Canal Ring (New York)
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The Canal Ring was a group of corrupt contractors and their political supporters in the 1860s and 1870s who defrauded the State of
New York New York most commonly refers to: * New York (state), a state in the northeastern United States * New York City, the most populous city in the United States, located in the state of New York New York may also refer to: Places United Kingdom * ...
by overcharging for repairs and improvement of the state's
canal Canals or artificial waterways are waterways or engineered channels built for drainage management (e.g. flood control and irrigation) or for conveyancing water transport vehicles (e.g. water taxi). They carry free, calm surface ...
system. It consisted largely of a group of loosely organized Democratic and Republican Assemblymen and State Senators, led by Jarvis Lord in the Assembly and William Johnson in the Senate. The firm Belden & Denison made the most money from the scam, though numerous contractors were involved. They were chiefly organized along the route of the
Erie Canal The Erie Canal is a historic canal in upstate New York that runs east–west between the Hudson River and Lake Erie. Completed in 1825, the canal was the first navigability, navigable waterway connecting the Atlantic Ocean to the Great Lakes, ...
; in
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, Rochester, Buffalo, Lockport, and Oswego. Frauds peaked in 1872, with "Appropriations for Extraordinary Repairs" rising to $4.1 million. Then
Governor of New York The governor of New York is the head of government of the U.S. state of New York. The governor is the head of the executive branch of New York's state government and the commander-in-chief of the state's military forces. The governor ...
Samuel J. Tilden began targeting the ring in 1874. In March 1875, he released a report detailing frauds carried out. This served as a direct appeal to the people, and so aroused public opinion that the legislature was forced to authorize the governor to appoint a canal commission. The reports of this commission resulted in a marked diminution in the appropriation for canals and the indictment of several officials for defrauding the State. His handling of the Ring is credited with helping Tilden secure the Democratic nomination for president in
1876 Events January * January 1 ** The Reichsbank opens in Berlin. ** The Bass Brewery Red Triangle becomes the world's first registered trademark symbol. *January 27 – The Northampton Bank robbery occurs in Massachusetts. February * Febr ...
.


Background

The Erie Canal was first proposed in the 1780s, then re-proposed in 1807. A survey was authorized, funded, and executed in 1808. Proponents of the project gradually wore down opponents; its construction began in 1817, and opened on October 26, 1825. In a time when bulk goods were limited to
pack animals A pack animal, also known as a sumpter animal or beast of burden, is a working animal used to transport goods or materials by carrying them, usually on its back. Domestic animals of many species are used in this way, among them alpacas, Bact ...
(a maximum''"Works of Man"'', Ronald W. Clark, (1985), Viking Penguin, New York quotation page 87: "There was little experience moving bulk loads by carts, while a packhorse would .e., "could"carry only an eighth of a ton On a soft road, a horse might be able to draw 5/8ths of a ton ) or 5× But if the load were carried by a barge on a waterway, then up to 30 tons or ) or 240×could be drawn by the same horse."), and there were no railways, water was the most cost-effective way to ship bulk goods. It was the first transportation system between the Eastern Seaboard and the western interior of the United States that did not require
portage Portage or portaging ( CA: ; ) is the practice of carrying water craft or cargo over land, either around an obstacle in a river, or between two bodies of water. A path where items are regularly carried between bodies of water is also called a '' ...
. It was faster than carts pulled by draft animals and cut transport costs by about 95%. The canal gave
New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...
's port a large advantage over all other U.S. port cities and ushered in the state's 19th century political and cultural ascendancy. The canal fostered a population surge in
western New York Western New York (WNY) is the westernmost region of the U.S. state of New York (state), New York. The eastern boundary of the region is not consistently defined by state agencies or those who call themselves "Western New Yorkers". Almost all so ...
and opened regions farther west to settlement. Though the Erie Canal and associated feeders were highly successful for several years after opening, overbuilding and the
Panic of 1837 The Panic of 1837 was a financial crisis in the United States that began a major depression (economics), depression which lasted until the mid-1840s. Profits, prices, and wages dropped, westward expansion was stalled, unemployment rose, and pes ...
marked the end of highly profitable years. Increased competition from
railroads Rail transport (also known as train transport) is a means of transport using wheeled vehicles running in tracks, which usually consist of two parallel steel rails. Rail transport is one of the two primary means of land transport, next to road ...
and other canals further contributed to decline in profits. In 1851, contracts under the $9 Million Act were divided among Democratic and Whig contractors. In 1854, a board of three commissioners was established to award contracts for the maintenance and repair of the canal. More competition forced the canal to lower rates, resulting in a decline in revenue. The canal saw a boom in prosperity with the outbreak of the
American Civil War The American Civil War (April 12, 1861May 26, 1865; also known by Names of the American Civil War, other names) was a civil war in the United States between the Union (American Civil War), Union ("the North") and the Confederate States of A ...
in 1861, which continued throughout the war and for a brief time after. After the Atlantic Cable was completed in 1866, however, the canal began to lose tonnage again. By 1869, railroads finally surpassed the canals in terms of tonnage, and the routes financial troubles were compounded by the
Long Depression The Long Depression was a worldwide price and economic recession, beginning in Panic of 1873, 1873 and running either through March 1879, or 1899, depending on the metrics used. It was most severe in Europe and the United States, which had been e ...
beginning in 1873. It registered a net loss of $265,610.70 in 1875.


Canal Ring

The Canal Ring made money by charging low prices for major works, but extremely high ones for minor things, in what was termed an "unbalanced bid". Under the system, contractors could also not complete all of the work they agreed to in a contract without punishment. In 1862, the enlargement of the canal was deemed finished in an effort to curb corruption, but new improvements were soon necessitated by the increased traffic due to the Civil War. Many New Yorkers felt corruption was a major cause of the canal system's troubles. In 1867 at the state Constitutional Convention,
Erastus Brooks Erastus Brooks (January 31, 1815 – November 25, 1886) was an American newspaper editor and politician from New York. Life He was born on January 31, 1815, in Portland, then in the District of Maine, Massachusetts, the son of Capt. James Brooks ...
alleged canal contracts of being awarded to the highest bidder. A commission was established, consisting of James Gibson, Henry C. Murphy, Charles Stanford, William Bristol, William S. Clark, George W. Millspaugh, and counsel Henry Smith. It concluded there were "gross and monstrous frauds", and the Canal Commissioner, Robert C. Dorn, was impeached.


References

* * {{Cite journal, last=Archdeacon, first=Thomas J., date=1978, title=The Erie Canal Ring, Samuel J. Tilden, and the Democratic Party, journal=New York History, volume=59, issue=4, pages=408–429, issn=0146-437X, jstor=23170015 Crimes in New York (state) Politics of New York (state)