New-York tribune., 1900-06-14


a member of the Board of Education when the
reform element was in power: he is a member of
the Chamber of Commerce, and is said to be
backed in making the charges by proni-
nent financial institutions
THE CHARGES PRESENTED.
The text of the document is in part as follows:
On July %, 1898, the Controller advertised for
proposals or bids for a sale of city stock (com-
monty called bonds) The advertisement was of
twenty separate issues Of stocks for as many
different improvements or purposes. aggregating
81, ,6SS,9 ,992 So Bids were in terms invited for
the whole part" That bidders for any part
were thus invited is distinct. And though
they had not been invited they would have had
the right to bid. The charter is guilty of no such
injustice to the city allowing only bids for ALL
The advertisement also contains this express
reserve tion namely: THE Controller shall de-
termine what if any part Of said proposals shall
be accepted; so that the advertisement made
him free TO reject any or all proposals.
When the bids opened there were three
bids in terms 'for all or none" namely, that of
Harvey Fisk Son. at S104 10, that of the
Produce Exchange Trust Company (represent-
ing syndicate) at S1O4 94, and that of Vermilye
& Co. at sos 03. These bids very low. as
you perceive. The reason will be stated herein
after.
In addition to these three bids for "all or
none there were fifty bids for parts of the said
bonds, running from amounts as small as $500
up to S1,O0O,O00. All of these and two of the
said three bids for 'all or none the Controller
hastily threw out and accepted the bid of the
Produce Exchange syndicate or trust, which
was for S1O4 "a Of these fifty bids there were
thrty-one offering higher premium than the
said bid for all which the Controller accepted.
They ranged from S1O5 80 to S1O3 So, the average
approximating S10S The bid accepted was. as
already stated for only S1O4 81.
LOSS TO THE CITY.
These thirty-one bidders bid for par aggre-
gate of $S,3S5,OOO of the said total issue Of 81
6SS,992 So of said city bonds, which were ad-
yertised and sold. The total of their bids was
1902, ,24S This shows (deducting the said
gregate premium of S636 24S on the said $685.,
600 of bonds. On the other hand the successful
bid Of S1O4 81 amounted to an aggregate of only
S,I99,219 for this amount of bonds. This.
as you. see actually shows premium of only
S414,219 and this is less than the premium Of
fered for the same amount of bonds by the said
thirty-one bidders by the large of S222,029
In word, the said aggregate Of SS,3S5,0O0 OF
city bonds at par actually sold and deliv-
cred by the Controller to a favored trust syn
dicate for S222.029 less than bid therefor
by these thirty-one bidders. The said favored
bidder was thus enabled by the Controller to at
once turn to these thirty-one small bidders
the said SIS, 3S5, 900 of bonds which they had bid
for at profit on the spot to said successful bid
Ger of S222,O29. which said profit belonged of
right to the city. The said successful bidder
did not need to seek for purchasers; they were
furnished right to hand by the Controller.
AS above stated, there three bids for "all
of $1O4 79 $104 "a and $105 03 The reason for
such low bids was that the Controller had been
falsely and wilfuly declaring publicly through
the newspapers for several months that the city
was already bonded in excess of the 10 per cent
limit fixed by the Constitution and that there
fore any city bonds issued would be void. In
deed, on July i, or less than three weeks be-
fore advertising the said issue of So, ,6SS 992 SO
of bonds for sale, as aforesaid, he had written
an official letter TO Governor Black Ito which
you referred), in which he positively stated
that after making all deductions from the total
city Indebtedness 'the present city still remains
indebted to an amount more than $10000,00O
in excess of the constitutional limit of indebted
ness" If it had been true that the city
already overbonded, then the Controller would
have been guilty of indictable crime for sell
ing any more bonds. Yet within three weeks he
advertised, as aforesaid for proposals for the
sale Of the said $12 6SS 992 Sc of the city bonds
This he could not have done if he believed his
own statement that the city already over
bonded.
INVESTORS ALARMED
The result of these repeated statements of
the Controller through the public press and in
his said letter to the Governor was to alarm
investors, the outcome being that the bids for
the city's bonds fell TO the low figures shown
by the three bids for "all none,' stated above,
and generally by the other bids. But, in addi-
ton to that two of the above mentioned three
bids contained the provision that they were
made subject TO the approval of the legality of
the issues by our counsel discreditabe con-
dition usually annexed to bids for doubtful
Western and Southern bonds. but never before,
as am informed, annexed to bids for New-York
credit had been heretofore unknown. Although
this condition was put in these two bids be-
cause of the fear and distrust which the Con-
troller had created by his said Official declara-
tions. he at once threw them out. and hastily
awarded the bonds to the said bid of the Prod
uce Exchange Trust Company syndicate or
trust at S104 94 although one of the bids thus
thrown out was higher, namely, S1OoO3 When
the highest bidders applied for a writ of n
damus the Courts decided they probably had
to do in strict law that such conditional bids
not legal But they were induced
by the Controllers said public declarations;
and a letter of Mr.. Read. of Vermilye
& Co. (who the highest of the said
three bidders), which was written at the time is
herewith submitted to show that the Controller
also made the said false declarations privately
to the said firm at its place of business, whittier
he went for the purpose while the advertisement
for bids actually pending.
1t also shows that a brother of the Controller,
who was a member OF the firm Of w. N Coler
& Co. a firm Of bond brokers, of which the
Controller himself was member, was actively
interested in the trust or syndicate which
ceeded in getting the bonds at the small figure
of S1O4 94 as above stated, thus being enabled
to make, as is apparent, probably S1,OOO.O00 on
the transaction, for the bonds of the city went
up in price the timidity caused by the official
declarations OF the Controller against the citys
credit being dispelled by this sale.
HIS REMOVAL REQUESTED.
The several sales of city bonds since made by
the Controller have been conducted in the same
manner Though he has sold between $50 900 600
and $40 900 600 worth of such bonds. bid
der for a part has been able to get any OF
them as / am informed. though the universal
policy is to prefer bidders for small amounts
in the sale of Government bonds. The sale OF
our recent war bonds and of England's recent
war bonds are examples. The unjust and dis
honest method of selling city bonds above stated
has been pursued by the Controller persistently,
and the facts show that he has been guilty of
gross breach of trust, If not worse While some
Continued on seventh page.
Delightful trips through the Highlands of the