and to a reduction of one-half upon the rates of toll on grain and lumber fixed by the toll-sheet of 1876.

WILLIAM DORSHEIMER.
ADIN THAYER.
D. A. OGDEN.

January 30, 1877.

REPORT OF THE COMPTROLLER, FEBRUARY 28, 1877. ALBANY, February 27, 1877.

To the Canal Board:

In answer to your resolution of the 20th instant, worded as follows: "Resolved, That the Comptroller be requested to report to this Board what, if any, reduction can be made in the toll-sheet of 1876 and not incur a risk of a deficiency in the necessary amount required for maintenance during the present year of the canals under the limitation of the Constitution,"

I would say that it is imperative that our income must at least equal our expenses.

A reduction of tolls would necessitate either a corresponding reduction of expenses or an equivalent gain in tonnage. I am quite willing to admit that a reduction may be made in the expenses in the following as well as in other directions. The lateral canals cost the last fiscal year $45,659 in excess of their income; the sections, in many cases can be lengthened, thus doing away with a number of superintendents; foreinen, lock-tenders can be dispensed with, and after two or three weeks of navigation, night watchmen and bank patrols are superfluous. In many cases boats are allowed to pass through the weigh-locks drawing from six inches to a foot more water than the regulations allow. As a natural result, jams occur and much labor and time are consumed in breaking them. Boats are passed in when they rise to a greater hight above the water line than the law permits. On one section of the canal four or five bridges were carried away last summer in this way. Collectors' offices, where not needed, can be closed; unnecessary officials can be dispensed with, etc. Yet, with so many sources of retrenchment and economy before us, we must remember that in the year last past we have had no breaks and no expensive work or structures to repair or rebuild. This good fortune we cannot expect always, and I very much doubt if we can reasonably hope for any considerable decrease in the expense of maintaining the canals below the expenses of 1876.

As to a gain in tonnage over 1876, this we can only hope for in a general revival of business. From the present outlook such revival cannot be expected. Capital is timid, and labor remains unemployed. There is a deep-seated feeling of uncertainty through the whole country, and especially so in the money centers. The shrinkage commenced in 1873 is still going on. Real estate of all descriptions has declined immensely; in many cases it is practically dead. Mortgages usually looked upon as a security of an available kind

cannot be collected, and the mortgagee has become the owner of the property. Life insurance companies, which are a species of savings bank, when probed, prove to be rotten. Banking institutions cannot earn their dividends. Powerful corporations whose stock, a few months since, was sought by prudent investors, are on the downward track, and those who were considered the richest and most fortunate of men, a few years since, are now as much to be pitied as the poor themselves. Looking the situation squarely in the tace, I cannot delude myself into the hope of an increased tonnage.

A toll-sheet reduced below that of 1876 I firmly believe will result in the closing of the canals. How can we meet a deficiency which the Constitution does not contemplate? We can create no new debt, and no officer of the State would permit himself to sign an obligation not warranted by the fundamental law, and no one short of a fool would part with his money in exchange for it. Neither can you lay a tax contrary to the fundamental law. I cannot see my way clear, then, to any reduction in tolls. The reduction, if made, can only lead us into grave difficulties, out of which there is no escape.

F. P. OLCOTT,
Comptroller.

ARGUMENT BY THE AUDITOR BEFORE THE CANAL BOARD, FEBRUARY 28, 1877, ON THE PROPOSED REDUCTION IN CANAL TOLLS.

February 28, 1877.

I have gathered a few facts and statistics relating to the tolls, trade and tonnage of the canals, which, with your permission, I will present for your thoughtful consideration. My proposition is that high or low tolls have very little effect upon the commerce of the canals, although they have a very important influence upon the revenues.

The traffic is governed more by supply and demand. The revenue depends upon the rate of tolls, the highest rates during the last twenty-five years affording the largest revenue.

From 1852 to 1857, both years included, there was no change in the rates of toll in the leading articles classed as vegetable food, that is, flour and grain. In 1856 the total movement of flour and grain by canal was 1,093,313 tons, and the tolls collected thereon amounted to $1,231,500. In 1857, the total movement of the same class was 702,271 tons, and the tolls collected thereon amounted to $765,465. The rates of toll were the same in both years, but the falling off in 1857, as compared with the previous year, of 391,042 in tons, and $466,035 in tolls, was in consequence of the financial and commercial revulsions which prevailed in that year, and could not be attributed to excessive tolls or freight charges. During that year bank suspensions were numerous and frequent, and $372,028.97 of canal fund moneys became unavailable through such suspensions.

In 1858 and 1859 the Canal Board, without taking into consideration thecauses which contributed to the loss of tonnage sustained in

1857, sought to regain or increase tonnage by a reduction of tolls on flour and grain. On flour, wheat, rye and barley, the tolls were reduced one-third, while on corn and oats the rates were unchanged and continued the same as in 1856 and 1857. The only trade of the canals which was subject to railroad competition was the through traffic or that designed for tide-water. The business of the two periods was as follows: 1856-7. The tide-water receipts of flour and grain were 1,438,043 tons. 1858-9. The tide-water receipts of flour and grain were, 1,313,873 tons; a loss of 124,170 tons on the tide-water deliveries by canal, notwithstanding the great reduction in tolls. The revenue receipts on the same class of freight was:

In 1856-7

In 1858-9

Showing a loss of (in tolls, by the reduction of
rates)..

$1,996,965 00

1,493, 813 00

$503,152 00

In 1860 the Canal Board began to restore the toll-sheet of 1857, and completed the work of restoration in 1862-in fact increasing the rates on corn and oats twenty-five per cent above those of 1857. The tide-water receipts for those years were:

gain of...... 1,063,919 tons under increased rates of toll.

The tolls received on same class of freight were:

From 1862 to 1869, both years included, no change was made in rates of toll on flour and grain.

In 1870, the Canal Board reduced the rates fifty per cent on flour, wheat, barley and rye, and forty per cent on corn and oats, which was followed by a loss in tide-water receipts in that year of 55,652 tons, and a loss in revenue of $817,774, on the very farticles upon which the tolls were reduced.

From 1870 to 1874, both years included, no further change was made in rates of toll on flour and grain, and comparing this period of five years, 1870 to 1874, with the five years preceding, 1865 to 1869, we have the following exhibit:

From 1865 to 1869 (high tolls) tide-water receipts

were ..

....

From 1870 to 1874 (low tolls) tide-water receipts

were

An aggregate gain in five years with reduced

tolls of..

The tolls received on flour and grain, for the same periods, were:

From 1865 to 1869 (high rates) aggregate tolls..
From 1870 to 1874 (low rates) aggregate tolls...

An aggregate loss in revenue by the reduction of
Or an average annual loss of

$10,382,678 00 6,508,678 00

$3,874, 000 00

$774,800 00

The result of the experiment made by the Canal Board in 1870 seems to have been a loss in revenue on vegetable food of $3,874,000. What was the apparent return for this great loss? An aggregate gain of 652,885 tons in five years, or an average of 130,577 tons a year. If even this small gain in tonnage could fairly be credited to the reduced toll-sheet, it might afford some consolation to tax-payers for the great loss in revenue. A comparison of the foreign exports of flour and grain from New York, for the two periods, will show that the increased movement was due to the increased supply and demand, and to no other cause.

EXPORTS OF FLOUR AND GRAIN FROM NEW YORK.

From 1865 to 1869, exports from New York, flour and grain, were 2,630,155 tons.

From 1870 to 1874, exports from New York, flour and grain, were 6,769,782 tons.

Showing an aggregate gain in the period from 1870 to 1874, as compared with the previous period from 1865 to 1869, of 4,139,627 tons, or an annual average gain of 827,925 tons.

One alleged object of the reduction was to relieve the canals from the competition of the New York Central railroad, but in that respect the experiment failed. The New York Central's charges for freight averaged :

From 1865 to 1869...

From 1870 to 1874..

$0.02.71 per ton per mile. 0.01.65 per ton per mile.

The decline in freight charges by the Central road, it will be seen, was almost identical with the per centage of reduction in tolls.

In 1875 the Canal Board again reduced the rates of toll on flour and grain thirty-three and one-third per cent below the rates which prevailed for the five years previous. The toll-sheet of 1875 was also adopted in 1876, the rates prevailing for 1875 and 1876 being sixty-six and two-thirds per cent on flour, wheat, rye and barley, and sixty per cent on corn and oats below those of 1869.

The tide-water receipts on flour and grain are shown comparatively as follows: