness and security of citizens ; but these matters are of equal concern to the State and to the city. KEPOET OF JOINT LEGISLATIVE COMMITTEE 9 This report is made under the provisions of the resolution appointing this Committee, as a recommendation to the Charter Revision Commission. Other reports covering the Committee's investigation will be submitted. Kespectfully submitted, SCHUYLER M. MEYER, Chairman. THEODORE D. ROBINSON, MAXWELL S. HARRIS, FREDERICK W. KAVANAUGH, ISIMON L. ADLER; SOL ULLMAN, WALTER W. WESTALL, JOHN R. YALE. I approve of the report in every respect, except that I believe the five boroughs of the city should elect their own representatives to the proposed Board of Finance as opposed to city-wide selection. THEODORE STITT. MINORITY REPORT It is the opinion of the undersigned, the minority of the Com- mittee, that no recommendations should be made at this time to the Charter Revision Commission. It is its opinion that only as the outcome of a consideration which they have been unable to give, that any views they may entertain 011 a revision of the present charter should be the result of a longer and fuller con- sideration. Inasmuch as nothing developed as the outcome of the investigation, which has continued since last May, of the affairs of the City of New York, to warrant the recommendations made in the majority report, the minority dissents totally from the conclusions and recommendations made therein. In general, the minority, members of the Legislature elected from the City of New York, are not at this time prepared to recommend the extension of any offices, nor are they prepared to agree that the powers of the Board of Estimate and Apportionment, particularly the powers of the Mayor and Comptroller, should in any degree be divided or curtailed. Particularly, in view that the very handsome as well as substantial majority by which the adminis- tration of the office of Mayor and Comptroller were ratified and endorsed by the people not more than a month ago, it would seem that they should be given an opportunity, in obedience to the will so emphatically expressed, to correct whatever deficiencies in the administration of the present charter may exist. The minority is unanimous that whatever decision shall be arrived at by the Charter Revision Commission, they recom- mend to the Legislature that the charter, before it becomes effective, be ratified by a referendum of the people of the City of New York. Respectfully submitted, JAMES J. WALKER, BERNARD DOWNING, CHARLES D. DONOHUE, MAURICE BLOCH, PETER A. McARDLE. [10] SECOND REPORT REPORT ON THE DEPARTMENT OF DOCKS January 31, 1922 [ii] REPORT ON THE DEPARTMENT OF DOCKS JANUARY 31, 1922 To ike Legislature and to the Charter Revision Commission: The administration of the dock department has been marked by a lack of policy in relation to dock rentals and charges for docking privileges: First. When docks are available for lease or permit, leases and permits are issued, without notice to applicants and pros- pective applicants, of the intended action of the department, and publicity is avoided. Second. Leases are frequently issued to stevedores and specu- lators having no claim for the accommodation of ships, when ship owners standing in immediate need of the accommodation are unable to secure it. Such leases are not infrequently granted for a less rental than ship owners stand ready to pay. Unable to secure a lease or permit from the dock department directly, prospective lessees pay large sums of money to intermediaries supposed to possess influence, to secure favorable action on their applications. Third. ~No attempt has been made to secure an adequate return to the city for the use of its property, or an income suffi- cient to cover the cost of carrying its investment. Millions are raised by taxes annually to meet the interest and amortization of dock bonds and expenses of maintenance, while income, readily obtainable without sacrifice, and more than equal to all charges, is wasted. Ships frequently berth under leases issued years ago at a quar- ter or even a seventh of the charge to ships berthing under recent leases or permits. Like inequalities prevail in payments for privileges currently granted under the subleasing system. The highest return now received by the city on the assessed valuation of a dock is for Pier 69, North river, 12.1 per cent, and the lowest return for Pier 81, North river, 1.7 per cent. Inequality and not equality of cost is the rule. The percentage of gross returns on assessed values in outstanding leases is shown in Exhibit "A" hereto attached. While the conditions described were aggravated during 1918- 1921, by war conditions, the main causes of inefficiency and loss have long prevailed, and though they vary in degree, as in the [131 14 INVESTIGATION OF AFFAIRS OF ,NEW YORK CITY present depression, will continue unless fundamental changes are made. Even in the present depression, representatives of some of the larger lines complained before the Committee of their ina- bility to lease piers and of being compelled to send ships to other ports. The inevitable results of such a haphazard administration have been to tax commerce heavily in most cases, and scarcely at all in others, under the pretence of furnishing a cheap rate to all; to deprive the city treasury of revenue to which it is entitled by wastefulness, improvidence and corruption, and to drive com- merce to other ports, as appears by the testimony of representa- tives of the French line, the Luckenbach line and others, and by the official statement of Gen. Black, the representative of the United States Shipping Board. A fair charge, based on the rental value of the docks leased and equal treatment, would encourage commerce and increase the revenue of the city by many millions of dollars. The city owns 235 docks, exclusive of the 12 uncompleted Staten Island docks, which will be taken up separately. This property ,though exempt from taxation, was assessed in 1920- 1921 by the tax department, as required by law, for $212,226,576. Docks assessed at $20,310,796 are used for municipal purposes, and are not available for commerce. The balance, available for commercial use, is assessed at $191,915,780. The loss of taxes on the docks by reason of municipal owner- ship is an essential element in comparing municipal ownership with commercial ownership. Assuming this property to be held and managed by the city on a commercial basis, a profit and loss statement for 1920 shows the cost of carrying this property as follows : Interest on $191,915,780 at 6 per cent $11,514,946 Cost of administration, 1920 . , 1,202,427 Two per cent depreciation on estimated value of the dock construction Jan. 1, 1920 ($70,000,000) . . 1,400,000 Loss of taxes on dock property not used by the city, exempt ' t [ 4,775,150 $18,892,523 Total receipts from rentals and wharfage, 1920. . 7,094,240 Loss to city on investment in 1920 $11,798,283 OF JOINT LEGISLATIVE COMMITTEE 15 The gross revenue of the department ($7,094,240, in 1920) consists of the rent from docks for terms of years and receipts from revocable permits and wharfage. Deducting from the gross revenue the cost of operation for 1920, amounting to $1,202,427, leaves an apparent margin of $5,891,813, or $1,116,663 more than the city would have received in taxes if the docks had been privately owned. This equals one-half of 1 per cent of the assessed value. This balance is less than the amount of the annual depreciation and makes no provision for annual interest or amortization charges on the dock bonds which are met by taxation, or for any return whatever on the investment in the dock property. The most valuable city dock property consists of the piers on Xorth river between the Battery and 59th street. These piers, having an assessed value of $117,073,500, produced in 19'20 a return of only 3.56 per cent in gross revenue on the assessed valuation. Privately owned piers in this water front section produced an average return of 11.5 per cent during the year 1920, and the 150 privately owned piers were operated at a commercial profit. Such a difference in the rent of public and private piers is intolerable, indicates a wastefulness in dock management, and opens the way to favoritism, jobbing and corruption. PROFITEERING IN WHARFAGE If shipping and commerce paid no more for the use of docks than the revenue received by the city, the availability of such great facilities at so little cost would be some compensation for the loss of revenue to the city. But the proofs indicate that the charges paid by shippers for dock privileges far exceed the revenue received by the city, and are undoubtedly in excess of the cost to the city of carrying its dock property as a business investment. Charges by lessees to shippers during 1920 on 24 leased city piers, contained in Exhibit " B," hereto attached, show: Aver ago daily berth charge to ship owners by lessee. $240 Average daily berth cost to lessee on basis of rent paid to the City of New York 63 Or expressed upon an annual basis of a 300-day year: Charge to ship owners by lessees, city piers $5,685,000 16 INVESTIGATION OF AFFAIBS OF NEW YOKK CITY Cost to lessees of city piers, on basis of rent to city of New York $1,494,717 Gross profit to lessees of city piers (280 per cent of rent paid to city) $4,190,283 While these berthing charges were for time when the lessees were not occupying the piers, the figures establish the rate of charges on ships not controlling piers during this period, and the market value of berthing privileges. They were the prevailing market rates, and there is abundant evidence of like charges. The dock commissioner during the last four years has issued to stevedores and other speculators, not ship owners, berthing permits at public wharfage piers, which in turn have been sublet to ships entering the port. Charges made to ships for berthing privileges at such public piers (1920-1921), set forth in Exhibit " C," hereto attached, show that such ships paid for their dockage privileges from 54 to 792 per cent more than the clock department received. The dock department charges for berth- ing privileges are in part regulated by law (section 859 of the charter, originally enacted 1882), and are in many cases not more than 25 per cent of the present market value of the privi- leges granted. It is inconceivable that ships would pay such a profit to speculators if they could obtain the privileges directly from the department at the legal rate. This abuse was abun- dantly proved. The following cases are stated as illustrations: The Maritime Shipping Company, a concern without capital, not maritime, and owning no ships, occupied Pier 72, at the foot of East 24th street, from September 1, 1919, to November 14, 1920, at an annual rental of $40,000, and rented berthing privi- leges at a net annual profit of $61,000 over the rent paid. Sabbatino & Company, a concern composed of a young saloon- keeper's helper, who was later interested in a small moving pic- ture house, and a ship's clerk without capital and not engaged in shipping, received from the dock department a large number of berthing permits between June 7, 1918, and September 22, 1921, which they sublet to ships entering the port. While their records were destroyed or suppressed, numerous cases of sn^li rentals showing a profit of from 66 to 400 per cent over the amount paid the dock department were established. They were REPORT OF JOINT LEGISLATIVE COMMITTEE 17 permitted a credit account with the dock department, and de- posited during this period over a million dollars in bank. Little or no effort has been made by the city to limit or restrict wharfage charges by lessees or permittees. It is inferable from a recent case that the dock department in the absence of a reser- vation in the lease is without power to limit charges for wharfage made by a lessee for a term of years, but there has been no serious effort to change the law. Shipping concerns failing to obtain such privileges on direct application to the department are often compelled to seek wharf- age accommodations at public piers through stevedores or go- betweens, who enjoy the favor of the department, A statement of payments to go-betweens will be submitted and marked Exhibit " D." LOSSES ON LONG TEEM LEASES A principal cause of loss of adequate returns on dock property is found in long term leases made by the commissioner of docks, with the approval of the Sinking Fund Commission. Dock leases are restricted by law to a term of ten years, but through permitted clauses of renewal, the terms are extended to from thirty to fifty years, with a provision for a 10 per cent advance in rent at the end of each renewal period. The value of piers as shown by the assessment, and charges to ships, has increased during the past ten years a hundred per cent, or ten times more than the advance secured by these leases to the city. Three leases of large modern city owned piers in South Brooklyn, of substantially the same commercial value, illustrate the city's loss from such leases. The pier at 31st street, leased to Cyprien Fabre in 1910 for twenty years, produces a rental of eighteen cents per square foot of area; the pier at 30th street, leased in 1916 to the Norwegian American for thirty years, and the pier at 29th street, leased in 1916 to the United States Steel Products Company for thirty years, produce a rental of thirty- six cents per square foot of area, while the pier at 33d street, under permit to the Luckenbacli Steamship Company in 1 1920, gave a return of $1.09 per square foot. On the basis of the present approximate value of a dollar per square foot, the city loses $350,000 a year on these three piers, and will continue 1 lose a like amount annually for the next ten years. The loss to tl.o city on these three leases from 1920 to their expiration wil approximate $6,000,000. 18 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Although it has long been apparent that the 10 per cent in- crease at the end of each renewal period was wholly inadequate, and the practice was condemned before the committee by the commissioner of docks, the department has continued to issue such leases down to the present time, eighteen such leases having been made during the past four years. LOSSES ON STATEN ISLAND PIERS The city now has in course of construction and Hearing com- pletion twelve piers on Staten Island at an approximate cost of twenty-five million dollars. These piers, with one exception, have been leased with an optional ten-year renewal clause for from thirty to fifty years on a rental basis of 7^2 P er cen t f the cost. Four of them have been leased to stevedoring concerns who own no ships. The city retains no control over the wharfage rates which the lessees may charge, thus furnishing every oppor- tunity for profiteering, although such a clause was included in the Luckenbach permit in 1919. Two of these four piers are leased to the Pan-American Corporation, a non-shipping concern which advised the committee on October 12, 1921, that their piers would cost the city $6,000,000, of which one million would be expended for machinery and cargo handling equipment. Using these piers as illustrative of the Staten Island piers generally, the annual profit and loss statement for the first ten years of the lease is as follows : Interest on $6,000,000, cost of construction $360,000 Two per cent depreciation of the dock construction, other than machinery 100,000 Seven per cent depreciation 011 the value of machinery 70,000 Loss of taxes on dock property because not privately owned, on valuation of $5,000,000 141.000 Total $671,000 Eental , 450,000 Annual loss . $221,000 At this rate the loss on the twelve piers, costing approximately four times as much, or $25,000,000, will amount to more than REPORT OF JOINT LEGISLATIVE COMMITTEE 19 $800,000 annually, or if there be no loss from depreciation on machinery on other piers, to more than $600,000. The city's revenue on this lease over loss of taxation and depreciation is 2.3 per cent of the cost, or about one-third of the legal rate of interest, or about one-half the interest paid on dock bonds issued to raise funds to build the docks. Adjoining this new development on Staten Island to the south there are three large and modern piers (erected 1917-1919) belonging to a private corporation, comparable in capacity with the city piers for the accommodation of ships. These piers pay the owner a gross return of 43.4 per cent on the assessed valuation. Adjoining the city piers on the north are four old piers, also privately owned, which pay the owner a gross annual return of 21.5 per cent on the assessed valuation. Allowing for possible increased cost because of recent construc- tion and possible lack of economy in construction because done through a municipality, there seems to be no reason why the city piers should not have been leased at a fair business return. Why should city piers be operated at such an enormous loss when private property similarly situated is operated at such enormous profit ? There is no evidence of any resulting benefits from such financial sacrifices. LACK OF ZONING AND WAREHOUSES Failure and neglect of the department in establishing zoning districts for the docking of ships, and adequate warehouse accom- modation, have resulted in serious loss in the operation of the docks and the accommodation of commerce. Zoning districts have not been established so that ships arriv- ing at the several channels of approach to the harbor can be docked at the nearest piers, or with reference to their draft or the desti- nation of their cargoes. In consequence the harbor is congested and navigation impeded and made more dangerous. Ships arc frequently docked at piers where ships of greater draft could He, while docks with less but ample depth are idle. Ships lie in the harbor awaiting berths, when there is room for all. Cargoe destined for inland shipment or local distribution are unloaded at inconvenient points, and reshipment and distribution delayed. Cargoes are unloaded at points where street traffic is congested, and the cost of lighterage and trucking greatly increased. There is no intensive use of the harbor facilities. These additional *. 20 INVESTIGATION OF AFFAIRS OF NEW YORK CITY costs have to be borne by the ships that dock and by commerce, and reduce the rental value of the piers. There is a lack of warehouse and storage facilities at the docks. As a consequence cargoes frequently lie for an unreasonabV period on the docks, preventing their best economic use. CITY WASTES ITS PROPERTY The city's proprietary interest in the dock property, acquired in part through grants from the State, but largely by expenditure of the taxpayers' money, is assessed at more than $212,000,000, to which must be added the $25,000,000 invested on Staten Island. The property is undoubtedly worth more than $300,000,000, and is rapidly increasing in value. The city is as well entitled to a reasonable return upon its business investment as private dock owners. If it accepts less, its action should be controlled by con- siderations peculiar to its own interest as, for example, the competition of other ports. No such reason is apparent. Hitherto the difficulty of correcting the inequality of charges and preventing waste of the city's property from the system of leasing, has apparently been treated as an excuse for the continu- ance of such inequality and waste. But if the system be changed, great improvement in the equality of charges and great increase in revenue will immediately be realized with a rapid progression to the desired end. The management and control of the proprietary interest in the docks, as well as the administration of the public utility, are sub- ject to the dual control of the commissioner of docks and the sinking fund commission. While the commissioner of docks is the administrative officer, he acts in the more important matters, such as granting long term leases and acquiring dock property, only with the consent of the sinking fund commission. Through these instrumentalities, the city has had complete control of these dock properties since 1888. No legislation has been passed to which the city objected. The out-of-date provisions of the statute turning the docks over to the city have remained undisturbed, and still furnish cover for the abuses in dock letting and management, which have converted a handsome potential income into a deficit, while speculator?, profiteers and handy men accumulate fortunes from its use. Not a subject of popular interest, its management has been undis- turbed by public inquiry, and the unbusiness-like organization REPORT OF JOINT LEGISLATIVE COMMITTEE 21 of its finances has hidden from pu'blic knowledge the disastrous results which would otherwise be obvious. The State has not intervened to apply even the rudiments of public utility require- ments, such as equal service for equal charges, and equal oppor- tunity for service to all. UNSOUND DOCK FINANCES The system of dock finances, with its diversion of dock receipts to other city purposes, is a hindrance to the construction of new docks, and the maintenance and improvement of the old. Receipts from the docks of Manhattan were pledged to the sinking fund for the redemption of the debt of the old City of New York under its charter, and are paid into this fund. Since the incor- poration of the greater city, such receipts from other boroughs than Manhattan, though not covered by such charter provisions, have been paid into this fund and in 1920 receipts from other boroughs amounted to $1,895,217. The reason for this practice may be discovered in the fact that these receipts, like the receipts from Manhattan, are diverted from docks, find their way into the city treasury, through the device of the general fund bonds, for current city expenses, and to reduce the tax rate. The city had outstanding in 1920 $101,372,036 in dock bonds on which it paid in that year $4,353,464 interest. Not a dollar of the dock receipts is applied to interest or amortization under the existing practice or to new construction or maintenance. Sixty-nine million dollars of these bonds were irregularly and mistakenly exempted in computing the debt limit, by order of the Appellate Division of the First Department in 1913 on the claim that the receipts from the docks by the city were sufficient to meet the interest charges and amortization of the amount exempted, although all of such receipts went to this sinking fund and not a dollar of such receipts was paid into the city treasury. The interest on the bonds, exempt and non-exempt, and the amortiza- tion charges, are met in the annual levy for debt service. The additional funds, made available to the city by increasing its debt limit through this exemption, were used in rapid transit con- struction. The docks were sacrificed in aid of an unrelated interest. The diversion of the dock receipts from payment of the debt to current city expenses is condemned by the comptroller. While this tortuous procedure has operated to increase the cash in the treasury for general purposes, it is an evasion of the Con- 22 INVESTIGATION OP AFFAIRS OF $"EW YORK CITY stitutioii, deprives the docks of the revenue applicable to the reduction of the dock debt and to betterments, and leaves dock appropriations exposed to the legal limitations of the city's debt and tax limit and the pressure of other interests for a place in the budget. EXCESSIVE COST OF POLICING DOCKS The cost of policing the docks of the city, as shown by the records of the War Department, is as follows: 1917 ...................................... $30,660,000 1918 ...................................... 33,850,000 1919 ...................................... 41,610,000 1920 ...................................... 35,850,000 And the men employed: 1919 ...................................... 19,000 1920 ...................................... 16,000 1921. 12,000 The entire police budget for the City of New York, with its 307 square miles and approximately 6,000,000 inhabitants, was: 1917 $18,200,191 1918 19,394,613 1919 20,662,219 1920 24,595,186 1921 28,545,407 And the number of men employed was : 1917 ' 11,237 1918 10,952 1919 11,047 1920.. 11,197 A representative of a large shipping company testified before the Committee that " the entire condition along the water front is very bad and that all private detective agencies * and our own employees on the dock, have all apparently reached a very demoralized state, and we consider that something radical and extraordinary has to be done." This statement may be accepted as descriptive of conditions. A statement of the number of men employed and the amount expended is sufficiently suggestive of or JOINT LEGISLATIVE COMMITTEE 23 the necessities of a complete change of system. Such a charge on commerce and on the use of the docks is a staggering burden, reflected in the cost of living, and the reduced value of pier rentals. This excessive cost is largely due: First.. To lack of a general agency under which co-ordination of service is possible. Each line or individual ship is compelled to rely upon its separate organization for police purposes without the aid or co-operation of the organization of any other line. Second. To the dependence of each line and individual ship upon the co-operation of the police department, which imposes its own private conditions in making the dock guards special policemen, dictates the appointment of heads of such dock guards and the employment of private agencies to do the work. One such agency, newly organized, but enjoying the favor of the police department, took over the policing of docks for forty shipping- companies in 1918. Instances of compulsory employment as a condition of police co-operation and payments to an inspector in alleged consideration of service in compelling such changes were proved before the Committee. Notwithstanding the expenditure of these vast sums for pro- tection, pilfering and theft have been extensive and protection has not been efficient. This condition can be largely accounted for by inefficient organization, by the compulsory employment of useless or untrustworthy persons and by the radically unsound relation of dock protection to the police. THE POET A MATTER OF STATE AND NATIONAL CONCERN While the port constitutes an indispensable prerequisite of the city's prosperity, and the city's ownership of the docks is an impor- tant factor in protecting the city's interest, the port has other relations of equal or greater importance to the State and Nation as the principal port of entry for both. The character of its management is immediately reflected, not only in the cost of living and the employment and prosperity of its citizens, but in the cost of living and the employment and prosperity of the people of the whole State and of millions of people throughout the Nation. As a part of the Nation's navigable waters, it is subject to the jurisdiction of the Federal government, which expends millions annually for the improvement of the harbor. It is the State's most important public utility, and as such has always been subject to the State's potential control. This control was exer- 24 INVESTIGATION OF AFFAIRS OF NEW YORK CITY cised down to 1888, when it was transferred to the city by act of the Legislature. The degree of control which the State exer- cises over the port for the accommodation of ships will always be determined by the public interest. The State owes an obligation, not only to the city and its people, but to the people of the whole State, to secure an efficient and economic management, with equal facilities and equal charges to all. GROWTH OF THE PORT A statement of the increase of business of the port will aid in understanding the matters under consideration. The world's mercantile and marine tonnage increased from 22,151,651 tons in 1900 to 49,089,552 in 1914, or more than 121 per cent in four- teen years. The merchant marine of the United States increased in the same period from 4,424,497 tons to 7,928,688 tons, or 79 per cent. The value of imports and exports at the port increased in the same period from $1,056,071,753 to $2,124,592,146 During the war period the United States Merchant Marine reached 16,324,024 tons (1920) and the value of the imports and exports at the port increased to $6,288,287,521. The port, by its great natural advantages, has reached its present position among the ports of the world, in spite of the mismanagement of its docks, but with increased trade, the dis- advantages of maladministration have become more burdensome and a greater drawback in competition with other ports. This report is based on testimony already taken. The Com- mittee has not yet completed its investigation of the docks, and the subject will be further dealt with in the Committee's final report when the hearing is closed. RECOMMENDATIONS The Committee recommends: First. That the office of the present dock commissioner originally established for the old City of New York, and the control of the Sinking Fund Commission over the docks, be abolished. Second. That a new dock commission of three members be established, to be appointed by the Mayor, one from a list to be named by the maritime interests of the city, one from a list to be named by the New York Chamber of Commerce, and one at REPORT OF JOINT LEGISLATIVE COMMITTEE 25 will, who shall be chairman of the commission. That the tenure of office be eight years, the first appointees to hold for four, six and eight years, respectively, as determined by law, and that such commissioners be subject to removal for cause. Third. That existing provisions of law affecting the dock finances be so amended that all receipts from the docks be subject to appropriation by the city for the following purposes and in the following order of preference : 1. For expenses of administration of the dock department. 2. For payment of interest and amortization of dock bonds. 3. For the maintenance and repair of docks and if not other- wise provided, for the extension of docks. 4. For the transfer of any surplus not required for the purposes cited, to the general fund. Fourth. That the charter and all laws affecting the docks be revised in harmony with the recommendations of this repart. Fifth. That the commission have power to fix rates of all rental charges by the city, by lessees and by private dock owners, such charges to be as nearly equal for the service as existing conditions permit; to provide for zoning regulations; to restrict the term of leases to a year unless the necessities of commerce require, and in no event to grant leases for a longer term than ten years without a revaluation, or in a manner to interfere with the general development of the port; to provide for the appraisal of the rental value of all properties leased, and to fix the rental on a fair business basis for a reasonable return from such value ; leases of city docks to be made according to the necessities of commerce, which shall be determined as a fact by the commission ; no lease to be issued without reasonable public notice of the inten- tion to grant it ; applicants who would be entitled from the neces- sities of commerce to receive such lease, to be listed in the order of their respective necessities, and preference given to the first one on such list who will pay the rental fixed therefor. If none of the applicants listed will take the lease at such rental, then the same to be put up at public auction and leased to the highest bidder on such list, subject to the right of the commission to reject any and all bids. FixiTi. That all payments for procuring or aiding in procur- ing or extending leases or permits, and all payments in connection therewith, be prohibited unless the same be for legal proceedings had before the said commission, or in court, the amount of such 20 INVESTIGATION OF AFFAIES OF NEW YORK CITY payment or payments in every case to be subject to the approval of the commission or court before which the proceeding is had ; all leases and permits to contain a clause that if this provision of law be violated, the commission may cancel the lease or permit at any time during its continuance without waiver for any cause. Seventh. That the policing of the docks when under lease or permit, now treated as guarding private property, be conferred upon a commission of seven members, without pay, to be named in the bill, representing as nearly as may be the various maritime interests using the port ; vacancies to be filled by the commission under such restrictions as will insure the continuance of its representative character ; such commission to have power to estab- lish and maintain a distinctive organized police force for the protection of merchandise on the docks, and to fix and apportion charges for the .services rendered, which shall be sufficient to meet the expenses incurred ; tha/t in the employment of such force preference be given, as far as consistent with the interests to bo served, of honorably discharged soldiers, sailors and marines; that the said commission have the power to promulgate rules and regulations not in conflict with law for the maintenance, discipline and control of such police force; that the jurisdiction of such com- mission or its police force upon any dock be conditioned upon the written reqilest of the lessee or permittee, or authorized accent of either, or the commanding officer of the ship using the dock, that police protection be extended thereto. Respectfully submitted, SCHUYLER M. MEYER, Chairman. SIMON I. ABLER, Vice-Chairman. THEODORE DOUGLAS ROBINSOX. MAXWELL S. HARRIS, SOL. ULLMAN, THEODORE STITT, JOHN B. YALE, WALTER W. WESTALL. ELON R. BROWN, Counsel. REPOET OF JOINT LEGISLATIVE COMMITTEE 27 EXHIBIT "A" Assessed Value and Gross Revenue of the Dock Department Properties, 1920, ~by Borough and District Segregation Group I. II. Location North river, Battery to 59th street. . . . East river, Battery to 59th street Gross revenue $4,175,215 1,338,467 Assessed valuation $117,073,500 27,440,230 Per- centage 3.56 4.86 III. IV. V North river, 59th st. to Spuyten Duyvil East river, 59th street to 100th street . . Harlem river .... 256,619 77,743 84,907 13,790,000 3,019,400 3,510,400 1.87 2.58 2 41 Sub-total $5,932,951 $164,833,530 3.59 VI Brooklyn 890 844 20,690 100 4 30 VII Bronx 12,694 726,650 1 74 VIII. Queens ... . 34,388 293,000 11.72 IX. Richmond ... . 141,304 5,372,500 2.63 Total $7,012,181 $191,915,780 3.65 GrROUP I North River, Battery to Fifty-ninth Street Individual Assessed percentage No. valuation; Gross returns of piers, bulk- income Per^ -^- > Class piers heads, etc. return cent High Low 1 (a) Shedded piers under long term lease 54 $81,812,500 $3,072,894 3.7 12.1 1.7 1 (b) Unshedded or open piers under long term lease 4 2,615,000 76,100 2.9 4.5 1.9 1 (c) Shedded piers occupied by per- mittees under revocable permits .. 7 8,667,000 700,929 8 11.1 4.9 1 (d) Piers leased to lessees under property reversion clauses 6 7,911,000 189,731 1 (e) Shedded and unshedded piers maintained by the city for public wharfage 15 8,840,000 135,559 1.5 6.1 .8 Total 86 $109,845,500 $4,175,214 3.8 Valuation of unallocated property 7 , 228 , 000 Grand total $117,073,500 3.56 INVESTIGATION OF AFFAIRS OF Jfajw YORK CITY GROUP II East River, Battery to Fifty-ninth Street, Manhattan Class 1 (a) Shedded pier under long term lease 2 (b) Unshedded or open piers under long term lease 2 (c) Shedded piers occupied by per- mittees under revocable permits 2 (d) Piers leased to lessees under property reversion clauses 2 (e) Shedded piers maintained by the city for public wharfage 2 (f) Unshedded piers maintained by the city for public wharfage Total Valuation of unallocated property No. of piers Assessed valuation : piers, bulk- heads, etc. Gross income return Individual percentage returns cent High Low 37 $16,238 ,500 $935 ,382 5 .72 9.3 2.33 3 1,214 ,000 56 ,237 4 .63 11.82 4.37 19 4,665 ,000 215 ,910 4 .62 14.72 0.46 1 68 ,000 2 ,022 2 .97 4 1,115 ,000 67 ,583 6.11 15.25 1.54 11 1,761 ,500 61 ,328 3 .48 7.12 1.05 75 $25,062,000 $1,338,466 2,378,230 Grand total $27,440,230 4.86 EXHIBIT "B" Table Showing Rates of Wharfage Charged by 24 Lessees of City- owned Piers, Compared with Cost of Berth Space Leased Lessee Eastern S.S. Corp Clyde S.S. Co Clyde S.S. Co Int. M. M Int. M. M Int. M. M North river piers 19 r. 44 45 58 61 ,'. " 62 63 69 72 74 . 80 Rent and charge per berth per day berths Rent Charge 2 $63 88 $350 2 42 93 225 4 42 93 225 4 58 33 350 4 58 33 350 2 68 75 350 1 57 50 250 2 109 17 350 2 86 27 125 4 62 50 200 4 15 75 300 6 200 00 250 2 15 42 150 ST RIVER 2 55 00 225 2 55 00 300 2 55 00 300 2 66 99 225 2 66 99 225 2 56 43 200 2 16 66 200 4 33 33 150 BROOKLYN 8 15 36 150 8 110 42 275 6 19 44 175 Total Rental $127 76 85 86 171 72 233 32 233 32 137 50 57 50 218 34 172 54 250 00 63 00 1,200 00 30 84 110 00 110 00 110 00 133 98 133 98 112 86 33 33 133 66 122 88 883 36 116 64 Charge $700 450 900 1,400 1,400 700 250 700 250 800 1,200 1,500 300 450 600 600 450 450 400 400 600 1,200 2,200 1,050 Amer. Cuban S.S. Co Occidental Dock Co N. Y. Central France & Canada S.S. Co Cen. R.R. of N. J Oriental Nav. Co Man. Term Co V 86 . 131st st. EA 8 g Spanish Line. . Munson S.S. Co . Munson S.S. Co N. Y. & Cuba Merc N. Y. & Cuba Merc 10 13 14 D. L. & W. R.R. ... 26 Seaboard & Gulf S.S 32 Maritime S. Co 72 Fabre Line Luckenbach . 31st st. 33rd st U. S. Steel Prod 29th st 24 piers 79 $4,982 39 $18,950 KEPORT OF JOINT LEGISLATIVE COMMITTEE 29 EXHIBIT " C " Table Showing Rates of Wharfage Charged by Stevedores and Intermediaries for Public Pier Wharfage, for which the City Received Prescribed Rates, as Shown Profit to inter- mediary on Paid city at city rates Charged ship amount Pier 1, North river (shedded) Per day Total Per day Total city United American Line To New York Mari- time Service. S.S. Bearport, 9/24-14/20, incl., 21 days. Charges made for 19 days account of reduction in tonnage stored on pier. 3,729 net tons $130 52 $2,479 88 $200 $3,800 54% Pier 69, North river (open) Cosmopolitan Steamship Co. to Sabbatino & Co. S.S. Pipestone County (3,434 tons), 10/7/20-10/15/20, 9 days 2017 18153 50 450 150% Harris, Magill & Co. to Sabbatino & Co., 523 Broadway, S.S. Western Light (3,504 tons), 12/7-12/21/20, 4 days 2052 8208 60 240 200% James W. Elwell & Co. to United Wharfage & Storage Co. S.S. Waukau (3,796 tons), 9/22-10/1/20, 9 days 2198 19782 75 675 240% Sudden & Christensen to Continental Trans- portation Co. S.S. West Hesseltine (3,466 tons), 2/23/21-3/3/21, 9 days 20 33 182 97 50 450 150% Cosmopolitan Steamship Co. to Sabbatino & Co. S.S. Remus (2,931 tons), 8/16/20- 8/24/20, 9 days 1766 15894 50 450 170% M. H. Tracy & Co. to Richmond Dock Wharf- age & Water Co. S.S. West Togus (4,447 tons), 9/20/20-9/21/20, 2 days 25 24 50 48 100 200 300% Pier 94, North river (open) Cosmopolitan Steamship Co. to Sabbatino & Co. S.S. Bellingham (3,621 tons), wharfage charges, 3/1/21-3/8/21, 8 days 21 10 168 80 50 400 137% Cosmopolitan Steamship Co. to Sabbatino & Co. S.S. Eastern Light (4, 148 tons), 8/28/20 to 9/7/20, 11 days 23 74 261 14 50 550 108% 95th street, North river (open) Munson Steamship Line to C. F. Terrence & Sons. S.S. Ausquam (2,174 tons), 3/25/20 to 3/31/20, 7 days 13 87 97 09 125 875 792% 96th street, North river (open) Cosmopolitan Shipping Co. to Continental Transportation Co. S.S. Poughkeepsie (3,987 tons), 12/10/20-1/9/21, 31 days 2244 69564 50 1,550 128% Cosmopolitan Shipping Co. to Continental Transportation Co. S.S. Poughkeepsie (3,887 tons), 1/10/21-1/19/21, 9 days 2214 20196 50 450 129% 07lh street, North river (open) Sudden & Christensen to Continental Trans- portation Co. S.S. Crown City (3,417 tons), 2/7/21-2/15/21, 8 days 2008 16064 50 400 150% Sudden & Ohristensen to New York Stevedore & Ballast Co. S.S. Haleakala, 2/26/21- 3/2/21, (4,512 tons), 5 days; 2/19/21- 2/25/21, 7 days 2546 30672 50 600 100% 30 INVESTIGATION OF AFFAIES OF .NEW YORK CITY Profit to inter- mediary on Paid city at city rates Charged ship amount ~ paid Pier 69, East river (open) Per day Total Per day Total city Black Diamond S.S. Co. to Frank J. Hoey. S.S. Polybius (5,483 tons), 9/21/20-9/24/20, 4 days 3042 12168 50 200 66% East 20th street, Manhattan (open) Cosmopolitan Shipping Co. to Sabbatino & Co. S.S. Pipestone County (3,434 tons), 7/6/20- 7/9/20, 4 days 2017 8068 50 200 150% 69th street, Brooklyn (open) Cosmopolitan Steamship Co. to Sabbatino & Co. S.S. Ossa (3,003 tons), 7/10/20- 7/13/20, 4 days 1802 7298 30 120 66% Cosmopolitan Steamship Co. to Sabbatino & Co. S.S. Beliingham (3,621 tons), 8/30/20- 9/24/20, 26 days 21 00 548 60 30 780 44% Cosmopolitan Steamship Co. to Sabbatino & Co. S.S. McKeesport (4,122 tons), 7/1/20- 7/7/20, 7 days 2361 16527 50 350 110% THIRD REPORT REPORT AND RECOMMENDATIONS ON THE BOARD OF EDUCATION February 15, 1922 [31] REPORT AND RECOMMENDATIONS ON THE BOARD OF EDUCATION February 15, 1922. To the Legislature: The administration of the public schools of the City is and for years has been weak and inefficient, and does not measure up to the reasonable requirements of the school children of the City, or the expectations and desires of the people of the City, or of the State which is charged with ultimate responsibility for main- taining efficient and adequate common schools in every part of the State. The deficiencies are apparent. A. INADEQUATE SCHOOL ACCOMMODATIONS. In December, 1917, the month before the present Board of Education took office, there were 746,114 children registered in the day elementary schools, of whom 34,153 were on part time and 76,214 on the so-called duplicate form of organization. In the last month for which figures are now available there were 817,210 children on register in the day elementary schools, of whom 81.242 were on part time and 194,234 on double session. In the day high schools there were 58,063 registered in Decem- ber, 1917, none of whom were on double session and only 1,796 were on part time. In October, 1921, the register had increased to 82,265 and there were 1,516 children on double session and 33,892 on part time. These figures show insufficient school accommodations to care for the growth of school population. The capacity of new elementary school buildings and additions opened during the past four years is as follows : No. of New Buildings No. of Sittings Therein 1,294 1,380 None 19 203 Year 1918 or Additions Opened 2 1919 4 1920 None 1921 to Dec 6 . .. 16* Total . 22 21,877 Of the 16 opened in 1921, all but two were opened after September 1st. 2 34 INVESTIGATION OF AFFAIRS OF ^"EW YORK CITY During the preceding four years, 44 new elementary buildings or additions were opened, with 52,847 sittings, a better, but still inadequate showing. This unfortunate condition is only partly due to lack of appro- priations. Exasperating delays and .a shifting policy are equally responsible. The total corporate stock authorizations from Janu- ary 1, 1910, to June 30, 1921, for school buildings amounted to $68,744,732.11, while the expenditures during the same period amounted to only $46,092,839.88. Fifteen million of this authorization was made in 1921, but the ten million authoriza- tion of earlier years was revoked on December 30, 1918, without the expenditure of any part of it in the meantime, and was subsequently appropriated for the same purposes for which it was originally designed. This resulted in holding up the build- ing program at the time of its greatest need. A detailed state- ment of the authorizations and cash expenditure from 1910 to 1921 will be found on page 38 of the appendix. It will be noted that the expenditures of the three and a half years, 1918 to July, 1921, were but $15,224,331.97, which, in view of the depreciated value of the dollar, represents not more than $8,000,000 in building value on the basis of 1910 to 1917, or about one-half of the previous four-year totals. The average annual authorization for the eleven and a half years covered in the annexed table was $5,977,802.79 and the average annual expenditure $4,008,073.03. The inadequacy of school buildings has inevitably resulted in (1) Inadequate instruction, keeping scholars on part time. (2) Overcrowding of the school buildings with resulting danr ger to sanitation and health. B. FIRE HAZARDS. In August, 1921, there were 7,353 violations of fire prevention rules recorded against 496 of the City's 695 school build- ings. The estimated cost of removing these violations is about $4,500,000. Some of the violations are serious, as, for example, stairways that are not enclosed with fire and smoke-proof parti- REPORT OF JOINT LEGISLATIVE COMMITTEE 35 tions and not provided with self-closing doors ; interior fire alarm systems that do not work; wooden and not self-closing fireproof doors along the line of exit stairways ; no hand fire extinguishers ; and storage of dangerously inflammable materials in non-fireproof rooms or compartments. The Superintendent of School Build- ings wrote the Board of Education, March 23, 1921, as follows: " This with the continued growth of the schools and con- sequent overcrowding and congestion causes me great uneasi- ness and distress of mind. If the fire prevention work was and is required for schools under normal conditions, how much more important must it he when a building contains quite one-half or more in excess of the normal . . . why paint and renovate the interior of a building when there are essential items of fire prevention work to be performed which would actually operate to safeguard life and lessen fire risk ? " The total authorizations and expenditures for fire prevention work since September 16, 1904, is as follows: Date of Amount of Authorization Authorization Expenditures Balance Sept. 16, 1904 $300, 000 00 $300, 000 00 550, 000 00 550, 000 00 April 3, 1908 1, 000, 000 00 1, 000, 000 00 June 3, 1910 450, 000 00 450, 000 00 July 17,1911 450,00000 447,66659 $2,33341 Nov. 19,1915 250,00000 250,00000 July 7,1916 250,00000 250,00000 April 20, 1917 250,000 00 240,660 85 9,339 15 April 22,1921 250,00000 250,00000 C. NEGLIGENT ADMINISTRATION". Other deficiencies of administration appear from the failure to repair the education building, and the condition of by-laws and minutes of the Board of Education. In February, 1918, the seventh, eighth and ninth floors of the Hall of the Board of Edu- cation, at 500 Park Avenue, housing the executive offices of the Board, were burned out. Bids for the rebuilding of these floors were not opened until December 7, 1921, nearly four years after the fire. During this interval the work of the Board has been seriously interfered with because of compulsory vacancy of the three top floors of its building. The Bureau of School Buildings had to be moved to inadequate quarters in the Municipal Build- ing, several miles away from the other offices of the Board. The 36 INVESTIGATION OF AFFAIRS OF ,NEW YORK CITY delay in agreeing on new plans, in securing an appropriation and in letting the contract is open to serious criticism. No business corporation would tolerate such methods. See testimony of President of Board of Education, vol. 3, p. 1321. The law of 1917 so changed the organization of the school sys- tem that a complete revision of the by-laws was necessary in order to make them conform with the new statute. This revision has not been made. A few sections were revised but the bulk of the by-laws was still in the form of a large octavo volume published in 1914 with hundreds of amendment slips pasted in, many of which antedate the law of 1917. The minutes of Board meetings are records of great im- portance to teachers, board members, board officers and city authorities, as they have the force of law within the scope of the powers delegated to the Board of Education by the Legislature. The last volume of minutes to be furnished with a printed index is that for 1915. The minutes of board meetings are not or- dinarily available until two months after the meeting. Such conditions could not exist with a capable Board. They have failed not only in matters wholly in their control, but they show no capacity to secure effective administration through the co-operation of other governmental agencies on which they de- pend, or to secure the enactment of better laws by inspiring public confidence and arousing public opinion. They have shown little or no capacity for leadership for many years in the discharge of the important trust confided to them. Unsound Legislation. Responsibility for such conditions may not be easily appor- tioned. It doubtless rests primarily on the system of making purely political appointments to the Board of Education. Such appointments are made without any check of non-partisan ap- proval or confirmation. Each incoming mayor seeks, and usually gains, a large degree of political control over the Board of Educa- tion. The members of the present Board were all appointed by the present Mayor under the amendment of 1917. Such political appointments are in strict accord with the ancient plan of dele- gating educational functions to localities, but the State has largely outgrown and changed the system by increasing State power over local administration, while furnishing State aid to meet new requirements imposed by law. The old system is not REPORT OF JOIXT LEGISLATIVE COMMITTEE 37 adapted in principle to a municipality like New York. State jurisdiction over schools is exercised by the University of the State, which is non-partisan in its organization and spirit. Some plan should be devised for the creation of an equally non-partisan and representative body in the City. Apart from this basic fault, it is desirable to review some specific faults of organization, which should be removed to give assurance that a competent board could successfully discharge its duty. 1. COMPLICATED AND ANTIQUATED PROVISIONS OF LAW REQUIRING THE CO-OPERATION OF MANY OTHER BRANCHES OF THE CITY GOVERNMENT IN BUILDING OPERATIONS WITH RESULTING DELAYS, OFTEN AMOUNTING TO A VETO OF A BUILDING PROJECT. The first and most important of these objectionable provisions is the provision of law making the Board of Education dependent upon the action of the Board of Estimate and the Sinking Fund Commission for appropriations and acquisitions of sites for school houses. There is a general concurrence in the necessity of making the Board of Education independent in this respect. It may therefore be assumed that there is but one opinion upon the subject, and that the necessity is great. The Committee inquired with particularity as to the steps required to be taken to build a school house, and found that there were at least twenty-seven, each one involving considerable delay and the whole practice likely to discourage those who were engaged in the undertaking. Most of them are unnecessary for the protection of the City's interest, and hinder the prompt building of school houses. An exhibit showing these steps in detail will be found on page 36 of the appendix. In two instances it was found that twenty years or more had elapsed from the time the recommendation for a new building was made by a local school board and the time when the building was opened for use. P. S. No. 54, Brooklyn, for example, was recommended by the school board of Brooklyn in 1901 ; the con- tract date for its completion is September, 1922. Examination of the record of some twenty schools on the cur-- rent building program shows that plans and specifications were before the Board of Estimate in one instance for 356 days, an- 38 INVESTIGATION OF AFFAI?*? OF NEW YOEK CITY other for 211 days, and in eight cases for more than 50 days. This did not take into account the time between the return by the Board of Estimate and a resubmission by the Board of Edu- cation. In one case the same matter was four times before the Board of Estimate. In four other cases the same matter was before the Board of Estimate three times. 2. STATUTORY POWERS PROPERLY BELONGING TO THE BOARD OF EDUCATION NOW VESTED IN BODIES OR OFFICIALS NOMINALLY SUBORDINATE TO THE BOARD BUT IN FACT SUPERIOR IN RESPECT OF SUCH POWERS. The superintendent of schools, the Board of Superintendents, and the Bureau of Compulsory Education, all have a fixed tenure of office, and although chosen by the Board, possess important powers of administration which are exercised independently of and often in opposition to the desires of the Board itself. It is unnecessary to enumerate these important powers which are readily referred to in the statute, and have been frequently the cause of conflict between the boards and officials named and the Board of Education. Many of these powers are among the most important exercised in the administration of the schools. 3. FREQUENT CHANGES AND CONFLICT OF LAWS GOVERNING THE ADMINISTRATION OF SCHOOLS. The Board of Education originally consisted of nineteen mem- bers. It was changed in 1901 to forty-six members, and in 1917 to seven members. The charter was radically revised in 1897 and in 1901, and its provisions extensively modified by amend- ments to the State Education Law in 1917, each change involving important changes in the plan of administration of the schools and their relation to other city agencies and the State. A com- parative statement of the principal changes effected by the statute of 1917 in the law of 1901 will be found on page 22 of the appendix. Under the act of 1917 conflicts have arisen by reason of the uncertainty of the law between the Board of Education and the Commissioner of Education at Albany, between the Board of Education and the municipal authorities relative to their respect- ive powers, and between the Board of Education and the superin- REPORT OF JOINT LEGISLATIVE COMMITTEE 39 tenclent of schools, if not between the Board of Education and the Board of Superintendents and associate superintendents. There has been a failure to concentrate in clear and unmis- takable language the full responsibility for the administration of the public school system on the Board of Education, the municipal authorities, or the State. Groping for a remedy they have found none because the fundamental error of appointing a political Board of Education has remained. Finances. Fortunately the financial statement for education in the City is not complicated. The expenditures since 1910 have been as follows : Year Expenditures. 1910 $28,456,945 08 1911 28,958,179 29 1912 33,791,974 40 1913 35,481,641 12 1914 38,185,495 90 1915 39,797,960 64 1916 39,708,764 22 1917 41,101,074 41 1918 43,884,893 59 1919 45,490,121 68 1920 66,194,668 04 1921 (first 6 mos.) 44,828,326 69 1922 (budget) *88,798,546 81 The normal increase for the years 1920, 1921 and 1922 has been augmented by the Lockwood-Donohue act in the sum of $30,000,000. This has been devoted to the pay of teachers. The annual normal increase may be roughly taken as $2,000,000. The apportionment of State moneys to the City since 1914 has been as follows : * Including $18,097,534.51 from the State. 40 INVESTIGATION OF AFFAIKS OF IN~EW YORK CITY Amount Apportioned Year to ^ ie &*!! 1914 $1,923,025 00 1915 '.'.'.'.'.'.'.'.'. 2,115,679 73 3916 2,220,730 03 1917 2,414,837 16 1918 2,321,191 13 1919 2.700.657 10 1920 5,025,570 17 1921 . . 16,938.023 R/. 1922 *18,097,534 51 The increase of apportionment for 1922 over 1919, the period during which the mandatory increase due to legislation has oc- curred, has been about $15,000,000, or one-half of the amount of the increased charge due to these laws. The City complains of the increase effected by law. As educa- tion is a State function, although commonly delegated to munici- palities, it would appear that when the State interferes to increase the cost of education in so considerable an amount, it should pro- vide ways and means for defraying such additional expenses with- out embarrassment to the municipalities. The State's taxing power is unlimited, and it is a matter of comparative indifference to any part of the State whether the funds for education are raised by State or local tax. The constitution limits the debt incurring power of cities to ten per cent of the assessed value of real estate, and the taxing power to two per cent of the assessed value of real and personal property. These limitations which are proper and useful, were enacted with reference to the normal expense for education. Such increase in cost is the result of a change of policy in the entire State as to the standard of teaching, which it is expected will be much improved !;y making the teachers' profession more attractive. It is true that i hip augmented cost was favored by substantially all the members of the legislature from the City, and the present administration of the City claims to have favored it ; but it was done by .State author- ity, and the Committee finds no evidence tending to show that the additional expense would in fact have been incurred in the absence of legislative enactment. It doubtless seems strange to one un- familiar with the real financial situation of the City and such an Estimated. REPORT OF JOINT LEGISLATIVE COMMITTEE 41 increased charge du ;ukl he a source of embarrassment. The City lias a debt incurring capacity of more than a billion dollars, a taxing capacity of more than two hundred million dollars, and an unencumbered income of more than sixty millions. But by reason of the course of past and present administrations, the City has been for sonic years past near its debt limit, if it has not exceeded it, and grave question exists as to its having exceeded its tax limit in the last two annual assessments. In preparing the budget for 1921, the City under claim of neces- sity, omitted $27,000,000 from the school appropriation, and met it afterwards by special revenue bonds, and other devices, throwing most of the charge over on to the year 1922. The Comptroller ad- vised striking ten million dollars from the 1922 budget for educa- tion on the ground that otherwise the tax imposed would exceed the constitutional limit. It is unadvisable at present to increase charges upon the City and it would seem to be desirable for the State to establish a plan of appropriations increasing annually until it is sufficient to meet the additional charge for education it has created since 1920. While this report is confined to matters relating to the City of !N"ew York, there is a like situation in other parts of the State, and the problem of providing for the cost of education under these laws will require solution in other important muncipalities. It is therefore a State as well as a City issue. The legislature has from time to time fixed a mandatory tax for school purposes in the City. It fixed the tax at four mills in 1898, three mills in 1903, and 4.9 mills in 1917. These charges were made in the exercise of State authority to insure the maintenance of schools, but they may be regarded as representing a minimum below which the cost of education may not be reduced rather than as an attempt to increase the expenditure. For the most part the City has made considerable and in many instances large appropria- tions for schools in excess of the mandatory tax. NON-POLITICAL BOARD OF EDUCATION. The problem of securing a Board of Education for the City which shall stand for education free from political considerations, is the fundamental one. As the University of the State is the State-wide instrument of control in education the members of the University of the State resident in the City, now four in number, can with the Mayor who should be chairman of the 42 INVESTIGATION OF AFFAIRS OF NEW YOEK CITY Commission, be drafted into service as a Commission to appoint members of the City Board of Education. This will give local recognition by requiring all members of the Commission to reside in the city. By taking over as members of the Commission resi- dents of the city who are members of the Board of Regents it will insure the performance of the State's obligation and duty in education, now greatly increased by the added burden of cost which the State assumes. But more important than all else, it will take politics out of schools. RECOMMENDATIONS 1. The Committee recommends that the Board of Education of the City of New York consist of members appointed by the Com- mission as provided in this report. 2. That the Board of Education be granted complete inde- pendence from all municipal control in the acquisition of real property for school purposes, by purchase, condemnation, lease or otherwise, within the limit of the funds available therefor. 3. That the Board of Education be granted complete inde- pendence from all municipal control in the construction, alteration and repair of school buildings, provided that its superintendent of school buildings, before starting work, certify in writing that the plans and specifications comply with the building and electrical codes and the laws of the State; and provided further that occupancy shall not be permitted until the superintendent of school buildings shall have certified that the building as com- pleted complies with the building and electrical codes and the laws of the State, but without disturbing the City's jurisdiction as to fire prevention. 4. That the Board of Education be granted complete inde- pendence from all municipal control in the administration and expenditure of all school moneys, subject only to audit by the Comptroller of the City for the purpose of preventing fraud or error. 5. That the City be required to appropriate in its annual budget amount which together with the school moneys which are apportioned to the City by the State, will equal the budget appro- priation for schools in the City for the year 1922 ($88,798,- 546.81) plus an annual increase of two million dollars as repre- senting the normal increase of cost ; that the present authorization KEPOET OF JOINT LEGISLATIVE COMMITTEE 43 for building school houses be not revoked and that at least $6,000,000 be authorized annually for this purpose. 6. That the State provide for a graduated increased appro- priation for schools until the amount apportioned for the City of New York shall be increased fifteen million dollars over the amount apportioned in 1922. 7. That sections of the greater New York Charter inconsistent with the provisions of the education law be repealed. And the Committee further recommends that as soon as the Board of Education is reconstituted under the foregoing recom- mendations that the powers of the Board be increased as follows : 8. That the Board of Education be constituted the fiscal and policy determining head of the school system with power to dele- gate authority to the Superintendent of Schools, as it may deem wise. 9. That the Board of Education be granted power to establish, abolish or consolidate such boards, bureaus and divisions as it may deem necessary excepting only the Board of Examiners. 10. That the Superintendent of Schools and all other officers and employees derive their power and authority from the by-laws of the Board of Education, subject only to the provisions of the Education Law. Respectfully submitted, SCHUYLER M. MEYER, Chairman. THEODORE DOUGLAS ROBINSON. FREDERICK W. KAVANAUGH. MAXWELL S. HARRIS, SIMON L. ADLER. SOL ULLMAN. JOHN R. YALE. WALTER W. WESTALL. ELON R. BROWN, Counsel. I subscribe to the Committee's recommendations except that I do not believe that the power of appointment of members of the Board of Education should be exercised by officials elected or appointed outside of the City of New York. Irrespective of their residence, the Regents are elected by the Legislature. I favor confirmation of appointments by the Mayor to the Board of Education by either the Board of Aldermen or by the Board of Finance suggested in the Committee's first report. THEODORE STITT. APPENDIX EDUCATION UNDER THE GREATER NEW YORK CHARTER. The union into one municipality under the corporate name of the City of New York of " the various communities lying in and about New York harbor, including the City and County of New York, the City of Brooklyn and the County of Kings, the County of Richmond and part of the County of Queens," effected by Chapter 378 of the Laws of 1897, brought together into one fabric the various different threads of educational policy which had been spun by the separate statutory provisions enacted by the State Legislature for the benefit of the several communities. These had been and were of the most diverse character, ancl the recognition in the new charter of many of these local peculiari- ties, in response doubtless to strong local pressure to perpetuate a time-honored custom or to assure a continuance in office to some local officer, made the educational sections of the new instrument complex and not simple affairs. At the time of consolidation, for example, the old City of New York had a Board of Education of 21 members appointed by the Mayor. The City of Brooklyn had a Board of Education of 45 members appointed by the Mayor. In what became the Boroughs of Queens and Richmond, there were 'many independent school organizations based on town or school district lines. The new charter sought to recognize local .sentiment. It con- tinued the Board of Education of the former City of New York as the School Board for the Boroughs of Manhattan and The Bronx. It continued the Board of Education of the former City of Brooklyn as the School Board for the Borough of Brooklyn, and it substituted in each of the new Boroughs of Queens and Richmond, a Borough School Board of 9 members for the various pre-existing local school organizations. This arrangement gave each borough a School Board with very considerable powers over the schools of the borough. In addition, provision was made for a Board of Education of 19 members, consisting of the 4 Chair- men of the 4 Borough School Boards, 10 delegates elected from [45] 46 INVESTIGATION OF AFFAIES OF ~N"EW YORK CITY its membership by the School Board of Manhattan and The Bronx, and 5 delegates chosen similarly by the School Board of Brooklyn. This Board of Education was constituted a separate corporation and was made the head of the Department of Educa- tion, set up as one of the administrative departments of the City. The new Board did not enjoy the same degree of independence as its predecessors. On the administrative side, many powers previously possessed by the Boards of Education were given to the Borough School Boards. On the financial side, there had been a gradual growing away from the original idea, whereby local school authorities were independent of municipal author- ities. The Act of 1851, for example, had given the Board of Education corporate powers and had invested it with full control of the common schools with power to take and hold property, secure proper accountability in the expenditure of school moneys and administer the funds derived from the city and State. No municipal control was incidental thereto, for the supervisors of the city and county were required to raise, for educational pur- poses, certain sums easily ascertainable under the law, and " such additional sum or sums as the Board of Education * * * shall have reported to be necessary." This gave the Board of Education a position of peculiar independence in relation to the fiscal authorities of the City of New York, but during the next 46 years, this independence was steadily and increasingly impaired. The Board of Education of 1898 had very little financial power. It was made the head of a department of the city gov- ernment, and by section 1059, the City was given the power to determine the amount of money to be allowed from the tax levy for the support of the schools. About the only financial functions remaining to the Board were the allotment of funds to the boroughs on the basis of school population and the number of teachers employed, and the control of the special school fund. The educational chapter of the charter of 1897 represents an attempt, similar to attempts made before and since, to reconcile two hopelessly conflicting theories. The schools cannot be both independent and subject to municipal control, and yet the Legis- lature has repeatedly enacted laws by which it has endeavored to make this paradox work. The school authorities have fought to preserve every right they ever enjoyed and the city authorities have sought, with equal vigor, to supervise and control the expendi- REPORT OF JOINT LEGISLATIVE COMMITTEE 47 tare of city funds appropriated by them for school purposes. A clear, consistent and uncompromising enactment by the Legisla- ture, settling the many points of controversy, would go far to improve school conditions in New York City. The charter of 1897 was soon radically revised. Its successor was Chapter 466 of the Laws of 1901, and the educational chap- ter of that instrument was until 1917 the basis for the administra- tion of the City's public schools. The Department of Education was continued as one of the administrative departments of the City, and the Board of Edu- cation was placed at its head. The former Borough School Boards were abolished and the size of the Board of Education increased, to provide for borough representation. The new Board consisted of 46 members, appointed by the Mayor for five year terms, as follows : 22 residents of Manhattan. 4 residents of The Bronx. 14 residents of Brooklyn. 4 residents of Queens. 2 residents of Richmond. The Board was given corporate privileges. Among other sig- nificant provisions of the new law were the following : The Board of Education was to succeed to all the powers of the former Board of Education and Borough School Boards. The Board of Education was to administer all moneys I available for educational purposes. The Board of Education had the power to lease property and make contracts. The Board of Education had the power to appoint certain officers and clerks and to fix their salaries, and to appoint and fix the salaries above certain minimums of members of the teaching and supervising force. There was to be a Board of Superintendents, consisting of the City Superintendent and 8 Associate Superintendents, the latter to consist of the 4 Borough Superintendents and of 4 persons selected from the Associate Bcrough Superintend- ents, each to hold office until the expiration of the term for which he had originally been appointed. 48 INVESTIGATION OF AFFAIRS OF ^"EW YOKK CITY There were to be 26 District Superintendents, including all the Associate Borough Superintendents not appointed to the Board of Superintendents. There were to be 46 local school boards, each consisting of a member of the Board of Education assigned by the President of the Board, the District Superintendent of the district and 5 persons appointed by the Borough President. There was to be a Board of Examiners, to examine candidates for teachers' licenses. The City was required to supply the Board of Education with funds for school purposes annually, amounting to not less than 4 mills on the dollar of assessed valuation. The Department of Einance was given authority to audit the Board's accounts. The provisions of this law respecting the organization of the school system remained substantially the same during the entire life of the educational section of the charter, but the powers of the Board of Education were increasingly impaired. Special sal- ary laws were passed by the Legislature, which in effect deprived the Board of practically all control over teachers' salaries. By Chapter 43 of the Laws of 1903, the amount which the City must annually make available for school purposes was reduced from 4 mills to 3 mills contemporaneously with an increase in the assessed valuation of such magnitude that the yield of the 3-mill tax was greater than the yield of the 4-mill tax. Both amounts were, however, inadequate, so that the Board of Estimate and Apportionment substantially controlled the Board of Education's finances by conditioning additional appropriations upon the obser- vance of the Board of Estimate's rules and regulations regarding the segregation of appropriations and accounting control. The tendency grew to regard the Department of Education as a regu- lar department of the city government and the Legislature made little, if any, effort to rcal\w in its contemporary legislation the ideal of educational independence which had been characteristic of earlier school legislation (notably Chapter 386 of the Laws of 1851), and such measure of independence as was contemplated in the charter of 1901 was, as indicated above, greatly reduced by subsequent legislation or by acquiescence. By 1917, the Department of Education was functioning very much as a regular city department. The 3-mill allowance was so REPORT OF JOINT LEGISLATIVE COMMITTEE 49 inadequate that the Board of Education would have been help- less had the City not granted additional funds to run the schools^ The budget for 1917, for example, appropriated $41,430,447.49 for the general and special school funds, while the amount yielded by the 3-mill tax and included in the budget for that year, was only $25,753,057.53. The Department of Education acted with and depended upon other city authorities, such as the Cor- poration Counsel, the Department of Finance, Board of Estimate and Apportionment and the Sinking Fund Commission, in connec- tion with its contracts, leases, real estate transactions and pro- posals for the construction of new schools. It is probably safe to say that what independence the Board of Education may have had under a strict interpretation of the law was not exercised. The situation was radically changed by the enactment of Chap- ter 786 of the Laws of 1917, which amended the State Education Law, by providing for Boards of Education in the several cities of the State and which repealed nearly all the sections of the New York City Charter with respect to the public school system. The advocates of this legislation contended that public education in cities was as much a matter of State concern as in villages and towns, and that the many varying laws controlling school systems should be brought together and made an integral part of the State Education Law. The consolidation and unification which was effected, however, is strikingly similar to the kind of consolidation effected by the first charter of the Greater City, where the customs and machin- ery of the two cities of New York and Brooklyn were, to a con- siderable extent, perpetuated in the new instrument. The State Law of 1917 provides for about as many different kinds of Board? of Education as there were before, and it preserves the right? enjoyed by certain communities and jealously defended by them It has the virtue of including, in one article, most of the provisions of law relative to city schools, but it does not provide a consistent; or a uniform system of control. 50 INVESTIGATION OF AFFAIRS OF [EW YORK CITY EDUCATION UNDER THE PROVISIONS OF CHAPTER 786, LAWS OF 1917, AS AMENDED THROUGH 1921. It is not necessary in the present connection to comment on the patchwork character of this law. The powers, duties and composition of boards of education in the larger cities of the State differ amazingly, and the organization of the school sys- tems left in some cities to local control is in New York pre- scribed with regard to certain phases such as the Board of Superintendents and the Bureau of Compulsory Education. It is enough to compare the conditions under the charter of 1901 as it stood in 1917, with the present legislative provisions. The following analysis of the more important provisions of both statutes is submitted in parallel columns to facilitate comparison : Section Charter Provisions 1055 School property vested in city under control of Board of Education. 1059 Board of Estimate and Board of Aldermen given power to raise by tax amounts re- quired for school purposes, as called for by annual city budget. 1060 General and special school funds established and Board of Education given power to administer " all moneys . . . available for educational pur- poses in the city of New York." 1061 Board of Education created to consist of 46 unpaid mem- bers appointed by the mayor for 5-year terms: 22 from Manhattan, 4 from the Bronx, 14 from Brooklyn, 4 from Queens, 2 from Rich- mond. 1062 Board of Education given cor- porate powers. 1064 Board of Education to be rep- resentative of entire school system. By Sept. 15th to submit annually to Board of Estimate a detailed estimate Section State Law Provisions 868-3 Charter sec. 1055 not re- pealed. Board of Education given care, custody and con- trol of all city school property. Charter sec. 1059 repealed. 877-7 Charter sec. 1060 repealed. General and special school funds defined and established, and Board of Education given power to administer " all moneys . . . available for edu- cational purposes in the city," subject to audit by the Depart- ment of Finance. 865-866 Charter sec. 1061 repealed. Board of Education created to consist of seven members: two from each of the two boroughs with the largest population, and one from each of the other three appointed by the mayor for seven-year terms. 300 Boards of education in cities made corporations. 877-1 Charter sec. 1064 repealed. Board of Education by Septem- ber 1st to submit annual esti- mate for ensuing fiscal year to Board of Estimate and Appor- REPORT OF JOINT LEGISLATIVE COMMITTEE 51 Section Charter Provisions of moneys required for next calendar year. Board of Esti- mate required to appropriate for general school fund not less than the yield of 3 mills. Board of Education to ad- minister all mone/s subject to audit by Department of Finance. 1066 Board of Education empowered to dispose of personal prop- erty. 1067 Board of Education empowered to appoint secretary, super- intendent of school buildings, superintendent of school sup- plies, city superintendent of schools, supervisor of lec- tures, director and assist- ant director of reference and research, and one or more auditors; also a chief clerk and " such other offi- cers, clerks or subordinates as it may deem necessary . . . and as are provided for by the proper appropriations." These appointees removable for cause by three-fourths vote. 1068 Board of Education empowered to enact by-laws, rules and regulations for the transac- tion of its business and " de- fining the duties of the city superintendent of schools, the director and assistant director of the Division of Reference and Research, the superin- tendent of school buildings. Section State Law Provisions 877-7 tionment, which is required to appropriate the amount of such estimate up to the yield of 4.9 mills. Board of Estimate au- thorized to make additional ap- propriations. Board of Edu- cation empowered to adminis- ter all moneys available for educational purposes subject to audit by Department of 877-8 Finance. Board of Education may submit special estimates to meet emergencies. Charter sec. 1066 not repealed. 868 Charter sec. 1067 repealed. Pow- ers and duties of Board of Education as follows: To per- form any duty imposed by State law or regulation of the University of the State of New York or Commissioner of Edu- cation; to create, abolish, maintain and consolidate such positions, divisions, boards, or bureaus as it deems necessary; to appoint a superintendent of schools, such associate district or other superintendents, etc., as it deems necessary, and to determine their duties, except as otherwise prescribed by the Education Law; to appoint 872 district superintendents, di- rectors, supervisors, principals, teachers and all other members of the teaching and supervis- ing staff upon recommen- dation of the Board of Super- intendents ( except associate superintendents and exam- iners) and to appoint asso- ciate superintendents and ex- aminers and all other em- ployees (except members of the teaching and supervising staff, the appointment of whom, must be on recommendation of Board of Superintendents). 868-9 Charter see. 1068 repealed. Board of Education empowered to prescribe such regulations and by-laws as may be neces- sary to make effectual the pro- visions of this chapter, etc. INVESTIGATION OF AFFAIRS OF HEW YORK CITY Section Charter Provisions the superintendent of school supplies, of its auditor or au- ditors, its clerks and subordi- nates," etc. 1069 Additional powers of Board of Education : 1. To establish and conduct elementary schools, kinder- gartens, manual training schools, trade schools, truant schools, evening schools and vacation schools. 2. To maintain free lectures and courses of instruction for the people of the city of New York. 3. To provide special classes for instruction in English to foreigners. 4. To provide " one or more high schools and training schools." 5. To establish and conduct playgrounds in connection with the public schools. 6. To establish new schools and discontinue or consoli- date any schools. 7. To make contracts with ap- proval of board of esti- mate for transportation of pupils. 8. To establish a bureau of compulsory education, school census and child welfare. " On the nomina- tion of the board of super- intendents the board of education shall have power to appoint a director and an assistant director " and other employees, and fix their salaries within the proper appropriation. 1070 Secretary to have charge of rooms, books, papers, etc., of the board and to perform " such other duties as may be required by its members or committees." 1071 Board of Education empowered to establish branch offices of the bureaus of school build- ings and school supplies in the several boroughs, super- intendent of school buildings to be executive officer of the board " in respect to all mat- ters relating to the bureau of buildings." Section State Law Provisions 868-5 Charter sec. 1069 repealed ex- cept subdivision 8. Board of Education has power to estab- lish and maintain such free ele- mentary schools, high schools, training schools, vocational and industrial schools, kinder- gartens, technical schools, night schools, part-time or continua- tion schools, vacation schools, schools for adults, open air schools, schools for the men- tally and physically defective children, or such other schools or classes as it may deem 868-6 necessary, and to establish and maintain libraries, public lec- ture courses, playgrounds, rec- reation centers, social centers and reading rooms. 871 -a Bureau of compulsory educa- tion, school census and child, welfare made mandatory, em- ployees continued in office dur- ing good behavior and remov- able only for cause. Charter sec. 1070 repealed. Charter sec. 1071 repealed. REPORT OF JOINT LEGISLATIVE COMMITTEE 53 Section Charter Provisions 1073 All plans for new school build- ings, additions and structural alterations must be approved by superintendent of school buildings, who shall submit such plans to Board of Edu- cation, whose action shall be final. 1074 Janitors shall be appointed by the Board of Education. 107o Board of Education shall pro- vide for purchase of all books, supplies, etc., and shall have power to enact by-laws and resolutions for government of superintendent of supplies, winch by-laws, etc., shall pro- vide that all supplies as far as possible shall be obtained by contract after public let- ting in accordance with sec- tion 419. 1076 Bureau under superintendent of supplies to be subject to rules and regulations of Board of Education. Superintendent of supplies may appoint such deputies and other subordi- nates as the by-laws of the Board of Education may au- thorize. He shall be the ex- ecutive officer of the board in respect of supplies, printing, transportation of pupils and such other matters as may be assigned him by the board. 1077 City superintendent shall have right of visitation and in- quiry in all schools of the city and shall report to the board thereon. He shall have a seat and a right to speak in the board meetings, but no vote. 1078 City superintendent shall visit schools and, subject to by- laws, prescribe forms and regulations for conducting school business. Under direc- tion of Board of Education he shall enforce Compulsory Education Law. He may ap- point clerks as authorized by the Board of Education, and assign, suspend or discharge them subject to appeal to the Board of Education. He shall Section ISlate Law Provisions Charter sec. 1073 repealed. Charter sec. 1074 repealed. 868-4 Charter sec. 1075 repealed. Board of Education to secure necessary books, supplies, etc. Charter sec. 1076 repealed. 870-1 Charter sees. 1077 and 1078 repealed. Superintendent of schools shall have power, sub- ject to by-laws, to enforce all rules, etc., relating to the man- agement of the schools, etc. ; to be the chief executive officer of the Board of Education and the educational system; to have a seat and voice but not a vote at board meetings; to 4 have supervision and direction of all persons employed by the Board of Education; to trans- fer teachers on recommenda- tion of board of superintend- ents; to suspend any employee until next meeting of Board 5 of Education; to have super- vision and direction over the enforcement of courses of study and all the other educational activities under control of the Board of Education; to issue 54 INVESTIGATION OF AFFAIBS OF YORK CITY Section Charter Provisions assign associate and district superintendents subject to by- laws. Twenty-three district superintendents to be as- signed, each one to two local school board districts. 1079 Board of superintendents estab- lished, consisting of city su- perintendent and eight asso- ciate superintendents ap- pointed by the Board of Edu- cation for six years. Board of Education empowered to pa&s by-laws regulating du- ties of city superintendent and board of superintendents. There shall be twenty-six dis- trict superintendents to be appointed by Board of Edu- cation for six years on nomi- nation of board of superin- tendents. Board of Education empowered to appoint direct- ors of special branches for six years on nomination by board of superintendents. 1032 Board of superintendents, sub- ject to approval of Board of Education, shall establish rules governing promotion, transfer, etc., of pupils. 1083 Board of Education shall, upon recommendation of board of superintendents, approve text books, etc. 1084 Board of Education shall have power to change grades and adopt and modify courses of study, but such changes must first be presented to board of superintendents and, in case of adverse report by latter, change shall not be effective unless passed by two-thirds vote. 1087 Creation of forty-six local school board districts and local school boards of five persons appointed by borough presi- dent, district superintendent and Board of Education mem- ber. Section State Law Provisions licenses to teachers on recom- mendation of board of exam- 870-6 iners; to have general super- 871 vision of bureau of compulsory education, school census and child welfare. 869 Charter sec. 1079 repealed. Board of superintendents continued, consisting of superintendent of schools and eight associate su- perintendents, superintendent to be chairman. It has power 870-2 to prepare the content of each course of study authorized by Board of Education, subject to approval by Board of Educa- 870-4 tion; to recommend text books; to recommend to superintend- ent the transfer of teachers. 870-5 Charter sec. 1082 repealed. Board of superintendents to have power to make rules and regulations for promotion and graduation of pupils. 868-8 Charter sec. 1083 repealed. Board of Education has power to authorize and determine text books from lists recom- mended by board of superin- tendents. 868-7 Charter sec. 1084 repealed. Board of Education has power to authorize the general courses of study and to ap- prove the content of such courses before they become operative. 873 Charter sec. 1087 repealed. Local school board districts contin- ued, but Board of Education given power to modify bound- aries, consolidate two or more and establish new ones. Local school boards to consist of five persons appointed by the bor- ough president, a member of the Board of Education desig- nated by the board, and a dis- trict superintendent assigned by the city superintendent. REPORT OF JOINT LEGISLATIVE COMMITTEE 55 Section Charter Provisions 1088 Duties of local school boards: 1. To visit and inspect schools at least once each quarter. 2. To report on needs for new accommodations, recom- mend sites, repairs, etc. 3. To report dereliction of duty. 4. To excuse teachers' ab- sences, subject to approval of board of superintend- ents, for absence with pay, and in accordance with by- laws. 5. To try and determine all matters regarding discip- line and corporal punish- ment. 6. To try charges against a teacher. 7. To transfer teachers within district, after hearing and subject to approval of board of superintendents. 1089 Board of examiners created to license teachers, consisting of city superintendent and four persons appointed by Board of Education upon nomination by city super- intendent. 1090 Principals, branch principals, heads of departments, teach- ers, assistants and all mem- bers of teaching staff shall be appointed by Board of Edu- cation on nomination of board of superintendents, from es- tablished eligible lists. 1091 Board of Education shall have power to fix salaries of mem- bers of supervising and teach- ing staff subject to certain minimums prescribed by the statute. 1093 Board of Education empowered to suspend principals, teach- ers, etc., with or without pay, pending trial of charges pre- ferred against them. 1096 Mayor can remove any member of Board of Education or local school board for causes specified. 1098 Board of Education may remove any school officer interested in furnishing supplies, etc. Section State JLaw Provisions 873-4 Charter sec. 1088 repealed. Powers and duties of local school boards : 1. To visit schools at least once in each quarter. 2. To make recommendations to Board of Education. 3. Subject to by-laws of Board of Education, to transfer teachers, excuse absences of teachers, and hear charges against prin- cipals or teachers. 871 Charter sec. 1089 repealed. Board of examiners to consist of seven members to hold exami- nations and promulgate eli- gible lists, and perform the du- ties required by Board of Edu- cation. Charter sec. 1090 repealed. See sec. 872 summarized above. 882 Board of Education shall adopt by-laws fixing salaries of mem- bers of teaching and supervis- ing staff, but they shall not be less than the rates prescribed by the State. Charter sec. 1093 repealed. Charter sec. 1096 not repealed. Charter sec. 1098 not- repealed. INVESTIGATION OF AFFAIRS OF JSTsw YORK CITY Section Charter Provisions 1099 Contributions by members of teaching or supervising force to funds to affect legislation increasing their emoluments, prohibited. 1100 Board of Education may inves- tigate any subject over which it has legal control or of which it has cognizance, in- cluding conduct of employees. 1101 Continuance in office of all em ployees under public school system. 1102 State school moneys payable to city and credited to general fund for reduction of taxa- tion. Section State Law Provisions Charter sec. 1099 not repealed. Charter sec. 1100 not repealed. Charter sec. 1101 not repealed. Charter sec. 1102 not specifically repealed. 880 State school moneys to be cred- ited to the Board of Education as well as all funds raised by the city for any purpose au- thorized by the educational chapter. 877-10 Board of Education shall not incur a liability chargeable against its funds or the city in excess of the amount avail- able therefor, or otherwise au- thorized by law. 879-4 Board of Estimate authorized to raise in its discretion money for new schools, sites, etc. 880-3 Board of Education to make such classification of accounts as the comptroller of the city shall require. From the above comparative summary the following outstanding features of the new law are apparent, viz. : 1. Reduction in size in Board of Education from forty-six to seven members. 2. Possibility of conflict between the Board of Education and the Superintendent of Schools relative to their respec- tive powers. 3. Possibility of conflict between the Board of Education and the municipal authorities relative to their respective powers. 4. Failure to concentrate in clear and unmistakable language full responsibility for the proper administration of the public school system either on the municipal authorities, the Board of Education or the State cf New York. BEPOET OF JOINT LEGISLATIVE COMMITTEE 57 5. Limitation of the powers of the Board of Education. 6. Great increase in the powers of the Superintendent of Schools. 7. Perpetuation of the Board of Superintendents. 8. Perpetuation of the Bureau of Compulsory Education, School Census and Child Welfare. 9. Conflict between section 1102 of the charter, which was not specifically repealed, and the State Education Law rela- tive to the disposition to be made of the city's share of the State school moneys ; the former providing that such money be credited to the city's general fund for the reduction of taxation, and the latter that It be credited to the Board cf Education. 10. Increase from three mills to four and nine-tenths mills in the amount which the City is required annually to appropriate for the use of the Board of Education. 11. The inclusion within the State's educational system of city beards of education, including the Board of Education of the City of Xew York and the subordination of the municipal authorities to the State in matters of school administration. The new law effecting these changes in the status of the local educational system has been in force for almost four years and its adequacy and effectiveness should be easily determinable from the history of the public schools during that period. A consider- able amount of data bearing on this subject has been collected and the President of the Board of Education, the Superintendent of Schools and the Superintendent of School Buildings have been examined at public hearings. The following discussion of the degree of success with which the State Education Law has been administered is based upon a combination of sworn testimony and independent examination of the school records. 1. Reduction in size of the Board of Education from 46 to 7 members. One of the most popular features of the new law at the time it was before the Legislature for enactment was that it reduced the size of the Board of Education in 'New York City from the unwieldy number of 46 to the small compact number of 7. But the experiences of the past four years have shown that good school 58 INVESTIGATION OF AFFAIRS OF NEW YOEK CITY management depends on more than the size of the board. A board of 7 must be composed of exceptionally conscientious and capable persons if it is to discharge satisfactorily its many responsibilities, and it must be composed of recognized authori- ties in the field of education and business if it is to command public respect. The appointments made to the new beard of 7 do not seem to have been made with due regard to these considera- tions. It is doubtful if the names of the present members are known to more than a small proportion of the city's population, and if the names are known, it is exceedingly doubtful if the qualifications of these members are known. The President of the Board of Education admitted on the witness stand that prior to his appointment to the Board he had not been specially inter- ested in educational matters or administration (Vol. Ill, p. 1205). In response to further inquiries he stated that he was in the real estate business, although at the present time he was not actually engaged in any business. As to his personal educational qualifica- tions, he stated (Vol. Ill, p. 1205) that he was a common school and high school graduate, but had not attended college. In January, 1922, the President of the Board of Education resigned his office and accepted a political appointment to a $7,000 job as Commissioner of Taxes and Assessments. The person appointed by the Mayor to fill the vacancy occasioned by the President's resignation has, according to the City's civil list, been a paid employee of the City of New York, from 1914 to the end of 1921, his last position being that of Commissioner of Public Works, at a salary of $5,500, under a Borough President whose term of office expired December 31, 1921. One of the most important committees of the Board of Educa- tion is the committee on buildings and sites. The chairman of that committee is the personal physician of the Mayor's family. Without wishing to reflect in any way upon the probity of the individuals in question, or upon other members of the present Board of Education, the committee believes that the persons appointed during the last four years do not all possess the highest qualifications for membership on this important body. The newest appointee is almost totally unknown outside of Ms own borough. Even in his own borough he is not conspicuous for his knowledge of and interest in educational problems. The law establishes qualifications for the office of Superin- tendent of Schools and other members of &e professional staff, EEPOET OF JOINT LEGISLATIVE COMMITTEE 59 but members of the Board of Education who are to determine the educational policies to be carried out by these professional school- men may be selected with regard only to the borough of their residence. With no other check upon the appointing power, it is not surprising that political considerations should carry great weight. Politics should be kept out of the public schools and some statutory safeguard should be erected to insure the selec- tion of persons qualified for other than political reasons for membership in the Board of Education. This can be done by requiring appointments to the Board of Education to be made by some non-political agency; that the desirability for some such provision is more than theoretical is adequately established by the evidence below. The best test of the qualifications and competency of the present Board of Education is afforded by its record of the past four years, a brief account of which will now be submitted. a. Inadequate School Accommodations. In December, 1917, the month before the present Board of Education took office, there were 746,114 children registered in the day elementary schools, of whom 34,153 were on part time and 76,214 on the so-called duplicate form of organization. In October, 1921, the last month for which figures are now available (December, 1921) there were 817,210 children on register in the day elementary schools, of whom 81,242 were on part time and 194,234 on double session. In the day high schools there were 58,063 registered in Decem- ber, 1917, none of whom were on double session and only 1.796 were on part time In October, 1921, the register had increased to 82,265 and there were 1,516 children on double session and 33,892 on part time. These figures demonstrate conclusively that the Board of Edu- cation has not provided sufficient additional school accommoda- tions to care for the growth of school population. It is a serious reflection upon New York City that 115,134 children should be deprived of a full day's schooling and that 195,750 children should be subjected to the disadvantage of the double session expedient to which the city has resorted. Such a condition is intolerable and the fault lies with the Board of Education, the city authorities, or the provisions of law under which they operate. If the trouble is with the law, it is the duty of the Board of Edu- 60 INVESTIGATION OF AFFAIKS OF NEW YORK CITY cation to seek such amendments as will obviate the difficulty. Unless the Board has actively concerned itself with desirable modifications of the statute, however, it cannot be free from blame for the failure to provide the necessary accommodations. The conspicuous failure to provide sufficient accommodations for elementary school pupils is demonstrated by the foregoing figures. Confirmation is afforded by the compilation of statistics showing the capacity of new elementary school buildings and additions opened during the past four years. The records show the follow- ing: No. of New Buildings or No. of Sittings Year Additions Opened Therein 1918.. ....... 2 1,294 1919 ......... 4 1,380 1920 ......... None None 1921 to Dec. 6. 16* 19,203 Total.. 22 21,877 During the preceding four years, 44 new elementary buildings or additions were opened, with 52,847 sittings, so that the record of the present Board of Education is unsatisfactory, both as com- pared with requirements and as compared with the accomplish- ments of its predecessor. Various reasons have been given by city and school officials to explain the delay in school construction, the war being the one most frequently mentioned. The record, however, does not indi- cate that the war played more than an incidental part in this matter. At the time the small Board of Education took office, it found a building program prepared by its predecessor, calling for the erection of certain specified buildings, and plans were practically completed for several typical schools. In addition there were authorizations aggregating about $10,000,000 from which the cost of construction could be defrayed. The new Board, however, did not make use of thk program or of the funds. On May 10, 1918, the President of the Board reported that " this Board undertook to set aside all previous plans and begin de novo," and on December 30, 1918, the Board of Estimate rescinded the authorizations made by the previous administration for new school construction. The first bids called for by the new Board were for P. S. !STo. 29, Brooklyn. The^ were opened July 10, 1918. The contract was let but was latv^ 1 rescinded at the * Of the 16 opened in 1921, all but two were opened after September 1st. BEPOET OF JOIXT LEGISLATIVE COMMITTEE 61 request of the War Industries Board. It would appear, there- fore, that the only delay in school construction actually attribut- able to the war and the rules of the War Industries Board was the four month period from July when the first contract was awarded, and November, when the armistice was signed. On November 13, 1918, the Superintendent of School Buildings reported that plans and specifications for fourteen new buildings and additions were ready for the estimating table, but the first construction contract was not let until March 24, 1919. During 1919 fourteen construction contracts were let and all fourteen covered buildings on the program of the previous administration for which the funds had been authorized by the previous administration. It took the new Board of Education more than fourteen months to gu ahead with the identical schools selected by its predecessor. It is difficult to find a satisfactory explanation of the delays in school construction. The passive role played by the Board of Education was one factor. It received pressure and criticism from the Mayor and from the city authorities and it encountered obstacles in its own organization and procedure, but instead of responding actively to the pressure or striving vigorously to over- come the obstacles it apparently more or less acquiesced in condi- tions as it found them. The following quotations from letters of the Mayor and from the testimony of the President of the Board of Education are illustrative of this point. On August 8, 1918, the Mayor wrote to a member of the Board of Education in part as follows: " Six months of our administration have passed by and very little has been done toward the construction of schools. If Mr. Snyder cannot build more than one or two schools at a time, would it not be a good idea to replace him with a man who could have five or six schools in the course of construc- tion at the same time ? " If the Board of Education will first figure out ho^\ many schools can be constructed with the money now avail- able and after conferring with the Presidents of the various boroughs will then recommend where the schools are imme- diately required, I will then submit your plan to the mem- bers of the committee on finance and budget, so that action I can be at once taken and at least seven or eight new schools be started without any further delay. . . . You have a standard type of school. You have some school sites where 62 INVESTIGATION OF AFFAIRS OF NEW YORK CITY schools are necessary. If YOU have not enough, let us pro- ceed to secure a sufficient number of sites in accordance with the money we have on hand and start the schools at once/ 7 This letter was read into the testimony and the President of the Board was then questioned as follows (Vol. Ill, p. 1264) : " Q. N"ow, at the time you received that letter, the $10,000,000 authorization was in force? A. Yes, sir. " Q. Remained in force until the 30th of the following December ? A. Yes, sir. 11 Q. But that letter did not result in any action along the line of new school buildings under that authorization? A. Well, no ; not under that particular authorization, no. " Q. Well, or any other authorization until after Decem- ber 30th ? A. I can't recall whether it was prior to that date that the Board submitted its program for 27 new elementary schools. " Q. You said in May that you had made a complete new program and wiped out the old program ? A. Yes. But I think perhaps that program had been sent in I am not certain I think it had been sent in before the receipt of this letter." On October 17. 1918, the Mayor wrote again, in part, as follows (Vol. Ill, p. 1266): " The question of a sufficient number of new school build- ings in this city to properly house the school children is giv- ing me great concern. . . . We have some ten millions of dollars available for building schools. I would like to have that money employed for that purpose -and I would like to begin making preparations for the construction of these schools at once. Mr. Bernard Baruch, representing the Gov- ernment of the United States, has declared that we cannot at this time have the material necessary for the construction of a certain type of school building . . . . if w T e cannot build one type of school building we can build another equally good type of school building. If we cannot use steel construction we can use reinforced concrete construction," The examination of the President of the Board then proceeded ollowB (Vcl in, p. 1268): REPORT OF JOINT LEGISLATIVE COMMITTEE 63 " Q. Xow, the Mayor wrote on October 18th that very urgent letter to you, hoping you would use that $10,000,000, and I do not understand how, in view of a letter of that kind from the Mayor, you did not begin to operate on the ten million dollars. A. Well, I can't very well answer that, Senator, for this reason: First, I was not the President of the Board at that time and I was not on the Building Com- mittee at any time, never on the Sites and Buildings. " Q. You seem to be a good man to write letters to. A. But we were at that time under that ban, and I do not know whether or not at that time the Board understood just what this ten million dollars meant, whether it was tied up spe- cifically on certain sites or buildings, I really couldn't say. ' * x * ~ # * " Q. I can't make out, in view of this correspondence, how it was that the 1918 program, the 1918-1919 program of the Board of Education was delayed the way it was. I am unable to find out. A. Well, it made a contract, as I under- stand in the beginning, we advertised for several contracts; we made one when the ban was put on. That ban was not removed until Xovember, until after the Armistice was signed. " Q. The llth of November? A. Until after the Armis- tice. Now this letter came in October, and the other letter in July. " Q. Yes ; from August to November, there was a hiatus there. A. Well, we were helpless at that time. " Q. What ? A. We -were absolutely helpless, as far as making contracts was concerned. o " Q. About three months ? A. Oh ? no ; it is more than that, from July until practically the end of the year. " Q. That would be four months " The foregoing quotations show the Mayor's impatience at the failure of the Board of Education to accomplish more and demon- strate how imperfectly the President of the Board of Education could explain the Board's failure. Every member of a small board should be familiar with such vital matters as insufficient school accommodations and every member should charge himself with the duty of facilitating a building program that is so sorely needed, and with the responsibility of eliminating obstacles to the completion of such programs. That there are many obstacles in the existing practice is shown below: INVESTIGATION OF AFFAIKS OF J^"EW YOKK CITY Superintendent of Schools Associate Superintendent Shallow Board of Superintendents Board of Education J3oard of Estimate and Apportion- ment Associate Superintendent Shallow Board of Superintendents Board of Education Superintendent of School Buildings Municipal Art Commission Bureau of Buildings Department of Water Supply, Gas and Electricity Board of Education. directs preparation of building pro- gram by who studies city's needs, reports on order of urgency and, with assistance of superintendent of school buildings, estimates cost of program, which he recommends to the which considers, and then makes spe- cific recommendations to the which considers program through its committee of the whole or committee on buildings and sites, and then acts on such committee's recommenda- tions, sending its recommendations to the which has recommendations examined by its committee on finance and budget and its engineers and acts upon their report, then notifying the Board of Education of its action. reports on layout of individual build- ings in approved program to which acts thereon and sends its rec- ommendations to which considers and takes appro- priate action as soon as site is acquired, and sur- vey received, selects type best suited to neighborhood and causes detailed plans to be prepared, submitting pre- liminary and final drawings to which must approve design before buildings can l)e erected; when this approval is given the general con- struction plans and specifications are submitted by the Superintendent of School Buildings to of appropriate borough for examina- tion and approval, while the plans and specifications for heating and ventilating (prepared by bureau of plant operation) and for plumbing, gasfitting and electrical work are sub- mitted to the for examination and approval. These plans and specifications, together with those for furniture and all other equipment, are also transmitted to tlie which, after approving them, for- wards them to the REPOBT OF JOINT LEGISLATIVE COMMITTEE 65 Board of Estimate and Apportion- ment Board of Education Superintendent of School Buildings Corporation Counsel Superintendent of School Buildings Board of Education Board of Education Comptroller Board of Education Comptroller Board of Education Superintendent of School Buildings Deputy Superintendent Contractor Final payment cannot be made to the Commission issues a certificate that approved plans. which, through its committee on finance and budget and its engineers, examines the plans and specifications for general construction, sanitary work, heating and ventilation, and electrical work, together with those for furniture and all other equipment, acts thereon and notifies the of its action, and when this action is favorable the Board of Education informs the who then submits proposed advertise- ment and contract to the for approval, and when this approval is obtained the advertises for bids in the City Rec- ord for ten days, then opens bids and reports thereon to which may award the contract, if the bid is within the authorized amount. If not within the estimate, the Board of Estimate and Apportionment must approve the increase before the con- tract can be awarded. After the award the notifies the who examines and passes on the sure- ties and returns bonds to which then signs contract, has it re- corded by its auditor and returns it to the who gives final approval as to finan- cial ability and then advises which notifies the who notifies appropriate who directs to start work. - contractors until the Municipal Art the building is in accordance with An examination of the periods of time actually consumed by the various agencies cooperating in the construction of schools also disclosed some most significant facts. A brief life his- tory was composed for each of the schools on the Board of Education's building program. In two instances it was found that twenty years or more had elapsed from the time the recommendation for a new building was made by a local school board and the time when the building was opened for use. P. S. 66 INVESTIGATION OF AFFAIRS OF ^EW YORK CITY No. 54, Brooklyn, for example, was recommended by the school board of Brooklyn in 1901 ; the contract date for its completion is September, 1922. There is also delay due to the requirement that plans and specifications be submitted to the Board of Estimate for approval. The examination of the record of some twenty schools 011 the current building program shows that plans and specifications were before the Board of Estimate in one instance for 356 days, another for 211 days, and in eight cases for more than 50 days. This did not take into account the time between the return by the Board of Estimate and a resubmission by the Board of Educa- tion. In one case the same matter was four times before the Board of Estimate. In four other cases the same matter was before the Board of Estimate three times. A further index of the actual accomplishments of the Board of Education in providing additional school facilities is afforded by the following table of authorizations and expenditures for such purposes, annually from 1910. STATEMENT SHOWING THE CORPORATE STOCK AUTHORIZATIONS AND CASH EXPENDITURES FROM JANUARY 1, 1910, to JUNE 30, 1921 Cash Expenditures Year Authorizations ( Sites and Buildings ) 1910 $5.270,173 26 $2,632,110 72 1911 12,138,387 39 4,388.647 65 1912 360,490 00 4,851,716 26 1913 6,131,085 00 4,726,394 67 Total $23,900,135 65 $16,598,869 30 1914 $798.194 89 $5,386,927 68 1915 1,505,500 00 4,138,094 66 1916 6,172,084 68 2,567,537 06 1917 6,797,571 13 2,177,079 21 Total 15,273,35070 14,269,63861 1918 *$678,754 24 $2.233,113 32 1919 7,000,000 00 2,648,070 46 1920 8,000.000 00 5,562,616 73 1921 15,250,000 00 4,780,531 46 Total 29,571,24576 15,224,33197 Grand Total... . $68,744,732 11 $46,092,839 88 It will be noted that the expenditures of the three and a half years, 1918 to July, 1921, were but $15,224,331.97 which, in view of the depreciated value of the dollar during all this period rep- .Net rescindment. KEPORT OF JOINT LEGISLATIVE COMMITTEE 67 resents not more than $8,000,000 in building value on the basis of 1910 to 1917, or about one-half of the previous four-year totals. The average annual authorization for the eleven and a half years covered in the above table was $5,977,802.79 and the average annual expenditure $4,008,073.03, or about $6,000,000 and $4,000,000, respectively. b. Fire Hazards in the Schools. It is the duty of the Bureau of Fire Prevention of the Fire Department and the Bureaus of Buildings in the five boroughs to inspect school buildings to determine whether the requirements of law respecting exits and the elimination of fire hazards are being complied with. In the event that violations are discovered, it is the duty of these bureaus to serve notice thereof on the Board of Education. An examination was made of the records of the Board of Education with respect to such violations. It was found that at the time of this examination, August, 1921, there were 7,353 violations of fire prevention rules recorded against 496 of the city's 695 school buildings. The Committee's engineer estimated the cost of removing these violations at about $4,500,- 000. Some of the violations are less serious than others, but, on the other hand, some are of the very greatest moment, as, for example, stairways that are not enclosed with fire and smoke proof partitions and not provided with self-closing doors ; interior fire alarm systems that do not work; wooden and not self-closing fireproof doors along the line of exit stairways; no hand fire extinguishers; and storage of dangerously inflammable materials in non-fireproof rooms or compartments. The seriousness of this situation is emphasized by the words of the Superintendent of School Buildings, quoted in the minutes of the Board of Education for March 23, 1921, as follows: " This with the continued growth of the schools and conse- quent overcrowding and congestion, causes me great un- easiness and distress of mind. If the fire prevention work was and is required for schools under normal conditions, how much more important must it be when a building con- tains quite one-half or more in excess of the normal . . . why paint and renovate the interior of a building when there are essential items of fire prevention work to be per- formed which would actually operate to safeguard life and lessen fire risk." 68 INVESTIGATION OF AFFAIES OF .NEW YORK CITY But in spite of the importance of this work and of the fact that many of these violations date back several years, only $250,000 was made available for the removal of fire violations during the past four years, and that appropriation was not made until April, 1921. The following table shows how the schools have been neglected in this respect as compared with the years preceding this administration and while it should be stated that the Board of Education has made repeated requests since 1918 for fire pre- vention funds, these requests have not been effective. AUTHORIZATIONS AND EXPENDITURES FOR FIRE PREVENTION WORK AS OF AUGUST 10, 1921 Date of Authorization Sept 16, 1904 Amount of Authorization $300,000 00 Expenditures $300,000 00 Balance o.")0,000 00 550,000 00 . April 3 1908 1 000 000 00 1 000 000 00 June 3 1910 450,000 00 450,000 00 . July 17 1911 450,000 00 447,666 59 $2,333 41 Nov 19 1915 250,000 00 250,000 00 . July 7 1916 250 000 00 250 000 00 April 20 1917 250,000 00 240,660 85 9,339 15 April 22 1921 250 000 00 250,000 00 On September 14th the Committee examined the Superintend- ent of School Buildings on this subject. Significant portions of the testimony are given below (Vol. Ill, p. 1364ff) : "Q. Well, this question of doing away with violations of the fire prevention rules has been a matter of a good deal of concern to you for several years, hasn't it ? A. It has. . "Q. And you have made efforts to secure moneys for the purpose of correcting the conditions ? A. Yes, sir. "Q. You have reported it frequently to the Board of Edu- cation ? A. I have. "Q. And seen that it was presented to the Board of Esti- mate and Apportionment? A. That would not be for me to do. "Q. That would not be your function ? A. No, sir. "Q. I see in your letter of Mar. 18, 1921, that you say: 'The condition in relation to fire prevention with the con- tinued growth of schools and consequent overcrowding and congestion, causes me great uneasiness and distress of mind.' Is that true? A. It was. REPORT OF JOINT LEGISLATIVE COMMITTEE 69 "Q. 'If the fire prevention work was and is required for schools under normal conditions, how much more important must it be when buildings contain quite one-half or more in excess of the normal ?' A. Yes, sir. "Q. 'I sincerely hope that a resumption of the carrying out of this most important work may be brought about with- out the stimulus represented perhaps by some awful acci- dent, either here or elsewhere. 7 You said that, didn't you? A. That is in the letter, yes. "Q. You adhere to it ? A. I do. " Q. And I notice you say, i These orders (that is, the fire prevention rules) have been and are now available at a mo- ment's notice. If there be no intention of granting funds for fire prevention work, then we should know it and make a study of the situation, looking to a decision as to whether or not all moneys for certain repairs should be used for this work.' Was any such decision made to divert moneys for repairs generally to this work? A. What was the date of that letter, please ? "Q. March, 1921? A. No. "Q. You need the money for other repairs that you get? A. We do. "Q. And you use it for other repairs ? A. We do. "Q. I notice you say, 'Why paint and renovate the interior of a building, when there are essential items of fire preven- tion work to be performed, which would naturally operate to safeguard life and lessen fire risk.' A. That is a question of judgment. "Q. 'The situation becomes more serious with each day's delay,' and then comes an appeal to the Board of Education to apply to the Board of Estimate. I will read it : 'I would earnestly recommend that the Board of Education adopt resolutions for transmission to the Board of Estimate and Ap- portionment, stating the stern necessity of prompt action upon the Board's request for funds to enable the department to undertake immediately fire prevention work that is ab- solutely necessary if we are to safeguard properly the lives of the children entrusted to our care.' That is your letter? A. I believe it is, yes, sir. "Q. And I notice elsewhere that you state that if the cor- rection of the violations was compelled, it would result in the shutting down cf a lot of schools ? A. Pardon me. I do 70 INVESTIGATION OF AFFAIRS OF NEW YOEK CITY not think that that is quite the meaning of that paragraph as I recall it. I have not seen it in some time. "Q. Well, I was trying to be brief. Sometimes I am brief at the expense of accuracy. A. I meant this, that the fire department have the right to close up any premises which it considers unsafe, and we might possibly be confronted someone might reach such a decision, and we would be con- fronted with such a decision. k * Q. Here it says, ' In the event, however, of the Fire Department enforcing through legal proceeding the carry- ing out of the orders now outstanding on our buildings, there wculd be no alternative, it would seem, except to close such structures for the time being, either in whole or in part, until funds had become available and the orders executed. 7 A. That is what I had reference to. " Q. That is an accurate statement, is it ? A. That is what I had reference to. The Fire Department could do that. "Q. I meant to state it in substance in that form ? A. Yes, sir. Senator Downing: Did the Fire Department close any school buildings ? The Witness : No, sir. " Q. Here you say, ' For instance, in Public School 117, Brooklyn, which was not originally intended for a school building, we have been obliged, much against the wishes of the District and Division Superintendents, to prohibit the use of the upper floor, owing to the absence of enclosed fire- proof stairway and other items, the cost of which was esti- mated about two years ago to be about $34,000, and no funds being available for the work. 7 .... In reply to a question as to how much money would be required to correct outstanding fire violations, Superintendent Snyder stated (Vol. Ill, p. 1368): "Around four millions of dollars." The following quotation from the testimony gives Superintend- ent Snyder' s recommendation for the prevention of such an accu- mulation of nncorrected violations. (Vol. Ill, p. 1381). "Q. Now what is +he matter with the system? A. Why, the system was that there has never been a policy the Board of Education was never in a position to fix a policy and go ahead and do the work systematically and know what it could do this vear and next vear and the vear after that. REPORT OF JOINT LEGISLATIVE COMMITTEE 71 '* Q. Because they didn't have the money ? A. They didn't have the right to fix a policy. "Q. To have the money? A. I wouldn't put it that way. They didn't have the right to fix a policy and the ability to carry it out when once fixed. "Q. Where would you vest that power, where should it be vested so as to insure it being carried out? A. I think all these things resolve themselves simply down to this, that the Board of Education either should be absolutely independ- ent and handle its own affairs and be able to fix its policy, or should know that it is not independent and must bow to the city departments or something of the kind. It is either one thing or the other, and everything can be traced to that one thing. a Q. Would you regard the system under which this large accumulation of fire violations occurs, is wrong, needs cor- rection ? A. I believe it does ; yes, sir. " Q. By statute, by law ? A. Whatever is necessary to bring it about. You know better than I do. "Q. By law ? A. Some way that it should be done. " Q. And there should be some power in connection with the Board of Education which will enable it to meet these violations of the fire prevention rules as they come up ? A. Yes, sir ; and anything else that comes up. a Q. Well, particularly these? A. Yes, sir." c. Failure to Repair Fire Damage to Board of Education Building In February, 1918, the seventh, eighth and ninth floors of the Hall of the Board of Education, at 500 Park Avenue, housing the executive offices of the Board, were completely burned out. Bids for the rebuilding of these floors were not, however, opened until December 7, 1921, nearly four years after the fire. During this interval the work of the Board has been seriously interfered with because of compulsory vacancy of the three top floors of its build- ing. The Bureau of School Buildings, for example, had to be moved to inadequate quarters in the Municipal Building, several miles away from the other offices of the Board. The delay in agreeing on new plans, in securing an appropriation and in letting the contract lays the Board of Education open to the most serious criticism. "No business corporation would tolerate such slovenly and inefficient methods. 72 INVESTIGATION OF AFFAIRS OF ^N"EW YORK CITY The following extract from the testimony of the President of the Board of Education on this subject is illuminating (Vol. Ill, p. 1325) : " Q. Was there a fire in the Board of Education Build- ing ? A. * * * Yes, in our building. " Q. In your building ? A. In February, I think, 1918. "Q. What did that do? A. Well, it destroyed, I think, the three upper floors of the building. " Q. How many floors have you got ? A. It is a 9 -story building. " Q. Did you need that room ? A. Yes, we needed it badly. " Q. You have needed it badly during all that time ? A. Yes. " Q. But it has not been restored ? A. No, it has not. " Q. Only a temporary roof put on it ? A. That is all. " Q. Is anything being done now to correct it ? A. Yes. The Department is working on plans. The Building Bureau is working on plans. " Q. That is, the Building Bureau of the Board of Educa- tion ? A. Of the Board of Education. " Q. Haven't they worked on plans before ? A. Plans have been prepared, yes. " Q. They must have had the plans in the same year it burned, didn't they ? A. No, we had no appropriation that year. " Q. You have to get plans before you get an appropria- tion, don't you? A. Yes, but I think we prepared plans but failed to secure an appropriation. '"* Q. That is, you prepared the plans in 19.18 ? A. I am not sure. I think in 1918, yes. " Q. Right after the fire? A. And thereafter, I think the plans were changed. They were to change the stairways and make some other changes in the building. " Q. When were tbey changed ? A. Well, that I can not tell you. The details as to that the Building Superintendent has. " Q. Who recommended the changes, the same Bureau ? A. I think the members of the Board requested changes, and I think perhaps the Superintendent of Schools. " Q. Well, now, this plan for the repair of this building was submitted to the Board of Estimate when, first? A. I can't tell you, Senator. REPORT OF JOINT LEGISLATIVE COMMITTEE 73 " Q. 1918? A. I couldn't say; I would have to get the facts on that; I couldn't remember the dates. " Q. It has been pending a long time ? A. They were pending a long time, yes. "Q. November 27, 1918, my records show? A. They were subsequently changed. " Q. And presented again June 25, 1919, the record shows, and then again in July and then again March, 1920, and then in May, 1920, so you have made abundant applica- tion to the Board of Estimate ? A. I have followed that up pretty closely myself personally. We were anxious to get in the building to have the building repaired and we were over- crowded, and as I say, we were very anxious to get in there. " Q. You have needed the room all the time, it was occu- pied before the fire, wasn't it? A. It was necessary to have some of our departments housed outside of the building, be- cause of lack of space there, due to the fire. " Q. I say, it was occupied when the fire occurred ? A. It was. " Q. You have needed it ever since ? A. We have. " Q. You have had to hire some rooms outside ? A. We have. " Q. To what extent ? A. Well, we are not hiring any rooms outside but we are occupying city owned property. " Q. City property ? A. Yes." d. Incomplete By-Laws and Delayed Minutes Matters of less public importance but of almost equal signifi- cance as indicating the degree of efficiency with which the Board of Education has administered the new Education Law are those relating to the revision of the Board's by-laws and the prepara- tion of its minutes. The new law of 1917 so changed the organization and scheme of the school system that a complete re- vision of the by-laws was necessary in order to make them con- form with the new statute. This complete revision had not, however, been made up to September 12, 1921, when the Presi- dent of the Board of Education was examined on this point by the Committee. A few sections had been adopted in new form, but the great bulk of the by-laws was still in the form of a vol- ume published in 1914 with literally hundreds of amendment slips pasted to the appropriate pages, many of which antedate 74 INVESTIGATION OF AFFAIRS OF NEW YORK CITY the law of 1917 and in the form of special documents containing salary schedules as enacted by the Legislature. A Board which can permit a delay of nearly four years in the preparation and adoption of by-laws to govern the administration of the public school system of which it is the head, cannot escape criticism on the ground of incapacity or lack of interest in the great responsibility with which it is charged. The Board has also tolerated during its term of office a condi- tion which no business house would permit to exist for a moment. The minutes of Board meetings are records of the greatest import- ance to teachers, board members, board officers and city authori- ties as they are the official documents setting forth the Board's determinations and decisions. The last volume of minutes, how- ever, to be furnished with a printed index is that for 1915. The index for 1916 is said to be completed, but it has not yet gone to the printer. A delay of five years in indexing current minutes is inexcusable. Another instance of the dilatoriness permitted by the Board is the fact that it takes the secretary's office about two months to issue printed minutes of Board meetings. The Com- mittee has been on the mailing list for these minutes and on the day that this statement is written (December 7, 1921) the last meeting for which minutes have been received is that of Septem- ber 28, 1921, and those minutes came only a few days ago. There has been a constant lag of about two months between board meeting and receipt of minutes ever since the Committee started inquiry in this direction. It is generally agreed that a small Board of Education can be more efficient than a large board, and that the abolition of the former board of 46 members was most desirable. It seems quite certain, however, that a Board of Education of seven members is too small for the City of New York. Boards of Education in other cities of the state number from three to nine members; about twenty cities having boards of nine ; about twenty-five cities having boards of from five to seven, and the others having boards of from three to five. It is not logical that New York, the largest city of the state, should have a Board of Education smaller than the Board of Education in twenty other cities with far less inhab- itants. The New York Board of Education should be large enough to handle its problems effectively and yet not so large as to be unwieldy, and its term of office should be uniform with the terms af office of Boards of Education in the other cities of the state. REPORT OF JOINT LEGISLATIVE COMMITTEE 75 It seems equally certain that the statutes should impose some means for guaranteeing the quality of the local appoint- ments to the Board of Education. Appointment should be made on the basis of qualification for the duties to be performed. An appointing officer with unrestricted power to appoint is subject to a degree of external political pressure to which it is difficult not to respond, and political considerations should play no part in the selection of members of a Board of Education. From the foregoing account of the division of responsibility between city and educational authorities under the present stat- ute, it is also clear that the only remedy lies in so amending the law as to centralize power in a single agency. If the Board of Education is to be responsible for the proper conduct of the schools, it should have the power to carry out its program without hindrance. 2. Possibilities of conflict between the Board of Education and the Superintendent of Schools, relative to their respective powers. Cinder the Greater New York Charter, the Board of Education had specific power to enact by-laws " defining the duties of the city superintendent of schools." The Education Law of 1917 re- pealed this section of the charter (Section 1068) and did not enact an equivalent. In addition to this negative act, it specifically constituted the Superintendent of Schools, " the chief executive officer of such board" (of education), and gave him power subject to the by- laws, " to enforce all provisions of law and all rules and regu- lations relating to the management of the schools." He was also given specific jurisdiction over the employees of the Board of Education. The material for a serious controversy between the Board and its Superintendent was thus at hand and controversy developed. The new Board of Education adopted new by-laws, defining the powers of its President, of the Board and of its subordinates. The Superintendent of Schools felt that his prerogatives under the statute had been invaded by these by-laws and appealed to the State Commissioner of Education for relief. The Commissioner upheld him and directed the Board to amend its by-laws so as to eliminate the objectionable provisions. The significance of the decision by the Commissioner is indicated bv the alterations that 76 INVESTIGATION OF AFFAIRS OF .NEW YORK CITY were made by the Board pursuant to his injunction, some of which are quoted below. First Version See. 3. "Any salaried officer, clerk or other employee may be suspended by the President or Superintendent of Schools. . . ." Sec. 4, Par. 2. " The President shall exercise general supervision over the transaction of the business affairs of the Board of Education and shall have the power to require that re- ports be made to him by any officer or employee for his use and informa- tion, or for presentation to the Board for its consideration and action. The Superintendent of Schools shall act in the administration of business af- fairs under the advice and guidance of the President." First Version Sec. 6, Par. 5. The Superintendent of Schools " shall recommend to the Board of Education the organization of day and evening schools and other educational and recreational activi- ties into major divisions, each of which shall be supervised by an asso- ciate superintendent, to be assigned by the Superintendent of Schools, subiect to the approval of the Board of Education." Sec. 6, Par. 8. Relative to the Su- perintendent of Schools, " In his ab- sence or inability to servo, the Board of Education shall designate an as- sociate superintendent to serve as acting Superintendent of Schools." Sec. 7, Par. 10. Relative to the Board of Superintendents, " It shall make rules and regulation? with the approval of the Board of Education for the admission of pupils to the schools, for their promotion, gradua- tion and for their transfer from one school to another." Amended Version "Any salaried officer, clerk or other employee may be suspended by the Superintendent of Schools. . . .'' " The President shall perform the functions that appertain to the office of a presiding officer. The Board may require that reports be made for its consideration arid action by any officer or employee." Amended Version The Superintendent of Schools " shall recommend to the Board of Education the organization of day and evening schools and other edu- cational and recreational activities into major division?. Each of said divisions shall be supervised by an associate superintendent, to be as- signed by the Superintendent of Schools." " " In his absence or inability to serve, he shall designate an associate superintendent as acting superintend- ent of schools." " Tt shall make rule* and regula- tions for the admission of pupils to the =chools, for their promotion and graduation and for their transfer from one pchool to another." The testimony of the Superintendent of Schools before the Committee on September 14, 1921, on this subject was as follow? (Vol. Ill, p. 1407) : " Q. I understood you to say that reasonable coordination could be expected from the educational system as it is now BEPORT OF JOINT LEGISLATIVE COMMITTEE 77 organized; that is, between the Board of Education and the Superintendent and the Board of Associate Superintendents. That works well, does it ? A. Within the Board, yes. That is, between the Board of Education, the Board of Superin- tendents, and the Superintendent of Schools. " Q. They cooperate with a reasonable degree of success and efficiency ? A. Yes, sir, they do now. " Senator Downing : In harmony ? " The Witness : Yes. It took a good while to get har- mony, naturally. I might explain here that this new law created an entirely new condition, and the tradition was in the Board of Education that affairs should be carried on as they had been carried on before this law, and in the carrying out of the business of the Board, there may have been a little conflict with the powers of the Superintendent of Schools, as he conceived them, and the Superintendent of Schools, of course, in his high regard for the sacredness of his office, had to protest against any such action and appeal to the State Commissioner. That was perfectly natural. There was not any acrimony on either side. It was simply a definition of powers. It took two years to straighten that out. " Q. You have it straightened out now ? A. Yes, sir, it is straightened out now. " Q. And the present workings are smooth ? A. At pres- ent, yes, sir." A situation where a Board of Education, nominally the head of a school system, is by statute given inferior powers to those of one of its subordinates, is unwholesome and subversive of dis- cipline. It is hard to see how a self-respecting Board of Educa- tion could acquiesce in such a condition. Responsibility and authority should be placed in the same hands. If a Board of Education is not deemed competent to administer the affairs of the school system, the remedy lies not in elevating an appointee of that Board to a position superior to that of the Board itself, but in changing the character of the Board. A continuance of this unwholesome condition would be most unfortunate. The Board of Education should be the unquestioned fiscal and policy determining head of the school system and it should have full power to delegate to its subordinates the responsi- 78 INVESTIGATION OF AFFAIES OF .NEW YOKK CITY bility of carrying out the policies upon which it determines. It is of course true that a Board of Education has not the technical pedagogical training possessed by the professional staff and that lay interference in the actual teaching of the children might be most dangerous, and that certain safeguards must be established by law which will insure a reasonable degree of freedom to the professional head of the school system. On the other hand there is ample evidence that the law under which the Board of Education now operates does not satisfactorily meet this problem. In a city like New York, which has the greatest educational problem in the world, it does not necessarily follow that the professional schoolman best qualified to carry out the educational program of the schools will also possess the quali- fications to supervise the strictly business duties of the school system, such as the purchase of supplies, the construction and alteration of buildings, the assignment of janitors and other em- ployees, etc., even if he had the time. In a smaller city, where these business matters do not constitute the burden that they do in New York, the Superintendent may be able to exercise the two functions without detriment to either. This is not likely, how- ever, ever to be true in New York City, and yet under the present Education Law the Superintendent of Schools is made the execu- tive officer of the Board of Education, with jurisdiction not only over the educational side of the Board's work, but also over the Board's business activities. Authority should, therefore, be given to the Board of Education to delegate the non-professional and administrative duties to some officer other than the Superintend- ent of Schools, if it deems it wise to do so. 3. Possibility of Conflict Between the Board of Education and the Municipal A uthorities Relative to their Respective Powers The repeal of most of the educational chapter of the charter and the enactment of an entirely new statute changing the rela- tionship between the Board of Education and the city authorities afforded an opportunity for either friction or co-operation in the working out of the new relationship. From the records it appears that it was friction and not co-operation which resulted, and this in spite of the fact that the Board of Education was composed wholly of persons appointed by the present Mayor. The chief points at issue are set forth fully in a brief submit- ted on April 4, 1919, by the Superintendent of Schools to a Com- I REPORT OF JOINT LEGISLATIVE COMMITTEE 79 mittee of the Board of Regents, requesting relief from "the unlaw- ful control of the public school system ... by the municipal authorities." This brief noted the following points. 1. That the municipal authorities diverted the State school moneys for 1918 amounting to some $2,300,000 from the Board of Education to the general fund for the reduction of taxation, following the provisions of Sec. 1102 of the charter instead of Sec. 880 of the Education Law. 2. That the municipal authorities sought to control educational policies and administrative details by a minute segregation of appropriations and the imposition of terms and condi- tions. 3. That the municipal authorities assumed a jurisdiction over administrative employees of the Board and by withholding their pay worked great hardship. 4. That the municipal authorities sought to gain entrance into the school system and establish jurisdiction over school affairs through the intrusion of the Commissioner of Accounts into the business of the Board. That the attitude of the Mayor, as indicated by his oral and written utterances, was significant of the relationship be- tween the City and the school authorities. The Mayor's attitude toward school affairs was further devel- oped in the testimony of the Committee, copies of letters written by him having been read into the record. Extracts from these letters and from others in the Committee's possession follow: (Vol. Ill, p. 1272) From the Mayor to Mr. Prall, Nov. 25, 1918. The by-laws a now pending and supported by Superintend- ent Ettinger would place that department in a position that would require all reports upon investigations ordered by the Board of Education to come to the Board through the Superintendent. This is part of a policy which, if persisted in, makes the Superintendent a dictator and practically the superior of the Board of Education. "Superintendent Ettinger is submissive to and is practi- cally controlled by Cook, the Auditor, who is the trouble- maker in the Board of Education and has little regard for the expenditure of money appropriated for educational pur- poses. 80 INVESTIGATION OF AFFAIES OF J^EW YORK CITY "I regret to be obliged to write you about this, but unless the Board of Education puts an end to the dictation of Cook, through Ettinger, there is little hope that we will be able to accomplish anything for the improvement of school condi- tions in this city. A year has almost passed and practically nothing in a constructive way has been accomplished by the new Board of Education. "Won't you please exercise the rights given you under the law to see that the Board of Education and not the subordi- nates run the schools of this City ? " When questioned about the "Cook" referred to in this letter, President Prall testified, "He is an auditor, a very good auditor; understands his business thoroughly. We depend on him abso- lutely." "Q. He has the confidence of the Board ? A. We depend on him absolutely. "Q. He has the confidence of the Board ? A. He has. "Q. And Ettinger the same ? A. Yes, sir. (Vol. Ill, p. 1277) From the Mayor to Mr. Prall, June 27, 1919. "My Dear Commissioner: I wish you would confer with the members of the Board of Education and see to it that no increases in salary are made in the Educational Depart- ment, until such time as we find how financial matters stand in the Department. "Cook, Ettinger and Company have so bungled matters that it will be hard to straighten things out." (Vol. Ill, p. 1277) From the Mayor to Mr. Prall, June 14, 1919. "Dear Sir: I note that Superintendent Ettinger, who is anxious to have the Legislature increase his salary by $5,000, which the Board of Estimate and Apportionment opposed, is attempting to give the public the impression that the Board of Estimate and Apportionment is opposed to keeping open the swimming pools in the public schools. This is absolutely false, and Ettinger knows it. "There has been $45,000,000 appropriated by the present Board of Estimate and Apportionment for the public schools of the city, and out of that there will be sufficient to pay the few attendants necessary, the cost of which is less than $7,000, to look after the swimming pools for the summer. BEPORT OF JOINT LEGISLATIVE COMMITTEE 81 " Ettinger had no trouble in finding money out of the $45,000,000 to start new activities so that his friends could get high salaried jobs and increases in salary for other Ettin- ger favorites. "A man who resorts to such methods to mislead the public is not the proper person to be Superintendent of the Schools of the City of New York." On August 6, 1919, the Mayor referred to the Police Commis- sioner for investigation an anonymous letter charging that the Superintendent of Schools had improperly pensioned a teacher. The Police Department made an investigation and reported on Sept. 3, 1919, naturally finding nothing to support the accusa- tion as all pensions are under the jurisdiction of the Teachers' Retirement Board and not under the Superintendent of Schools. On September 2, 1920, the Mayor wrote President Prall as follows: "Dear Sir: I am in receipt of your letter of September 1st with reference to the refusal of the Department of Finance to honor the payrolls of the Board of Education so that the teaching force will receive the increases granted them under the mandatory legislation passed by the Legis- lature at its last session. "The Board of Education should immediately begin man- damus proceedings against the Comptroller to compel him to pay the salaries now legally due the teachers. " I have directed Corporation Counsel O'Brien to confer with you without delay to the end that the teachers' salaries be paid without any further quibbling." On September 23, 1919, the Mayor wrote President Prall in part as follows: 1 ' Ettinger bitterly opposed the investigation of the expen- ditare of $44,000,000 appropriated for educational purposes. He now seems to have the City Club behind him to help him thwart your investigation of the finances of the educational department and ether conditions in our school system. The Board of Education should take some action so that Ettinger will give his time to educating the children and bettering conditions in our public schools instead of playing education politics and making trouble for those who want school-houses erected and the children given a proper education." 82 INVESTIGATION OF AFFAIRS OF JN"EW YORK CITY On December 4, 1919, the Mayor wrote tho Corporation Counsel as follows: " Dear Mr. Burr : I congratulate you upon your success in the Court of Appeals in the case of Hirshfield, Commis- sioner of Accounts of the City of New York against Cook, Auditor of the Educational Department. I understand the decision was unanimous in favor of the city investigating the financial condition of the educational system. " The Board of Education have at all times, as you know, been in favor of a thorough investigation of the financial condition of the educational system under Superintendent Ettinger, but this policy was opposed by Superintendent Et- tinger and Auditor Cook, and other prominent persons in the city who for some reason, feel that the taxpayers should not know what is being done with their money. However, the Court of Appeals has sustained the city's contention and the investigation can now go on. " If Ettinger and Cook had not been encouraged by Fine- gan of the State Educational Department they would not have attempted to override the action of the Board of Educa- tion, their superiors, and the people of this city would have known long ago whether the finances of the Board of Educa tion were being properly expended. " The decision of the Court of Appeals should be suffi- cient to convince Superintendent Ettinger that his superiors, the Board of Education, must be recognized, and that he can- not override them with the aid of Deputy Einegan at Albany. " Superintendent Ettinger can now devote his time to the proper housing and education of the children and the better- ing of the moral tone of the schools of the city. '' The people of the city appropriate millions of dollars yearly for the better education of their children. They want a sufficient number of school-houses to properly house the little ones and a thorough fundamental education given to them. They do not want their money wasted for unneces- sary textbooks, fads, frills and fancies. " It is a pleasure to remember that the great judges of the Court of Appeals have stood by the people and against the traction interests in their fight for an increased fare, and again by the people and against those in the school system KEPOKT OF JOINT LEGISLATIVE COMMITTEE 83 who objected to the people knowing what is done with the millions they appropriate yearly for education, as well as the many other important cases which are of great interest and importance to the people." On December 9, 1919, President Prall wrote the Mayor as fol- lows (Vol. Ill, p.' 1282) : " My Dear Mr. Mayor : Some time between Friday even- ing, December 5th, and yesterday (Monday) morning, De- cember 8th, certain correspondence in my files, i. e., all the letters received by the President of the Board of Education from the Corporation Counsel, and all the duplicate copies of letters sent to the Corporation Counsel during the period from January, 1919, to date, were surreptitiously removed. " I, therefore, respectfully request that you assign to this case capable men from the detective bureau of the Police De- partment in order that I may apprehend the person or per- sons guilty of this outrage." Mr. Prall testified that he regarded this as an important loss but that the guilty parties were never apprehended. In reply to the question whether there were any matters pending at the time of the theft on which the correspondence had a bearing Mr. Prall stated (Vol. Ill, p. 1285) : " I think the controversy between the Superintendent of Schools and the Commissioner of Accounts was on at that time." On December 20, 1919, the Mayor wrote President Prall a letter in which the following statement is made: " There is no discipline in the educational system under Superintendent Ettinger. Certain principals and certain high officials spend little time performing the duties for which they are paid. Some action should be taken by tha Board of Education to punish insubordination." The person not already familiar with conditions in New York City during the past four years must read this correspondence with amazement. But even the foregoing extracts do not tell the whole story of the antagonism between municipal and educational authorities. The Court of Appeals decided a case on November 22, 1921, that may prove of great significance in the future determination 84 INVESTIGATION OF AFFAIRS OF ,NEW YORK CITY of the relationship between municipal and educational authori- ties, but unless the City and the Board of Education can agree as to the bearing of this decision upon the current business of the public school system there may be frequent recourse to litigation of a similar nature. A certain cure would be the revision of the Education Law as affecting New York City. The decision referred to is printed in the New York Law Journal for Decem- ber 20, 1921, and reads in part as follows: " Section 880 of the Education Law provides that all funds collecHed or received from any source for school purposes shall be paid into the treasury of the city and shall be credited to the board of education ; that such funds shall be disbursed only by authority of the board of education and upon written orders drawn on the city treasurer or other liscal officer of the city, such orders to be signed by the superintendent of schools and the secretary of the board of education or such other officer as the board may authorize. The city treasurer is inhibited from permitting the use of said funds for any purpose other than that for which they are lawfully authorized, or paying out said funds except on audit of the board of education 'and the countersignature of the comptroller. A casual reading of the Education Law leads to the conclusion, so tersely stated in the Gunnison case, that the only relation of the city to the subject of education is as custodian of the school funds and to disburse the same according to the instructions of the board of education. " The language quoted from subdivision 7, ' the board of education shall administer all moneys appropriated or avail- able for educational purposes in the city, subject to the pro- visions of law relating to the audit and payment of salaries and other claims by the department of finance,' must be read in connection with section 880 of the Education Law, which provides that school funds shall be disbursed only by the board of education, and clothes that body with power of audit. " The power vested in the board of education to administer the school fund is a grant of authority to that body to fix salaries of all employees of the board. Such salaries when fixed by the board are presumably embodied in the estimate- filed with the board of estimate and apportionment. Upon receipt of a requisition from the board of education the KEPORT OF JOINT LEGISLATIVE COMMITTEE 85- comptroller is authorized to ascertain whether or not the requisition made upon him embraces charges against the education fund as disclosed in the record in his department relating to the board of education. If such requisition be found correct there remains but one duty on the part of the comptroller, viz, to draw the necessary warrant for the pay- ment of the salaries, etc. He is powerless to exercise a power of audit conferred on the board of education. We cannot ascribe to the Legislature an intention to provide for two several boards of audit. The language used in subdivision 7 was applicable only to the procedure to be adopted by the board of education that in the disbursement of its funds it shall adopt the procedure prevailing in the case of claims against the city, require as it did in the case at bar pre- sentation of the claim, proofs in support of the validity of the same, the extent and value of the labor and material and generally all information obtainable relating thereto before any allowance or audit of the same shall be made. Had relator in the first instance filed its claim with the comp- troller, as is asserted it should have done, and the comptroller audited the same for a stated amount and drawn a warrant for the same on the city treasurer, the latter officer could not pay the same save by a violation of the provision of the Education Law, which prohibits the treasurer from making payment from the school fund except on audit of the board of education." It is regrettable, to say the least, that the possibility for such controversies should exist and that if existing, the issues should IIMVO br-en rrr'sefl. It is equally regrettable that it should have been necessary for the parties to such disputes to have recourse to the courts, to the Regents and to the State Commissioner of Educa- tion, because whichever side was favored in the decisions, the litigation, confusion and consequent irritation must necessarily react on the children whose education is suffering from the dis- agreement between school and city authorities. So far as the wording of the statutes affords an excuse for such conditions the statutes should be amended and the excuse removed. This decision of the Court of Appeals lends judicial sanction to the suggestion that the dual control over school moneys hereto- fore exercised or claimed be ended, by specifically excluding the municipal authorities from any control over school funds. 86 INVESTIGATION OF AFFAIRS OF NEW YORK CITY 4> Failure to Concentrate in Clear and Unmistakable Language Full Responsibility for the Proper Administration of the Public School System Either on the Municipal Authorities, the Board of Education or the State of New York The evidence to support this interpretation is adequately set forth under the two sub-divisions immediately preceding. It is only necessary to add here that if the S+ate is to assume full responsibility for the proper administration of the New York City school system it should enunciate that fact in clear terms and should specifically repeal those sections of the charter and other local laws in conflict with that theory. 5. Limitation of the Powers of the Board of Education This point has been touched upon under sub-division 2 above. The powers of the present Board of Education are demonstrably far inferior to those of its predecessor. It cannot be successfully argued that the powers of a Board of Education should be limited in favor of one of its subordinates, or that if local control is desir- able the Board should be unable to modify or dispense with two powerful agencies nominally subordinate to it, viz., the Board of Superintendents and the Bureau of Compulsory Education. The State Education Law in so far as it applies to the City of New York clearly curtails the power of the Board of Education. It does not seem that the experience of the past four years indicates that this was a wise provision. So long as responsibility and authority are not entrusted to the same hands there is encourage- ment for an evasion of obligation and a shifting of blame for non-performance. And in all cases of this character the ultimate sufferers are the children for whose benefit Boards of Education, Boards of Superintendents and school officers are supposedly created. 6. Great Increase in the Powers of the Superintendent of Schools This matter has also been discussed at length under sub-division 2 above and it will not be further dealt with here. 7. Perpetuation of the Board of Superintendents The Board of Superintendents is a unique institution. It is an inheritance from the time of consolidation (1898) when it was apparently deemed desirable to carry over into the structure of the Greater City local officers of the Boards of Education of New York and Brooklyn. It survived all the amendments to the REPORT OF JOINT LEGISLATIVE COMMITTEE 87 Greater New York charter and was continued in the education law of 1917 as a mandatory institution. But this law while pro- viding a general statute for all cities of the State, established a Board of Superintendents only in the City of New York by the common expedient of creating such a board in "a city having a population of one million or more." It is hard to see why the requirements of a city with a population of over a million should differ so materially from those of a city of under a million. If a proper school administration requires a Board of Superintendents in the one case, why does it not require a Board of Superintend- ents in the other case ? And if a Superintendent and a group of Assistant Superintendents can operate successfully in a city of less than a million, why should it be necessary for a larger city to place its educational administration in the hands of a board of nine persons and to be able to make progress only when a majority of such board can be secured. The opportunity for discussion by a board cannot always be said to accelerate school business. The President of the Board of Education sought to explain the delay of his Board in adopting by-laws by saying that the Board of Superintendents had been considering a draft of by-laws "I guess for a year, perhaps for two years." Examination of the minutes of the Board of Superintendents shows the many discussions and the many references and reports relative to matters which should be settled by prompt executive action. The records show that one of the major contributing factors to the delay which has charac- terized the provision of additional school facilities is the fact that the Board of Superintendents has to originate the program and approve the layout of the new buildings contemplated therein. Much time could be saved in the working out of an educa- tional program, and that the management of the schools would be much more efficient, if the Board of Superintendents were abolished as a board, and if the Superintendent of Schools, with a staff of competent Assistant Superintendents, was made the agent of the Board of Education in the carrying out of educationa] policies. 8. Perpetuation of the Bureau of Compulsory Education, School Census and Child Welfare Reference has already been made to the provision of law, mak- ing mandatory a Bureau of Compulsory Education, School Census and Child Welfare. The State Education Law, passed in 1917, id not single out this bureau for special recognition. It was 88 INVESTIGATION OF AFFAIRS OF .New YOEK CITY left on a parity with the other administrative bureaus of the Board, subject to modification, abolition and consolidation by the Board of Education. Chapter 612, Laws of 1920, however, added a new section to the State Education Law, placing the Bureau of Compulsory Educa- tion ID the mandatory class with the Board of Superintendents and the Board of Examiners. This amendment applied only to the City of New York as it was worded to affect " a city having a population of one million or more." Mandatory legislation of this character affecting only the City of New York, particularly when in the form of amend- ments to general State acts, should not be passed unless there is a compelling reason in its favor. It is hard to believe that any such compelling reason existed in the case of the statute in question. If the enforcement of the compulsory education law, in the City of New York, requires the organization of a Bureau of Compulsory Education, the Board of Education can be relied upon to establish such a bureau, but if the Board of Education prefers to enforce the compulsory education law through some agency other than a specially constituted bureau, it should be permitted to do so. It is the prerogative of the State to enact * //-I 01 of 1791. The people of Clermont asked authorization from the Legislature for the use for school purposes of the surplus of excise moneys not needed for the support of the poor, and this authority was granted by the above-mentioned act. In 1793, 1794 and 1795 the Regents repeated their recom- mendation for the establishment of public schools for the teaching of reading, writing and arithmetic, and the Legislature in 1795 passed a Common School Law (Chapter 75) which appropriated 20,000 annually for five years and required each city and county to raise by tax a sum equal to one-half the amount apportioned to it by the State. These two sums constituted the local school fund. There was no rate bill. This law expired in 1800 and was not renewed. The Legislature of 1801, however, provided for a lottery to raise $100,000, one-half of which was to be used by the Regents and the other half to be used for the support of the com- mon schools as the Legislature might direct. In 1802, 1803 and 1804 the Governor recommended again that the Legislature continue the system of common schools. In 1805 Governor Lewis sent a special message to the Legislature urging the adoption of a liberal policy toward education and recom- mending that 1,500,000 acres of unappropriated land then owned by the State be devoted to educational purposes; the funds real- ized from the sale thereof to be placed under the supervision of the Regents ; the interest to be used for the support of colleges, com- mon schools and " perhaps of academies." This plan, if adopted, would have unified the State's educational system under one head, the Regents. The Legislature, however, included in the new law only that part of the plan relating to a common school fund and set aside only 500,000 acres of unoccupied land for establishing the common school fund. The creation of this fund was, appar- ently, the only result of Governor Lewis' plan to establish a gen- eral system of education. In 1810, and again in 1811, Governor Tompkins urged legis- lative action for popular education, and in the latter year the Legislature appointed a commission to study the subject and report. The report was submitted in 1812 accompanied by a bill which, with modifications, became Chapter 242. This law pro- vided for a Superintendent of Common Schools, for the distribu- tion of the interest of the common school fund; authorized the election of town commissioners and inspectors of schools; re- quired teachers to be examined and licensed by the inspectors: provided for school districts in towns, and required a local tax 102 T-isvKSTKjAtnEOj; 'or AFFAIRS OF NEW YOKE: CITY for school moneys in addition to the fund distributed by the State with the limitation that the offer of State aid must have been accepted at a town meeting, in which case a sum equal to the State apportionment was to be raised by a town tax. The town might also raise an additional sum. These amounts con- stituted the local school fund. There was no rate bill. This act vvas revised and repealed in 1814. By the new act the towns were required to raise by tax an amount at least as great as the amount of the State apportionment, and provision was made for the rate bill which was used to collect money for teachers' salaries in excess of the amount of the local school fund. The rate bill was continued in the revision effected by Chapter 161, Laws of 1819. The office of Superintendent of Common Schools was abolished by Chapter 240, Laws of 1821, and his functions trans- ferred to the office of the Secretary of State. Education under the Second Constitution, 1S22-1SJ+6 The Constitutional Convention of 1821 gave but little atten- tion to the subject of education. The common school fund was protected and was made perpetual. Its foundation was enlarged to include the proceeds of all the State lands not otherwise appro- priated. Except for these provisions, however, the new constitu- tion contained no educational material, but during its life con- siderable legislation on this subject was enacted, much of it hav- ing to do with the training of teachers. By Chapter 133 of the Laws of 1843 the Legislature abolished the offices of Commis- sioner and Inspector of Common Schools and created the office of Town Superintendent of Schools, to be chosen annually by the people. The same law authorized the State Superintendent to issue teachers' certificates .which could be used anywhere in the State and were valid until revoked. This act completed the policy of supervision by Superintendents, including the State Superintendent, Deputy County Superintendents and Town Superintendents. Prior to 1846 several separate free school laws were enacted. But, as a general rule, parents were required to pay a separate and additional tax (rate bill) for the instruction of their children, if the public money was not sufficient to pay teachers' wages. Poor people might, however, be relieved from this additional charge. A resolution was offered in the Assembly of 1846 requesting the Committee on Colleges, Academies and Common Schools to REPOKT or JOINT LEGISLATIVE COMMITTEE 103 report on the expediency of providing free schools in all cities and also in all incorporated villages with a population of 10.000 or more. The Committee reported itself in favor of the idea but advised postponing action until the Constitutional Convention then about to meet could consider the matter. Education under the Third Constitution, 1847-1894 The Constitutional Convention in 1846 considered the matter of free public education and on the day before adjournment adopted two sections to be submitted to the people separately and not as part of the Constitution. One section read: " The Legislature shall provide for the free education and instruction of every child in the state in the common schools now established or which hereafter shall be established therein." The other section related to taxation. These two sections, how- ever, were reconsidered by the Convention later in the same day and the earlier action reversed. The Convention struck out the free school provisions by a vote of 61 to 27. Numerous petitions were submitted to the Legislature of 1849 for a general free school law. The Legislature responded and enacted a law providing that: " Common schools in the several school districts in this state shall be free to all persons residing in the district over five and under twenty-one years of age " and that " free and gratuitous education shall be given to each pupil " in all public schools. A free school law was such a radical departure from the exist- ing policy of the State, however, that the Legislature decided to submit this new law to the electors. It was approved by them at the November, 1849, election by a vote of 249,872 to 91,951 and became effective January 1, 1850. The constitutionality of the law was attacked because of the provision requiring its submis- sion to the people before becoming effective, and in 1853 the Court of Appeals held it to be unconstitutional (8 N. Y. 483). This decision had little practical effect because the law had been repealed in 1851, many complaints having been made of the oppressive tax burden on account of free schools. Chapter 151 of the Laws of 1851 was enacted to provide relief and restored the rate bill. In 1855 Governor Clark recommended that the rate bill be abolished and that schools be made entirely free, but the 104 INVESTIGATION OF AFFAIRS OF NEW YORK CITY revised school law of 1864 (Chapter 555) continued it in force. In 1867 Governor Fenton made a similar recommendation and the Legislature by Chapter 406 did abolish all rate bills, thus making the schools really free. In 1853 (Chapter 433) the Legislature sought to encourage the establishment of schools by providing for the union of two or more districts, or parts of districts, in one school under the imme- diate supervision of a Board of Education. These union free schools, while in their general character common schools, might have an academic department. Thus there was a union of common and academic education in the same school. The academic de- partment was, however, under the general supervision of tlio Regents. In other respects the Board of Education had the "superintendence, management and control of the school." This law did not specifically give the Superintendent of Common Schools any supervision over a union school but laws relating to the powers and duties of trustees of common schools .were made applicable to boards of education. The Superintendent of Public Instruction whose office was cre- ated by Chapter 97 of the Laws of 1854 was practically the suc- cessor of the former Superintendent of Common Schools. He was specifically required to " visit as often as may be practicable such and so many of the common schools, academies and other literary institu- tions of the state as he may deem expedient ; to inquire into the course of instruction, management and discipline of such institutions, and to report the results of such visitation and inspection annually to the Legislature, with such recom- mendations and suggestions as he may deem suitable. 7 ' In 1856 -Governor Clark recommended the abolition of the office of Town Superintendent and the creation of local Boards of Education. He also urged the more thorough supervision of schools, and the Legislature, by Chapter 179 of the Laws of 1856,. created the office of School Commissioner in each assembly dis- trict except in the counties of New York and Kings, to whom was given the general power of visitation, inspection and supervision of common schools in his district. He was also authorized to grant teachers' licenses and to hold teachers' 7 institutes subject to rules prescribed by the state superintendent. The same act abol- ished the office of Town Superintendent of Common Schools. EEPOKT OF JOINT LEGISLATIVE COMMITTEE 105 By Chapter 555 of the Laws of 1864 the general acts relating to public instruction were revised and consolidated. Union schools were made subject to the visitation of the Superintendent of Public Instruction, who was also made responsible for the " general supervision of its board of education and their man- agement and the conduct of all its departments of instruction." The Superintendent was also empowered to remove members of ^ Board of Education. As a result, a double supervision was established for union schools with academic departments, the Superintendent being one of the instruments and the Board of Regents the other. And, similarly, there was a double inspection and distribution of State funds. This duplication of function continued until the unification act of 1904. The Convention of 1867 included a free school provision in its draft of the Constitution. The Commission of 1872 con- sidered but did not adopt propositions relating to compulsory education and free common school instruction. The Legislature of 1876 passed a free school amendment to the Constitution, but it was not agreed to by a subsequent Legislature and was not, therefore, submitted to the people for acceptance. Not until 1894 were effective steps taken toward the inclusion of a free education section in the state constitution. The constitutional convention of that year adopted the section quoted at the begin- ning of this sketch and that section has remained ever since as a part of the state constitution. Summary The foregoing summary of the development of constitutional free public education in New York shows clearly that the pro- cess was not a consistent one. The present system is an outgrowth of a variety of conflicting ideas and tendencies. Most of the progress has been of comparatively recent years. The Dutch Colonists had a lively regard for the value of edu- cation, but it was not free state education. It was church educa- tion sanctioned and encouraged by the state. The English Colonists had no conception of free public education. There were no public schools at the end of the colonial period. The general policy was to leave education to individual effort. The govern- ment felt itself absolved from responsibility. If the people desired schools they could have them by paying for them. The church would license proper teachers and the schools could be supported by private contributions. 106 INVESTIGATION OF AFFAIRS OF NEW YORK CITY This was me educational inheritance of the new State. The first education law passed by the new state government had to do with the establishment of a state university. There was no recognition of any need for state common schools. The evi- dent purpose of the first University Law was to establish a private educational institution and not to institute a comprehensive sys- tem of public education. The differentiation between the two ideas is shown by the fact that when the Legislature passed the first Common School Law (1795) the Regents of the state uni- versity were not made the instrumentality for administering the new law. The university had to do with private educational institutions while the state government was then about to try an experiment in public education. The Legislature, accordingly, left the university at one side and used means with which they were familiar, namely, the township governments. Township government was a colonial inheritance and was recognized and perpetuated by the first constitution of the State, which guar- anteed to the people of the town the right to elect their own officers. The towns themselves had an organized government and it was natural that the State should resort to these local governments for the machinery to carry out the new plan. It is also probable that the New England township school policy had an influence in shaping the New York statute. Massachusetts in 1789, six years before the New York law, had enacted a common school law by which each town was directed to maintain public schools. There was no central administration at all, the whole subject, including taxation, being committed to the people of the town, who might subdivide the town into school districts. The New York law was constructed on this model. The town was made the basis of school administration and taxation, and local officers were made responsible for the enforcement of the law. The New York statute was strikingly different in one respect, how- ever, in that the state contributed funds from its treasury for the support of local schools, while in Massachusetts the schools were maintained wholly at local expense. In neither State was there any central state supervision. A speech by Governor Clinton in 1802 indicates that the first Common School Law was a failure. The revival of the common school plan in 1812 included the idea of local supervision but added the element of state supervision by a Superintendent of Common Schools. The duties of this office were transferred to the REPORT OF JOINT LEGISLATIVE COMMITTEE 107 Secretary of State in 1821, who administered them until 1854 when the office of State Superintendent of Public Instruction was created. Since 1812 the State has maintained an unbroken policy of supervising public schools through one state officer or another. The growth of educational policy in the state of New York was rapid in the latter part of the nineteenth century. The State increasingly assumed responsibility for the education of its citizens. Years before the adoption of the educational section of the Constitution of 1894 the Legislature was exercising its rights with respect to public education, and this gradual develop- ment of the idea of state control over this matter became crystal- ized in the fundamental law of the state as Article IX of the Constitution of 1894. THE EVOLUTION OF PUBLIC EDUCATION IN THE PRESENT CITY OF NEW YORK Up to 1898 when the Greater New York Charter (Chapter 378 of the Laws of 1897) became effective, the history of education in what is now the City of New York w.as the history of the several independent communities which, by consolidation at that time, or by earlier consolidation with the constituent munici- palities, became the Greater City. Before treating of the devel- opment subsequent to 1898, therefore, there will be outlined the growth of a public educational system in the former City of New York, in the City of Brooklyn and very briefly in what are now the other two boroughs. These sketches should afford a suffi- ciently clear picture of the experimental and inconsistent char- acter of the legislative and other provisions through which the present city's educational system was developed. The earliest history of education in the territory now con- tained within the City of New York is little different from the general history of the State. Up to the Revolutionary War and for some years thereafter there is nothing of great significance to differentiate the treatment accorded to schools in the City from that accorded to schools outside the City. But early in the nine- teenth century the individual school history of the City began, and it is at that time that the following outline commences. The Former Ciiy of New York In 1805 there was a new and strictly local development in educational policy in the shape of the formation of a society incorporated by the Legislature under an act entitled " To Incor- 108 INVESTIGATION OF AFFAIRS OF NEW YORK CITY porate the Society Instituted in the City of New York for the Establishment of a Free School for the Education of Poor Chil- dren who do not Belong to or Are not Provided for by any Eeligious Society. 77 The school opened by this Society in 1806 with funds pro- vided by private subscription marked the beginning of what in later years became the public school system of the City. It scon became evident that this first school must be followed by others, and in 1807 the Society obtained an appropriation from the Legislature and also assistance from the municipal authorities to enable it to furnish additional educational facilities. These early schools were, however, of a strictly eleemosynary character. In 1808 the Society's name was changed by the Legislature to " The Free School Society of New York " and its powers were extended to cover "all children who are the proper objects of a gratuitous education." The first apportionment of the State common school fund established in 1805 was made in 1815 and the Free School Society then received $3,708.14 as its share of the amount paid to the City and County of New York. Under the Act of 1813 permitting the city to participate in the common school fund, the City's portion was paid to the Free School Society, the Orphan Asylum Society, the Society of the Economical School in the City of New York, the African. Free School and to such "incorporated religious societies in said City as now support or hereafter shall establish charity schools within the said City who may apply for the same." The State funds thus apportioned were dedicated solely to the payment of teachers' salaries. In 1817, however, the Free School Society, finding that the Lancasterian system was so economical that the State moneys were more than enough for teachers' salaries, secured permission from the Legislature to apply the surplus to the erection of build- ings or any other needful purpose. In 1822 the Bethel Baptist Church, which participated in the common school fund under the law of 1813, secured a similar dispensation from the Legislature. Considerable alarm was felt by the Free School Society and by the other church schools lest this lead to a perversion of State school funds to sectarian rather than to school purposes. Repeated attempts were made to have the Legislature repeal the exemption made in favor of the Bethel Baptist Church, but without success. The scene of the controversy was moved from Albany to New York by the passage of a law in 1824 placing the distribution REPORT OF JOINT LEGISLATIVE COMMITTEE 109 of the school fund for ^ew York City in the hands of the Com- mon Council. In 1825 the Common Council passed an ordinance excluding all religious societies from participation in the income from the common school fund, leaving only the Free School Society, the Mechanics' Society, the Orphan Asylum Society and the African Free Schools as beneficiaries. The Free School Society was eager to extend the field of its operations and in 1824 suggested that its schools which had suffered from the stigma that they were charity schools should also receive as pupils children of parents able and willing to pay small sums for instruction. In 1826 the Legislature granted a new charter whereby the Society's name was changed to " The Public School Society of Xew York/ 7 whereby the Society was permitted to charge a moderate fee for instruction, provided that no child be denied the benefits of education because unable to pay (this pay system proved unsuccessful and was abolished in 1832), and whereby the Society was authorized "to convey their school edifices and other real estate to the Mayor, Aldermen and Commonalty of the City of New York, upon such terms and conditions and in such forms as shall be agreed upon between the parties, taking back from the said corporation a perpetual lease thereof upon condition that the same shall be exclusively and perpetually applied to the purposes of education." The Society was not satisfied with the adequacy of the system of schools existing in 1828. It estimated that 12,000 children between five and twelve years of age were entirely without means of instruction and it stated that the principle which had led to the recent change from free schools to public schools should be extended so that schools " should be supported from public reve- nue, should be public property, and should be open to all, not as a charity but as a matter of common right. " The specific recom- mendation was then made that a tax be levied of half a mill upon the dollar of assessed city property, and a vigorous effort was made to arouse public sentiment in favor of this tax measure, the result being the enactment by the Legislature in 1829 of a tax law levying a local tax of one-eightieth of one per cent. A controversy as to the application of public school moneys to the support of schools under the control of religious societies com- menced in 1840 and had far-reaching consequences. The Roman Catholic churches which maintained free schools requested from 110 INVESTIGATION OF AFFAIRS OF NEW YORK CITY the Common Council a share of the school moneys. Similar requests were made by a Hebrew congregation and by the Scotch Presbyterian church. They were all strenuously opposed by the Public School Society and were denied by the Board of Assistant Aldermen. The Catholics then petitioned the Board of Alder- men, which after a public hearing on the matter, denied the request. The Legislature was the next point of attack and lengthy mem- orials were submitted by the proponents and opponents of the plan. All of these documents were referred to John C. Spencer, the Secretary of State and ex-officio state Superintendent of Com- mon Schools. Mr. Spencer studied the entire problem and then outlined a plan of education in New York City providing for the election of a Commissioner of Common Schools in each ward ; for the extension of the general school laws of the State to the City, with certain modifications; for the transfer to the elected Com- missioners of " the schools of the Public School Society and the schools of the other associations and asylums now receiving the public money as schools under their general jurisdiction, leaving the immediate government and management of them to their respective trustees and directors" ; for the establishment, by the Commissioners, of schools in other parts of the city as district schools, and for the payment of the public school money by the Chamberlain directly to the Commissioners. The Legislature post- poned action until January, 1842, and the school question became an important issue in the city campaign. In his annual message for 1842 Governor Seward gave con- siderable space to the school problem in New York City, saying among other things: "Happily in this, as in other instances, the evil is dis- covered to have had its origin no deeper than in a departure from the equality of general laws. In our general system of common schools, trustees chosen by tax-paying citizens, levy taxes, build school-houses, employ and pay teachers, and govern schools which are subject to visitation by similarly elected inspectors, who certify the qualifications of teachers and all schools thus constituted participate in just propor- tion in the public moneys, which are conveyed to them by commissioners also elected by the people. ... In the public school system of the city, one hundred persons are trustees and inspectors, and, by continued consent of the REPORT OF JOINT LEGISLATIVE COMMITTEE 111 Common Council, are the dispensers of an annual average sum of $35,000, received from the Common School Fund of the State, and also of a sum equal to $95,000, derived from an undiscriminating tax upon the real and personal estates of the City They build school-houses, chiefly with public funds and appoint and remove teachers, fix their compensa- tion, and prescribe the moral, intellectual, and religious instruction which one-eighth of the rising generation of the State shall be required to receive. Their powers, more effec- tive and far-reaching than are exercised by the municipality of the City, are net derived from the community whose chil- dren are educated and whose property is taxed, nor even from the State, which is so great an almoner, and whose welfare is so deeply concerned, but from an incorporated and perpetual association, which grants, upon pecuniary subscription, the privileges even of life membership, and yet holds in fee simple the public-school edifices, valued at eight hundred thousand dollars. Lest there might be too much responsibility, even to the association, that body can elect only one-half of the trustees, and those thus selected appoint their fifty associates. The philanthropy and patrio- tism of the present managers of the public schools, and their efficiency in imparting instruction, are cheerfully and grate- fully admitted. 'Nor is it necessary to maintain that agents thus selected will become unfaithful, or that a system that so jealously excludes popular interference must necessarily be unequal in its operation. It is only insisted that the insti- tution, after a fair and sufficient trial, has failed to gain that broad confidence reposed in the general system of the State, and indispensable to every scheme of universal edu- cation. ... I submit, therefore, with entire willingness to approve whatever adequate remedy you may propose, the expediency of restoring to the people of the City of "New York what I am sure the people of no other part of the State would, upon any consideration, relinquish the education of their children. For this purpose, it is only necessary to vest the control of the common schools in a board to be composed of commissioners elected by the people; which board shall apportion the school moneys among all the schools, including those now existing, which shall be organized and conducted in conformity to its general regulations and the laws of the State, in the proportion of the number of pupils instructed. 112 INVESTIGATION OF AFFAIRS OF NEW YoEK ClTY It is not left doubtful that the restoration, to the common schools of the City, of this simple and equal feature of the common schools of the State, would remove every com- plaint, . . ." By chapter 150, Laws of 1842, entitled "An act to extend to the City and county of New York the provisions of the general act in relation to common schools " the Legislature established the tirst Board of Education for the City. The statute provided that there should be elected in each ward at special elections held in June,, two Commissioners of Common Schools, two Inspectors of Com- mon Schools and five Trustees of Common Schools. The Com- missioners were to constitute a Board of Education. The Board had very little power, however. Its importance can be measured by the fact that the law required it to meet at least once in three months. The real authority was vested in the ward officers. Under the statute each ward was to be considered as a town for the pur- poses of school administration; the ward trustees initiated new school projects and these projects, if approved by the respective inspectors and commissioners, became binding on the city. The supervisors cf the city and county were required to raise annually by tax a sum equal to the amount of the State apportionment of school moneys, plus a special tax of one-twentieth of one per cent of the total assessed valuation, plus such further amount as was necessary. The Board of Education distributed the school moneys among the wards on the basis of average attendance, and the ward officers had charge of the expenditure of the funds. The schools of the Public School Society and those of other incorpo- rated societies were continued under the management of their respective trustees. It was further provided that no school should receive any portion of the school moneys in which " any religious sectarian doctrine or tenet shall be taught, inculcated or practiced." This act proved unsatisfactory and was, therefore, amended in 1843 and 1844. By chapter 320, Laws of 1844, passed May 7, 1844, the same school officers were provided for as in the first act, but with a transfer of powers from the ward officers to th& central Board of Education. New school projects deemed desir- able by the ward officers had to be submitted to the Board of Education for approval before they became effective, with the- provision that appeals from the Beard's decision could be made to the State Superintendent of Common Schools whoee dsterm ina- tion was binding for one year. A form of local mprrnricn. HEPORT OF JOINT LEGISLATIVE COMMITTEE also established under this act in that it authorized the Board of Supervisors to appoint a County Superintendent of Common Schools for a two-year term. The compensation of this officer was fixed at $2.00 a day and necessary expenses. The schools established under the Acts of 1842, 1843 and 1844 were desig- nated as ward schools. But the double system of schools and of public and private school control was not a happy one. There was friction between the Board of Education and the Public School Society and in 1846 the Board questioned the Society's right to erect new school- houses. A hearing was held and the Board decided that since the Act of 1844 the Society had had no such right. The Society appealed to the Legislature which in 1848 passed a law legalizing those schools which the Society had established since May 7, 1844, but providing that it should establish no others without the consent of the Board of Education. In 1851 the Legislature passed an act (Chapter 386) "to amend, consolidate and reduce to one act the various acts relative to the common schools of the City of New York." By this act the powers of the Board of Education were materially enlarged; school funds were deposited in the city treasury and withdrawn by the Board as a whole instead of being handled by the separate commissioners. The Board was given authority to make rules and regulations to secure economy and accountability and was authorized to appoint a City Superintendent of Schools, Assistant Superintendents and a Superintendent of School Buildings. For the past ten years there had been a County Superintendent of Schools elected by .the Board of Supervisors, but he was not directly amenable to the Board of Education. The City Superin- tendent was now empowered to visit schools, inquire into all mat- ters pertaining to the administration thereof and to advise with the trustees. The same school officers were continued but their terms of office were adjusted to a change made by an earlier statute, whereby the special June elections were abolished and provision made for the election of school officers at the general elections. The school system was really established on a pretty independent basis by this law. One very significant provision required the City to raise annually by tax not only the equivalent of the State apportionment as prescribed by the general State law, and not only one-twentieth of one percent on the assessed valuations as prescribed by another special statute, but also " such 114 INVESTIGATION" OF AFFAIRS OF NEW YOEK ClTY additional sums as the Board of Education * * * shall have reported to be necessary. 77 In 1853 the Legislature ended the dual control of the City's public schools by joining the schools of the Public School Society and those of the Board of Education and providing for the trans- fer to the City of all the property of the Public School Society. TEe same law provided for the appointment by the Society from among its trustees of fifteen commissioners of common schools to hold office until January 1, 1855, and also for three trustees of common schools "for each ward of said City in which one or more of the schools of said Society ,are now established 77 to serve until the first of January, 1855, 1856 and 1857, respectively, and for the merging of its schools into the system of common schools established by law. In 1853, therefore, the Board of Education consisted of 59 members, two commissioners from each of the 22 wards and the 15 representatives of the Public School Society. The latter remained in office until January 1, 1855, when the number of commissioners again became 44. The law also limited to $4.00 per pupil the amount which the Board of Education could require annually from the City in addition to the equivalent of the State apportionment and to the yield of the special tax of one-twentieth of one per cent. Nine years later, in 1864, an act was passed establishing seven school districts in the City of New York and reducing the Board of Education from 44 members elected by wards to 21 members elected by districts, each district to elect one commissioner of common schools each year. The new law also reduced the num- ber of trustees electe'd in each ward from eight to five, provided for three inspectors in each of the seven districts to be named by the Mayer subject to confirmation by the Board of Education. The power of appointing teachers and janitors was retained by the trustees, but nominations of principals and vice-principals made by the trustees were subject to approval by the Board of Education, and the Board was also given authority in the matter of the removal of teachers. A measure was introduced in the Legislature of 1867 which, although it failed of passage, deserves mention at the present juncture. It provided for the abolition of the Board of Educa- tion, the trustees and the inspectors and created a commission of seven, termed the Metropolitan Board of Instruction, and appointed by the Governor and the Senate. This was to be a paid board and its members were to hold office for eight years. REPORT OF JOINT LEGISLATIVE COMMITTEE 115 In 1869 the Legislature passed an act providing for a Board of Education of twelve members who were to be appointed by the mayor and to serve until December 31, 1871. It was further provided that at the general election of 1871 twelve Commis- sioners of Common Schools should be voted for on a general ticket, recognition being given to the principle of minority representa- tion. This law was repealed in 1870, so that the election pro- vided for was never held. The Act of 1870 "to reorganize the local government of the City of New York " was amended in 1871 by Chapter 574, which created a Department of Public Instruction as one of the depart- ments of the city government, and turned over to it all the powers and duties of the Board of Education. The existing Board was legislated out of office and provision made for the appointment by the Mayor of twelve commissioners for terms of five years, recognition being given to the principle of minority representa- tion. The Mayor was also authorized to appoint the school trus- tees and inspectors. This law did away with the machinery of ward and district representation and created a centralized school system under the Mayor. But this new arrangement did not last. By Chapter 112 of the Laws of 1873 the seven school districts set up by the law of 1864 were re-established, and provision was made for the appoint- ment by the Mayor of a Board of Education consisting of twenty- one Commissioners of Common Schools whose terms were for three years. This Board was empowered to appoint five trustees for each ward for five year terms and the Mayor was authorized to appoint twenty-one inspectors, three from each district. This sys- tem remained substantially unchanged until 1896. Its advan- tages were said to be the removal of the schools from political supervision, the provision of moderate local control by the trus- tees, and the establishment of centralized supervision and final control by the Board of Education without placing a danger- ously great authority in the hands of the central Board. The next important modification of the administrative machin- ery of the school system was the abolition by Chapter 387 of the Laws of 1896 of the ward trustees. These officers had persisted since 1842 and had exercised many important powers. For many years they were elected and, under the short-lived act of 1871, they were appointed by the mayor. After 1873 they were appointed by the Board of Education. The trustees were often 116 INVESTIGATION OF AFFAIRS OF NEW YORK CITY attacked by persons interested in the welfare of the schools. It was claimed that some of them were illiterate; that they were appointed for political purposes ; that they considered the appoint- ment of teachers as legitimate patronage and that they showed favoritism in promotion and in the selection of contractors. A telling argument against the ward trustee system was that it was absurd to use the ward as a basis of selection, as some wards had very few schools while other wards had many. In 1888, in the second ward, for example, there was only one school with but two teachers, while in the twelfth ward there were 499 teachers. The result of this agitation was the passage of a law by the Legislature (Chapter 532, Laws of 1893) providing that the Mayor should appoint a commission to report to the Legislature a comprehensive revision of the laws affecting common schools and public education in the City. This commission reported in 1894 and recommended abolishing the inspectors and depriving the trustees of all powers except those of visiting schools and reporting on their condition. Some of the trustees' powers were given to the Board of Education and others were conferred on a Board of Superintendents, to consist of the City Superintendent and twenty Division Superintendents. This Board was given large powers. Provision was also made for a Superintendent of School Buildings and Supplies. The proposed law failed of pas- sage at the 1894 session. It was reintroduced in 1895 with some amendments, but failed again. Chapter 387 of the Laws of 1896 abolished the trustees and gave the Mayor power to appoint five inspectors in each district whose duty was to visit schools. The statute also created a Board of Superintendents, consisting of the City Superintendent and as many Assistant Superintendents as the Board of Education might deem necessary. The professional control of the schools was lodged almost entirely in the new Board of Superintendents, only a veto power being given to the Board of Education, whose composition remained unchanged. Brooklyn In Brooklyn there was no " Public School Society." The schools that were established and maintained there, after the recognition by the State that education was a matter of public concern, were administered by local authorities subject to the general State laws. REPORT OF JOIXT LEGISLATIVE COMMITTEE 117 As mentioned above, the State established the common school fund in 1805. The first distribution was made in 1815, and in 1816 a local tax of $2,000 was levied and a common school opened in the village of Brooklyn. Several other schools were established prior to the incorporation of the City of Brooklyn in 1834 and the creation of a Board of Education in 1843. But prior to 1843 all the schools were organized as special district schools. It is true that in 1835 a law was passed (Chapter 129) authorizing the Common Council to appoint three trustees of com- mon schools in each district, and for the whole City three inspec- tors and three commissioners, but the district organization was still paramount. The statute of 1843, creating a Board of Education, provided that the members of the Common Council should be Commissioners of Common Schools in and for the City, and that on the first Mon- day in April, 1843, they should appoint two or more persons to represent each of the school districts as members of the Board of Education. The full term of office was fixed at three years and the Mayor and Deputy County Superintendent of Common Schools were made members ex-officio. The new Board was organized with only twenty-eight appointed members, as in two districts the full number of appointments was not made. The Board was authorized in 1848 to appoint a City Superintendent of Common Schools, the office of County Superintendent having been abolished by statute in 1847. By Chapter 143 of the Laws of 1850 the Board of Education was made to consist of thirty-three members appointed by the Common Council. The law provided that at least one member should reside in each district. The term of office continued to be three years. The law of 1854 annexing the City of Williams- burg and the town of Bushwick to Brooklyn required the Com- mon Council to appoint additional members of the Board of Education for the new part of the City, and that body fixed the membership at forty-five, of whom thirteen were to be residents of the new territory. This number remained unchanged through- out the rest of the Board's existence. In -1862 the Mayor was given authority to nominate members of the Board of Education, subject to confirmation by the Common Council. In 1873 the charter was amended by providing that there should be a Department of Public Instruction in Brooklyn under the con- trol of the Board of Education ; that the City Superintendent of 118 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Schools should be called the Superintendent of Public Instruc- tion; that his term should be increased from one to three years and that the Board of Education might appoint two Associate Superintendents for three-year terms. The amended charter which was passed May 25, 1880, pro- vided that any vacancy in the Board of Education occurring dur- ing the remainder of 1880 should be filled by the Mayor and Comptroller (an act passed June 16, 1880, provided that in case the Mayor and Comptroller failed to agree, the Auditor of the City should become one of the appointing powers), and any vacancy during 1881 should be filled by the Mayor alone. After January 1, 1882, the sole power of appointment was with the Mayor. Some confusion resulted in 1886 from the fact that the amended charter fixed two-year terms for the heads of all city departments without specifically mentioning the Board of Educa- tion whose members had been serving three-year terms. In 1882 Mayor Low acted on the assumption that the Legislature had not intended to change the term of office of Board members and made regular three-year appointments. His successor, in 1886, took the other view, declared vacancies and made appointments on the two-year theory and doubt was cast on the legality of some of the Board's acts. In 1887 the Legislature settled the matter by spe- cifically extending the terms of the 1885 and 1886 appointees and establishing the three-year term. One unique feature of the Brooklyn public school system can- not be left untouched upon. The by-laws of the Board of Educa- tion of 1843 provided for district committees consisting cf the Board members for each district. The schools of the district were especially committed to these committees. This scheme lasted but a short time, being followed by the local school committee, pro- vided for by an amendment to the by-laws made soon after the reorganization necessitated by the statute of 1850. These local school committees consisted of three members for each school . In the course of time these committees acquired large powers in the appointment and promotion of teachers, in the making of repairs, etc., until they were practically supreme in their respective schools. This system was continued until the abclition of the Brooklyn school board in 1902 and was even then carried over as Section 1103 of the first Greater "New York charter. The abuses of the local committee system, particularly with respect to the appoint- ment and promotion of teachers, were repeatedly the subject of criticism. REPOBT OF JOINT LEGISLATIVE COMMITTEE 119 Queens and Richmond. The Borough of Queens is composed of several formerly inde- pendent communities, such as JTewtown, Flushing and Jamaica. The early history of education is the history of these separate towns. The towns became school districts under the general State law, the subdivision in Newtown taking place in 1814, and schools were established from time to time. In 1870 a portion of New- town was incorporated as Long Island City and the schools were placed under the city government in charge of a Board of Educa- tion of five members appointed by the Mayor. The village of Flushing was incorporated in 1837. In 1848 it was provided with a Board of Education of five members elected by the people. In neither Queens nor Richmond, however, was there any central organization in charge of the public schools. There were numerous school districts and district officers, but not until the incorporation of these two boroughs into the Greater City was there anything that resembled centralized local school authority. FOURTH REPORT REPORT ON THE FINANCES OF THE CITY OF NEW YORK March, 1922 [121] REPORT OF THE FINANCES OF THE CITY OF NEW YORK, MARCH, 1922 To the Legislature and to the Charter Revision Commission: The city lias run in debt approximately a hundred thousand dollars a day since the greater city was incorporated. The funded debt has fluctuated around the constitutional debt limit for ten years. The tax rate has risen until it has reached, if not passed, the constitutional tax limit. All other means of raising funds to meet the ever rising tide of expenditures having been exhausted, resort has been had to various devices, including doubtful in- terpretations of constitutional limitations not contemplated at their enactment, to statutory relief unsound in principle if not unconstitutional like the general fund bond legislation, to increas- ing and making permanent the floating debt which in the eye of the law was intended to be small and temporary, and to the use for current expenses of the income of public utilities allocated in law and equitably applicable to the payment of the principal and interest of bonded indebtedness incurred in the construction of such utilities. These devices proving inadequate, the power of assessment has been resorted to by the city administration, which controls the department of taxes and assessments, until the assessment has reached approximately 94 per cent of the actual value, a rate much higher than the rest of the State. Like the other devices pursued, this is nearly exhausted. The net debt of the city as of December 31, 1921, was $1,224,- 475,347.51, of which $1^110,795,697.51 was funded and $113,- 679.050 floating debt represented by revenue bonds, special revenue bonds and tax notes. The total net debt as of Decem- ber 31, 1911, was $809,353,129.29, of which $756,711,343.05 was funded and $52,641,786.24 floating debt. The present debt amounts to $217.64 per capita of the population. Exhibit "A," hereto attached, is a statement of the net funded debt since 1898. The budget for 1921 was $345,530,039.77 and for 1911, $173.967,835.16. The budget for 1921 is made up of: Cost of administration $217,960,329 20 Debt service 105,528,527 30 State taxes 22,041,183 27 [123] 124 INVESTIGATION OF AFFAIRS OF NEW YORK CITY The budget for 1911 was made up of: Cost of administration $123,306,013 IT Debt service 50,661,821 99 State taxes . None. Tables showing the budgets, cost of administration, debt service, State taxes and tax levies since 1898 are hereto attached marked respectively Exhibits " B " and " C." The difference between budget and levy for the same year arises from the annual revenue from income paying properties like the docks, ferries, water system, and taxes received from the State, constituting the general fund. These receipts amounted to $63,216,718.87 in 1921, and to $32,154,342.95 in 1911. The assessment for real property in 1921 was $9,972,985,104, personal $213,422,175, a total of $10,186,207,279. The assess- ment for real property in 1911 was $7,858,840,164, personal $357,923,123, a total of $8,216,763,287. While the cost of government in this period has increased 81 per cent, the assess- ment has increased only 24 per cent. A table showing the assess- ments since 1898 is hereto attached, marked Exhibit U D." The real estate tax rate for 1921 (Manhattan) was 2.77 and for 1911, 1.72248, for Brooklyn, 1921, 2.80, and 1911, 1.75502. For other years see World Almanac, 1922, page 557. A table showing the per capita cost of government during suc- cessive city administrations is hereto annexed and marked Exhibit "E." ABUSES IN FINANCIAL MANAGEMENT Floating or Short Term- Debt. The average monthly balances for the first half of the year 1921 shows the short term or floating debt of the city as follows : Kevenue bonds $103,549,833 33 Special revenue bonds 27,150.066 67 Tax notes 4,628,902 53 Corporate stock notes 109,584,442 73 $244,913,245 26 After deducting from this debt such of these securities as are held in the sinking funds, there was an outstanding average REPORT OF JOINT LEGISLATIVE COMMITTEE 125 balance of $201,191,900. Carrying this debt as a floating debt is the source of great loss to the city. Revenue bonds are issued in anticipation of the payment of taxes during the year in which they are issued, and to be paid out of such taxes. -Special revenue bonds are issued in anticipation of an appropriation in the budget of the year following their issue. Tax notes are issued to pay for public improvements to be redeemed by taxes in the tax levy or levies of the year or years next following the adoption of the budget or budgets in which the expenditure is authorized. Corporate stock notes are issued in anticipation of the sale of bonds, with the proceeds of which they are to be paid, and are part of the funded debt. (a) Revenue Bonds The taxes in each calendar year are allocated to the year in which they are levied. Such taxes are payable in the months of May and November. The city borrows money for its expenses from January first until taxes are paid in May by issuing revenue bonds, payable out of the year's taxes. As the city re- quires more each year for expenses than taxes levied, and there are delinquent taxes not paid during the year in which they are levied, payment of the bonds is delayed. They are in fact, though not in form, renewed from time to time to carry back taxes. The total arrears of taxes for the year 1921 was $56,854,- 113.14, and the whole amount of back taxes as of December 31, 1921, was $113,142,538.63. A statement of back taxes is hereto attached, marked Exhibit " F." The revenue bonds outstanding December 31, 1921, amounted to $78,077,000. These were increased by new issues commencing January 1st to meet the cost of administration until taxes are paid in May. A statement of revenue bonds outstanding to June, 1921, will be found in Exhibit "G," hereto attached. (&) Special Revenue Bonds In 1909 the Constitution was amended to permit the city of New York to issue "bonds to be redeemed out of the tax levy for the year next succeeding the year of their issue, provided that the amount of such bonds which may be issued in any one year in excess of the limitations herein contained shall not exceed one- tenth of one per centum of the assessed valuation." It was un- doubtedly anticipated at the time this provision was adopted that 126 INVESTIGATION OF AFFAIRS OF NEW YORK CITY the limitation of one-tenth of one per centum would be an abso- lute limitation, but an examination of the context makes it doubt- ful whether this limitation takes effect before the city reaches or passes the debt limit. Special revenue bonds have been issued in much larger amounts than one-tenth of one per ecnt, and the practice has been sanctioned by legislative enactment. The amount outstanding December 31, 1921, was $30,602,650, or more than three times the amount named in the constitution. A state- ment of such bonds outstanding since 1917 is contained in Exhibit "G." 'Special revenue bonds are intended to meet contingencies not anticipated when the budget is made up, but have been issued for any and everything as a means of increasing revenue for the cur- rent year, to be paid out of taxes of the following year. In 1920 the city having all but reached the tax limit, authorized special revenue bonds, to the amount of $37,735,181.35, to meet expenses. A statement of such authorizations is contained in Exhibit " H," hereto attached. The multiplicity of the authorizations forbids a full statement in detail, but as illustrative of the multitude of abuses under this provision, the following items are given from these authorizations: "A tablet to the donor of Hero Park $450." " Coal for municipal ferries, $244,472.50." " Premiums on bonds of municipal officers, $12,560.98." (c) Tax Notes Tax notes now constitute a minor item of the floating debt. Five millions are outstanding. The volume of business transacted by the city in carrying $135,000,000 of revenue bonds, special revenue bonds and tax notes is by no means represented by the amount outstanding at any date. These securities, like the corporate stock notes, exceeding in amount one hundred million dollars, are issued and reissued at short periods, after the fashion of commercial paper. The total issue for 1921, including renewals or new issues to take up old issues, are for: Revenue bonds $369,000.083 Special revenue bonds 30,602.650 Tax notes . 5,000,000 $404,603.633 REPORT OF JOINT LEGISLATIVE COMMITTEE 127 The issue and reissue of corporate stock notes amounted to $230,185,500. Such a course of municipal business is carried on at great cost, owing to the high rate of interest on short term paper and the expense incident to so many transactions. The city is always an applicant at the banks for millions of dollars on short loans. As the debt is never redeemed, but met by the issue of new paper, " temporary " is a misnomer. It is as " permanent " as any part of the debt, but not a limitation to incurring further debt. While the corporate stock notes are less subject to criticism because issued as a part of the funded debt with a view to con- verting them into bonds, they swell the floating debt and add to its perils. The legislative committee of 1915, investigating the finances of the City of New York, reported (1916) in relation to this feature of its finances: " Great embarrassment and loss in the City's finances have arisen from the custom of keeping a large amount of short time commercial paper on the market. In August, 1914, the City had outstanding of such paper $25,000,000 in cor- porate stock notes, issued in anticipation of bond issues, and $73,000,000 of short time paper chargeable to current revenues issued in anticipation of taxes. Of this paper $77,000,000 was held in Europe. The crisis resulting from the war compelled the City to borrow of the New York banks $100,000,000 to meet this paper and current expenses and to charge off a loss of more than $4,000,000 in expenses, commissions and interest. The City was caught in the same way in 1907 and the City administration in each case regarded itself as fortunate in escaping a worse predicament from a default on the City's commercial paper. " The issuing of short-term paper in anticipation of taxes is unavoidable under the present system of collecting taxes for each calendar (fiscal) year in May and November. The City always spends borrowed money for its current expenses. Such issues could be avoided if taxes were collected in Jan- uary and July. The Committee favors making this change. To avoid the shock that would otherwise be felt by real estate, it should be provided that taxpayers may in 1917 have until April 30, instead of May 31, in which to pay taxes, and a sliding scale adopted for three years, so that January 31 128 INVESTIGATION OF AFFAIRS OF NEW YOEK CITY and July 31 will be the last days for the payment of taxes in 1920. '' The annual interest charge for these loans has averaged three and a half million dollars. The total amount paid in the last ten years is $o(j,470,837, or substantially $5,000,000 more than the City has paid during the same period in direct State taxes. To this amount, lost to the City through a system of discounting substantially all of the taxes before they reach the City treasury, must be added the $4,000,000 lost on the hundred million loan in 1914, and upwards of $1,000,000 lost in 1907." The conditions condemned in this passage of the report of 1916 without a single dissent, involving an annual loss of three and a half million dollars have continued until the loss is now five and a half million dollars. The city comptroller testified that the city is thrown into the short term money market for $142,000,000 twice a year by reason of the failure to advance the tax date, and that it is safe to take as a round figure $150,000,000 for short-term loans on this account. A bill to advance the tax dates from May and November to January and July was passed by the Legislature in 1916, but vetoed by the mayor because of a technical defect, with a state- ment of approval of the principle of the bill, and in expectation that it would become a law in 1917. War conditions prevented the enactment of the law, which should not now be further deferred. The comptroller sought this legislative relief in 1921, and testified that he informed the Legislature, " that the respon- sibility for a financial crisis would be upon them if they did not pass the tax date bill, because the failure to pass that bill results in outstanding obligations at a sum far in excess of what the money market is in condition to stand in normal times." Sinking Funds. There are eight sinking funds, of which five were inherited from municipalities incorporated in the present city, and relate only to indebtedness which they were created to protect. These sinking funds are as follows: Sinking fund for the payment of interest on the (old) city debt. Sinking fund for the redemption of the (old) city debt No. 1. Sinking fund of the City of Brooklyn. Water sinking fund of the City of Brooklyn. REPORT OF JOINT LEGISLATIVE COMMITTEE 129 Sinking fund of Long Island City for the redemption of fire Jbonds. Sinking funds have been established and maintained by the present city as follows : Sinking fund of the City of New York. Rapid Transit sinking fund of the City of .New York. Water sinking fund of the City of New York. The total amount reported as held by these funds on Decem- ber 31, 1921, was $603,590,922. The transactions of the funds, which are substantially duplicated each year, will be referred to the year preceding this inquiry, 1920. Substantially all of the holdings of the sinking funds consist of obligations of the city. As principal and interest fall due, it is paid into the funds and they are increased from year to year. They are also increased from year to year by the amount paid in for amortization. Assets of the sinking funds are always deducted in .statements of the city debt. The sinking funds of the old municipalities stand in marked contrast to the sinking funds of the present city. They were secured by pledging revenues to debts incurred. These revenues have not only proved adequate, but have produced large surpluses which inure to the benefit of the present city. The sinking fund for the payment of the interest on the (old) city debt is chargeable $476,372.08 annually for interest on out- standing bonds while its cash receipts from interest on its invest- ments, Croton water rents, ferries and other pledged revenues, is approximately $14,000,000. The sinking fund for the pay- ment of (old) city debt Xo. 1, charged with the payment of $35,832,891.79 in bonds falling due in 1929, receives from its securities now amounting to $35,000,000 (besides $376,500,000 general fund bonds), and from dock rents and other pledged revenues more than nine million dollars annually. These huge surpluses have not been overlooked by the city government. General Fund Bonds. In 1903, section 222 of the charter was enacted, under which the sinking fund commission deter- mines the amount of the surplus in each of these funds, and directs its transfer to the city treasurer for expenses of adminis- tration, and in reduction of the tax rate. This section provides for the issue of general fund bonds 'by the city, to be deposited in 5 130 INVESTIGATION OF AFFAIRS OF NEW YORK CITY place of the surplus removed, and for the cancellation of such bonds as soon as the old city debt is paid. Such bonds are in fact no more than receipts by the city for the money withdrawn. Three hundred seventy-six million and five hundred thousand dollars of the general fund bonds have been issued since 1903. They are reported as a part of the sinking fund holdings, but as a matter of bookkeeping only. Deducting these bonds from the whole amount of such holdings, the sinking fund contains only $227,090,922, instead of $603,590,922, the apparent total. The funds actually transferred to the city treasurer under this pro- vision to date amount to $296,661,385.81 and the funds so trans- ferred for each year are as follows : 1903 $8,462,583 33 1904 9,216,437 50 1905 10,423,625 01 1906 10,886,958 33 1907 12,297,087 50 1908 ' 12,704,416 66 1909 14,943,083 33 1910 14,367,812 50 1911 14,359,916 66 1912 13,885,875 00 1913 . 17,811,629 56 1914 18,744,589 04 1915 17,563,445 21 1916 V. 17,306,232 88 1917 18,004,678 08 1918 19,321,109 59 1919 20,085,308 22 1920 23,000,574 96 1921 23,276,022 45 Total $296,661,385 81 The surplus increase each year with the increase in receipts from pledged revenues, among which are water, docks and ferries. The discrepancy between the sums annually transferred to the city treasury and the annual issue of general fund bonds arises from the issue of bonds to cover interest on the general fund bonds REPORT OF JOINT LEGISLATIVE COMMITTEE 131 previously issued, and is likewise only a matter of bookkeeping. The comptroller's testimony on these transactions follows: " The surplus moneys in the Sinking Fund ^To. 1 of the old City of Xew York have been taken out under the act of the legislature passed in that year and held and applied to the reduction of taxation, and altogether, up to the present time, more than $350,000,000 of moneys pledged to the pay- ment of the City's debt has in that way been applied to reduce current taxes, and general fund bonds substituted, and that is merely a memorandum showing the total amount that the sinking funds have been depleted by applying their cash to current expenses. " I may add that that money could be better applied in reducing the City's debt. " I think it is beating the devil around the bush, that is what I think about it. " The act of 1903, although no one from 1903 to 1921 has challenged its constitutionality, is an utterly indefensible bit of legislation. " My present judgment is that it is entirely irregular and unsound to take the revenue received from self-sustain- ing properties for which debt has been incurred and apply those revenues for any other purposes than to the payment of the interest and the amortization of that debt, except where there may be a surplus so great that you can never have any possible use for it, and then I think you could very well apply it to the interest and amortization of some other debt that is not self-sustaining. " There is a gross diversion of them from their proper application. Revenues from docks, or the revenues from water, or. for that matter, from any other self-sustaining enterprise, rapid transit, so far as it is self-sustaining, should be applied to the payment of interest and to provide for the redemption of the bonds that have been issued to provide those several public improvements. They should not be diverted to reduce taxation and then throw this other burden of redemption and interest into the budget over and above the tax limit." The practice thus established of diverting sinking fund assets, in their nature applicable to specific debts, to ordinary city expenses has proved so convenient to successive administrations 132 INVESTIGATION OF AFFAIRS OF NEW YOEK CITY that they have turned into these sinking funds receipts from docks, ferries and water, which were not pledged to the funds, thereby facilitating and covering the misapplication. 'Substantially all cash accumulating in the sinking funds is absorbed annually by purchasing new issues of city securities. Thirty million dollars was so absorbed in 1920. The results of sinking fund management may be summarized as follows: (a) The sinking funds furnish no security for the debt held by the public. That debt must be paid by taxation. The sinking fund securities could be disposed of, if a market could be found, and the proceeds applied, but that has been discounted by treating such securities as cancelled in computing the city debt, and when disposed of to the public, such securities would have to be met by taxation. (b) Taxes have been increased by taking funds which should be applied to keep down debt service, for expenses of administra- tion, this in effect increasing to that extent the 2 per cent con- stitutional tax limitation and by adding instead of deducting the amount of such funds to debt service which has no constitutional limitation. In this way $9,471,722.74 of Croton water rents, $1,633,677.56 from the ferries and $6,974,093.31 from dock leases, besides lesser revenues derived from permanent utilities diverted from application to the funded debt, were applied to the cost of administration in 1920. In the same year there was included in the budget for debt service for the water supply, $8,619,289.17; for docks and municipal ferries, $3,940,402,40. The issue of corporate stock and bonds for water supply in the same year amounted to $3,120,100. The practice is indefensible and the reverse of the practice in relation to the old subways, where the receipts are directly applicable to the payment of amortization and interest ; to the Brooklyn water system, where the receipts go to pay the debt ; and to bridges, where the receipts are applied to the expenditures on bridges. The taxes levied having passed the constitutional limit in 1921, such transfers operated to further increase prohibited taxes in the amounts so transferred, and in the same way to keep barely within the limit in 19'20. The practice is condemned by the present comptroller, who testified that in practical effect it expanded the tax limit. Nothing could be more complicated and confusing than the sinking fund system established under the title of the sinking REPORT OF JOINT LEGISLATIVE COMMITTEE 133 fund of the city transit sinking fund and the water sinking fund and provides for each funded debt allocated on paper to its own amortization. While the funds are indiscriminately mixed, sink- ing funds, if maintained at all, should be separately maintained. Such was manifestly the purpose of the constitutional amend- ment of 1909, as applied to the $69,000,000 of dock bonds exempted under its provisions, but no separate sinking fund has ever been provided. If the present system of sinking funds had been organized with a view to concealing their purpose and effect, the inquiring citizen could not have been rendered more helpless. A sinking fund is defined as " a fund created by gradual accumulations for sinking or paying a debt, or providing against contingencies." These sinking funds answer neither purpose of the definition. On the contrary, they promote the increase of debt and extravagance, involve a multitude of costly trans- actions without profit, stimulate a false sense of security and confuse the public as to the city's real financial condition. This is in marked contrast to the operation of the sinking funds of the municipalities out of which the city was formed. These were adequately secured, have safely provided for the bonded debts charged against them, and have furnished huge surpluses for manipulation by succeeding administrations of the greater city in violation of every sound principle of finance. The sinking fund commission, as the responsible director of these funds, is worse than useless and should be abolished. A statement showing the transactions of the sinking funds, with their interlocking and interweaving hodge podge of revenues, internal investments, contributions, redemptions, interest pay- ments and transfers, is hereto annexed and marked Exhibit " I." Refunding City Debt. The funded debt of the city has been issued without system and matures so irregularly as to invite future peril to the city's credit. Of the $914,441,*412.68 falling due from 1922 to 1967, only $22,000,000 falls due before 19-28. None falls due in the years "l931, 1938, 1939, 1943, 1944, 1945, 1946, 1947. Seven hundred and eighty-one million dollars falls due after 1951, and $109,000,000 in the year 1960. This unscientific arrangement is expensive as it is inexpedient, and the investigations of the Committee indicate that by making provision for the payment of the debt in equal annual install- ments for amortization and interest, a saving of approximately $178,000,000 can be made by 1967, the last date of maturity. The payments as they fall due with compound interest have been 134: INVESTIGATION OF AFFAIRS OF NEW YORK CITY computed and compared with the equal annual payments on the basis of 5 per cent as an average return on the funds held for application to future debt. The plan for redemption is set forth in the report of the Committee's actuaries, Messrs. Ferine & Nichols, marked Exhibit " J," hereto attached. If criticism foe made that assurance is lacking of the annual return of 5 per cent on such funds, on the ground that it may be too high, nothing more serious would in such event occur than a partial loss of the profit indicated. This would not be important for a number of years, as the interest and bonds falling due will substantially absorb the payments. As the funded debt is issued at a low rate of interest, such funds would be reasonably sure to draw a higher rate of interest than the debt they are kept to redeem. If the plan be adopted, a sinking fund should be established and invested in other obligations than of the City of New York. The State has always found such a course wise and profitable. The payments by the city under this plan would be less than the amounts now currently paid for amortization and interest, and would continue to be less until 1930. No embarrassment can arise from the obligation to maintain existing sinking funds for parts of the funded debt. It can be arranged by consolidation or transfer, or if necessary, payments to existing sinking funds can be treated as partial payments to the new sinking fund until the time arrives when the old funds go out of existence. Future debts can be provided for in the same way by providing for periodical funding in the same manner with like security. Loss FROM MUNICIPAL OWNERSHIP The city suffers great loss by reason of its investment in prop- erty which falls under the classification of municipal ownership. A. Docks. As appears by this Committee's report on the dock department, the city owns dock property worth $300, 000, 000. This property serves State and National purposes even more than municipal, and could, as appears from payments for dock service by lessees, readily give a net return of 6 per cent, or $18,000,000. But the financial statement of the docks is: Total receipts $7,094,240 Cost of administration 1 ,202, 427 Two per cent depreciation on pstim^ted value of dock construction Jan. 1, 1920 ($70,000,000) 1 ,400,000 Loss of taxes on dock property not used bv the citv 4 , 775 , 1 50 7,377,577 Deficiency $283,337 REPORT OF JOINT LEGISLATIVE COMMITTEE 135 The docks occupied by the city for municipal purposes are assessed at $20.000,000, and the value of the use may be estimated as 7 per cent over and above taxes, or $1,400,000, giving an apparent net return on the whole investment of approximately $1,100,000, or approximately $17,000,000 less than its fair rental value. The city is now engaged in completing docks on Staten Island costing $25,000,000, which have already been rented at an annual loss of $600,000. The city had outstanding in 1920 bonds issued for docks and ferries amounting to $101,372,036 (greater now) on which it paid $4,353,46-1 in interest, or $3,153,464 more than its apparent complete net return. B. Subivays. The cost to the city of the original subways, that is, the Bronx-Manhattan line and the Brooklyn line, was $51,013,724, the amortization and interest charges on which are paid under the terms of the contracts under which they were built. The amount expended or placed under contract for the con- struction of the dual subways, that is, those built under Contract 3 (Interborough) and Contract 4 (Brooklyn Rapid Transit), appeared on March 1, 1921, to be $2'26,220,432. In addition to these sums, the city's contractual obligation to complete lines now building, or still to be built under the dual contracts, will require an additional expenditure estimated at $40,000,000, for which provision has not yet been made. The city paid in interest on this indebtedness for 1920 $7,250,000, for which it received no return. It may be a counsel of perfection to suggest that the city's property interest in the subways vastly exceeds the amount of the investment, and should give a handsome revenue to the city treasury. It will be a step in the right direction when the receipt^ equal the disbursements. C. Ferries. The ferries likewise are unprofitable. The state- ment for 1920 is as follows: Total receipts Expenditures Staten Island division $1 ,446,490 87 $2,011 ,514 04 Brooklyn division 192,252 99 594,485 43 Astoria division 27,589 90 205,483 69 $1,666,333 76 $2,811,483 16 Over receipts 1,145,149 40 of disbursements over receipts 1 ,045, 149 40 Excess To this must be added interest and depreciation on $8,668,345.24, expended for wharf property and construction of 136 INVESTIGATION OF AFFAIRS OF NEW YORK CITY terminals since 1903, and interest and depreciation on terminal property of the city acquired before 1903, amounting at a con- servative estimate to $600,0000 annually. The city has expended since 1903 $4,357,270.29 for boats. Their present inventory value or rate of depreciation does not appear, but it must be a very considerable sum. Two million dollars would be a conservative estimate of the annual loss from operation of the ferries. The annual loss on docks, subways and ferries foots up over $26,000,000. It may be noted in this connection that there is no profit and loss account on city owned property. Such state- ments would contribute to economy in management and expendi- ture. While the properties were acquired for the accommoda- tion of the public, they were also acquired for the expectation that they would be self-sustaining', and a source of revenue rather than a drag on the city treasury and a burden to the taxpayer. The city treasury gets none of the receipts from the docks or ferries which are paid into the sinking funds of the old City of New York, and the city borrows such receipts on general fund bonds. The subway receipts are absorbed in providing for amor- tization and interest. Nothing could be more unsound financially or absurd than the exemption of $51,000,000 of subway bonds and $69,000,000 of dock bonds to enable the city to incur further debt, when the subways, as a whole, and the docks and ferries are run at a fearful loss. The constitutional amendment of 1909 manifestly contemplated that these properties should be self-supporting, but carelessness in drafting and skill in manipu- lating its provisions have enabled the city to avoid to its own detriment compliance with this requirement. THE ABANDONMENT OF THE " PAY-AS- You-Go " POLICY Among the abuses in financial management in the city, none is of greater importance than the virtual abandonment of the " pay-as-you-go " policy. When the city, to avoid defaulting on its securities, found it necessary to borrow $100,000,000 in 1914, the syndicate which financed the loan imposed as a condition of its negotiation the adoption of the pay-as-you-go policy, and the board of estimate, on the llth day of September, 1914, adopted the following resolution : " Resolved, That the Board of Estimate and Apportion- ment hereby declares that it will pursue the following plan in financing public improvements : REPORT OF JOINT LEGISLATIVE COMMITTEE 137 "(1) The cost of all improvements of the revenue-produc- ing class, such as rapid transit, docks, railway aiiu water terminals and water supply, shall be defrayed oy the issue of nity-year corporate stock as neretoiore; "('2) The cost of all permanent improvements, other than those of the revenue-producing class, hereafter authorized by this board, shall be financed as follows : "(a) Those authorized subsequent to the passage of this resolution and during the year 1915 shall be paid ior, three- quarters by the issue of fifteen year corporate stock. The corporate stock so issued shall mature either in not more than fifteen years, amortized as provided by law, or in equal annual installments, during a period of not more than fifteen years. The remaining one-quarter of the cost of such improvements shall be paid through the medium of a one- year bond payable from the next annual tax budget. "(b) Those authorized in the year 1916 shall be paid for, one-half by the issue of corporate stock maturing as afore- said. The remaining one-half of the cost of such improve- ments shall be paid through the medium of a one-year bond payable from the next annual tax budget. u (c) Those authorized in the year 1917 shall be paid for, one-quarter by the issue of corporate stock as aforesaid. The remaining three-quarters of the cost of such improvements shall be paid through the medium of a one-year bond payable from the next annual tax budget. a (d) The foregoing statements of policy contemplate the financing of improvements authorized during the year 1918 and subsequent years through the inclusion of the entire cost thereof in the annual budget of the City, excepting the revenue-producing improvements hereinbefore mentioned. "(3) In so far as corporate stock notes issued by the City of Xew York as a part of the proposed plan of $100,000,000 shall be retired by issues of corporate stock, the corporate stock so issued shall mature as provided in clauses (a), (b) and (c) of paragraph 2 of these resolutions. "(4) The cost of public works already authorized, whether under contract or not, but in respect of which new bonds are to be issued, is to be financed in the same manner as above provided, with the exception of the cost of revenue- producing- improvements hereinbefore mentioned. 138 INVESTIGATION OF AFFAIRS OF NEW YORK CITY " Nothing herein contained shall be deemed to affect their corporate stock or assessment bonds issued to replenish the street improvement fund or the fund for street and park openings." The joint legislative committee in 1916 recommended the enact- ment of a statute embodying the provisions of this resolution. By section 2 of chapter 615 of the Laws of 1916 it was accord- ingly enacted: " The City of New York shall not, except as hereinafter provided, expend any part of the proceeds of sales of cor- porate stock or serial bonds for other than revenue-producing improvements." By the terms of the act of 1916 this policy first took full effect in the year 1918. As the pressure of war finances was at its height in that year, the city applied for and secured by chapter 658 of the Laws of 1918, the suspension of the pay-as-you-go policy to permit the issue of " fifteen million dollars for each calendar year of the present war, dating from January 1, 1918, and for one year after the termination of the war * * *. For the purposes of this act, the termination of the war shall be as fixed by proclamation of the President of the United States." Owing to the failure to proclaim peace until the year 1921, the city secured by this act the right to issue $15,000,000 of long- term bonds for a period of five years, and has taken full advantage of the act, issuing the full $75,000,000. While within the law, it was not within the spirit of the law, and constitutes a serious evasion of this sound principle of finance. Notwithstanding the relief thus secured, the city again applied for a modification of the policy, and by the enactment of chap- ter 960 of the Laws of 1920, exempted from its provisions, long- term bonds for the erection of school buildings, and the acquisition of sites. The purpose of the act is by this means subverted, and the city has in the brief period since 1916 issued approxi- mately $100,000,000 of corporate stock or long-term bonds in violation of the pledge of the city made in 1914. TAX LIMIT EXCEEDED The constitutional 2 per cent tax limit is fixed and determined by the valuation of the real and personal estate of the city as shown by the last assessment-rolls, and not as shown by the cur- rent assessment-rolls. The city, therefore, in 1921 exceeded the tax limit by $20,000,000. REPORT OF JOINT LEGISLATIVE COMMITTEE 139 The last sentence in section 10 of article 8 of the Constitution provides : " The amount hereafter to be raised by tax for county or city purposes, in any county containing a city of over one hundred thousand inhabitants, or any such city of this state, in addition to providing for the principal and interest of existing debt, shall not in the aggregate exceed in any one year two per centum of the assessed valuation of the real and personal estate of such county or city, to be ascertained as prescribed in this section in respect to county or city debt." Referring to the clause in the same section as to county or city debt, it reads: " No county or city, shall be allowed to become indebted for any purpose or in any manner to an amount which includ- ing existing indebtedness shall exceed ten per centum of the assessed valuation of the real estate of such county or city, subject to taxation as it appeared by the assessment rolls of said county or city on the last assessment for state or county taxes prior to the incurring of such indebtedness." It is, therefore, clear that the assessment referred to in the tax limit provision is the last assessment, and not the current assessment. The assessed valuation of the real and personal estate of the city for 1920 was $8,922,627,892 and for 1921 $10,186,207,279. The tax levy, exclusive of debt service and State tax, was barely within the 2 per cent limitation of $203,724,145.58, if computed on the assessment of 1921. It exceeded 2 per centum on the assessment of 1)20 ($178,452,557.84) by approximately twenty millions of dollars. Each tax levy prior to 1921 has been uni- formly within 2 per cent of the tax levy of the preceding year. The 1921 levy was a clear violation of the constitutional pro- vision as hitherto understood throughout the State. Tax rolls are not completed until they are extended, and the tax roll of the city for 1921, the current tax roll on which this limitation was sought to be made, was not completed until March 28, 19'21, when the tax in excess of the limit was assessed. It was not assessed upon the last assessment-roll as required, but upon the current assessment-roll. The reasons for this conclusion were presented to the Committee during the examination of the city 140 INVESTIGATION OF AFFAIKS OF NEW YORK CITY officials in an opinion by its counsel, which is annexed to this report as a part oi Exhibit " K." The city has violated the spirit and purpose of the 2 per cent tax limitation 'by using the receipts from income-paying utilities for expenses and charging all interest on the bonded debt of such utilities to debt service. The city received from Croton water rent, through the general fund bonds statute in 1920, $9,471,722.74; from docks, $6,974,093.31; from ferries, $1,633,677.56, or over $18,000,000, and collected by taxes for debt service, interest on the Croton water debt, $8,619,289.17, and interest on the bonded debt of docks and ferries, $3,940,402.40. Under this practice, the more the city is in debt for income-paying properties, the greater will be its available funds for expenses in excess of the- 2 per cent tax limitation. To illustrate: If the city, having reached the 2 per cent limit, purchases or contracts for a public utility costing a hundred million dollars, for which bonds are issued, with an annual amortization and interest charge of $4,000,000, and a revenue of $3,000,000, amortization and the interest charge of $4,000,000 go into the debt service, and the $3,000,0*00 revenue goes into the city treasury for expenses in excess of the 2 per cent tax rate. The comptroller testified, " This acts in practical effect to expand the tax limit." DEBT LIMIT EXCEEDED Section 10, article 8, of the Constitution provides : " No county or city whose present indebtedness exceeds ten per centum of the assessed valuation of its real estate sub- ject to taxation, shall be allowed to become indebted in any further amount until such indebtedness shall be reduced within such limit." In the freqnent amendments to this section, relief has been granted the City of New York by the following exceptions to this rule: First. Revenue bonds issued against taxes in the levy of the year in which they are issued. Of these the amount outstanding has averaged a hundred million dollars in recent years. Second* Special revenue bonds issued against taxes to be levied in the next .succeeding year. Of these about thirty million dollars have been issued in each of the last two years. Third. Bonds for water supply, of which $206,000,000 are now outstanding. Fourth. County bonds amounting to $6,600,000. REPOKT OF JOINT LEGISLATIVE COMMITTEE 141 Fifth. Debts hereafter incurred for revenue purposes where such revenue exceeds repairs, maintenance, interest and amortiza- tion charges. This may be regarded as a dead letter, as the city is a stranger to such investments. Sixth. Any indebtedness heretofore (1909) incurred by the City of New York " for any rapid transit or dock investment may be so excluded proportionately to the extent to which the current net revenue received by said city therefrom shall meet the interest and amortization installments thereof, provided that any increase in the debt incurring power of the City of New York which shall result from the exclusion of debts heretofore incurred shall be available only for the acquisition or construction of properties to be used for rapid transit or dock purposes." Attention is now directed to the sixth exception. The margin of the city's debt incurring- power is reported by the comptroller as follows : January 1, 1918 $18,419,078 91 January 1, 1919 52,099,492 55 January 1, 1920 21,439,370 05 January 1, 1921 34,804,248 86 January 1, 1922 133,645,964 51 In reaching these results the comptroller in each of his state- ments has treated as exempt from the debt limit $120,000,000 under this exception ($69,000,000 for docks and $51,000,000 for subways), thus allowing to the city a debt incurring, power for other purposes than docks and subways of $120,000,000. This exemption is not justified by the Constitution. The bonds are not excluded for general purposes ; the exclusion is for a specific purpose only, viz., docks and rapid transit, and the debt incurring power of the city is increased in this sum for no other purpose. Except for such purpose, the excluded bonds, as well as the debt subsequently incurred, must be treated as a part of the debt of the city in fixing its debt limit. The city's debt incurring power as of January 1, 1922, is, therefore, $13,645,964.51, and not $133.645,964.51, and the city has incurred debt in excess of trie constitutional limit in each of the preceding years referred to, and for most of the time since the alleged exemption of the dock and rapid transit bonds. The opinion of the counsel of the Com- mittee presented to the Committee during* the examination of the city officials on this point is contained in Exhibit " L," hereto attached. 142 INVESTIGATION or AFFAIRS OF NEW YORK CITY GENERAL CONSIDERATIONS ON THE TAX LIMIT AND DEBT LIMIT As the tax limit and the debt limit are a source of annoyance to those seeking other and greater appropriations, some advocate their repeal, claiming that u the strength of sin is the law.' 7 They would abolish the sin by repealing the law. But these principles have their roots in economic law, the law of personal rights and the law of self-preservation by the State. Without such restraints taxable property would be confiscated, the financial soundness of the city imperiled, and when the tax-bearing capacity is exhausted the State would be deprived of its potential capacity to tax for State purposes 63 per cent of its real estate. Financial abuses in city management, and the failure to correct or attempt to correct them, all indicate an indisposition to retrench or economize. Remedies are not hard to find, they are at hand, but not employed. Expenditures and employment, made on a war basis, have not been reduced. The State, the Nation and all private business have made heavy cuts in their budgets, but the city not. City officials without exception denied before the Committee the possibility of economies in any other way than the fall in price of commodities, and the expenditures show an unrestrained growth. This curiosity could not exist in any other municipality in the State, or even in the city, with an informed public opinion. The weight of taxes in the long run falls as heavily upon the poor as upon the rich. It is easier for the tax- payer to realize this when he pays his taxes than for the tenant when he pays his rent or buys his groceries. In searching for reasons for this apparently inexplicable con- dition of the public mind, the Committee caused a census of the taxpaying and nontaxpaying voters to be taken in nineteen elec- tion districts, selected in the city at random. The returns show 8,477 nontaxpaying voters and 521 taxpaying voters. One dis- trict returned 493 nontaxpaying voters and one taxpaying voter. For census see Exhibit " M." MANIFEST FINANCIAL REFORMS Among the reforms which present conditions call for are the following : Docks $17,000,000 Subways (amortization and interest on bonds) . . . 7,250,000 Ferries 2,000,000 Actuarial payment of funded debt 4,000,000 REPORT OF JOINT LEGISLATIVE COMMITTEE 143 Retrenchment from 3 per cent to 10' per cent on city's expenses of administration (3 per cent) . . 5,500,000 Saving by advancing the tax dates 5,500,000 Saving by bringing county government under the jurisdiction of the city 2,500,000 Additional State appropriation for schools 15,000,000 $58,750,000 These reforms cannot be hoped for from the city government as now organized. They cannot be achieved by law alone, but they can be met by a reorganization of city government with the aid of law. An indispensable condition is the constitution of a board of finance, or some similar body, as recommended in the Committee's first report. A redistribution of powers among exist- ing officials and boards will be more of the same thing, and with- out effect. It is not claimed that these reforms can all be immediately realized, but the plan can be immediately put in operation, great progress made promptly, and the end reached within a reasonable time. While some small relief may come from stopping mandatory legislation, it will amount only to the difference between the sums required by law and the sums the city would expend for the same purposes. The greatest injury to the city from this legislation lies in its use as a screen to hide great and substantial faults of city management. STATE TAXES The city cannot escape bearing its share of the burden of State taxes. The legislative committee of 1915 found the indirect taxes were equitably distributed over the whole State. The direct State taxes are really negligible, amounting to $22,041,183.27 in 1921. The city received from State taxes in the same year $44,499,014.62. The State is now paying the city for schools nearly as much as the direct State tax of 1921. Inequalities, if any, are not hard to correct, but they will not be reached by outcries against so small a burden to maintain the State of which the city is a part, when 63 per cent of the value of all real prop- erty is in the city. The State tax, like mandatory legislation, is a mote to distract attention from the beams. The city taxes were in 1921, $284,146,634. The people of the city paid to the Federal government $859,851,705.63, of which more than $634,- 144 INVESTIGATION OF AFFAIRS OF NEW YORK CITY 000,000 was for income taxes. Not an unnecessary dollar of State tax should be imposed, but the relative importance of the interests provided for cannot be overlooked. FINANCIAL REQUIREMENTS OF CITY Besides the ordinary city expenses, the city requires vast sums of money for new improvements. The Transit Board fixes the amount required for subways at $500,000,000 in the next ten years, of which $200,000,000 will be required within five years. Docks, a marginal railway, markets, schools, tunnels and bridges are all necessary to the welfare of the city. A billion dollars for extraordinary expenses will not more than suffice in the next ten years. Under the present management the city cannot meet these expenditures from current revenues, or by incurring debt, but if it will put its house in order and practice economies, com- mon to States, municipalities and private business, it can make satisfactory progress. NECESSITY OF CONSTITUTIONAL AMENDMENT The constitutional provisions affecting the city are found in. section 10, article 8 of the Constitution. Since its adoption in 1894, it has been amended five times by the insertion of clauses of exemption and exception principally to meet temporary emergencies in city finances. The result is a hodge-podge. It is involved. The new clauses, inserted without recasting the entire section, frequently confuse the meaning of the whole. The sec- tion now covers many unrelated matters, and instead of being a constitutional guide, is a labyrinth of words and provisions in which the reader is lost. It serves as often to foster violations of sound finance as to prevent them. The section should be re- drawn in several sections and re-enacted to meet the conditions described in this report. RECOMMENDATIONS FOR RELIEF I. The Committee recommends changing the tax dates from May first and November first to January first and July first, under a system of gradual change to the prior month, and annex a copy of the proposed bill for that purpose. II. Restoration of the " Pay-as-you-go " policy, as enacted in 1916. III. Abolition of the sinking funds at the earliest day prac- ticable and of the sinking fund commission. Care of the funds to be vested in the Comptroller. REPORT OF JOINT LEGISLATIVE COMMITTEE 145 IV. Repeal of the general fund bond legislation, and the appli- cation of all sinking lund receipts to the payment of interest and reduction of the city debt, and specifically of the application of funds received from the income-paying properties to the debts created for the acquisition of such properties. V. Placing public utilities on a self -support ing and inde- pendent basis, with separate profit and loss accounts. VI. Inauguration of an actuarial system of payments to pro- vide for the existing debt, and the inauguration of a new serial bond system on the same basis to provide for new debt. VII. Amending section 10, article 8 of the Constitution in accoi dance with the recommendations of this report. VIII. Simplification of government through such constitu- tional amendment and enactment of statutes in accordance with the terms of this report. The Committee refers to recommendations already made bear- ing upon the finances of the city as follows : (a) First Report. Recommending the establishment of a finance board of nine members, to be elected 'by the city at large for six years, three to be elected every other year. (b) Second Report. Department of Docks, recommending a new dock commission of three members, to be appointed by the mayor, one from a list to be named by the maritime interests of the city, one from a list to be named by the New York Chamber of Commerce, and one at will, who shall be chairman of the com- mission, with an eight year tenure of office. (c) Third Report. Recommending the granting of complete autonomy to a board of education appointed on nonpolitical lines. Reference is had to these reports for a full statement of the Committee's recommendations. Respectfully submitted, SCHUYLER M. MEYER, Chairman, THEODORE DOUGLAS ROBINSON, FREDERICK W. KAVANAUGH, MAXWELL S. HARRIS, SIMON L. ADLER, SOL ULLMAN, JOHN R. YALE, THEODORE STITT, WALTER W. WESTALL. ELON R. BROWN, Counsel. 146 INVESTIGATION OF AFFAIKS OF NEW YORK CITY EXHIBIT "A" Showing Growth of Net Funded Debt Less Sinking Fund Since Consolidation Year 1898 $250,510,551 64 1899 256,843,289 25 1900 277,691,434 97 1901 298,873,969 50 1902 311,760,974 30 1903 334,176,991 30 1904 400,945,164 75 1905 430,477,000 39 1906 474,653,205 12 1907 537,577,801 03 1908 589,045,654 07 1909 648,062,228 92 1910 689,363,508 53 1911 760,995,992 15 1912 827,910,800 94 1913 820,064,364 22 1914 892,172,621 88 1915 942,216,168 29 1916 973,734,136 52 1917 1,007,495,164 14 1918 1,020,481,661 25 1919 1,025,583,349 79 1920 1,027,811,089 70 1921 1,031,201,252 27 EXHIBIT "B" Showing Cost of Administration, Debt Service, Tax Deficiencies, State Taxes and Total Budget Since 1910 Cost of Tax YEAR administration State taxes Debt service deficiencies Grand total 1910 $112,684,57465 $46,443,695 72 $4,000,000 00 $163,128,270 37 1911 113,306,01317 50,661,8219910,000,00000 173,967,83516 1912 122,247,01595 $4,301,34565 51,254,25817 3,287,36674 181,090,25631 1913 127,487,02786 7,947,03196 54,977,38134 2,300,00000 192,711,44116 1914 133,307,73054 4,576,30343 52,611,51765 2.500,00000 192,995.55162 1915 133,045,31304 59,832,38104 6,112,09214 198,989,78652 1916 131,767,94570 13,975,02173 63,213,21011 4,000,00000 212,956,17754 1917 136,369,56787 69,744,56895 5,000,00000 211,114,13682 1918 150,969,54280 8,463,75638 75,590,46002 3,100,00000 238,123,75920 1919 159,735,86717 8.522,62961 77,931,93810 1,835,00000 248,025,43488 1920 188.663,79010 8,539,15637 74,811,53866 1,675,00000 273,68948513 1921 216,280,33020 22,041,18327 105,528,52730 1,680,00000 345,530,03977 REPOKT OF JOINT LEGISLATIVE COMMITTEE 147 EXHIBIT "C" Showing Budget Total, General Fund Revenues Deducted and Amount of Tax Levy General Total Fund Year Budget Revenue Tax levy 1899 $95,209,259 84 $9,026,191 26 $86,183,768 58 1900 92,397,446 46 9,855,272 71 82,542,173 75 1901 99,826,582 67 11,787,949 88 88,038,632 79 1902 100,349,619 30 11,396,711 67 88,952,907 63 1903 98,898,968 92 21,266,304 98 77,632,663 94 1904 108,592,693 48 22,521,665 21 86,071,028 27 1905 111,964,648 52 22,979,002 77 88,985,645 75 1906 119,032,841 75 24,934,694 33 94,098,147 42 1907 130,915,324 19 28,965,070 61 101,950,253 58 1908 143,997,841 74 27,454,945 65 116,542,896 09 1909 156,976,273 01 34,231,062 84 122,745,210 17 1910 163,509,272 56 32,030,989 45 131,478,283 11 1911 174,394,997 51 32,154,342 95 142,240,654 56 1912 181,477,865 09 30,971,807 62 150,506,057 47 1913 193,189,076 31 41,581,991 46 151,607,084 85 1914 193,382,860 69 43,235,935 35 150,146,925 34 1915. ...... 200,618,401 32 40,831,063 61 159,787,337 71 1916 213,647,436 34 37,996,936 34 175,650,500 00 1917 212,670,401 26 35,827,901 26 176,842,500 00 1918 ... 241,633,829 47 38,233,016 67 203,400,812 80 1919 248,588,256 70 43,831,760 98 204,756,495 72 1920 273,689,485 13 60,020,647 78 213,668,837 35 1921 345,530,039 77 63,216,718 87 282,313,320 90 EXHIBIT "D Schedule of Real and Personal Property Assessments Since 1918 Personal Year Real estate property Grand totals 1898 $2,533,730,809 $548,987,900 $3,082,718,709 1899 2,932,445,464 545,906,565 3,478,352,028 1900 3,168,557,700 485,574,495 3,654,132,195 1901 ... 3,237,778,261 550,192,612 3,787,970,873 1902 3,330,647,579 526,400,139 3,857,047,718 1903 4,751,550,826 680,866,092 5,432,416,918 1904 5,015,463,779 625,078,878 5,640,542,657 1905 5,221,582,301 690,561,926 5,912,144,227 1906 5,738,487,245 567,306,940 6,305,794,185 1907 6,240,480,602 554,861,313 6,795,341,915 1908 6,722,415,789 435,774,611 7,158,190,400 1909 6,807,179,704 443,320,855 7,250,500,559 1910 7,044,192,674 372,644,825 7,416,837,499 1911 7,858,840,164 357,923,123 8,216,763,287 1912 7,861,898,890 342,963,540 8,204,862,430 1913 8,006,647,861 325,418,440 8,332,066,301 1914 8,049,859,912 340,295,560 8,390,155,472 1915 ... 8,108,760,787 352,051,755 8,460,812,542 1916 8,207,822,361 376,530,150 8,584,352,511 1917 8,254,549,000 419,156,315 8,673,705,315 1918 8,339,642,851 251,414,875 8,591,057,726 1919 8,428,322,753 362,412,780 8,790,735,533 1920 ... 8,626,121,707 296,506,185 8,922,627,892 1921 9,972,985,104 213,422,175 10,186,207,279 148 INVESTIGATION OF AFFAIRS OF NEW YORK CITY. EXHIBIT " E " Schedule Showing Yearly Per Capita Cost and Average Per Capita Costs Under the Various Administrations Budget appropriations Year: 1 898 Yearly exclusive of appropriation to provide deficiency in collection of taxes $77,473,084 77 93,520,082 03 90,778,972 48 98,100,413 43 Per capita Total for four fPopulation, years yearly 3,350,000 4 Yearly $23 12 26 35 26 41 28 15 Lverage for four years 1899 3 549 558 1900 3,437 202 1901 3,485,000 Total for Robert A. Van Wyck, administration. Year: 1902 $26 04 27 78 31 90 34 11 $98,619,600 88 97,119,031 10 106,674,955 09 109,817,593 03 $359,872,552 71 3,582,930 $27 53 26 58 28 45 28 53 1903 1904 1905 Total for Seth Low and Geo. B. McClellan, administration 3,653,501 3,750,000 3,850,000 412,231 180 10 Year: 1906 $116,805,490 37 127,421,505 66 140,572,266 17 153,622,701 06 4 014 304 $29 10 30 68 32 80 34 73 1907 4 152,860 1908 . . 4 285,435 1909 . 4 422,685 Total for Geo. B. McCellan, administra- tion... 538,421,963 26 Year: 1910 $159,128,270 37 163,967,835 16 177,802,889 77 190,411,441 16 4 766 883 $33 38 33 33 34 37 35 44 1911 4,983,385 5,173,064 5,372,983 1912 1913 *Total for William J. Gaynor, administra- tion 691 310,436 46 Year: 1914 $190,495,551 62 192,877,694 08 208,956,177 54 206,114,136 82 5,468,100 $34 84 34 53 37 29 35 92 1915 1916 5,585,772 5,602,841 5,737,492 1917. . . *Year 1313 of Mayor Gaynor's adminsitration completed by Ardolph L. Kline, t Population estimated except in census years. REPORT OF JOINT LEGISLATIVE COMMITTEE 149 EXHIBIT " E " (Concluded) Schedule Showing Yearly Per Capita Cost and Average Per Capita Costs Under the Various Administrations Budget appropriations Year; Total for John Purroy Mitchell, administra- tion Year: 1918 $235,023,759 00 1919 246,190,435 00 1920 272,014,485 13 1921.. . 343,850,039 77 Yearly exclusive ~^ of appropriation to provide deficiency in collection of Total for four Population, taxes years yearly $798,443,560 06 5,872,143 6,006,794 5,620,048 5,753,151 Total for John F. Hylan, administration.. 1,097,078,71890 Per capita Average for four Yearly years $35 65 47 18 150 INVESTIGATION OF AFFAIRS OF NEW YORK CITY I 1C X - t^OO I i~ lOOtO'fCO'M'MiOCifti'NiOb. Tf< CO t23"ao^;oioosSSKtt. in x .-HiCOcDcD'.DCOOi-'OO-.ON.-i,-! cO_; rt< X i-c -t^OO (N CO O iC I-H (N rfi 1C *- 03 CD.C^ C (N rj< O c COXr>-t^COtNcO-*'-iOCO^OO'C'-H iCDT-HCKMi-i * O o * O5 Ol t^ >-( CO * Tt< Tf t>. 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T M ni C, (-H Sf) . o3 d 4$ H O M d ^D I I 154 INVESTIGATION OF AFFAIRS OF NEW YORK CITY 3 888888888888 fe 888888 8 |^ iS2222S=2S2 3 S C) - t^.jOOOOOOOOO-lC^C^tO "^ to tO to O O O3 to r " O OsSSSSSSSS^^fi^cC^ O C<) CM CO u^ o o o o o o O o t>- r^ t^ t-. i i ^Oi SooSooSS-^-^^C^J t>- (NC^OltNfM-rH J/} r _^ OSOSOSOSOSOSOSOsOCOWtO 00 tOtOtOtOOcO EH L' Q Tt* CO CO to Os OO TH OS CO CO C^l C^l OS OS OS CO "^ CO t^ OS " o P^ ^SS2^^1^I5^;2?i2 52 cs?5^cNcsc5 ^ 1S < i f s>, O b H ^^-g T^3 Jfl - Ill III 1 I g P 5 3S 5 a|- Bjsi I a w S 1 88888S888888 8 888888 g? H^ rK " PQ ' r^i Q fe ^^ ^5 -,-,-,-v~-,-,-,.-,-..^.s -^ -^T^-^r ** "* *" ** " ^H ^ ^ -*^ S t^- 1 > ^ "^ *^ cp 10 co T H co os oc t^^* ^5 ^^ ^^ ^^ r ^ *^ ^* ^t* ^t^r^ H^CCi-HCOi t^OOOOT 'i HT^C 'S o -r & ||| REPORT OF JOINT LEGISLATIVE COMMITTEE 155 EXHIBIT " H " Schedule of Special Revenue Bond Authorizations During Year 1920 Armory Board $30,359 96 Bellevue and allied hospitals 92,605 19 Board of Aldermen and City Clerk 66,800 00 Board of City Record 294,371 37 Department of Public Welfare 240,724 9'2 County Clerk, Kew York county 2,985 78 County Clerk, Kings county 655 82 County Clerk, Queens county 6,878 20 County Clerk, Richmond county 2,401 88 County Clerk, Bronx county 670 83 Claims 963,620 70 Commissions and commissioners 295,330 90 Public Service Commission 117,890 52 College of the City of Xew York 89,149 62 Courts 444,610 28 District Attorney 37,015 31 Department of Plant and Structures 1,093,501 42 Department of Correction 19,959 37 Department of Docks 85,298 3 Department of Education 13,060,480 11 Department of Health 247,150 13 Department of Parks, Manhattan and Rich- mond 84,955 59 Department of Parks, The Bronx 49,145 62 Department of Parks, Brooklyn 51,805 09 Department of Parks, Queens 14,389 86 Department of Street Cleaning 6,899,970 76 Department of Taxes and Assessments 6,657 73 Department of Water Supply, Gas and Elec- tricity 169,513 38 Fire Department 1,732,812 15 Miscellaneous 6,027,288 72 Hunter College of the City of New York. . . . . . 31,567 66 President, Borough of Brooklyn 502,712 10 Police Department 173,628 83 President, Borough of Manhattan 1,191,187 04 President, Borough of Queens 648.586 51 President, Borough of Richmond 217,439 80 156 INVESTIGATION OF AFFAIRS OF ^EW YORK CITY President, Borough of the Bronx $393,742 76 Registers ; 189,433 43 Sheriffs 26,386 39 New York City Employees' Retirement System. 13,184 58 Tenement House Department 4,562 89 Dreamland Park award 2,113,749 77 Total $37,735,181 35 EXH!BIT "I" The Story of the City's Sinking Fund Transactions During 1920 The interlocking and interweaving hodge-podge of revenues, internal investments, contributions, redemptions, interest pay- ments and transfers all gather into a single collection of fiscal accounts in the City Comptroller's office, constituting a record which may be best interpreted by tracing the origin and final resting place of the various moneys, with some attempt toward making a statement of sinking fund affairs in the order of their occurrence. The so-called inter se transactions are marked (*) in each case. An old and underlying account bears the title : SINKING FUND FOR THE PAYMENT OF INTEREST ON THE CITY DEBT In this fund there was a cash balance on January 1, 1920, of $1,639,420 39 To this was added within the year ended December 31, 1920, revenue received by the city, in cash, and paid directly into this fund on account of Croton water rents and penalties $9,471,722 74 Moneys received from the city treasury on account of the redemption of its obligations as held for investment by this fund (See Schedule "A") ... 2,305,000 00 Receipts from municipal ferry operations, paid directly into this fund 1 , 633,677 56 Ferry rents and leases 346,573 08 Fees, fines, penalties, costs, etc 1 ,665,568 49 House and ground rents 452 , 101 07 Interest on deposit 47 , 531 60 Revenue and investments 110,936 72 Interest on Croton water rents 48 , 345 96 Water lot rent 599 10 Fares Astoria ferry 27,060 51 16,109,11683 This makes a total for the year $17,748,537 22 EEPORT OF JOINT LEGISLATIVE COMMITTEE 157 Out of which there were disbursements in cash as follows: Investments in Corporate Stock Notes of the City of New York issued in anticipation of the sale of corporate stock (See Schedule " B ") $3,200,000 00 Interest charges met on city debt incurred prior to January, 1898 476,372 OS Refunds of revenue 21 , 863 66 Payments of contributions to sundry societies. . 13,470 00 These disbursements, in connection with the balance of cash on hand on December 31. 1920, of... 736,831 48 Aggregated the sum of $4,448,537 22 *The remainder becoming a matter of transfer to another account, amounting to the sum of $13,300,000 00 The account to which this transfer was made is called: == ===== Sinking Fund for the redemption of the City Debt No. 1 The cash balance of this account on January 1, 1920, was $940, 106 13 *And in addition to the transfer above described, amounting to $13,300,000 00 There were receipts as follows: Investments of this fund purchased by Sinking Fund of the City of New York 6,675,780 67 "Investments of the fund maturing in 1920 and redeemable from and purchased by the Sinking Fund of the City of New York 230,686 78 Moneys received from the city treasury on account of the redemption of its obligations as held for investment by the fund (See Schedule "A") - - 2,600,000 00 Dock and slip rents 6,974,093 31 Forfeited security deposit 16,800 00 Market and cellar rents 420, 150 26 Market wagon fees 18 , 873 25 Privileges 11,652 44 Franchises 501,753 33 Permits, street vaults 210,089 97 Fees, fines and penalties 1 , 353 00 Licenses 333,701 00 Interest on sinking fund deposits 54 , 907 81 Interest on city treasury balances 607,899 41 Interest on general fund bonds 9,500,547 96 Interest on all other bonds 1,448,455 73 Water lot quit rent 7 36 Chamberlain's commission of State tax 10,660 23 Collections by collector of assessments and arrears 42 65 Interest on assessments 03 42,917,455 19 This makes a total for the year $43,857,561 32 Out of which there were disbursements in cash as follows: Investments in corporate stock notes of the City of New York, issued in anticipation of the sale of corporate stock $3,610,000 00 Redemption of corporate stock held by the public 7 , 305 , 300 00 *Redemption of corporate stock maturing in 1920, held by the Sinking Fund of the City of New York.. 172,00000 158 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Refunds of revenue $1 , 986 18 These disbursements, in connection with the bal- ance of cash on hand December 31, 1920, of. . 268,275 14 Aggregated the sum of $11,357,561 32 The remainder becoming a matter of transfer to the city treasury, and by it devoted to the acquire- ment of general fund bonds amountin* to the sum of $32,500,000 00 The other sinking funds of the City of New York are detailed as follows: Sinking Fund of the City of New York The cash balance of this account on January 1, 1929, was $553,631 12 To this was added during the year, cash receipts as follows: Annual installment from 1920 tax budget $8,000,090 00 Revenue from investments 4,006,435 32 Moneys received from the city treasury on account of redemption of its obligations, as held for investments by this fund (See Sched- ule "A") 10,630,000 00 *In vestments of this fund maturing in 1920, redeemed by sinking fund for redemption of City Debt No. 1 172,000 00 *Investments of this fund maturing in 1920, redeemed by Water Sinking Fund, City of New York 25,000 00 terest on balances of sinking fund bank deposits 21,636 84 apid transit railroad rentals. . 4,234 54 22,859,306 70 This makes a total for the year $23,412,937 82 Out of which there were disbursements in cash as follows : Investments in corporate stock of the City of New York $1,396,000 00 Investments in miscellaneous securities of the City of New York (See Schedule " B ") 1 , 760,000 00 Investments in serial bonds of the City of New York (See Schedule " B ") 700,000 00 Investments in corporate stock notes of the City of New York, issued in anticipation of the sale of corporate stock (See Schedule " B ") 12,430,000 00 *Investm.ents of the sinking fund for the redemp- tion of city debt (No. 1 purchased) 6,675,780 67 *Redemptions of corporate stock held by the sinking fund for the redemption of City Debt No. 1 230,686 78 Accrued interest on corporate stock purchased as investment 6, 456 76 Installments of rapid transit rentals paid to this account in 1919 in error 40,248 52 These disbursements in connection with the balance of cash on hand. December 31, 1920, of 173,765 09 Aggregated the sum of 23,412,937 82 REPORT OF JOINT LEGISLATIVE COMMITTEE 159 Rapid Transit Sinking Fund of the City of New York The cash balance of this account on January 1, 1920, was $39,079 46 To this was added during the year, cash receipts as follows : Annual installment for 1920 tax budget $1 ,225,000 00 Revenue from investments 262,709 33 Moneys received from the city treasury on account of the redemption of its obligations as held for investments by this fund (See Schedule "A") . . 300,000 00 *Rapid transit installments paid to this fund by the Sinking Fund of the City of New York which were paid to that fund in the year 1919 in error 40,248 52 Interest en balance of sinking fund bank deposits 1,400 15 1,829,358 00 This make a total for the year $1 , 868 , 437 46 Out of which there were disbursements as follows: Investments in corporate stock notes of the City of New York issued in anticipation of the sale of corporate stock (See Schedule " B ") $555,942 73 Investments in corporate stock of the City of New York (See Schedule " B ") 1,303,000 00 These disbursements in connection with the balance of cash on hand December 31, 1920, of 9,494 73 Aggregated the sum of 1,868,437 46 Water Sinking Fund of the City of New York The cash balance of this account on January 1, 1920, was $108, 948 08 To this was added during the year, cash receipts as follows: Moneys received from the city treasury on account of the redemption of its obligations as held for investments by the fund (See Schedule "A") . . $4,500,000 00 Revenue from investments 820,030 78 Interest on balances cf sinking fund bank deposits 8,930 02 5,328,960 80 This makes a total for the year $5,437,908 88 Out of which there were disbursements in cash as follows: Investments in miscellaneous bends of the City of New York (See Schedule " B ") $600,000 00 Investments in corporate stock notes of the City of New York issued in anticipation of the sale of corporate stock (See Schedule " B ") 700,000 00 *Redemption of corporate stock held by the public 4, 012 , 1 10 00 *Redemption of corporate stock held by the Sinking Fund of the City of New York 25,000 00 These disbursements in connection with the balance of cash on hand December 31, 1920, of 100,798 88 Aggregated the sum of 5,437,908 88 160 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Sinking Fund of the City of Brooklyn The cash balance of this account on January 1, 1920, was $129,832 43 To this was addei during the year cash receipts as follows: Bonds and mortgages, East Side Parkland: Principal $3,024 00 Interest 2,019 20 Moneys received from the city treasury en account of the redemption of its obligations as held for investments by this fund (See Schedule "A") . . 700,316 96 Prospect Park improvement: Installments 191 04 Interest on installments 89 77 Revenue from investments 289,616 34 Interest on balances of sinking fund bank deposits 3,537 61 998,794 92 This makes a total for the year $1, 128,627 35 Out of which there were disbursements 6f cash as follows : Investments in corporate stock notes of the City of New York issued in anticipation of the sale of corporate stock (See Schedule " B)" $250,000 03 Investments in tax notes of the City of New York (S3e Schedule " B ") 250,000 00 Investments in serial bonds of the City of New York (See Schedule " B ") 400,000 00 Redemption of corporate stock held by the public 95,000 00 These disbursements in connection with the balance of cash on hand December 31, 1920, of 133,627 35 Aggregated the sum of 1,128,627 35 Water Sinking Fund of the City of Brooklyn The cash balance of this account on January 1, 1920, was $44,438 62 To this was added during the year cash receipts as follows: Moneys received from the city treasury on account of the redemption of its obligations as held for investments by this fund (See Schedule "A") . . $1,500,000 00 Surplus water rents from water revenue, borough of Brooklyn 3,284,445 70 Revenue from investments 196,041 40 Interest on balances of sinking fund bank deposits 10, 299 49 4,990,786 59 This makes a total for the year $5 , 035 , 225 21 Out of which there were disbursements in cash as follows: Investments in corporate stock of the City of New York (See Schedule " B ") $600,000 00 Investments in serial bonds of the City of New York (See Schedule " B ") 425,000 00 Investments in miscellaneous bonds of the City of New York (See Schedule " B ") 400,000 00 Investments in corporate stock notes of the City of New York issued in anticipation of the sale of corporate stock (See Schedule " B ") 3,490,000 00 Purchases from the public of New York city securities 74,605 00 REPORT OF JOINT LEGISLATIVE COMMITTEE 161 Accrued interest on bonds purchased from the public $1,054 95 These disbursements in connection with the balance of cash on hand December 31, 1920, of 44,565 26 Aggregated the sum of $5,035,225 21 Sinking Fund of the Long Island City for the Redemption of Fire Bonds The cash balance of this account on January 1, 1920, was $11,656 54 To this was added during the year cash receipts as follows: Revenue from investments $690 00 Interest on balances of sinking fund bank deposits 239 98 929 98 This makes a total for the year $12,586 52 There were no expenditures from this fund during the year 1920. The cash balance on hand December 31, 1920, was $12,586 12 The general method of making transfers between funds, at least as regards all of the largest of those transfers, has been uniform in the years prior to 1920 as far back as 1903, in which year charter authority was granted to the acquiring of general fund bonds. For example, the annual transfers from the interest sinking fund account to the No. 1 account corresponding with the item of $13,300,000 in 1920 are found to have been as follows: ' Year Amount 1898 $2,500,000 00 1899 1,500,000 00 190-0 1,500,000 00 1901 3,000,000 00 1902 4,750,000 00 1903 4,515,000 00 1904 4,300,000 00 1905 4,950,000 00 1906 5,650,000 00 1907 7,450,000 00 1908 8,000,000 00 1909 9,250,000 00 1910 9,000,000 00 1911 8,000,000 00 1912 7,000,000 00 1913 11,250,000 00 6 162 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Year Amount 1914 11,700,000 00 1915 10,650,000 00 1916 9,700,000 00 1917 *11,300,000 00 1918 11,250,000 00 1919 11,250,000 00 EXHIBIT J ?: Hon. SCHUYLER M. MEYER, Chairman, Hon. ELON K BROWN, Chief Counsel, New York State Legislative Committee to Investigate Affairs of the City of New York: DEAR SIRS. The problem of providing a proper system of sounder amortization of the city's bonds held by the public is the most serious problem arising from the city's funded debt. A tabulation of all the maturities from 1922 to 1967, inclusive, shows that these were of record by the city as outstanding debt, on December 31, 1920, in the aggregate sum of $914,441,412.68. These issues were put out without any attempt to average the maturities by years. The borrowings were not required in the course of a long and uniform spreading out of constructive or other needs, necessitating the issue of about so many bonds in each of several years. The single project of rapid transit piled up a huge obligation needing to be met years hence, but no better apportioned to the fiscal opportunities of those future years than to present a series of balances (at least as now outstanding) of: Maturities 1954 to 1960, inclusive 427 millions Maturities 1961 no maturities Maturities 1962 to 1967, inclusive 307 millions 734 millions or about 80 per cent of the entire 914 millions, and this 80 per cent calling for redemption in the 14 years beginning with 1954. No redemptions are to occur in 1931, 1938, 1939, 1943, 1944, 1945, 1946 and 1947. * This amount includes an item of $800,000.00 which is an Investment in Rapid Transit Railroad Note No. 2026, purchased by the Sinking Fund for the payment of interest on the City Debt from the Sinking Fund for the Redemption of City Debt No. 1. REPORT OF JOINT LEGISLATIVE COMMITTEE 163 Furthermore the operations of sinking fund purchases of the city's own securities have had, and as long as continued must always have, the effect of constantly disarranging the quantities of oncoming annual redemption of publicly held bonds. It is manifest that with but 70 millions of debt coming due between 1922 and 1936, and 62 millions coming due between 1937 and 1951, some fair, sound, business-like scheme of amortiza- tion is needed to provide for the enormous demands which may be made upon the city's treasury within the few years to follow the middle of the present century, and which will be made unless there are large refunding operations. Such a scheme is available and is herein presented. It com- bines four main features, viz. : First. A fixed sum of annual contributions, subject to no variation whatever until 1967, save as the compounding interest rate of 5 per cent on sinking fund investments may prove to be slightly above or below the average money rate for such invest- ments throughout the entire period. Second. It automatically rises by gradual steps, i. e. y accre- tions of unused balances, year by year, to a peak of 279 millions of dollars in the fund by 1953, and descends to a negligible sum left over, at the end of 1967, amounting to less than $30,000. Third. The annual installment to be raised, $42,800,000 an- nually, is a less sum than the aggregates of simple debt, plus interest on unpaid debt, in 21 of the 46 years beginning with 1922, and in fact less than the amount of the city's needs to redeem bonds and pay interest during that first year, 1922, to wit, $44,343,103.64. Fourth. The accumulation of interest on sinking fund bal- ances during the 46 years, figured at 5 per cent, or made equal to that rate of income by budgetary adjustment in any year in which there might be a surplus or deficiency, is an aggregate income of no less than $234,543,352.56, all of which except an odd $29,000 of final surplus may be made applicable to the re- tirement of a volume of debt now ev^eeding nine hundred millions of dollars. In support of the plan a tabulation is appended hereto show- ing the details, year by year. Of its seven columns the first three, showing (1) debt to be met, (2) decreasing volumes of interest, and (3) the total burden of each year, will he found to be self- 164 INVESTIGATION OF AFFAIES OF NEW YOEK CITY explanatory. To these charges, in a fourth column, is added (4) the average cost of meeting payments at different periods within each year. The fifth, sixth and seventh columns are of the nature of credits, i. e., respectively, (5) the values of $42,- 800,000 contributed at the beginning of each year and invested at 5 per cent until the end of that year, (6) the increment at the same rate of interest on unexpended balances, and (7) the balances themselves, at the end of each year, cleared of redemptions, in- terest charges, and carrying charges (averaged) on the disburse- ment of interest, These figures are offered as a fair general statement of condi- tions, prepared on an actuarial basis. We believe that this method can be availed of as the solution of one of New York city's most compelling problems. If sinking funds are hereafter created, in respect of new debt, the same plan may be applied or serial bonds issued without sinking funds at approximately balanced dates of maturity. The raising of the fixed annual contributions for amortization purposes should be mandatory, varied by no surpluses or de- ficiencies except as the 5 per cent compounding interest rate might be found to vary. The character of investments should be care- fully restricted, but with such restrictions the city may safely and confidently avail itself of the plan. It provides the utmost of protection to the bondholders ; it relieves the inequalities which now imperil fiscal safety in future years, when vast, wholly un- classified obligations will need to be faced ; it is a method in accord with the principles of such business foresight as is exercised by the largest corporations, notably banks, insurance companies, and many other organizations which need to take a forward look at large problems demanding scientific provision for debt service, based on the strictest of amortization. Very respectfully yours, PEKINE & NICHOLS. New York, N. Y., September 9, 1921. REPORT OF JOINT LEGISLATIVE COMMITTEE 165 o O 02 M rH >> S 2 CO j - 1 1 ,3V ft EM 1 ,_, ,_, js) ,-t rH 0} CO **< 1C CO CO t~ C3 O O O 1-1 N r}< CO OO O CO (N CO CN kC rP CO 00 CO rH OO 00 CO i-< Q >O 1C O3 C^ CO CO CO CN b- 1C $ OCO'*OcOt^OO500COt-COcO(Nc5l^CC'CCOCOTjl(NOOiC ** O -^ "C CO O O O O CN ^< (N O3 C 1C CN 1C O5 rJJ (N T}< rJJ rH T}< IN N 00 < iC CO O O O O C^ ) rH CO O O3 CO O3 H > 00 CN Tf O5 Tt< kC (N 5 coc^oco IN rt< rh icco icic coco rn r^. s 8 88888888888888888888888888 >OOOOOOOOOOOOOOOOOOOOOOOO< >O3O3O3O3O3O3O3O3O3O3O3O3C3O3O3O3O3O3O3O3O3O3O3O3< iTfTfTtHTfTj'TPrMTflTH 1 CD OS >O 5 1-1 ^ OS O r4 CO rH 05 O M 00 O5 * CO O TH O CC ^H rH rH * 00 00 00 00 00 9* II ll ""! t^ 2 Co JH O) OH' ' ^H CO b a-! 3 ^^ a b d co 2 ^ S O JB rt t? 2 CC rt (N O OO'tt^CO |r Q> t-HC<)O5CO'^COt>-t N C -.. TfOCOOsOOiTtiCCT-il^t^t^iCOCcOr-H CO CDO3 COOO C Ti-^ - i . CO CO CO CO CO CO ( "oJ rH COIN 03 00 CO 05 -C M rH CO rH O5 t^ rH r- OOCOrH^ -C*IT. 1C CO IC , b-O^OINOcDi-iT^r-HiOcNOO-^INOOiOlNOJ "^j-tJ^ t^ O> CO >-i GO T* ^H r^. 00 O (N 00 CO >O 00 O5 O CC CD CM ooot-^eocoos'OOociN-t-oOi-ii-Hi-icoiOio (NWOb-t^l^(NiNOOOTtN'*iOOiO-^rH COINOOOSOCt^-iOCSOOOOSOOX'-HOiO^iO co ^tO OOO COCO O5 (NO * O5CO CO rf( O iO O CD .8 88888888888888888888 "OT) O5 OOO C i-H CO CO CC to >O ' COCCOOiOC^O'50cDr- 00 t> I-H OJ 00 CC CO CO 980 Same 1920, chap. 823 Clerk } 944 Same 1920, chap. 823 2 Clerks 7 920 Same 1920, chap. 823 REPORT OF JOINT LEGISLATIVE COMMITTEE 199 Budget Mandatory Position rate rate Law 5 Clerks 1,800 Same 1920, chap. 823 8 Clerks 1,794 Same 1920, chap. 823 Clerk 1,560 Same 1920, chap. 823 27 Copyists 1,872 Same 1920, chap. 823 2 Copyists 1,794 Same 1920, chap. 823 2 Copyists 1,680 Same 1920, chap. 823 Copyist 1,560 Same 1920, chap. 823 Copyist 1,512 Same 1920, chap. 823 2 Copyists 1,440 Same 1920, chap. 823 2 Custodians 1,711.00 Same 1920, chap. 823 Custodian 1,656 Same 1920, chap. 823 2 Custodians 1,440 Same 1920, chap. 823 Telephone operator 1,680 Same 1290, chap. 823 7 Messengers 1,440 Same 1920, chap. 823 Messenger 1,296 Same 1920, chap. 823 Keeper of coat room 1,422 Same 1920, chap 823 COMMISSIONER OF RECORDS, KINGS COUNTY Budget Mandatory Position rate rate Law Commissioner $5,000 Same 1920, chap. 821 Deputy commissioner 4,000 Same 1920, chap. 821 Superintendent 3,000 Same 1920, chap. 821 Assistant superintendent 3,000 Same 1920, chap. 821 Secretary 2,000 Same 1920, chap. 821 Chief clerk 3,162.50 Same 1920, chap. 821 Stenographer 1,955 Same 1920, chap. 821 Stenographer 1,800 Same 1920, chap. 821 Supervisor of copying 2,530 Same 1920, chap. 821 Chief of division 2,530 Same 1920 chap. 821 4 Chiefs of division 2,300 Same 1920, chap. 821 Chief clerk old records 2,300 Same 1920, chap. 821 Assistant chief of division 2,185 Same 1920, chap. 821 Assistant chief of division 1,840 Same 1920, chap. 821 3 Clerks 2,070 Same 1920, chap. 821 2 Clerks 1,955 Same 1920, chap. 821 Clerk 1,868.75 Same 1920, chap. 821 4 Cerks 1,840 Same 1920, chap. 821 3 Clerks 1,800 Same 1290, chap. 821 2 Draftsmen 1,800 Same 1920, chap. 821 Clerk: 1,740 Same 1920, chap. 821 2 Clerks 1,680 Same 1920, chap. 821 Clerk 1,650 Same 1920, chap. 821 4 Clerks 1,560 Same 1920 chap. 821 4 Clerks 1,470 Same 1920, chap. 821 Foreman of bindery 2,300 Same 1920, chap. 821 4 Bookbinders 1,620 Same 1920, chap. 821 Custodian 1,800 Same 1920, chap. 821 Custodian 1,200 Same 1920. chap. 821 6 Laborers 1,500 Same 1920, chap. 821 COMMISSIONER OF JURORS, KINGS COUNTY Budget Mandatory Position rate rate Law Commissioner $6,000 Same 1921 chap. 412; chap. 628 Deputy commissioner 4,000 Same 1921, chap. 640 Secretary 3,250 Same 1921, chap. 640 Clerk 2,772 Same 1921, chap. 640 Fine and exempt clerk 2,520 Same 1921, chap. 640 7 Clerks 2, 160 Same 1921, chap. 640 9 Jury notice servers 1,823 Same 1921, chap. 640 Stenographer 1,464 Same 1921, chap. 640 1911, 200 INVESTIGATION OF AFFAIRS OF YORK CITY SHERIFF, KINGS COUNTY Position Under sheriff 8 Deputy sheriffs 8 Assistant deputy sheriffs Counsel Chief clerk Assistant clerk Equity clerk Assistant equity clerk Secretary Accountant Confidential stenographer Telephone operator Warden Deputy warden Bookkeeper 8 Keepers 3 Matrons 2 Cleaners 2 Cooks NEW YORK STATE GUARD AND NAVAL MILITIA, KINGS COUNTY NOTE. Wages of all regular employees totaling $259,770 are mandatory under Military Law, section 187, and following. SUPREME COURT, SECOND DEPARTMENT, KINGS COUNTY Budget Mandatory rate rate Law $6,500 $6,000 1901, chap. 705 2,904 2,200 1901, chap. 705 2,040 1,500 1918, chap. 647 5,500 5,000 1901, chap. 705 3,300 2,500 1901, chap. 705 2,760 2,000 1901, chap. 705 2,760 2,000 1901, chap. 705 2,520 1,800 1901, chap. 705 2,040 1,500 1901, chap. 705 2,160 1,500 1901, chap. 705 1,823 Same 1901, chap. 705 1,464 Same 1901, chap. 705 3,500 3,000 1901, chap. 705 2,640 2,000 1901, chap. 705 2,040 1,500 1901, chap. 705 1,708 1,200 1901, chap. 705 1,464 1,000 1901, chap. 705 1,100 750 1901, chap. 705 600 300 1901, chap. 705 Position General clerk Assistant general clerk Consultation and opinion clerk. 4 Clerks 8 Clerks 5 Clerks 8 Clerks 11 Clerks to justices 12 Stenographers Confidential attendant 39 Attendants 4 Attendants 5 Interpreters 2 Typewriter operators Budget Mandatory rate rate $5,000 Same 4,500 7,000 4,250 3,750 3,250 2,750 4,000 4,200 3,500 2,500 2,000 3,300 2,500 Same Same Same Same Same Same Same Same Same Same Same Same Same Law 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 1921, Chap. 246, 168. 168. 168. 168. 168. 168. 168. 168. 168. 168. 168. 168. 168. 1921, Chap. 246, 168. SUPREME COURT, SECOND DEPARTMENT, APP. Div., KINGS COUNTY Position Deputy clerk 1 2 Confidential clerks f Case and consultation clerk f Attendants J Confidential clerks to justices. . Budget Mandatory rate rate Law $28,522.69 See laws cited in 1921 budget, page 276. $16,719.60 See laws cited in 1921 budget, page 276. SURROGATE'S COURT, KINGS COUNTY Position Law assistant Chief clerk and clerk of court . Mandatory rate rate $4,000 Same 9,000 Same Law Code Civil Procedure. 2492 and 2493, Surro- gate court Act, 22. REPORT OF JOINT LEGISLATIVE COMMITTEE 201 Position Accounting clerk. Assistant accounting clerk Probate clerk Assistant probate clerk Administration clerk Assistant administration clerk . . Certificate and financial clerk.. . Guardian accounting clerk Calendar clerk Index clerk . . 5 Recording clerks 2 Clerks 5 Clerks Stenographer Stenographer Typewriter copyist Comparer Chief of records and interpreter. Assistant chief of records Chief custodian* 2 Custodians Chief court attendant . . Budget rate Mandatory rate 6,500 Same 3,000 Same 6,000 Same 3,500 Same 3,500 Same 3,500 Same 5,000 Same 5,500 Same 4,000 Same 3,250 Same 2,160 Same 2,400 Same 2,280 Same 3,000 Same 2,160 Same 2,160 Same 2,160 Same 4,000 Same 2,040 Same 2,160 Same 2,160 Same 3,000 Same Law 2492 and 2493, Surro- gate court Act, 22. 2492 and 2493, Surro- gate court Act, 22. 2492 and 2493, Surro- gate court Act, 22. 2492 and 2493, Surro- gate court Act, 22. 2492 and 2493, Surro- gate court Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, Sec. 22.... Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22, Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. 202 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Budget Mandatory Position rate rate Law 3 Court officers 2,500 Same Code Civ. Proc., 2492, 2493 and Surrogate Act, 22. Telephone operator 1,600 Same Code Civ., Proc. 2492, 2493 and Surrogate Act, 22. Law assistant 6, 000 Same Code Civil Proc., 2492, 2493 and Surrogate Act, 22 Stenographer 3,000 Same Code Civil Proc., 2492, 2493 and Surrogate Act, 22 Clerk 2,500 Same Code Civil Proc., 2492, 2493 and Surrogate Act, 22 Stenographer 2,000 Same Code Civil Proc., 2492, 2493 and Surrogate Act, 22 Court officer 2,400 Same Code Civil Proc., 2492, 2493 and Surrogate Act, 22 2 Recording clerks 1,500 Same Code Civil Proc., 2492, 2493 and Surrogate Act, 22 4 Laborers, temporary totaling . . 5,776 Same Code Civil Proc., 2492, 2493 and Surrogate Act, 22. COUNTY COURT, KINGS COUNTY Budget Mandatory Position rate rate Law Chief clerk 7, 500 Same Judiciary Law, 195 and 284 Deputy chief clerk 5,500 Same Judiciary Law, 195 and 284 5 Confidential clerks 3,250 2,750 1917, Chap. 808 2 Clerks 4,500 Same Judiciary Law, 195 and 284 4 Clerks 4,300 Same Judiciary Law, 195 and 284 2 Clerks 3,800 Same Judiciary Law, 195 and 284 Clerk 3,700 Same Judiciary Law, 195 and 284 6 Clerks 3,500 Same Judiciary Law, 195 and 284 Clerk 2,520 Same Judiciary Law, 195 and 284 Clerk 2, 160 Same Judiciary Law, 195 and 284 5 Stenographers 5,000 Same Judiciary Law, 197 and 310 Stenographer and typewriter . . . 2,520 Same Judiciary Law, 195 and 284 Chief court attendant ........ 3,800 Same 1920, Chap. 816, 352 Assistant chief court attendant 3,300 Same 1920, Chap. 816, 352 [9 Court attendants 2,500 Same 1920, Chap. 816, 352 3 Court attendants 2,400 Same 1920, Chap. 816, 352 Court attendant 2, 160 Same 1920, Chap. 816, 352 REPORT OF JOINT LEGISLATIVE COMMITTEE 203 Budget Mandatory Position Rate Rate Law 3 Detectives 3,800 Same Judiciary Law, 195 and 284 2 Detectives 2,640 Same Judiciary Law, 195 and 284 Detective 2,400 Same Judiciary Law, 195 and 284 Warden, grand jury 4,000 Same Judiciary Law, 195 and 284 2 Interpreters 4,000 Same Judiciary Law, 195 and 284 2 Interpreters 2,160 Same Judiciary Law, 195 and 284 Chief probation officer (male) . . . 2,160 Same Judiciary Law, 195 and 284 2 Probation officers (male) 2,160 Same Judiciary Law, 195 and 284 2 Probation officers (female) 2,160 Same Judiciary Law, 195 and 284 Telephone operator 1,464 Same Judiciary Law, 195 and 284 Messenger 2,400 Same Judiciary Law, 195 and 284 2 Laborers 1,449 Same Judiciary Law, and 284 195, Female prison helper 1,464 Same Judiciary Law, 195 and 284 Telephone operator 900 Same Judiciary Law, 195 and 284 Stenographer 4,500 Same Judiciary Law, 195 and 284 Stenographer, transcript fees totaling $989.50 Code Crim. Proc. 456 THE SUPREME COURT LIBRARY IN THE BOROUGH OF BROOKLYN Budget Mandatory Position Rate Rate Law Librarian $4, 800 Same Education Law, Assistant librarian 3, 000 Same Education Law, Clerk 2, 000 Same Education Law, Assistant clerk 900 Same Education Law, COUNTY CLERK, QUEENS COUNTY Position Deputy county clerk Assistant deputy county clerk Counsel to county clerk Private secretary Bookkeeper Financial clerk Deputy financial clerk 2 Assistant tickler clerks Notarial clerk Superintendent of block index. Index clerk 2 Index clerks Chief recording clerk Assistant chief recording clerk . Chattel mortgage clerk Budget Mandatory Rate Rate $4,500 $4,500 3,900 3,000 3,500 3,000 2,700 1,500 2,112 1,500 3,250 2,500 3,000 2,000 2,064 1,500 2,520 1,800 3,140 3,000 2,400 1,800 2,160 1,500 2,808 1,800 2,040 1,500 2,064 1,500 Law 1912, chap. 540, 3 1912, chap. 540, 3 1912, chap. 540, 3 1912, chap. 540, 3 1912, chap. 540, 3 1912, chap. 540, 3 1912, chap. 540, 3 1912, chap. 540, 4 1912, chap. 540, 4 1912, chap. 540, 1914, chap. 434 1912, chap. 540, 4 1912, chap. 540, 4 1912, chap. 540, 4 1912, chap. 540, 4 1912, chap. 540, 4 4; 204 INVESTIGATION or AFFAIRS OF NEW YORK CITY Budfel Mandatory Position rate rate '.-aw Satisfaction clerk 2,280 1,500 1912, chap. 540, 4 2 Docket clerks 2,040 1,500 1912, chap. 540, 4 Naturalization clerk 2,040 1,500 1912, chap. 540, 4; U. S. Stat. 1906, chap. 359, 13 Assistant*naturalization clerk. . . 1,708 1,200 1912, chap. 540, 4; U. S. Stat. 1906, chap. 359, 13 Mailing"clerk 2,040 1,300 1912, chap. 540, 4 Clerk 1,830 1,500 1912, chap. 540, 4 Chief clerk of marriage license > bureau 2,112 1,500 1912, chap. 540, 4 Assistant chief clerk of marriage license bureau 1,756 1,200 1912, chap. 540, 4 General clerk 1,756 1,200 1912, chap. 540, 4 3|General clerks 1,708 1,200 1912, chap. 540, 4 Supervisor of copying mutilated records 2,160 1,500 1912, chap. 540, 4 10 Copyists of mutilated records. . . 1,708 1,200 1912, chap. 540, 4 K Recording clerk, copyist 1,830 1,200 1912, chap. 540, 4 11 Recording clerks, copyists 1,708 1,200 1912, chap. 540, 4 4 Comparers 2,112 1,500 1912, chap. 540, 4 Searcher 2,880 2,000 1912, chap. 540, 4 Map draftsman 2,040 1,200 1912, chap. 540, 4 Stenographer 1,830 1,200 1912, chap. 540, 4 Record clerk and custodian .... 1,561 1,000 1912, chap. 540, 4 Custodian 1,464 1,000 1912, chap. 540, 4 Bank messenger and clerk 1,464 1,000 1912, chap. 540, 4 Messenger and clerk 1,449 800 1912, chap. 540, 4 Messenger 1,439 800 1912, chap. 540, 4 DISTRICT ATTORNEY, QUEENS COUNTY Budget Mandatory Position Rate Rate Law Assistant district attorney $4,500 $7,500 1921, chap. 161 3f Assistant district attorneys 3,500 6,500 1921, chap. 161 2JDeputy assistant district at- torneys 2,772 5,000 1921, chap. 161 Chief clerk 3,140 4,000 1921, chap. 161 Legal examiner 3,074 4,500 1921, chap. 161 Clerk 2,088 2,750 1921, chap. 161 Clerk (bail clerk) 1,200 2,500 1921, chap. 161 Clerk 824 1,800 1921, chap. 161 Stenographer 2,376 2,400 1921, chap. 161 Stenographer 2,400 1921, chap. 161 Stenographer to grand jury .... 1,464 1,464 1921, chap. 161 Stenographer to grand jury 1,464 1921, chap. 161 County detective "l,'944 2,100 1921, chap. 161 Investigator 2,160 2,400 1921, chao. 161 4 County detectives 1,823 2,000 1921, chap. 161 County detective 1,683 1,683 1921, chap. 161 Typist clerk 900 1,800 1921, chap. 161 Private secretary 3,000 1921, chap. 161 3 Process servers 1,500 1921, chap. 161 Phone operator 1,200 1921, chap. 161 Stenographer transcript fees totaling $1.000 Code Grim. Proc. 952 V REPORT OF JOINT LEGISLATIVE COMMITTEE 205 COMMISSIONER OP JURORS, QUEENS COUNTY Position Commissioner Assistant commissioner. . . Clerk 2 Clerks Jury notice server Stenographer Budget Mandatory Rate $5,000 3,250 2,160 1,823 1,610 1,376 Rate Same Same Same Same Same Same Law 1920, chap. 819 1921, chap. 640, 1921, chap. 640, 1921, chap. 640, 1921, chap. 640, 1921, chap. 640, PUBLIC ADMINISTRATOR, QUEENS COUNTY Position Public administrator Budget Mandatory Rate Rate $3, 500 Same Law 1921, chap. 778 NEW YORK STATE GUARD AND NAVAL MILITIA, QUEENS COUNTY NOTE. Wages of all regular employees totaling $7,300 are mandatory under Military Law, section 187, and following. SUPREME COURT, QUEENS COUNTY Position Budget Mandatory Rate Rate Law $4, 250 Same Judiciary Law, 3, 750 Same Judiciary Law, 2,750 Same Judiciary Law, 2,500 Same Judiciary Law, 2,400 Same Judiciary Law, 1,800 Same Judiciary Law, 2, 500 Same Judiciary Law, 2,500 Same Judiciary Law, 2,400 Same Judiciary Law, Special deputy clerk 3 Special deputy clerks 3 Assistant special deputy clerks. Chief court attendant 6 Court attendants Court attendant Court attendant Interpreter Interpreter SUPREME COURT, SECOND DEPARTMENT, APPELLATE DIVISION, QUEENS COUNTY Position Deputy clerk 2 Confidential clerks Case and consultation clerk . . Attendants Confidential clerks to justices. Budget Mandatory Rate Rate $9,299 06 5,451 05 Law See laws cited in 1921 budget, page 276 See laws cited in 1921 budget, page 276 COUNTY Coi Position Confidential clerk .... JRT, QUEENS COUNTY Budget Mandatory rate rate $3,250 $2,750 4,500 Same 3,350 Same 3, 100 Same 4,200 4,000 2,592 Same 2,500 Same 2,2?0 Same 2,700 Same 3,000 Same Special deputy clerk 2 Assistant special deputy clerks.. Assistant special deputy clerk . . Stenographer Court crier Chief court attendant 3j, Court attendants Interpreter 2 Countv detectives . . Law 1917, chap. 808 Judiciary Law, 287 Judiciary Law, 287 Judiciary Law, 287 1920, chap. 818 Judiciar} T Law, Judiciary Law, Judiciary Law, Judiciary Law, 1920, chap. 779 206 INVESTIGATION OF AFFAIRS OF NEW YORK CITY DISTRICT ATTC Position Assistant district attorney Assistant district attorney Chief or confidential clerk Grand jury stenographer. >RNET, RICHMOND COUNTY Budget Mandatory rate rate Law $3,500 Same 1920, caap. 795 3,500 Same 1920, chap. 795 2,500 Same 1920, chap. 795 2,000 Same 1920, chap. 795 1,500 Same 1920, chap. 795 1,800 Same 1920, chap. 795 1,500 Same 1920, chap. 795 2,500 Same 1920, chap. 795 Grand jury stenographer Process server and clerk Messenger Assistant district attorney COMMISSIONER OF JURORS, RICHMOND COUNTY Budget Mandatory Position rate rate Law Commissioner ................ $2, 500 $1, 500 1S99, chap. 441 Assistant commissioner ........ 2, 160 2, 160 1921, chap. 640, 6 Clerk ........................ 2,160 2,160 1921, chap. 640, 6 NEW YORK STATE GUARD AND NAVAL MILITIA, RICHMOND COUNTY NOTE. Wages of all regular employees totaling $13,505 are mandatory under Military Law, section 187, and following. SUPREME COURT, RICHMOND COUNTY Budget Mandatory Position rate rate Law Special deputy clerk ........... $4,500 Same Judiciary Law, 168 Special deputy clerk ........... 4,250 Same Judiciary Law, 168 Clerk ........................ 3, 250 Same Judiciary Law, 168 Court attendant .............. 2, 600 Same Judiciary Law, 354 2 Court attendants ............. 2, 100 Same Judiciary Law, 354 Confidential clerks to justices. . 1,666.36 Same Judiciary Law, 160 and 279 SUPREME COURT, SECOND DEPARTMENT, APPELLATE DIVISION, RICHMOND COUNTY Budget Mandatory Position rate rate Law Deputy clerk ............... ) 2 *u> 02 ........ Attendants ................ ] Confidential clerks to justices.. . 963 71 ........ See laws cited at page 290 of the 1921 budget COUNTY COURT AND SURROGATE'S COURT, RICHMOND COUNTY Budget Mandatory Position rate rate Law Court stenographer .............. $4, 200 $4, 000 1920, chap. 818. SUPREME COURT LIBRARY, RICHMOND COUNTY Budget Mandatory Position rate rate Law Librarian .................... $3, 000 Same Education Law, 1180-c Assistant Librarian ........... 1,464 Same Education Law, 1180-c Junior clerk .................. 900 Same Education Law, 1180-c Grand total above mandatory fixations .......................... $5, 389,025.44 REPOET OF JOINT LEGISLATIVE COMMITTEE 207 EXHIBIT 2 Mandatory County Salaries. The following is a list of the Mandatory County Salaries which would not be affected by a bill similar to the one attached Exhibit 3 (Senate Int. 590, Print 622, 1916) because they pertain to judicial or elective offices. It is interesting to note that the salaries of the County Clerk of Richmond county and the Sheriff of Queens County are, at present, discretionary although they are also elective officers. Furthermore, the additional compensation to the County Judges for services in drawing jurors, is discretion- ary under Judiciary Law Section 26 although they are judicial officers. It will be noted that the Commissioners of Jurors of each county are listed in Table I, although in a later amendment to Senate Int. 590 of 1916 Commissioners of Jurors were also excepted from its operation. NEW YORK COUNTY Budget Mandatory Position rate rate County clerk $15, 000 Same District attorney 15, 000 Same Register 12,000 Same Sheriff 12,000 Same 28 Justices of the Supreme Court, first department, New York and Bronx counties 7, 500 Same 7 Judges, court of general sessions 17,500 Same 2 Surrogates 15,000 Same Law 1884, chap. 299 1920, chap. 822 1921, chap. 227, 2510 1920, chap. 565 Const., art. VI, 12 1911, chap. 526 1919, chap. 641 BRONX COUNTY Budget Mandatory Position rate County clerk $10,000 District attorney Register Sheriff Surrogate County judge . Visiting judge . 10,000 10,000 10,000 10,000 10,000 2,000 rate Same Same Same Same Same Same Same KINGS COUNTY County clerk $12, 000 District attorney 15, 000 Register 12,000 Sheriff 15,000 14 Justices of Supreme Court, second department Justices designated to Appellate Division from other districts.. Official referees at Appellate Division 39,728 46 Official referees 2, 820 06 Surrogate 15,000 00 Same Same Same Same Law 1913, chap. 266, 1913, chap. 266, 1913, chap. 266, 1913, chap. 266, 1913, chap. 266, 1913, chap. 266, 1921, chap. 141 1911, chap. 641 1920, chap. 825 1911, chap. 780 1901, chap. 705 7, 500 Same Const., art. VI, 12 8,04211 Same Judiciary Law, 76 Same Judiciary Law, 116 Same 1913, chap. 724 Same 1919, chap. 641 208 INVESTIGATION OF AFFAIRS OF NEW YORK CITY QUEENS COUNTY Budget Mandatory Position rate rate Law County clerk $8,000 00 Same 1912, chap. 540 District attorney 12,000 00 Same 1912, chap. 161 Additional compensation to justices of second department residing outside Kings county. 39,519 64 Same Const., art. VI, 12 Justices designated to Appellate Division from other districts.. 2,621 91 Same Judiciary Law, 76 Official referees to Appellate Division 12, 952 40 Same Judiciary Law, 116 Official referees 919 41 Same 1913, chap. 724 Surrogate 10, 000 00 Same County Law, 232 County judge 10, 000 00 Same County Law, 232 RICHMOND COUNTY District attorney $15,000 00 Same 1915, chap. 408 Sheriff 6,000 00 Same 1916, chap. 83 Additional compensation to justices residing outside Kings county 6, 986 84 Same Const., art. VI, 12 Judges designated to Appellate Division from other districts. . 463 54 Same Const., art. VI, 12 Official referees of Appellate Division 2, 289 91 Same Judiciary Law, 116 Official referee 162 55 Same I -Lc/^JLj Cil&p. iOJ- \ 1913, chap. 724 County judge and surrogate. ... 7, 500 00 Same County Law, 232 Grand total above mandatory fixations ........................... $837,506.83 EXHIBIT 3. STATE OF NEW YOEK. No. 622 Int. 590. IN SENATE, FEBRUARY 21, 1916. Introduced by Mr. Brown (for the committee) read twice and ordered printed, and when printed to be committed to the Committee on Affairs of Cities. AN ACT To -provide for submitting to the voters of the city of New York the question; " Shall the expenses of County Offices of a county included within the city, and the salaries and compen- sation of all county officers and employees of any such county, except judicial or elective officers, be fixed by the city author- REPOKT OF JOINT LEGISLATIVE COMMITTEE 209 ities ; " and declaring the effect of an affirmative determi- nation of such question. The People of the State of New York, represented in Senate and Assembly, do enact as follows: Section 1. There shall be submitted to the voters of the city of New York at the general election held in November, nineteen hndred and seventeen, the question: " Shall the expenses of county offices of a county included within this city, and the salaries and compensation of all county officers and employees of any such county, except judicial or elective officers, be fixed by the city authorities ? " If a majority of votes cast on such question at any election be in the affirmative the power to fix and determine the expenses of the county offices of any county included within the city, and the amount and the times and manner of payment of the salary or compensation of any county officers or employees of any such county, except a judicial or elective officer and the term of office and mode of appointment, number and grade of any appointive county officer, and of the clerks, assistants or employees in any county office, shall notwithstanding the provisions of any general, special or local law, be vested in the city authority or authorities which would have power, in the absence of statutory regulation, to fix and determine such expenses, salaries, compensation or other matters, if such offices, officers or employees were offices, officers or employees of the city. 2. This act shall take effect immediately. Amendments in later prints of this bill were as follows: Amendment No. I. except a judicial or elective officer, a commissioner of jurors, and officers or employees of a Court of Record, or an assistant or employee of a district attorney, Amendment No. II. judge or justices, an elective officer, a clerk of a court of record, a commissioner of juror, a district attorney, 210 INVESTIGATION OF AFFAIRS OF NEW YORK CITY EXHIBIT 4. MANDATORY SALARIES IN 1921 BUDGET (EXCLUSIVE OF COUNTY POSITIONS) BOARD OP ALDERMEN Position Budget Mandatory Mandatory Law rate rate total Vice chairman $4, 000 $4, 000 $4, 000* Charter, 18 Chairman, finance com- mittee 4, 000 4, 000 4, 000* Charter, 18 65 Aldermen. .' 3,000 2 ; 000 130,000* Charter, 18 BOARD or ELECTIONS Position Budget Mandatory Mandatory Law rate rate total All 964,073 Election Laws 200, Char- ter, 230 LICENSE DEPARTMENT Position Budget Mandatory Mandatory Law rate rate total Commissioner 7,500 7,500 7,500 Charter, 640 BOROUGH PRESIDENTS Position Budget Mandatory Mandatory Law rate rate total Five 10,000 10,000 50,000* Laws 1920, chap. 32, Charter, 38 BOARD OF EDUCATION Position Budget Mandatory Mandatory Law rate rate total 49,912,415.67* Education Law 887, subd. 7, represents product of mandatory 4.9 mill tax COLLEGE OF THE CITY OF NEW YORK Position Budget Mandatory Mandatory Law rate rate total Total Personal ser- vice 903,041.66 Laws 1918, chap. 583; Charter, 1131 BROOKLYN INSTITUTE OF ARTS AND SCIENCES Position Budget Mandatory Mandatory Law rate rate total 20,000 Charter, 230; 624; Laws 1911, Chap. 696; Laws 1906, Chap. 618 POLICE DEPARTMENT Position Budget Mandatory Mandatory rate rate total Law Chief surgeon .. $6,500 $3,500 $3,500 Charter, 299 Marine inspector 4,900 4,400 4,400 Laws 1920, Chap. 708; Charter, 276-C Chief lineman . . 2, 400 1, 200 1, 200 Charter, 276-A REPORT OF JOINT LEGISLATIVE COMMITTEE 211 2 Deputy Com- missioners.. . . Volunteer system: Queens Richmond. . 5,500 FIRE DEPARTMENT 5,000 10,039 Cia-ter, 720 15,400 15,400 10,800 10,800 15,400 Cha-ter, 722 10, 800 Charter, 722 Commissioner . . Position rate rate 10 Justices 10 Stenographers . . 812,030 3,800 $12,030 3,000 1 Clerk 6,500 6,000 1 Deputy clerk. . . 4,500 3,000 1 Deputy Clerk . . 4,000 2,000 1 Deputy clerk... 3,560 2,000 2 Deputy clerks. . 3,074 2,000 12 Assistant clerks . 3,074 1,500 1 Assistant clerk.. 2,616 1,500 7 Assistant clerks. 2,520 1,500 3 Interpreters 2,640 1,500 1 Chief attendant. 2,304 1,200 24 Attendants 2,160 1,200 1 Librarian 3,500 3,500 DEPARTMENT OF PLANT AND STRUCTURES 7,500 7,500 7,500 Laws 1916, Chap. 523 CITY COURT Budget Mandatory Mandatory total Law 120,003* La,v 1907, Chap. 707, 4 30,000 Law 1893, Chap. 651 and N. Y. C. Court Aat 11 6,000 N. Y. C. Court Act 5; aTi'd 1921 3,000 Consol. Act. 1275 Am'd. 1894 and N. Y. C. Ct. Act. 5 2,000 Consol. Act. 1275 Am'd 1894 and N. Y. C. Ct. Act. 5 2,000 Consol. Act. 1275 Am'd. 1894 and N. Y. C. Ct. Act. 5 4,000 Consol. Act. 1275, Am'd 1894 and N. Y. C. Ct. Act, 5 18,000 Consol. Act. 1275, Am'd 1894 and N. Y. C. Ct. Act, 5 1,500 Consol. Act. 1275, Am'd. 1894 and N. Y. C. Ct. Act, 5 10,500 Consol. Act. 1275, Am'd. 1894 and N. Y. C. Ct. Act, 5 4,500 Consol. Act. 1275, City Ct. Act, 12 1 , 200 Laws 1898, Chap. 172 and N.Y. C. Ct. Act, 14 28, 800 Laws 1898, Chap. 172 and N. Y. C. Ct. Act, 14 3,500 Laws 1921, Chap. 709; Salary fixed by Trustees of Library at not over $5,000 CITY MAGISTRATES COURT Budget Mandatory Mandatory Position rate rate 1 Chief magistrate 11,000 10,000 total Law 10, 000* Laws 1915, Chap. 531 Position 41 Justices. . . 6 Justices. . . 18 Clerks... MUNICIPAL COURTS Budget Mandatory Mandatory rate rate 9,000 9,000 8,003 3,000 8,000 3,500 total Law 369,000* Laws 1920, Chap. 310 4S,000* Laws 1920, Chap. 310 54,030 Laws 1915, Chap. 279 and 581; Charter 1373. All em- ployees transferred " at their present salaries." 6 Clerks 3,000 2,000 12,000 Laws 1915., Chap. 279 and 581; Charter 1373. All em- ployees transferred " at their present salaries." 212 INVESTIGATION OF AFFAIRS OF NEW YORK CITY 18 Deputy clerks. . . 3,500 3,000 54,000 Laws 1915, Chap. 279 and 581- Charter 1373. All em- ployees transferred " at their present salaries." 6 Deputy clerks . . 3,000 2,000 12,000 Laws 1915, Chap. 279 and 581 ; Charter 1373. All em- ployees transferred " at their present salaries." 42 Assistant clerks. 3,500 3,000 126,000 48 provided in budget but only 44 were transferred in 1915. 2 Assistant clerks. 3,500 2,000 4,000 48 provided in budget but only 44 were transferred in 1915 45 Stenographers. . 3,074 2,000 90,000 46 prov : ded for, only 45 trans- ferred 9 Interpreters. . . . 2,232 1,500 12,500 46 provided for, only 45 trans- ferred 12 Interpreter .... 2,160 1,500 18,000 46 provided for, only 45 trans- ferred 1 Interpreter 2,088 1,500 1,500 46 provided for, only 45 trans- ferred 1 Interpreter 2,040 1,500 1,500 40 Drovidcd for onlv 4^) trSiim ferred 2 Interpreters. . . . 2,016 1,200 2,400 46 provided for, only 45 trans- ferred 109 Attendants.... 2,160 1,500 163,500 46 provided for, only 45 trans- ferred 8 Attendants 1,944 1,500 12,000 46 provided for, only 45 trans- ferred 1 Bookkeeper .... 2,376 2,000 2,000 46 provided for, only 45 trans- ferred 1 Attendant to Board of Jus- tices 1,040 300 300 46 provided for, only 45 trans- ferred Grand total $53 275 530 53 Total of starred items. . . 50 647 415 67 Total unstarred items . ... $2 6?8 114 86 EXHIBIT 5. STATE OF NEW YOKK. 3d Edg. 656. Nos. 626, 1487, 1557, 1734. Int. 59 IN SENATE, FEBRUARY 21, 1916. Introduced by Mr. Brown (for the ISTew York Committee) read twice and ordered printed, and when printed to be com- mitted to the Committee on Affairs of Cities reported favor- ably from said Committee with amendments, and ordered reprinted as amended, and committed to the Committee of the Whole amended and ordered reprinted as amended and EEPOBT OF JOINT LEGISLATIVE COMMITTEE 213 when printed to be recommitted to the Committee of the Whole ordered to a third reading, amended and ordered reprinted retaining its place in the order of third reading. AN ACT To provide for submitting to the voters of the city of New York the question : " Shall the salaries or compensation of all city or borough officers and employees, except the salaries of judi- cial or elective officers and of members of the supervising or teaching staff of the department of education, be fixed by the local authorities ?" and declaring the effect of an affirma- tive determination of such question. Tlie People of fJie State of New York, represented in Senaie present and former members of the Police Department, largely, if not wholly, because of their official positions. It found thht such persons had benefited materially from investments, from business connections, from gifts and from real estate transactions. For example : Richard E. Enright. On February 15, 1918, Commissioner Enright appointed Dr. John A. Harriss a Special Deputy Commissioner. On March 4, 1918, seventeen days later, Dr. Harriss purchased a Packard Twin-Six automobile from the Packard Motor Car Company, at a cost of $4,622.40. The initials "E. E. E." were ordered placed on that car, and the car was put at the disposal of Eichard E. Enright. Commissioner Enright testified that the car had not been given to him "yet," saying, "He would have given it to me if I wanted it. I told him I would discuss that with him after I got through with the office." In the meantime, the Commis- sioner uses it as his own and the expense of maintaining it (in- cluding the purchase of an eighty dollar pair of field glasses) is borne by the City of New York, out of Police Department funds. On April 15, 1918, Commissioner Enright appointed Allan A. Kyan a Special Deputy Commissioner and on April 16, 1918, a Stutz automobile was delivered to Commissioner Enright. This car was paid for on April 16th by a cheque of Allan A. Eyan's for $2,641.50. Commissioner Enright testified that this was a gift to Mrs. Enright from Mr. Eyan, Mr. James H. Ward and, he thought, others. Commissioner Enright was not married, how- ever, until November, 1918. In April, 1919, Commissioner Enright received a cheque for $12,083.29 from Allan A. Eyan & Co., representing " profits r on a transaction in Morton Petroleum stock. Commissioner Enright put up no money himself, did not know when the stock was purchased nor when it was sold. About four months after a conversation with Eyan about possible stock speculation, he received a report of the Morton Petroleum transaction and the cheque. REPORT OF JOINT LEGISLATIVE COMMITTEE 241 Edward P. Hughes. Edward P. Hughes, a friend of Commissioner Enright's, re- tired as police inspector February 15, 1918, for " physical dis- ability " and organized a piivate detective agency. He received contracts to police the piers of a number of steamship lines and the testimony taken before the Committee showed that his close relations with the Police Department were of material value to him in getting and keeping business. An examination of his various bank accounts, business, per- sonal and joint with his wife showed deposits between January 1, 1918, and September 15, 1921, totaling over one million dollars, as follows: 1918 1919 1920 1921 Detective service ... . $97,67882 $255,09005 $267,94577 $130,63100 Up to Septem- ber 15. E.P.Hughes 133,23822 112,94230 32,40443 Up to Septem- ber 15. Joint account 23,089 92 8,237 08 4,770 50 3,125 00 Up to Septem- In addition, Hughes had a speculative account with Allan A. Ryan & Co. This was opened in 1916, but showed dealings of only $2,335.14 up to February 28, 1918. In 1918, however, the total was $7,900, and in 1919 it was $105,000. Domini ck Henry. The financial transactions of Police Inspector Dominick Henry were not so spectacular. His salary was $4,900 per annum and his bank accounts showed deposits as follows: 1918 $10,184 04 1919 14,659 73 1920 9,095 00 1921 to September 7 242 30 Henry's account with Billings, Olcott & Winsmore also showed the outright purchase of stocks as follows: October, 1919 $10,552 95 November, 1919 35,825 00 May, 1920 21,615 69 The most significant fact established by the Committee with respect to Inspector Henry's personal forturieb was that the Xavigazione Generale Italiana, a steamship line leasing two North River piers, donated $1,000 to Henry, the Inspector in whose district the piers were located. The steamship company 242 INVESTIGATION OF AFFAIRS OF NEW YOKK CITY had not been getting adequate protection, and in the course of a conference at police headquarters to discuss this matter, Henry suggested that an ex-police inspector named Cross be employed in place of the Vachris detective agency, to furnish watchmen on the piers. The change was made but the new arrangement cost the steamship company twice as much as the old, exclusive of the payments to Henry. These payments were explained by Francis Gilbert, the attorney who made them, as having been made because of sympathy for Henry who was under indictment at the time for neglect of duty and who was very hard up because of the expenses incident to his trial. The first " contribution " by the Italian line to relieve Henry's poverty amounted to $500 and was entered on their ledger under date of May 21, 1920, as " Gratuity as per advice of Gilbert $500." On the same day, namely, May 21, 1920, Henry paid $18,615.69 to the firm of Billings, Olcott & Winsmore, which amount with the sum of $3,000 paid the preceding day was the purchase price of stocks bought by him and costing $21,615.69. John F. Dwyer. During the Committee's investigation of the financial opera- tions of high officials in the Police Department, it learned of the purchase by Inspector John F. Dwyer of an apartment house, through the office of Warren Leslie, an attorney. The Committee accordingly made a careful inquiry into the facts and into the relations of Leslie and Dwyer, and found: 1. That, in 1920, Leslie arranged for the purchase by Dwyer, at the price of $152,000, of the apartment house at 403 West 115th street, through Leslie's father as a dummy, and for the subsequent transfer thereof to the Park Court Realty Company, a corporation formed for the purpose of holding the property, Dwyer's interests in these transactions being carefully concealed. 2. That in 1919, Leslie arranged for the sale by Inspector Dwyer of an interest which the latter owned in a hotel known as the Hotel Van Cortlandt, or more recently the Hotel DeFrance, located at 142 West 49th street, and notorious for years for its immoral character. 3. That Leslie had utilized the services of at least one police officer on Dwyer's staff, to secure evidence in a case of private litigation in which Leslie had been retained as REPORT OF JOINT LEGISLATIVE COMMITTEE 243 counsel, and that much of the evidence thus secured was obtained by tapping the telephone wires of the person con- cerning whom evidence was desired, in violation of section 1423 of the penal law. The Apartment House Transaction. Committee Exhibit ^"o. 243 of October 4, 1921, is a contract for property executed in March, 1920, and covering the sale by the Simley Realty Corporation to Warren Leslie of the above mentioned property on West 115th street, for a consideration of $152,000. Dwyer was the actual purchaser of this property, but when conveyance was actually made the grantee named was one William Leslie, father of Warren Leslie. The property was subsequently transferred by the nominal grantee to the Park Court Realty Company, a corporation organized in Warren Leslie's office and whose directors were persons employed in Warren Leslie's office. Annie L. Rogers, a tenant of this apartment house, identified (p. 2240) Inspector Dwyer as the man who introduced himself to her on a date subsequent to August 15, 1921, as the owner and superintendent of the apartment house. Frank Wulf, a member of the police reserves, testified (p. 2542) that at Inspector Dwyer's request he did some work at 403 West 115th street, that Dwyer' s son Ralph would, from time to time, call up Cortlandt 33 and ask for " Dad/ 7 for instructions about the work, and that sometimes Inspector Dwyer himself would come and give instructions about the work. On August 31, 1921, John F. Dwyer made an affidavit in connection with litigation between a tenant and the Park Court Realty Company, to the effect that he was neither a director, officer, nor agent of the corporation, and was in no wise connected with the management or business affairs of said corporation. On September 16, 1921, he made a second affidavit in the same case to the effect that he was neither " an officer, director, nor stock- holder of the defendant herein" (Park Court Realty Corpora- tion), that he had " no financial interest in said company," and denying that he was "the owner of the premises referred to 77 herein, and denying that he had " any interest therein. 77 The affidavit continues, "Deponent further says that since July, 1920, when the Park Court Realty Company, Inc., acquired the prop- erty, I have visited the premises on several occasions solely for 244 INVESTIGATION OF AFFAIRS OF NEW YORK CITY the purpose of seeing my two sons, James and Ralph, both of whom lived at the time in the premises." Thirteen days later (September 29) Dwyer testified before the Committee under oath that he was the purchaser of this property, that, on the advice of Leslie he had the property conveyed to Wil- liam Leslie, but that (p. 2276) he was the " real party in inter- est," and that it was by his (Dwyer's) direction that the prop- erty was conveyed by William Leslie to the Park Court Realty Company. He stated to the Committee that (p. 2279) "between the seventh of June and probably the first of July" he assigned all of his shares in that company to his son and that his son (p. 2281) paid nothing for the stock so assigned. When asked as to his son's whereabouts, Dwyer replied (p. 2279) "He left here on the steamer l Steelmaker ' for Boimbay, India, calling) at several ports on the way. The boy got sick." Dwyer also stated at first that he had a general power of attorney from his son, but later denied it. With respect to Dwyer's statement that his son was sick, Patrick F. Donnelly, marine superintendent, Isthmian Steamship Tine, owners of the S. S. " Steelmaker," on which James L. Dwyer sailed, testified (p. 2497) that Dwyer introduced his son, James, by letter, saying " he is desirous of going to sea and I will appreciate anything you may be able to do for him," and that as a result the boy was shipped as an ordinary seaman with wages of $52.50 a month. In reply to' the question: "Was he in good health ? ", Donnelly said, " He appeared to be all right." With respect to Dwyer' s statement that he had assigned all his stock in the Park Court Realty Company to his son before the latter sailed, Gertrude M. Steinway, an employee in Leslie's office and secretary and treasurer of the Park Court Realty Company, produced the stock book of the company which showed the follow- ing distribution of stock as of October 4, 1921 : Date Number Name of Issue of Shares John F. Driscoll April 6, 1921 5 Cornelius F. Dwyer April 6, 1921 29 John F. Dwyer! April 6, 1921 106 Gertrude M." Steinway April 11, 1921 1 James L. Dwyer .. April 6, 1921 30 EEPOET OF JOINT LEGISLATIVE COMMITTEE 245 Her testimony on this point follows (p. 2499) : " Q. Has any transfer of 106 shares issued to John F. Dwyer to anybody else by him have you any record of it ? A. ^N"O, I have not. Q. Has your attention been called to it in any way? A. It has not." The evidence indicates that Inspector Dwyer, in spite of his affidavits and testimony remains the real party at interest with respect to the Park Court Kealty Company property. The Hotel Van Cortlandt Hotel De France. Dwyer admitted (p. 2528) that he had been a stockholder in the company which owned the Hotel De France, formerly the Hotel Van Cortlandt, on West 49th Street. The Committee subpoenaed transcripts of the bank accounts of Leslie and Dwyer with the Empire Trust Company, and also Dwyer's deposit slips. These records showed that Dwyer depos- ited on January 22, 1920, a check on the Empire Trust Com- pany for $6,651.45, and that on the same day Leslie's account was charged with this item. Leslie voluntarily offered to exhibit his personal ledger and to explain to the Committee the circum- stances surrounding all his payments to Dwyer, including this amount. He was given this opportunity informally and exhib- ited a ledger containing an account with Dwyer in connection with the Hotel De France property, thus establishing the fact that he had handled funds from the sale of Dwyer's interest in that hotel. The unsavory character of that hotel in the past few years has been notorious, and as Dwyer for some time was the Police Inspec- tor in command of the Fourth Inspection District in which this hotel was located, he must have known officially of its disorderly character, but he testified that the reputation of the hotel was good, that he never stationed policemen at the hotel to suppress a nuisance, and that he knew of no men being stationed there for that purpose. The records of the Police Department with respect to these premises, however, contain a copy of a letter written by the Police Commissioner, September 26. 1918, to the receiver of the Hotel Van Cortlandt, reading in part as follows: " For s^me time past the Hotel Van Cortlandt was run in a manner that compered strict police surveillance. Its *. 246 INVESTIGATION or AFFAIRS OF NEW YORK CITY reputation as a rendezvous for undesirable characters is so confirmed that the police of the district have felt it necessary to continue to give it, at least, casual supervision." Police Commissioner Enright described this hotel in his testi- mony before the Committee, as follows: (p. 3672) " It is one of many other such houses in this town we have to watch all the time. * * * They have entertained single men and their wives, and single ladies and their hus- bands frequently. You would be surprised too, Senator, if you knew who some of them are." The police records also show three arrests at the Hotel Van Cortlandt Hotel De France for prostitution in 1918, and one in 1920, and- that patrolmen were stationed at the hotel from April 24, 1918, to May 10, 1918 ; from June 25, 1918. to July 2, 1918 ; from November 23, 1918, to November 24, 1918, and from October 31, 1920, to November 2, 1920. That a police inspector should be financially interested in such a resort needs no further comment. The Wire-tapping Case. Warren Leslie, Dwyer's attorney in these other two transactions, was engaged as counsel by Mrs. Allers in her litigation against her husband. He employed John W. Sutter, a policeman on Dwyer's staff, and Sutter's brother-in-law, James Shaw, to secure evidence against Dr. Allers. Sutter came almost daily to Leslie's office with detective reports and was known by at least one person in the office as " Shaw." The real Shaw rented a room in a house across the street from Dr. Allers' house and after the room was thus rented a wire was strung to it from the telephone post on the street. Shaw told his landlord that he was a detective. The land- lord testified that the wire was fastened to a hook outside the window and that there was a little round attachment to the end of the wire. The landlord's wife identified SHitter as a frequent visitor to Shaw's room, but stated that he was known to her not as Sutter, but as Sullivan. Persons employed in Leslie's office admitted that they knew of the wire tapping and that they had heard Leslie discuss the mat- ter. A lawyer associated with Leslie in the case refused to use the evidence secured in this manner when he learned how it had REPORT OF JOINT LEGISLATIVE COMMITTEE 247 been secured and by whom. He testified that Shaw admitted under pressure that Dr. Allers' wires had been tapped and that reports purporting to be reports of " shadowing " were in fact written up from listening in to telephone conversations. Mrs. Anna F. Wamsley of Olmstedville, N. Y., identified Sutter as a man who came to her home in November, 1919, to make inquiry about Dr. Allers. Leslie denied knowledge of the wire-tapping and explained Butter's frequent visits to his office by saying, " What Sutter came to my office with were charges preferred against members of the police reserve, which I looked over and passed upon before they were filed. That was his business in my office." The records of police reserve court-martials, however, show a total of only 51 cases from July 20, 1918, to October 1, 1921, only 11 of which bear Leslie's name. The latest of these 11 is dated April 4, 1919, and was concluded May 2, 1919, several months before the detec- tive work described above. Sutter's " very frequent visits " to Leslie's office after May 2, 1919, must therefore be explained in some more plausible way if he is to be cleared of the charge against him. It appears from the evidence that Sutter, Shaw and Leslie per- jured themselves before the Committee and that Sutter and Shaw violated the penal code by tapping the telephone wires of Dr. Allers. 1 248 INVESTIGATION OF AFFAIRS OF NEW YORK CITY DIVISION OF LICENSED VEHICLES OF DEPART- MENT OF LICENSES. The Department of Licenses was created by Chapter 475 of the Laws of 1914 as a consolidation of most, but not all, of the previously existing licensing agencies of the C'ity government. It has control of the licensing, among other things, of hacks, cabs and taxicabs and of drivers or chauffeurs of hacks, cabs and taricabs. That part of its jurisdiction is exercised through the Division of Licensed Vehicles. The City ordinances (Chapter 14) provide, with reference to the vehicles ( 84) that they shall not be licensed until they have been " thoroughly and carefully inspected * * and found to be in thoroughly safe condition * * *, clean, fit, of good appearance and well painted and varnished." Taximeters must be examined for accuracy. With reference to taxicab chauffeurs the ordinances, while not expressly so providing, con- tain provision doubtless intended to prohibit the licensing of any but persons of good character. They require the produc- tion of affidavits of good character from two reputable citizens, a " testimonial " from the last employer and the filling out of a sworn statement showing, among other things, whether the ap- plicant " has ever been convicted of a felony or a misdemeanor " and " whether he has ever been summoned to court," Prior to this administration, the discharge of this branch of the License Department's functions had been largely committed to the Chief of the Division of Licensed Vehicles. Cabs were kept clean and safe; taximeters were reasonably accurate; and taxicab chauffeurs were kept under strict supervision. The pub- lic was well served, but the drivers complained of the rigid control to which they were subjected. With the advent of the present administration, this control was considerably relaxed. The Chief of the Division of Licensed Vehicles was shorn of power. An official sub- ordinate was made his actual superior in charge of the issue of licenses and one of the Deputy Commissioners, James F. Geraghty, a district leader in the Bronx, was placed in direct charge of the Division. From time to time the complicity of taxicab chauffeurs in crimes of violence, often com- mitted in broad daylight, roused public concern. While this branch of the inquiry was under way, Geraghty ? s resignation was invited and submitted. REPORT OF JOINT LEGISLATIVE COMMITTEE 249 The Committee's investigation disclosed that the administra- tion of the Division of Licensed Vehicles of the License Depart- ment under Deputy Commissioner Geraghty not only made it a hot bed of petty graft, but that the safety of the public has been seriously menaced by the large number of licenses, as taxi- cab drivers, issued to ex-convicts. All of such cases were not located by the Committee. That was prevented by the obstruc- tive tactics of certain members of the division's force and by lack of time available for this phase of the investigation. The Committee did, however, find that taxi-drivers' licenses had been issued within a year to 153 convicted felons and 226 persons convicted of serious misdemeanors. These 379 licensees were either actively plying their trade with the approval of the de- partment or were the holders of licenses enabling them so to do, which the department made no serious effort to cancel. In many of these instances the criminal records of the applicants were known before the licenses were issued and in all of them, it should have been known before such issue. Of the 153 con- victed felons who were licensed taxi-drivers, sixty-seven had been convicted of grand larceny, thirty-five of burglary, five of rob- bery, fifteen of felonious assault, five of assault in the second degree, three of rape, three of abduction and twenty of miscel- laneous felonies. In many instances licensees had been convicted of the same or of an assortment of felonies at various times prior to obtaining the license. They have been counted only once in the foregoing statement. Of the convicted misdemeanants holding licenses, slightly more than half, 117, had been convicted of petty larceny. This is, however, more serious than it seems, because many of these were cases, in which petit larceny was the plea of guilty upon the charge of grand larceny, burglary or other graver crime. In- toxication, impairing the morals of a minor, unlawful entry, indecent exposure and having concealed weapons were among the other convictions against persons to whom licenses were granted. The explanation of such a condition may be in mere ineffi- ciency. Certainly the haphazard confusion in which the records of the division were found was well calculated to increase its difficulty in locating its information about a given applicant. On the other hand, the evidence in relatio-n to other activities of the division, difficult as it was to get from those who had been victimized and who naturally feared reprisal for any disclosures they might have made, would tend to indicate that convicts ob- 250 INVESTIGATION OF AFFAIES OF NEW YORK CITY tained taxi-drivers 7 licenses either for a money payment or through the use of political influence. The inspection of a taxi-cab submitted for license has been a prolific opportunity for petty graft. One inspector would ex- amine the brakes; another the general appearance of the cab. The second began after the first finished and gave the applicant an O. K. slip. These " O. Ks " caried a well understood price. This condition had been brought to the attention of Geraghty by one of the hackmen and Geraghty promised to end it, but nothing was done. Geraghty's tolerance is not difficult to understand in view of his own standards of conduct in public office. For instance, when his political club held an " outing " twenty-seven taxicabs were furnished him gratis by an association of taxi-drivers, which itself paid the men who owned the cabs. When his club gave an affair this same organization was requested to and did buy $100 worth of tickets. When the bill for the transfer of juris- diction over the licensing of cabs and drivers was pending, em- ployees of the division professed to fear for their positions and raised a fund for expenses in working up opposition by the sale of raffle tickets among the persons licensed by the department. In a word the division has been completely demoralized. The Routine of a Taxi-Driver's Application. In relation to the issue of taxi-drivers' licenses, the claimed routine should be stated. The applicant for a license to drive a hack or taxicab goes to 517 West 57th Street, the office of the Division of Licensed Ve- hicles and sumbits his application to John S. Egan, inspector of licensed vehicles. If he desires a license to drive a taxicab he is asked to give his state chauffeur's license number and must have one before a taxi-driver's license is issued to him. He is then given an application to fill out. This includes the usual questions as to name, residence, age, place of birth, etc., and in addition the following question : " 10. Have you ever been ar- rested or summoned to court? Give particulars and disposition of every such case." The applicant is required to give the names and addresses of his employers and his occupation for the past five years. He must give a personal description of himself, sup- ply two copies of his photograph, and submit an impression of his finger prints. He must have two witnesses who will vouch for his character and a statement from a reputable physician.. REPORT OF JOINT LEGISLATIVE COMMITTEE 251 that he is physically fit to drive a taxicab and in addition he must have a certificate of his employer stating the reason for the termination of the employment. On the reverse side of the finger-print record is a space headed " Remarks." This is for the notation of the Police Department. The finger-print rec- ord is signed by the license inspector who takes the applicant's finger prints. The original application and the finger-print record is sent from the License Bureau at 57th Street to the Investigation Squad of the Police Department at 30th Street between Sixth and Sev- enth Avenues. The application and finger-print record are generally received the same day they are completed and are delivered to the Investi- gation Squad by a messenger from the License Department, but in favored cases where an applicant is particularly anxious to have immediate action the applicant himself is permitted to de- liver the papers. When the finger-print record and the application are received by the Investigation Squad an entry is made in a book known as a Register of Applicants and Record of Finger Prints. The application is given a serial number. The name and address of the applicant and the state license number are also noted. In this book is also placed the date on which the final report is sent by the Police Department to the Department of Licenses with a statement as to the number of felonies, misdemeanors and sum- monses on the record of the applicant. There is also a nota- tion as to whether or not there is a finger-print record in the Police Department. The following day the finger-print record and the application are separated. The finger-print record is then sent to the Po- lice Department's Bureau of Criminal Identification for compari- son and search. In three or four days it is returned to the Investigation Squad with notations under the caption " Re- marks." These remarks give the criminal record of the appli- cant, stating the felonies and misdemeanors, together with the dates of the arrest. These notations are neither signed nor dated. In cases where the applicant's finger prints are not on record in the Police Department, the space is left blank, indicating that the man has no criminal record. Occasionally the examiner will write his name in the space under " Remarks " when there is no criminal record. After the notations above referred to have been entered in the Register of Applicants and Recording 252 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Finger Prints, the finger-print record is returned to the License Department at 57th Street. A copy of the finger-print record is retained hy the Investigation Squad. After being separated from the finger-print record the appli- cation itself is sent to the Old Record Room of the Police De- partment at MacDougal Street for search of arrests of any kind. After the records at the Old Record Room have been searched the application is sent to the Bureau of Information for a search of the records of the last two years. The applications are re- turned to the Investigation Squad from the Bureau of Informa- tion very irregularly in lots. This process, from the time the application leaves the Investigation Squad until it is returned, takes about two weeks. When returned the applications are checked off on the Register of Applicants and Record of Finger Prints to see that all have been returned. ~No date is placed on the application. Then the application blank is turned over to an investigator of the Investigation Squad. The staff of the Investigation Squad consists of fifteen regular men, including Acting Captain Finn. The squad is known as the " Crippled Squad " because the staff is composed of men who have been injured or incapacitated in the performance of duty. The in- vestigator who receives the application makes a personal investi- gation. He is supposed to interview the applicant and verify the statements on the application and other material details. He is supposed also to interview the vouching witnesses, the physi- cian and the former employer of the applicant and he is supposed to make general inquiries among the applicant's business asso- ciates and those in the neighborhood of his residence, as to the applicant's character and general fitness to drive a taxicab. When the investigation is completed the investigator makes his report to the Investigation Squad. The report of the investigator, together with all other data, including that originally noted on the finger-print record, com- prises what is known as the Police Report. A typewritten copy of this is sent to the Department of Licenses with the applica- tion by messenger. A copy of the report is retained by the In- vestigation Squad. Because of the detail of the investigation and the physical incapacity of the members of the squad it is quite usual for sev- eral months to elapse between the time the application is sent to the Police Department and the time it is returned therefrom to the License Department. REPORT OF JOINT LEGISLATIVE COMMITTEE 253 In the meantime the finger-print record having returned to the License Department, if it contains no notations in the " Re- marks " space, it is assumed that the applicant has no criminal record, and the License Department immediately issues a license. When the finger-print record is received from the Police De- partment with a notation under " Remarks " to the effect that the applicant has an important criminal record, the license is not issued. If the man has been convicted of a felony the appli- cation is marked " denied " and that is said to be the end of the case. If the police record shows an arrest the man is required to obtain from the court before whom he was arraigned the proper official documents, showing the disposition of his case. If he was convicted of a misdemeanor his papers are sent to Deputy Commissioner Geraghty at the main office. Geraghty passes on the merits of the case and marks the application 0. K. or denied. If Geraghty O. K.'s the application the license is issued. In many cases, although the finger-print record is returned with nothing to indicate a criminal record, the subsequent police report some time later discloses the fact that one applicant has such a record. In such cases, the license having been already issued to him, his file is removed from the " active " file and placed in the " suspended " file. A letter is then sent out to the licensee to the following effect : " Please call at this office as soon as possible with your badge and book as it is necessary to make some correction in same as there are two men working on this same number." If the licensee fails to see through this strategy and reports, his badge and book are taken from him and the entire container is sent down to Commissioner Geraghty for a hearing on the case. If Geraghty so 1 decides the license is re- voked. If not, the badge and book will be returned to the man and he will be permitted once more to operate. If the licensee does not call in response to the stupid " decoy " letter, neither the License Department inspectors nor the police are instructed to pick the man up. He continues to operate until he is disposed to call at the department either in response to a complaint for other misconduct or to get his license renewed. Perhaps at such time his license may be taken up because of his criminal record. The vices of such a procedure are obvious. No license should be issued until all the available police information with refer- ence to the applicant has been obtained. No applicant should be 254 INVESTIGATION OF AFFAIRS OF NEW YORK CITY permitted to act as messenger between the License Department and the Police Department. The police investigation should he made by able-bodied men and all reports should be signed and dated by the officer submitting them. The police should be re- quired actively to co-operate in picking up the licenses of per- sons improperly holding them. The applicant's false statement as to his criminal record should automatically cancel his license. While licenses expire on April 1st, the department permits men to operate for as much as six months thereafter without renewal of their licenses. In short, for aught that the authorities do to prevent, a convict once licensed and that does not appear to be difficult to achieve may operate unmolested for eighteen months. These conditions demand remedy. If the License Department is to retain jurisdiction, its administrative methods must be changed along the lines above mentioned. Doubtless too, much of the personnel in the Division of Licensed Vehicles should be changed. Upon that assumption the divided duty and responsi- bility between the Police and License Departments would persist. That may warrant the transfer of the jurisdiction to the Police Department, which alone has adequate force and equipment for investigation. That, however, would disrupt the centralization: of licensing jurisdiction effected for good reason in 1914 and,, moreover, the discharge of licensing functions by the Police De- partment has, in the past, and continues as to Steam Boiler in- spection and licensing, to be unsatisfactory. Upon these matters the Committee submits no recommendation for legislation, for it assumes that in the revision of the City Charter there will be a separation of the structure of the City Government from the administrative code thereunder, the latter to be adopted by the local authorities, together with jurisdiction vested in them to abolish and combine or consolidate existing bureaus. The dis- position, then, of the licensing function as to taxicab drivers would be for the local authorities to determine. REPORT OF JOINT LEGISLATIVE COMMITTEE 255 THE ADMINISTRATION OF THE DEPARTMENT OF MARKETS. The Committee's investigation of the Department of Markets leaves no doubt upon the fact that, under the administra- tion of Commissioner Edwin J. O'Malley, that department, created as a public agency to combat and control the rising cost of food to the people of New York City, has been perverted into a vehicle for the levy of " graft " and the play of political favor- itism, the cost of which must inevitably have been passed on to the public. The Establishment of the Department. Prior to the enactment of the Farms and Markets Law by Chap- ter 802 of the Laws of 1917, public markets in the City of New York, such as the Washington M'arket, the West Washington Market and Jefferson Market, had for many years been under the jurisdiction of the respective Borough Presidents as to their physical maintenance and of the Department of Finance as to the fixation and collection of rentals for space therein. During all that period no breath of scandal attended the administration of the markets and that situation continued during the brief period in the closing days of the administration of Mayor Mitchel during which the markets were administered upon the plan authorized by the legislation of 1917. That legislation (L. 1917, Ch. 802, Sect. 71) authorized the Board of Estimate and Apportionment, by resolution approved by the Board of Aldermen, to establish a Department of Markets, headed by a Commissioner, appointed and removable at pleasure by the Mayor. Such resolutions were duly adopted by the respec- tive Boards in June and July 1917. Sections 72 and 74 define the jurisdiction of the department, concentrating in it all the jurisdiction previously exercised by the Borough Presidents and by the Finance Department. The Com- missioner was authorized to make rules governing the markets, subject to the approval of the Board of Estimate and it was pro- vided (Section 81) that all stands and stalls in such market shall be rented on permits issued by the Commissioner or a subordinate designated by him. 256 INVESTIGATION OF AFFAIES OF NEW YORK CITY The Rules. In 1919 such rules were duly adopted by the local authorities. It has been the administration of them which has provided such a fruitful field of graft. They provided, among other things, that : "A market, stand may be occupied only under a revocable permit" (Rule 1 (a).) "All permits are for a bi-weekly period and may be revoked or terminated by the Commissioner of Public Markets at the end of any such period, if, in his judgment, the public inter- est requires it, or at such times or sooner, for a violation of any of the rules and regulations of the department." (Rule 1 (b).) " Permits for markets stands are personal to the individual, corporation, association or partnership named therein and shall not be assigned or transferred without the written con- sent of the Department of Markets." (Rule 4.) " No market stand or any part thereof shall be sublet or assigned or used by or for the business of any person, corpo- ration, association or partnership other than that designated in the permit .... without the written consent of the Commissioner of Public Markets." (Rule 5.) The Rules Administered. The provisions of these rules are not required by any statute. They constitute the exercise of a discretion granted by statute to the local authorities. It has been the apparently arbitrary power, which they give to the Commissioner to revoke permits and to approve transfers, which has facilitated the collection of graft and the attempts so to do. These have been perpetrated so frequently and so boldly through the active agency of one Charles A. Winter, General Inspector of the Department and an employee in the exempt class, that Commissioner O'Malley must have been incred- ibly stupid and incompetent, if he did not know and approve of them. A number of instances are detailed hereinafter, including one in which it was testified that O'Malley himself received $1500, in cash after " inducing " a standholder in Washington Market, whose permit was revocable by the Commissioner under the rules, to sell a piece of property outside the market to the telephone com- pany. The receipt of this money O'Malley denied, but at the outset of cross-examination upon this and other features of his administration, he declined to be questioned and fled from the witness stand. REPOBT OF JOINT LEGISLATIVE COMMITTEE 257 Mr. O'Malley's predecessor as Commissioner had been Dr. Jonathan 0. Day, who had been removed by the Mayor after charges of misconduct had been made against him and after he had made similar charges against O'Malley, who was a deputy under him and whose exit from the department he compelled. Shortly after leaving the Market Department O'Malley was ap- pointed a Deputy Commissioner in the Department of Public Welfare and after Dr. Day's removal he was appointed as his successor by the Mayor. Such evidence of corruption in the Market Department, as was developed by the Committee, was turned over to District Attorney Swann, in the expectation that he would make it the basis of fur- ther investigation and prosecution, but the District Attorney de- clined to proceed. While permittees of the department were tes- tifying before the Committee to the extortions practiced or at- tempted upon them, O'Malley announced the revocation of their permits. This was obviously an attempt to terrorize other per- mittees and to prevent their testifying to the facts. The Com- mittee publicly denounced such tactics and demanded O'Malley's removal by the Mayor. The Mayor declined to take such action, but the revocations were rescinded and Winter was dismissed from the department. O'Malley remained and was reappointed as Commissioner. No change of state law is suggested by the grave maladminis- tration of the Market Department, for it should not be necessary to provide by law that permits should not be made revocable at will. Indeed, the courts have held in litigations precipitated by the Commissioner's attempts to exceed his power, that his discre- tion to revoke mlist be reasonably exercised and may not be capricious or arbitrary. The Commissioner has, however, dis- regarded this limitation in other cases not before the Court. Clearly he should not have even apparent arbitrary power and the rules should be amended by the local authorities so that per- mits must be transferred except for cause and may not be revoked except for cause, such cause to include any attempt to monopolize the facilities of any of the public markets. THE HASLOB CASE Negotiations With Whiting. Christian Haslob is a retail butcher in Washington Market for 20 years (Haslob 644 & 648). His firm does about $250,000 worth of business a year (645). They have two stands and storage space 9 *. 258 INVESTIGATION OF AFFAIRS OF NEW YORK CITY (644-647). They bought one stand from Stark (649) for $2 ? 000 five or six years ago and had no trouble in getting the transfer from the Collector of City Revenue (649) who then had jurisdic- tion. They agreed to buy the other stand from one Whiting for $650 (651) and it was finally transferred in May, 1920 (650), but not until a money payment had been made therefor. First Visit to Markets Department, Refusal. Having arranged to buy Whiting's stand, Haslob went to the Markets Department to have the permit transferred from Whit- ing to himself (651). Mr. Bird, secretary of the Department, told him he could not have the transfer made, because he had filed no written application for the stand. About six months later Haslob talked to Winter about the matter (653). Negotiations With Winter. Haslob' s testimony is: "I asked him if he couldn't do some- thing for me, trying to get that stand. * He said he could * * * I said I was willing to pay a thousand dollars * * * and didn't care who got it * * *. He said he would come and see me the next day * * *. He came back the next day and I agreed to pay him $450 * * * for * * * get- ting my permit for that stand." (653 and 654). Haslob agreed to have the money ready the following Monday (656). On the Monday following, " I met Mr. Winter in Washington Market * * * about 9 or 10 o'clock in the morning * * at my stand * * * he asked me to go out with him," (656 and 657). Pays Winter $450 Bribe. They left the market together and went to Barclay street and took the elevated down Ninth avenue. Haslob took the cash from his safe out of Saturday's receipts (656 and 657). This is cor- roborated by page 95 of this day book (Exhibit 42), the entry be- ing: " Saturday, May 15th, 1920 Part Payment on stand Ex- pense $450." (656, 657 and 658). Haslob, as they were going south on the Ninth Avenue ele- vated took the $450 from his pocket and gave it to Winter. They had no particular conversation. He didn't even say " Thank you." They separated at the Battery and Haslob took a train right back to the market. All this was on Monday morning, May 17th. REPORT OF JOINT LEGISLATIVE COMMITTEE 259 Second Visit to Markets Department Receives Permit. Monday morning Winter told Haslob that the permit would be ready for him. That afternoon Haslob and Whiting went to the Markets Department (660). They saw McGrath, who showed them in to O'Malley. Haslob asked for the permit and received it without delay. (661). He had not yet made any written application for it. (665). THE HEINEMAN CASE Negotiations With McGuiness. Joseph Heineman has been a retail butcher in Washington Market since March 1, 1920 (Heineman 668), and did about $65,000 worth of business the first year. He bought the stand fixtures from Peter McGuiness for $4,500 (669). Heineman and McGuiness Visit O'Malley. On February 3 (673) Heineman and McGuiness went to the Markets Department to have the permit transferred (671). McGrath ushered them into O'Malley who asked if the stand was for Heineman's father, who already had a, stand in the market. Heineman said " No." O'Malley 'said " Nothing more than can be done for the present and I will have my inspector investigate " and asked Heineman to see Winter in the outer office (672). They Talk With Winter. They had to pass through Winter's office to get to the Commis- sioner's office (673). They left O'Malley and talked with Win- ter on the way out. He merely asked where the stand was located and where Heineman lived (674). Heineman Summoned to Winters Office Request for $1,000. A few days later word was left with Heineman's father that Winter wanted to see Heineman at the Market Department. Heineman went and conversed with Winter at first in the latter's office and then Winter led him outside in the main hall near the elevators. Winter asked how much Heineman was paying for the stand. Heineman refused to tell. Winter said it was custom- ary, in order to get a permit, to pay something in addition (674). " I said I am paying too high a price and I cannot afford to pay anything more." Winter said, " You will have to pay more " and I said " How much " and Winter said " a thousand dol- lars." I said " That is out of the question, I cannot pay that " , 260 INVESTIGATION OF AFFAIRS OF NEW YORK CITY * * He said my father already had two stands down there and getting too many in the family * * * he said ' you will have to get the money somehow or other because he won't accept anything less ' * * * speaking of somebody else." (675). " He was leaving the hall .and he turned back and said, ' it is absolutely useless for you to call any of those cheap politicians in to plead for you ' '' (676). At this interview Winter brought Heineman downstairs to another department to locate his residence on the map to see if he lived in New York City (678). Summoned a Second Time; Request Reduced to $500 ; O'Malley Comes In. About a week later Heineman received through his father another message to call and see Winter. Winter took him into an office adjoining the Commissioner's. " He sat me down and wanted to know if I had the money ready for him I said that I had no money for him and he said i you will have to pay something ' and I said that I could not afford any such amount. ' Well/ he said, ' Can you pay $500, because he might accept that ? ' And I said " Who is he ? " He said, ' We are not mentioning any names now.' I told him it was out of the question, that I could not pay him any $500. While we were discussing this the door opened from the Commissioner's office and Com- missioner O'Malley came into the office. He apologized, said he did not know it was occupied and he walked over and took a book out of a cabinet and went outside again * * * into his own office." (677). Third Conference Alone ivith Winter. Either at the Markets Department or in Washington Market, Heineman had still another talk with Winter. " He wanted to know if I had any money ready for him, and I told him ' no '." He told Winter he could not pay him anything and that he was not going to pay him anything (679). Heineman Sees Minder; Gets Permit Without Bribe. In the meantime Heineman had asked some of his friends for their advice " in order to get the permit and avoid paying any .money to the inspector " and " to see if they could not do some- thing for me to hurry the matter along." He told them he had been asked to pay money (678). Mr. Minder, the President of the Merchants' Association at Washington Market, was one of REPORT OF JOINT LEGISLATIVE COMMITTEE 261 these friends. Thereafter Heineman received word both from his father and from Mr. Minder to call for the permit. He then went to Commissioner O'Malley (679 ! ) with Mr. McGuiness. O'Malley insisted on Heineman signing an agreement to employ McGuiness because the latter was an old man and could not find employment. He then received the permit (680). This was on February 28, 1920. THE WOOLSEY CASE Negotiations with Yonteff. Stephen Woolsey has been in the retail butter, cheese and egg business in Washington Market since November, 1913 (Woolsey 682-683). The annual volume of his business is $200,000. He used to have five stands. He now has only two (683). He sold the other three to one Yonteff (684). They agreed on the price about the first of January, 1920. It was to be $5,500. First Visit to O'Malley. Woolsey then went to O'Malley's office alone on January 2nd or 3rd (691), to get the stands transferred (685). No one eke was present, Woolsey asked) O'Malley to transfer the downstairs stands to Yonteff. He said he could not, but if he wished to surren- der the stand the city would pay for the fixtures less depreciation (686). Woolsey refused, saying that he had worked eight years building up a business there and could not afford to sell it merely for the value of the fixtures. He was to receive more than the value of the fixtures from Yonteff. " I tried to persuade O'Malley to miake the transfer and he said it couldn't be made and I left." O'Malley said he could surrender the stands, but he would not consent to making the transfer. (687). Attempt to get Someone to Intervene. Woolsey next visited a customer of his who runs a restaurant in Brooklyn where " some men went to have lunch that could be of assistance." Woolsey asked if he knew of any one that could assist in having the transfer made. He said he would see. In two or three days he replied that " he couldn't do anything for me." Second Visit to O'Malley. He then went again about one week later (690) to O'Malley alone (688). He again requested O'Malley "to transfer the per- mit to Mr. Yonteff." " He said that he couldn't do it, if I wanted ' 262 INVESTIGATION OF AFFAIRS OF NEW YORK CITY to surrender the stand I would be paid * * * for the fixtures * ~ x ~ * less depreciation * * * I said, ' I don't see why it is that after working and building up a 'business for eight years that I will have to get rid of it for less than my fixtures cost me to start in business.' " (689). First Conference with the Stranger. Aibout ten days after his second visit to O'Malley, Woolsey received a telephone call from someone who did not give his name., (690) but said "I understand you are having trouble getting your permit transferred * * * if you will meet me on the corner of Barclay and Church Street, perhaps I can be of some service to you." Woolsey said " all right, I will meet you there in about half an hour" (691). He went there and saw a man who said he was the one who had telephoned him. He was of medium size with smooth face and refused to give his name (Woolsey 701). " He said * * * he could help me out but his time and services would 'be worth something, and he felt he ought to be paid for it * he said that it would cost; $1,000 * * * eventually we reached a price of $450 (692) and I told the man that I would let him know the next day." (693). Conference between Woolsey and Yonteff. The next day Woolsey told Yonteff " if you want to pay $100 of this, I will pay the rest " and Yonteff said "All right " (Wool- sey (693). Yonteff remembers only that Woolsey said " it would cost them something to get this permit." Yonteff volunteered (709) to contribute $100 and so the price became $5,600. (Yonteff 704 and 708). Second Conference with the Stranger. The next day Woolsey met the same man at the same place. Wcolsey said he was trusting to his honesty to put the thing through. He had never seen him before and might not know him if he saw him again. He paid the man $450 then and there, having cashed a check with one of his customers for $250 and taken $200 out of receipts of the business (Woolsey 694). Permit Issued. Two days later Yonteff received a telephone message to call at the department as the permit was ready for them (Woolsey 695). REPORT OF JOINT LEGISLATIVE COMMITTEE 263 In the morning of the same day or the day after, Yonteff and Woolsey went to the department, had a general conversation with O'Malley at which no reference was made to their previous con- versations or the subject matter thereof. O'Malley gave instruc- tions to have the permit issued to Yonteff and Woolsey sur- rendered his old permit. Yonteff paid the agreed price as later changed to $5,600. (Woolsey 697 and 8 and Yonteff 703 and Ex. 48). EIA.HN-KLOEBLEIN CASE Steers & Menke Negotiate with Kloeblein. Frederick E. 'Menke is treasurer of 'Steers & Menke, Inc., a corporation handling poultry, calfs, pigs and pork products (Menke 717) having been in this business since 1883 with its main place of business at West Washington Market. They are commission merchants who receive shipments direct from pro- ducers. Their customers are wholesalers and butchers. They have seven stands. (718). They have known Albert Kloeblein 13 years. Kloeblein, individually and representing his father's estate, had been in business in West Washington Market adjacent to Steers & Menke for 25 years. Kloeblein was not a " direct receiver." He bought beef from slaughter houses and resold it. His father died about four or five years ago (719). Steers & Menke negotiated with Kloeblein for his stands, culminating in a definite offer on March 31, 1921 (720 and Exh. 50). Kloeblein was to have receipted for $100 as deposit on six stands, total price to be $8,000, but did not sign because of their con- ference with O'Malley (721). Menke and the Kloebleins visit O'Malley. Menke, Albert Kloeblein and his brother James, went to O'Malley's office (Menke 721) on March 31. Albert Kloeblein said business was poor and he wanted to sell out. He said that Menke' s father and his father had been doing business alongside each other for years and he felt Steers & Menke should have the preference in transferring the stands. O'Malley asked what terms they had agreed upon and they told him $8,000. (Menke 722). On April 1st Menke lictated written application accordingly, signed it ard direc**"] thit it be mailed. He received no reply. (Menke 72*;,. J 264 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Kahn Negotiates with Kloe~blein. Adolf Kahn was in the butcher business for nine years at 723 Tenth Avenue. He buys from slaughter houses and resells to butchers. (Kahn 731). He says that for about a year he had been negotiating with Kloeblein for his stands and on March 25, 1921 reached an oral agreement with him to sell for $8,000. Whereupon Kahn mailed a written application for the stands to the Commissioner of Markets (Kahn 732). Kahn Requests McManus' Help. Having made written application for the stands, Kahn went to see former Senator Thomas J. McManus. One of the market men had told him he should get some one of that sort to intercede for him. He (Kahn) had had business relations with McManus (Kahn 733) McManus said " he would do that for me." (Kahn 734.) Kahn, Kloeblein & Menke Visit O'M alley. On the Saturday after his first talk with McManus, Kahn saw Kloeblein and learned that Steers & Menke also wanted the stands, Thereupon he called up McManus and made an appoint- ment to go to O'Malley's office at 11 o'clock on Monday and arranged for Kloeblein to be there also (Kahn 734). They met McManus downstairs (735) at about 11.30 (736 and 738). Before leaving his office he drew and cashed a check for $3,000 being the first check he drew that day (733, 6 and Ex. 53). On the way down he stopped at his bank and cashed the check. Kahn claims that he met his brother-in-law at the bank by appointment and gave him the money, so that he claims he did not have the $3,000 with him when he reached the Municipal building (737 s ). Downstairs he met first McManus and then Kloeblein, both by appointment, and introduced them. (Kahn 738 and 739). They went upstairs and into Secretary McGrath's office (740). They were told the Commissioner was not in and that they should wait. McManus left Kloeblein and Kahn there (741) and came back in about two hours when all three and McGrath went into O'Malley's office (741). They remained about half an hour. McManus introduced Kahn saying, " This is a friend of mine, Mr. Kahn, which I spoke to you about." O'Malley paid no attention to Kain, but said to Kloeblein, "Are you selling this stand ? " He said, " ISTo, I have to get rid of REPORT OF JOINT LEGISLATIVE COMMITTEE 265 them on account of my brother being sick." " From the way they talked, it appeared that they were acquainted before." (743.) O'Malley said, " You cannot sell these stands, you un- derstand that ? * * * If I knew you were selling those stands, I will take this permit away from you." Kloeblein said, "All I am selling is the contents of my fixtures." Kloeblein surrendered the permit he had to the Commissioner and the latter told Mc- Grath to make out a permit to Kahn. When this was done all three left together. It was about 4 o'clock. (748.) Kloeblein, who could not be served with process in ]STew York or compelled to testify in JSTew Jersey, where he resides, did, how- ever, make a statement to an examiner for the Committee. He stated that it was about 1 P. M. when they reached the Com- missioner of Markets office (McDeirmott 819). They waited until 3 P. M. James Kloeblein was with them but was told to stay outside. When he entered O'Malley's office he saw tnerc? Kahn, O'Malley, McGrath and both McManuses, the former Senator, and his brother, Charles, an Alderman. (McDermott 820.) O'Malley said to Kloeblein, " Now, you are not selling these stands. Kloeblein hesitated and Senator McManus kicked his foot and he refrained from replying. (McDermott 822.) Kahn pays Kloeblein only $6^50. On leaving O'Malley's office Kahn, Kloeblein and McManus rode up town in Kahn'>s machine, which had been waiting outside the Municipal Building (748 & 749). Kloeblein stated that Alderman McManus and Albert Kloeblein were also in the machine. Alderman McManus got out at 48th Street between 9th and 10th Avenues on the north side and entered a house. Senator McManus got out a little farther west (McDermott 822 & 823). McManus left the machine at 49th Street and 8th Ave^ nue. Kloeblein and Kahn reached Kahn's office about 4 :30 p. M. Kahn then gave Kloeblein a check (Exh. 55) for $6,250 (749), although he had agreed to pay $8,000. Kahn testifies : " I told him that the stands cost me a great deal more to fix up than I first expected they were to cost * * * We battled for about a half hour and he couldn't get no mlore out of me than $6,250." (750). There had been no written agreement, and Kahn now had the permit (753). Kloeblein says he asked Kahn why the check was only for $6,250. Kahn showed by his checkbook that he had drawn a check to cash for $3,000, and said he had used the cash for trans- 266 INVESTIGATION OF AFFAIKS OF NEW YORK CITY feiring the stands. " Kahn said the $1,750 that Kloe'blein did not receive was one-half of what it cost him to get the stands, that he was standing one-half and Kloeblein would have to stand the other half." (McDermott 823). Kahn Draivs a $500 Check to McManus. On returning to his office from the Markets Department on April llth Kahn also drew a check for $500 to Thomas McManus. Kahn testifies : " I reconsidered and I wouldn't use that check * * * I don't know if it was destroyed or not." It was replaced by another check taken from the back of the book (Kahn 753 & 756; Mass. 775 & 776) drawn to "Bearer" (Ex. 56) (Stub is Ex. 57). Kahn claims he gave his check to a bookmaker named Henry Jones to make a bet with sometime in April on the Demp- sey-Carpentier fight. (754). Kloeblein says he asked Kahn what the check for $500 was for and he replied " That is for the Alder- man." Kahn then drew another check for $125.15 to the Aeon Garage. This is run by the McManuses and Kahn keeps some of his trucks there (756). Maas, Kahn'e accountant, erased the words " Thomas McManus" on the check stnb (Ex. 57) at Kahn's direction and wrote in the word "Bearer" (Maas 776). In the cash book (Ex. 58), under date of April llth he originally entered " Thomas McManus." Later he applied ink eradicator and then entered "Bearer" (Maas 778 & 779; Osborne 796). In the cashbook he originally entered page 50 as the page of the ledger where this item of $50'0 would be posted but eradicated page "50 " and wrote in "8" (Maas 778 & 779; Osborne 796). He also eradicated all entries on page 50 of the ledger (Maas 780 & 781) on which he had entered " Investment Market Stands " " $3,000 " and other items, concededly relating to the cost of the market stands. (Osborne 798). Maas also made other eradications of entries which he had made in reference to the $3,000 check to cash and $500 to McManus (Maas 781 to 791 and Osborne 794 to 803). Menke Leamp of Transfer to Kahn. On a Tuesday about two weeks after April 1st, having received r-o reply to his application of that date, Menke went t the De- partment but was told that the Commission was busy. His secretary, McGrath, told him that the stands had been transferred to Adolph Kahn the day after (Menke 724). REPORT OF JOINT LEGISLATIVE COMMITTEE 267 Conference at Kahn's office before testifying. Kahn was served with a subpoena on Saturday, May 21, 1921, to appear before a sub-committee' on Monday, May 23rd (Kahn 757). The next day, Sunday, May 22nd, Kahn was at his place of business. His bookkeeper, Maas, was there and so were two other men (758). On Saturday after he was subpoenaed there were three tele- phone calls from his apartment to his brother-in-law, Isaac Gold- berg, (Kahn 760; Jones 730 and Reardon 728 & 28, Ex. 51). After leaving his office on Sunday, Kahn went to Goldberg's home and spent several hours there (Kahn 760, see a'bove, Kahn's testimony that he gave the $3,000 to Goldberg). On Sunday Kahn phoned both to Goldberg and his visiting accountant, Sol. Goodman (Kahn 761, 762 and Ex. 51). On Monday morning before testifying Kahn talked with Alder- man McManus in the 54th Street Court (Kahn 76S&766). Phone calls by Kahn after testifying. Kahn finished testifying before the sub-committee at 8 o'clock, May 23rd. He had claimed that Sam Kern was one of the two men who was at his place of business on Sunday, May 22nd, but later admitted the falsity of that testimony. That evening he- called up Mr. Kern in Tarrytown (762 and Ex. 51) and also the Thomas J. McManus Association and Sol. Goodman, his ac- countant. (Kahn 763 & 4; Ex. 51). Attempt to revoke Kahn's permit after testifying. After Kahn testified 'before the sub-committee on May 23rd. he was subpoenaed by the Commissioner of .Accounts and testified there. This was repeated after he testified before the sub-com- mittee, on May 25th (Kahn 766). The second time he testified before the Commissioner of Accounts was on June 2nd. On the 4th of June he received a registered letter notifying him that his permit had been revoked. He brought an action to restrain such revocation and obtained a temporary injunction. The disposition of the case was, by agreement between the parties, delayed pend- ing the hearings of the Committee and Kahn is now in possession of the stands. v 268 INVESTIGATION OF AFFAIRS OF NEW YORK CITY THE KATENKAMP CASE Receives Dispossess Notice. Mrs. Bertha Katenkamp had been conducting a fish stand in Washington Market under the permit of her husband for about a year after his death (Katenkamp 844; Minder 832). In August. 19'20, she received a dispossess notice from the Commissioner of Markets saying that she had no permit to do business in Washing- ton Market and must vacate on a specific date stated therein (Katenkamp 845; Minder 833; Eggers 855). Visit to O'Malley. As Minder was out of town she conferred with Eggers, the Vice-President of the Washington Market Merchants' Associa- tion (Katenkamp 845), who is 'also in the fish business. She had received three notices from O'Malley to see him about her permit but she had taken no notice of them (Eggers 856). He (Eggers) took her to O'Malley. Mr. Turner who also has a fish stand went with them to adjust his troubles also (Eggers 856; Katenkamp 846). O'Malley said the permit died with her husband (Katen- kamp 846) and she would have to leave the stand. Mrs. Katen- kamp and Turner then went into the outer office and waited for Eggers who remained behind with O'Malley. They waited about 20 minutes. Then he came out and all three left. (Katenkamp 847). Eggers says O'Malley said Mrs. Katenkamp didn't live in New York City and many residents wanted to get permits, who ought to have precedence (-Eggers 858). He absolutely refused to issue a permit to her. Eggers Talks with Winters and then with Mrs. Katenkamp. Eggers had known Winters for several months before he spoke to Winters about the Katenkamp case. Eggers said to Winters : " Mrs. Katenkamp is dependent upon the proceeds of this stand. I would not like to se her put out, isn't there no way of arranging these matters." Winters said, "No, I want her out We have someone else for the place " (Eggers 860 & 861). Eggers said, " What about Turner " ? Winters said, " Well we can fix that up." Eggers said, " What do you want ?" Winters said " $500." (860). Winters had a " party that was going to give Mrs. Katenkamp an amount of money to get out noth- ing came out of that," (861). REPORT OF JOINT LEGISLATIVE COMMITTEE 269 Later on Eggers had other talks with Winters. The latter con- tinued to insist he wanted the widow out. Finally he said he was going to Washington and " if we could fix it up for a thousand dollars" after he got back it would be all right (862). Eggers told this to Mrs. Katenkamp but she said she didn't have the money (Eggers 862 & Katenkamp 848). Meanwhile Winters was in sight waiting at Eggers' stand (Katenkamp 848 & 849), which can be seen clearly as it is obliquely across from Mrs. Katen- kamp' s (Katenkamp 848 & Eggers 855). When Winters returned from Washington he asked Eggers " Well how did you make out." He said, " I can't do anything with Mrs. Katenkamp, she has not got the money ", Winters said. "Well, let her get out." (9862). Eggers said, " Why do you want to put this woman out, she is dependent upon this for a living." He said, " Well, I will tell you, we will make it $500." (863). Eggers told this to Mrs. Katenkamp but she said, " I haven't got it." Eggers said " Worse and worse, here is where I throw up my hands." Then Mr. Minder " came into the proposition and she didn't put up a nickel." (Eggers 863). Eggers' various conversations with Mrs. Katenkamp took place " every day in the week for ten days." The talks always took place in Mrs. Katenkamp' s stand and Winters was always in sight at Eggers' stand (Mrs. Katenkamp 849). Minder 's Visits to O'Malley. Minder was out of town when the permit was revoked and during the week or ten days that Eggers was handling the matter for Mrs. Katenkamp (Minder 832 & 833). When he returned the matter was brought to his attention by various members of the market. Minder told Eggers to leave the case in his hands. He did not know Mrs. Katenkamp very well but had known her hus- band fairly well (Minder 833). Minder then went alone to see O'Malley and explained to him that he saw no reason why Mrs. Katenkamp should be put out of the market. "After going into it very thoroughly with the Commissioner, he said he would give it further consideration." (Minder 834.) There were two or more such visits, Minder always going alone. At first O'Malley said "she had to go ". Minder pleaded her case (837). " I felt that I had .succeeded, that he had been mislead by people giving him reports that were not true," (Minder 838). 270 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Minder Confers with Mrs. Katenkamp and Egger. Egger reported to Minder his conversations with Winters. He stated that it: was necessary to leave the matter in the hands of Winters. Minder said that he had already been to the Commis- sioner of Markets direct and saw 1 no reason to go through Winters. Egger said the Katenkamp matter could be settled and the woman left alone if she would pay $1,000. (Minder 835). She was to pay it to Egger, not for himself, but for Winters. Minder said. " Not while I was president of the association would anything go on like that * * * I called Mr. Egger and Mrs.. Katen- kamp together to see if there was not some way of breaking down this attempt to get the widow to pay $1,000 * * * and Mrs. Katenkamp said that she would be willing to give $500." (Minder 836; also Katenkamp 850). "I told her to bring the $50-0 to my office * * * she brought me the $500' * * * I had my bookkeeper take it, it was then in an envelope that had her name and the date on the back of it and put it in my safe for safe keeping and I told her that if anyone wanted it to come and ask me for it. No one came. Afterwards it was returned to Mrs. Katenkamp." (Minder 836; Katenkamp 850). Minders Visit to O'Matteys Office, October 4, 1920. Minder and Mrs. Katenkamp were subpoenaed to appear before the C'omtmissioner of Accounts on October 4, 1920 (Minder 838 and Katenkamp 850.) Just before appearing, they went to O'Malley's office (Minder 838). Mrs. Katenkamp waited outside of O'Malley's office for Minder, who went in and stayed there ten or fifteen minutes (Katenkamp 850 to 852). Minder told O'Malley that they were subpoenaed to the Commissioner of Accounts office. He said he knew it, that the entire matter was in Hirshfield's hand and we would leave it rest there, that people were talking about graft, giving newspaper stories out and he was going to get to the bottom of it. " I told him * that all this stuff getting into the papers 1 would do harm and would do harm, to Mrs. Katenkamp * * and would embarrass me, himself and the 'administration and that while I had no definite proof that graft was asked for, except by word of mouth, I did not feel inclined to drag anybody into it * he asked me whether it was a positive fact that I could say there was a graft request, I told him I could * * * yet I could not prove it, that it was unfair to drag Mr. Winters 7 name into it when it REPORT OF JOINT LEGISLATIVE COMMITTEE 271 wasn't my party. I told him I was going to the Commissioner of Accounts office and tell the same thing and try to leave out Mr. Winters' name if I possibly could, because it was to my mind unfair * * unless I have some specific proof that I should defame his character * * * he thought that was mighty nice and if that was the case he thanked me for doing it * * * I asked him if I could assure Mrs. Katenkamp, who wa& in the outer hall waiting for me, of that fact, and would she get her permit and be able to continue her business if she would follow my instructions and testify and try to leave Mr. Winters' name out of it before Mr. Hirshfield * * * he assured me that that would be the case." (Minder 839 & 840). After testifying Minder returned to O'Malley's office. It was late in the afternoon. O'Malley was out. " I told him (McGrath) to tell the commissioner that we had testified before the Com- missioner of Accounts and I felt that everything would be allright." (Minder 841). Minder did not tell O'Malley nor Hirshfield nor anybody in their office that he was holding the $500. He held it about a week or ten days " inasmuch as Mrs. Katenkamp was frightened to death for fear she would give it, as she threatened to do, to have peace as she called it." It has now been returned to Mrs. Katenkamp. (Minder 842). Mrs. Katen- kamp did not receive her permit until January 27, 1921. Commissioner of Accounts' Investigations. On October 1, 19'20, O'Malley wrote Hirshfield a letter (Com- mittee Exhi. No. 41) in reference to the Katenkamp case (864). requesting an investigation because of " ugly rumors that * * * if she would pay money to some employee of this Department he would be able to fix the matter up" (866). On November 27, 192O, O'Malley wrote Hirshfield inquiring as to the result of the investigation (867). He again wrote on Jan- uary 3, 1921, to the same effect, stating " it has been and still is my opinion that Mrs. Katenkamp should vacate this stand but have taken no action pending a reply from you." (868). Minder's testimony before Hirshfield on October 4, 1920 (869) shows that he reluctantly mentioned Winter's name as the one as to whom there were such "ugly rumors" (871). Mrs. Kat- enkamp testified " I was not asked to pay. It is rumored around there that if you want to stay there you have to pay * * *. They won't ask direct. A gentleman came to me and said if I wanted *. 272 INVESTIGATION OF AFFAIRS OF NEW YORK CITY to stay it would cost me money and I said I didn't have any money * * * First a Mr. Turner came. He said he under- stood I would have to pay * * *. He didn't mention any names" (879). Asked if anyone else told her anything about paying, she said " No " (880). Neither Turner nor Winter were examined. (88-2). On January 22, 1921, Hirshfield submitted his report to the Mayor (882), suppressing the fact that Winter's name was men- tioned in the testimony (883). He concluded " Nothing has been disclosed from the examination to sustain the assertion that moneys had been demanded or received by any employee of the Department" (884). He recommended that Mrs. Katenkamp be allowed to continue the occupancy of the stand (885). On January 26, 1921, O'Malley acknowledged receipt of a copy of this report and wrote " Your suggestion as to allowing Mrs. Kat- enkamp to remain in occupancy of this stand will be followed." (886). THE TURNER CASE Egger and Turner Visit O'Malley. James E. Turner, as well as Mrs. Katenkamp, came to Egger " with his troubles." He had also received a notice to vacate. He had succeeded to his uncle's business. His uncle had had a permit for many years, but he had none. Egger is not sure whether Turner had received a notice to vacate or not (Egger 856 & 7). Turner and Mrs. Katenkamp both went with Egger at the same time to see O'Malley (Egger 898). (Turner 967). O^Malley refused to issue him a permit because he lived in Jer- sey City (Turner 968). Egger's Talk with Winters. Later when Egger was talking to Winter about Mrs. Katen- kamp's case he said " What about Turner ? " Winter said, " Well, we can fix that up." E'gger said, " What do you want, " Win- ter said " $500." (Egger 860). Egger told Turner that if he wanted to stay in the market he would have to put up $500. " So I took Winter over to Mr. Turner and said ' Jim meet Mr. Winter,' and he met him and that was all." (Egger 860- 861). Turner's First Talk with Winters. This introduction took place about one wtek after Turner, Egger and Mrs. Katenkamp had been at O'Malley's office REPOKT OF JOINT LEGISLATIVE COMMITTEE 273 (Turner 972). Egger had told Turner that Winter had said Turner would have to pay $500. (Turner 974). Turner claims he told Winter as well as Egger that he would fight the matter in the courts (975). Turner Gets His Permit. Later he told Egger that it would probably cost him $1,000 in the courts and that as long as his daughter was sick he would! as soon pay $500 to Winter to get his permit (976). Then Winter came and told Turner the permit was ready and he should go up and get it (977). Turner Pays $500 to Winters. A couple of days after he got his permit Turner paid Winter $500 in bills at Broadway in front of 176 Broadway (977-980). He took the money from his receipts (977). He made no book entry of this item (978). This was in August, 1920, about 1 o'clock. Ete made the appointment with Winters about an hour earlier at the market (979). Winters suggested the place (981). Turner said, " Here is a present for you for what you done for me" (981). THE CASE OF BARNET COHEIT Barnet Cohen was in the live poultry business at 39 and 41 Loew Avenue, West Washington Market, first in connection with Harry Bail, Inc. and then as a member of the firm of Cohen and Jacobs (Cohen 929). When that firm got into difficulties, Com- missioner O'Malley sent for its members in March 1920. Cohen responded and O'Malley induced him to surrender the permit for the Loew Avenue stands, which were given to one Rothberg, on the promise that Cohen would receive a permit for certain other stands then held by a saloonkeeper (Cohen 930-32). Cohen called repeatedly at the Commissioner's office to get the promised permit but without success. One Thursday O'Malley called Cohen at his home by phone and told Cohen td come to his office the next day, Friday. Cohen went and waited all day. (Cohen 933). O'Malley gives Cohen an Auto ride. After waiting all day O'Malley told Cohen he would give him a ride in the machine. (Cohen 933). Cohen took a machine ride with O'Malley. The machine was waiting at the Municipal A 271 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Building. They rode up to 48th Street and Broadway, O'Malley and Cohen in the car. (Cohen 934). Both left the car at 48th Street, (Cohen 935). During the ride to 48th Street O'Malley asked Cohen how much money he had to invest and was told Cohen could get $10,000 from his brother-in-law. O'Malley said to see him next week. (Cohen 933). llillman comes into the Case. The following Monday or Tuesday, Cohen called at the De- partment of Markets and spoke to McGrath, secretary to Com- missioner O'Malley. McGrath told him that one Hillman, a member of a firm which held stands in the market, was with the Commissioner " too many times " and that the Commissioner had told McGrath, " I give it away to Hillman them stands." (Cohen 935). The same day when MdGrath told Cohen about Hillman's getting the stands (of the saloonkeeper), Cohen went to Commissioner O'Malley and asked about it O'Malley told Cohen the stands were given to Hillman " because you (Cohen) wasn't such a good customer for me." (Cohen 936). O'Malley had suggested that Cohen and one Price (Cohen 937), Hillman's brother-in-law, should together occupy these stands (Cohen 938). O'Malley also told Cohen people offered him money for the stands. (Cohen 939); Cohen Tells Price about O'Malley's Suggestion. Cohen told Price that O'Malley suggested that Cohen and Price get the stands together and begged him to " Have a heart." Price told Cohen to go to Mr. Hillman, Price's brother-in-law and that whatever Hillman said Price would do. (Cohen 945). " For Money I got Honey." Cohen went to Hillman with his story and Hillman, referring to the stands obtained by him for Price said to Cohen, " For money I got honey." (Cohen 946). O'Malley objected to Cohen because he said Cohen voted Re- publican, so Cohen was told by O'Malley and by others (Cohen 846). But Cohen is a member of the Thomas M. Farley Associa- tion and is a member of the regular Democratic organization (Cohen 947). Cohens Vain Appeal to the Commissioner of Accounts. Cohen appealed to the Commissioner of Accounts and was re- ferred to Mr. Klein. Klein told Cohen he could not do anything EEPORT OF JOINT LEGISLATIVE COMMITTEE 275 for him (Cohen 949). Klein told him to see Commissioner Hirshfield. Cohen went to Commissioner Hirshfield and when Hirshfield saw him he would go through some door into another room, so Cohen could not see him. Cohen had been to the office a great number of times (Cohen 950). Finally he spoke to a man in the office of Hirshfield he thinks Mr. Mc- Ginley, Chief of 'Staff, and Cohen was told to put his story on paper and it would be presented to Hirshfield, and a report made to the Mayor or to the Commissioner of Markets. Cohen came back a few days later and was told "Hirshfield did not want to sign the papers for you we cannot do anything for you. v Cohen wanted to see Hirshfield and Hirshfield told the officer to " Throw him out, that crook, from this building." (Cohen 950). Hirshfield had on a previous occasion found Cohen's testimony against Dr. Day credible and in still another investigation by Hirshfield's office one of his subordinates reported that O'Malley admitted that he had suggested that Cohen and Price should join in the occupancy of market stands. THE LEWIS CASES George H. Lewis & Son Inc. originally had seven stands in West Washington Market 43, 45, 47, 49 Grace Avenue and 44, 46, 48 Thompson Avenue, for which the corporation received permits (Lewis 984). They acquired three more stands 25, 27, 29 Lawton Avenue from F. H. Fechtman & Co. Inc. These stands are about lO'O feet removed from the other seven stands held by Lewis (Lewis 986). When the stands were acquired from Fechtman an application was made by Lewis & Sons Inc. through its vice president, John L. Luger, to the Department of Markets for permits and permis- sion to effect the transfer from the Fechtman Company to Lewis. Luger said he thought it would cost him $300 to have the trans- fer made. (Lewis 990). Lewis pays Luger $300. Lewis paid Luger $300 on September 27, 1920 to have the transfer of the Fechtman stands effected (Lewis 990). Luger did not tell lewis what the $300 was for (Lewis 991). In four or five days, the permit desired was issued (Lewis 992). Inspector Winters in -the Case. When Fechtman wanted to sell the stands Luger said some sort of investigation would be made. Lewis saw Inspector Winters 276 INVESTIGATION OF AFFAIRS OF NEW YORK CITY around the market and Fechtman told Lewis that Winters had called on him (Lewis 992). Permit No. 416 was issued October 1, 1920 to G. H. Lewis & Sons Co. Inc., for stands No. 25, 27, 29 Lawton Avenue, West Washington Market at a rental of $27.50' weekly. Receipt signed by G. Hi Lewis, & Sons Inc., John L. Luger, vice president; wit- ness Charles A. Winter. Lewis sells a Stand to Benjamin. The sale of one stand by Lewis to Mr. Benjamin of West Wash- ington Hotel Supply Company cost $350 (paid by Lewis) for the transfer of the permit. Luger attended to the transfer (Lewis 993). receiving $350 from Lewis to effect it. Luger tells Lewis of his Political Affiliations. Luger told Lewis he was a member of some political organiza- tion and through that he would be able to get the transfer put through. (Lewis 994). He did. A Third Transfer Effected by Luger. Luger told Lewis it would cost $1,000 to 1 get approval of a transfer of stands from Lewis to Dorato Cerutti Company. Lewis paid Luger the $1,000 oil April 13, 1921 in cash for this purpose and the transfer was effected the same day. Luger 3 s Connections and Admissions. John L. Luger was vice president of George H. Lewis & Sons Inc. on a salary of $75 a week (Luger 999). Luger admits getting from Lewis $300 and $350 in connection, respectively, with Fechtman and Benjamin transfers (Luger 999). He also admits getting $1,000 with reference to the third transfer (Luger 1,000). Luger knew Inspector Winter of De- partment of Markets for about 1 year (Luger 1,000). Luger is a member of the Tammany Hall General Com- mittee and of the Peter J. Dooling Association (Luger 1,000). He had been a district captain for three s or four years prior to working for Lewis & Sons (Luger 1,000) and a member of Dool- ing Club for five years. sees O f Motley Re Fechtman Transfer. Luger called on O'Malley at the Department of Markets and asked for transfer of Fechtman stands to Lewis (Luger 1002). EEPORT OF JOINT LEGISLATIVE COMMITTEE 277 O'Malley refused because Lewis already had seven stands. (Luger 1003). After O'Malley' s refusal Luger went to the Peter J. DooKng Association and told his troubles to 1 John Burke, secre- tary of the club, and Burke suggested that Luger and he call on O'Malley (Luger 1004). Mr. Burke and Luger called on O'Malley and Burke told O'Malley that Luger was an active worker in the organization, and he, Burke> thought Luger was entitled to be favored with the transfer (Luger 1005). O'Malley still mentioned about the seven stands already held by Lewis and Burke and Luger left (Luger 1005). Permit Obtained next Morning. The next morning Mr. Burke went back to see O'Malley. He told Luger he had been there. Then Luger went to see O'Malley (Luger 1006). O'Malley told Luger he would get the transfer of the permit because he was an active worker for the organization and the permit was issued. Winter signed the permit as a witness (Luger 1006), having previously called at the market to investi- gate and spoken to Luger while there and having recommended the approval of the transfer in his report dated September 27th, the same day as Luger received the $300 payment. Luger on the Benjamin Transfer. Luger originally applied to the Department of Markets for permission to* have Benjamin store materials in one of Lewis 7 stands by letter dated November 13, 1920 (Luger 1010). Winter made a report to O'Malley six days later suggesting that permission could be granted and the purpose effected by transfer of the stand from Lewis to Benjamin (Luger 1011). Luger waited for an answer to his letter and then called at the Depart- ment of Markets (Luger 1011). He spoke to O'Malley, telling him a personal friend of his (Luger's) wanted the stand and asked for the transfer (Luger 1012). He had two or three conversa- tions with O'Malley on the subject and then finally obtained the permit for transfer to Benjamin (Luger 1013). In this connec- tion he got $350 from Lewis (Luger 1013). Luger also Handles the Third Transfer. In March Lewis wanted to sell four more stands and told Luger so (Luger 1013). A 278 INVESTIGATION OF AFFAIRS OF NEW YORK CITY Luger went to the Department of Markets and spoke to O'Malley and " when he seen me he was fit to be tied/' (Luger 1014). Luger again Appeals to his Political Club. Luger went to the Peter J. Dooling Association and arranged to meet Mr. Dooling, who was to go with him to the Department of Markets. They went the next day and both called on O'Malley (Luger 1015). O'Malley again refused to do anything for Luger (Luger 1015). Luger appealed to Dooling to help all he could and then Dooling told Luger to go again to the Department of Markets with his old permit. When he saw O'Malley he was told by O'Malley that he had reconsidered the matter and the transfers were approved. (Luger 1016). Luger Secured the Permit about April 12, 1921. On April 13th, Lewis drew two checks one for $500 and the other for $300, making a total of $800, which were cashed and with an additional $200, the three checks amounted to $1,000-, all of which was given to Luger (Luger 1019). The transfers were effected the same day and Luger says he contributed $500 the next day to the Irish Fund, of which Mr. Burke, the club secretary, was treasurer for his district (1020 1 ). Records show that of a total of $800 contributed to the club for this fund, Luger is credited with a contribution of $500 (Luger 1022), the other contributions being in nearly all cases, one dollar each. When first examined before a sub-committee Luger had no receipt for his contribution, but afterwards obtained one dated April 14, 19'21 (Luger 1021). This receipt was the last in the book from which it was drawn, the book bearing the name of a person other than Burke, who signed the receipt, and many receipt books, admitted to have been received from the central office of the Fund organization, being missing or destroyed. THE MICHELS TELEPHONE COMPANY CASE B. Michels Sons Co. Inc., is the holder of a permit for stand 11-R-22-R, in Washington Market, issued July 1, 1919. (H. F. Michels 1081). The corporation had been in business five or six years and prior to that the stands had for a great many years been held by a partnership composed of same people. (Michel 1081-82). The Washington Markets stands were too small for the busi- REPOKT OF JOINT LEGISLATIVE COMMITTEE 279 ness so that the corporation rented and later bought the building at 108 Vesey Street. The purpose of buying the building at 108 Vesey Street was not to resell it, but to use it as a storeroom, ice box, etc., for the business (Michel 10*83). The New York Telephone Company, through its agent, wanted to buy the Vesey Street building and Michel referred them to his real estate agent, Mr. Hibbard (Michel 1084). Michel told Hibbard that he would rather keep the building than sell for $60,000 as he needed it for business purposes. Also Michel told this to the representative of the telephone company (Michel 1084). This occurred about one month after Michel had bought the building (Michel 10-85). After Michel's refusal to sell he heard that O'Malley wanted him at his office, for an interview. Michel went to O'Malley's office and the Commissioner asked him why he had stands in the market and a store across the street (Michel 1085). Also what right did Michel have to a stand as he lived in New Jersey (Michel 1086). Michel had read and knew about the revocation of permits for stands in the markets. Second Interview with O'Malley. The next day Michel took his agent, Hibbard, to O'Malley's office. At first O'Malley wanted to talk to Michel alone, but Michel insisted on Hibbard's presence and he was called in (Michel 1088). Michel told O'Malley, Hibbard represented him in all transactions for the building (Michel 1090). Michel had decided he must sell the building to stay in the market. His testimony is as follows: " Q. Had you told Mr. Hibbard to negotiate for the sale of this building? A. Mr. Hibbard had my approval of that. Q. Well, what made you change your mind about it. I thought you didn't want to sell it ? A. If it had to be sold I had to get the best figure I could get for it. Q. Why did it have to be sold ? A. Because I wanted to stay in the market. Q. Because you wanted to stay in West Washington Market? Yes." (Michel 1089). Telephone Company had Done O'Malley "A Great Many Favors/' At the second interview, November 17 or 18, 1920, O'Malley said to Michel and Hibbard, " The telephone company has done A, 280 INVESTIGATION OF AFFAIRS OF NEW YORK CITY me a great many favors and we want that building. We got to have that 'building. 77 Michel then left and Hibbard remained along with O'Malley (Michel 1092). The contract for the sale of the property by Michel to telephone company for $45,000 was made January 7, 1921 (1093). On January 7, 1921, Michel drew check for $3,000 to Cash or J. B. Hibbard, cashed it at the bank, received six $500 bills, which he gave to Hibbard as his commission. (Michel 1094). The deed to the telephone company was executed on January 31, 1921. (Michel 1095). Hibbard on November 18th, accompanied Michel to O'Malley's office. First Michel went in alone; then Hibbard was called in. Hibbard told O'Malley that if he wanted to talk about the Vesey Street building he did not need Michel, that Hibbard was taking care of that for Michel (Hibbard 1101). Michel then went out and Hibbard and O'Malley remained alone. (Hibbard 1102). The testimony is: " Q. What did you say to Commissioner O'Malley ? A. I asked him he told me that he was under obligations to the telephone company; they had done a great many favors for him and they had asked him to see if he could get possession of that property for them. Q. At 108 Vesey Street ? A. At 108 Vesey Street. Q. Did he say who it was representing the telephone com- pany? A. Yes. Q. Who? A. McHarg. Q. Did he say whether or not he had previously been ac- quainted with Mr. McHarg ? A. I think he did I think he said McHarg had done a number of favors for him." (Hibbard 1102). Hibbard Promises O'Malley Share of Commission. Hibbard asked O'Malley if he intended to " put the screws on Michel" about his market stand and O'Malley said "No," but he did want to do something for the telephone company ; so Hib- bard said, " We will make the telephone company pay a little more money, and I shall charge a. little more commission and you will get your share of it." (Hibbard 1103). Michel's written offer to sell the property for $45,000 was received by O'Malley. On January 7th, after the contract for the sale was signed Hibbard went with MicheLto the bank, where a check for $3,000 was cashed and Hibbard received the six $500 bills (Hibbard 1104). REPORT OF JOINT LEGISLATIVE COMMITTEE 281 Hibbard Gives 0' Medley $1,500. After leaving the bank Hibbard walked to O'Malley's office. The testimony is : " Q. Did you see Mr. O'Malley ? A. I did. Q. What took place in that conversation? A. I simply to ] d him that we had signed the contracts and I received my commission and I thought he was entitled to three of the six bills I showed him. Q. Did you give them to him ? A. I did. Q. Three $500 bills? A. Yes, sir. Q. Anything else said in the conversation? A. No, we had a general talk." (Hibbard 1104-1105). O'Malley's Testimony. Before fleeing from the witness stand, O'Malley answered some questions in relation to this transaction as follows : " Q. Do you know John B. Hibbard ? A. Yes, sir. Q. Did you get $1,500 from him? A. No, sir. Q. Never received any money from him? A. I did not receive it. (O'Malley 1179). Q. Did McHarg ask you to assist the telephone company in getting property at 108 Vesey Street ? A. Yes, sir. Q. Did you send for Michel ? A. Yes, sir. Q. Did you advise him to sell the property ? A. I told him of the proposition. Q. Did you get from Mr. Michel a written offer to sell the property for $45,000? A. No, sir. Q. Didn't you give it to McHarg? A. Yes, sir, I didn't get it from Michel. Q. Did you get it from Hibbard ? A. Yes, sir. Q. You gave it to Mr. McHarg? A. Yes, sir, I called up Mr. McHarg and he came to my office and I gave it to him." (O'Malley 1180). O'Malley further testified that McHarg told him he wanted O'Malley to talk to Michel about the building, because the tele- phone company had been unable to get a definite offer of sale from Michel and they needed the property to complete a square b ] ock for the telephone company (O'Malley 1182). O'Malley told McHarg " I will find out from him (Michel) if I can. I will send for him and ask him just what he means to do and let you A 282 INVESTIGATION OF AFFAIRS OF NEW YORK CITY know if that will help you." (O'Malley 118-3). O'Malley tes- tified McHarg had done some favors for him and that he had known him possibly a year (O'Malley 1184). O'Malley admitted he sent for Michel to come to his office and then talked to him about the Vesey Street property. Michel told O'Malley the piece of property was in the hands of his agent (O'Malley 1186), and that Michel would have his agent see O'Malley about the matter (O'Malley 1187). MARKET SUPERVISORS A curious sort of institution established by the market adminis- tration was that of " Market Supervisors." To reduce the cost of food to the people, the Board of Aldermen was induced to establish a number of open air markets for pushcart and wagon peddlers in the streets of the city. The object in legally estab- lishing the markets, many of which had previously existed on sufferance, was to end the opportunity for petty graft alleged to have been levied by policemen and others upon the pretext that the hucksters were blocking traffic or littering the streets. The opportunity of the legal markets was, however, seized upon to create also a new and officially sanctioned kind of graft. The a Market Supervisors " are not city officials or employees, being in no class of the civil service and being without place upon the payroll. They have been appointed by the Market Depart- ment usually on the nomination of a Tammany district leader. Their jurisdiction is to approve the application of peddlers who desire places in the markets and to see that they are kept clean. For that purpose they have assistants nominated in the same way. Their compensation comes from the fee of $1 per week or 50 cents per day, which they in person collect from each peddler in the market and keep as their own, except for disbursements to helpers. The attendance in the various markets varies from 31 to 375 peddlers per day. The alleged expenses of the supervisors are subject to doubt, but in any event, their admitted receipts are substantial. The vice of such a system is obvious. The admitted graft is bad enough. The opportunity for additional levy is clear and the absence of official responsibility invites the exploitation of such opportunity. Clearly, if such markets need supervisors, they should be regular city officials or employees and the fee paid by the peddlers should go to the city. REPORT OF JOINT LEGISLATIVE COMMITTEE 283 SALE OF ARMY AND NAVY FOOD SUPPLIES While O'Malley was deputy commissioner of Public Markets under Dr. Day, he had an active part beginning in July, 1919, in the distribution in New York City of surplus food supplies remain- ing in the possession of the War and Navy Departments after the Armistice. The purpose of the Federal Government in enabling these foodstuffs to be distributed by municipal agents was to place the same within the reach of the general public, especially the poor, at just enough over the low prices charged by the govern- ment, to pay the cost of distribution. However, under the scheme of distribution in New York, in which O'Malley had a very im- portant part, not only were large quantities of choice foodstuffs made available to high priced hotels instead of to the public gen- erally or the poor, but the margin of profit was fixed so high that on the handling of goods costing $2,831,183.26 there was a gross profit of $796,199.94. That enormous gross profit has never been fully accounted for and $38,257.36 has been totally unaccounted for. Of the balance, certain items of expenditure are conspicuous. Commissioner Day and Deputy Commissioners O'Malley, Smith and Mulry paid themselves compensation out of this fund at the rate of $20 a day, to the total sum of $7,340, in addition to their regular city salaries. Hosts of city employees, policemen, clerks and others, received extra compensation from the fund though working on city time and receiving their regular city pay. Trucking charges amounted to $144,480.15, large portions of which went to a political friend of the administration and to a neighbor of O'Malley 's without competition and at rates that allowed them a profit on trucks hired by them, which the administration could have hired at the same rates as the favored contractors. The latter's profits ranged as high as $6 per day per truck. Three hundred thousand dollars of the surplus was turned over to a Special Committee for charitable purposes, but $50,000 of that amount was later paid to persons, whom the administration had loudly proclaimed to be volunteer workers during the distribution and whom the Commissioner of Accounts had, after investigating, savagely denounced, as seeking pay to which they were not enti- tled. Altogether, here, as in the routine administration of the Market Department, the touch of its officials was attended by the taint of incompetence, waste, favoritism and corruption. 284 INVESTIGATION OF AFFAIRS OF NEW YORK CITY DEPARTMENT OF PUBLIC WELFARE KINGS COUNTY HOSPITAL JOB An illuminating example of the futility of law and ordinance to compel an honest and efficient administration of government is disclosed by the Committee's investigation of the conspiracy to defraud the city in connection with the proposed installation of an oil burning heating and power plant in the Kings County Hos- pital under the jurisdiction of the Department of Public Welfare (formerly the Department of Public Charities). There is every reason to believe that the conspiracy would have been successful but for the committee's exposure of the facts. Alderman Charles A. McManus and his brother, former Senator Thomas J. Mc- Manus, were the persons with " influence/' for which they were to be paid, sufficient to circumvent the law as to competition for public work. A " shoe string " company was to get the contract at a profit of over 100 per cent and " competition " was to be "encouraged" by the official use of plans and specifications formulated by the insiders. Even then if competition became dangerous, the insiders were to be pre^advised of the bid which must be met. The testimony upon the subject shows the following: In May. 1921, Irving Cohn, Dr. Gustavo New and Edward A. Pierce started in the oil burning installation business under the name of " Terminal Engineering Company." Pierce and Cohn had no previous experience in oil burning installations. Kings County Hospital was the first public building in which the new concern became interested. During the war, Dr. New, who is an engineer, had charge of inspecting steel mills all over the United States and installing oil burning systems in furnaces. He became acquainted with Pierce in January, 1921, and rented desk room in his suite of offices, from which he endeavored to secure contracts to install oil burn- ing heat and power plants. Pierce proposed that they go into business together, taking a third man, Cohn, in with them. Pierce took up the question of getting an introduction to Com- missioner Coler with Senator McManus. McManus became asso- ciated with Pierce in the business. He became financially inter- ested in the matter by an -agreement dated July 29, 1921, among Pierce, Alexander, Cohn and McManus. They agreed to form a corporation which was to be called the " Oil Burning Installation REPORT OF JOINT LEGISLATIVE COMMITTEE 285 Company." McManus was to get 24% per cent of the stock with- out paying anything for it. He was to use his influence to intro- duce them to men who would consider burning oil, particularly in public buildings. Pierce and Cohn had called upon Coler concerning installing a plant in the Kings County Hospital. Senator McManus also went to see Coler about it. Early in 1918 the Department of Public Welfare had looked into oil burning and had decided it was too expensive. The Mc- Manus group brought the Singer Building plant to Mr. Coler's attention. He inspected it with them and concluded that it embodied the best means for any hospital to get rid of dust and dirt. Having written his decision as to policy he then turned the matter over to his engineers to estimate the cost. A verbal report was submitted by Chief Engineer Herrick. The Terminal Engineering Company was permitted to study the feasability of installing such a plant in the Kings County Hospital. Senator McManus at Pierce's request took up with Mr. Coler the matter of having Dr. New examine the Hospital plant, with a view to making an oil installation. On May 19, 19-21, the Terminal Engineering Company wrote that it would install a plant in the Kings County Hospital for $47,500. New had suggested $35,000 or $38,000 as the price. Pierce and Cohn said that was too low, because they would have to take care of the " people who were going to help us bring the job off.' 7 The company again wrote Mr. Coler on June 2nd, and June 6, 1921. Coler testifies that he did not know that Buxton, the engineer who had shown him the Singer Building plant, was interested in the Terminal Engineering Company. As a matter of fact he was to receive 5 per cent of the profits. Buxton made a favorable re- port to Mr. Coler concerning the Kings County Hospital plan which report was enclosed with the letter of June 2nd from the Terminal Co. A blue print, showing the proposed layout, was submited with the letter of June 6th. The department took the blue prints furnished by the Terminal Engineering Company and filed these identical blue prints with the Fire Department. The specifications were partly drawn in the office of the Terminal Engineering Company. All the speci- fications for the Kings County Hospital job were typewritten in 286 INVESTIGATION OF AFFAIES OF NEW YORK CITY the office of the Terminal Engineering Company and Chief Engi- neer Herrick's name was placed on the first page. The company again wrote the Department on June 23rd, this time addressing Deputy Commissioner McStay and offering this time to install the system for $62,500'. A skilled engineer exam- ining the blue print of the proposed lay-out, sent with the letter of June 6th, would have known that the price of $62,500 was about $25,000 too much. For this amount Mr. Coler applied to the Board of Aldermen for Special Revenue Bonds. He could not explain why the amount was raised from $47,500 but said he took his engineer's judgment on that. Pierce calculated that the installation at the Kings County Hos- pital would cost the Terminal Engineering Company about $40,000. Dr. New figured it at $30,000. One of the "pros- pects " listed to be turned over by the Terminal Engineering Company to the Oil Burning Installation Company upon its organization was the Kings County Hospital plant. The memo- randum read " approximate contract price $62,500 ; approxi- mate cost $26,000; approximate profit $36,500." Deputy Commissioner McStay testified that the first estimate was based on tanks for 36,000 gallons and that then it was found that it required another tank in order to have a surplus. How- ever, there was no explanation of this in any of the correspon- dence. Pierce endeavored to explain the matter in another way. He testified that after the $47,500 bid the tanks as planned were enlarged to 12 ft. by 44 ft. though not increasing the number. But Dr. New testified that what really happened was this : The day before New wrote the letter of June 23rd and while getting ready to dictate to ex-Senator McManus, Cohn, Pierce and Staley were in Pierce 7 s inner office. Pierce and Cohn told New to make the price higher than $47,500. New objected. Cohn said to put in $62,500. Pierce showed New a piece of paper which New had just before seen in McManus 7 hands. Pierce said, " You see here is a list of what we have to give for graft." On the paper was written : Me 2 $10,000 B 3,000 T. S. & E. Co 3,000 K 200 (or $1200). Murph 300 St 1,500 REPORT OF JOINT LEGISLATIVE COMMITTEE 287 Pierce said " Me 2 " stood for the two McManuses and that " B " was some Tammany Hall man. The slip was passed around the table and came to New and he retained it. On June 29, 1921 Coler wrote the Board of Aldermen request- ing authorization of $62,500 of Special Revenue Bonds for in- stalling an oil fuel system under the boilers in the powerhouse of Kings County Hospital. He wished to extend this service to the various institutions of the deparment, particularly those on Randall's Island. The letter was dictated by Herrick, who is Chief Engineer of the department. The enumeration of ad- vantages therein was substantially the same as those set forth in Mr. Buxton's report attached to the letter of June 2nd, 1921 from Terminal Engineering Company to Coler. The City Record of July 14th shows that Alderman McManus offered a resolution, which was made a special order for the day, to the effect that the request previously received from Commis- sioner Coler, dated June 28, 1921, be granted. The resolution was unanimously passed. At this meeting, beside Alderman Mc- Manus, ex-Senator McManus, McStay, Coler, Buxton, New and Pierce were present. Alderman McManus had previously helped with the name of the new company. Pierce had met the Alderman shortly after he met the Senator. The Alderman was in Albany when the in- corporation papers were to be submitted to the Secretary of State. Pierce talked with him over the phone and also wrote him about submitting a list of alternative names to the Secretary of State. The letter ended, " Hop to it old kid and let us have some action." After the vote of the Aldermen, Pierce wired his brother-in-law " Contract closed satisfactorily." The next day, after the Aldermanic vote, Amos T. Smith, an engineer in the office of Secretary of the Board of Estimate, called Dr. New up and said he wanted to see him. He said, " How did you arrive at $62,500 " ? At that point Mr. Pierce took up the conversation. A few days later New, Pierce, Staley and Buxton all went to see Smith by appointment. Buxton and Smith went over the whole matter. New tried to speak but Pierce signalled to him to keep quiet and himself got into an argument with Smith and Smith said, " You are talking a lot of bull." New later heard them ask who Smith was and what could be done to make him keep quiet. The request for Special Revenue bonds had been referred to *, 288 INVESTIGATION OF AFFAIES OF NEW YORK CITY Smith for advice to the Board of Estimate, while he was away on vacation. On his return he took the matter. up, but he never made a report 011 it. Nevertheless the Board of Estimate took final action approving the application even though the Committee on Finance and Budget, to which the matter had been referred, had submitted no report. Pierce wrote New on August 6th, " I am preparing all of the specifications and blue prints for the city job and they are in turn going to establish my specifications and drawings which are the tracings themseives as their own, or in other words as though they had originated, them and not us.' 7 Pierce attempted to tear up the following letter of August 5th when it was subpoenaed. It was addressed to his brother-in-law and read in part : " We applied for a closed letting but were not successful therefore, it is necessary that specifica- tions and blue prints be drawn in order that all can figure on the job * * *. Regardless of what their figure is, our price will be the lowest as we will be pre-ad vised." On August 26th, 1921 Coler submitted specifications for the Kings County Hospital oil burning plant to the Bureau of Build- ings for their approval. On September 9th he wrote to them, " It is my wish to have this installation begun as quickly as pos- sible." This letter (and presumably the previous one) was sent to the Manhattan Bureau instead of the Brooklyn one. On Sep- tember 19th the Acting First Deputy Commissioner of his de- partment wrote the Brooklyn Bureau forwarding to them dupli- cate specifications for the Kings County Hospital installation. There was some delay due to somebody losing the duplicate plans. On September 30th a letter was again sent to the Brooklyn Bureau saying " Commissioner Coler is very anxious that this installation be begun before the end of the year." Again on October 4th the First Deputy Commissioner wrote calling attention to the fact that the appropriation would lapse unless the matter was ex- pedited, as it still had to go to the Bureau of Fire Prevention, the Mayor and the Board of Estimate. Finally on October 4th the department was notified that the plans had been approved. At this point the Committee's interest in the matter terminated it. Pierce and his Oil Burning Installation Company have dis- appeared. YC 36270