USA > Ohio > Cuyahoga County > Cleveland > History of the city of Cleveland : its settlement, rise and progress > Part 19
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NOTES.
1 On February 13, 1866, a special committee of the City Council, con- sisting of Messrs. Thomas Jones, Jr., Ansel Roberts and John Huntington, after an exhaustive examination, extending through the records of a period of fifteen years, submitted a report upon the school fund showing a. balance to the credit of that fund of nearly ninety thousand dollars, with which to meet an estimated current expenditure for the year of fifty-five thousand dollars, whereas the current accounts of the clerk indicated a large deficit in that fund.
2 In every matter pertaining to the disbursement of its vast revenues, in the appointment of its numerous officials and fixing the rate of their compensation, in directing the laying of pipe and in fixing the charges to consumers, this Board is entirely independent of supervision or control. Bills are passed upon by the Board, the warrants on the treasury are drawn by its secretary, and the auditor is required to sign the latter, without the authority of enquiry as to the nature or correctness of the account. These bills are not placed in the ordinance for the payment of
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HISTORY OF CLEVELAND.
claims and passed upon by the Council, as is true of all other claims against the city. For many years the approval of a single member of the Board of Trustees sufficed to pass claims for payment. For as many years no footings of the book of entry for water rents had been made, and the system of accounts was so far defective that embezzlement was made easy and rendered safe by the entire absence of any check upon the receiving officer. The strict integrity of the incumbents alone saved the city from loss, and it is but justice to these gentlemen to say that an in- vestigation made by a special committee of Council in 1878, disclosed the fact that all moneys had been duly accounted for. On the recommenda- tion of this committee many defects in the system were remedied.
The autocratic power of this Board is well illustrated in the attitude taken in relation to the bonded indebtedness incurred in behalf of the de- partment, the Board declining to pay either interest or principal out of the large surplus remaining in the treasury every year (amounting on the first day of January, 1887,to $125, 386.74), thus placing the burden upon the general public and this without any apparent adequate reason, be- yond a desire to show at the end of each year that the department had not only been self-sustaining, but had been operated at a large profit, a profit which, under the present schedule of rates, innures to the large con- sumers and is taken directly not only from the pocket of the small con- sumer, but as well from that of the citizen who is not supplied with water through this channel. The following statement will show the results of this policy :
Total amount of bonds issued for Water-Works purposes. $2,700 000
Interest to date of maturity. 3,246,790
Total $5,946,790
Of this amount there will have paid prior to January 1, 1888:
Of the principal
$ 925,000
Interest 2,331,040
Total $3,256,040
The payments have been made as follows:
From the Sinking Fund. $ 300,000
By the Water-Works Department 220,000
By direct general taxation 2,736,040
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HISTORY OF CLEVELAND.
From the foregoing it will be seen that for the past thirty-two years the city has paid on this behalf, principal and interest, an average of $101,750 annually, and for sixteen years to come will be required to pay an annual average of $168,170, if no change is effected.
3 On April 1, 1868, the Fire Department fund was balanced by trans- ferring from the general fund to its credit the sum of $102,695.64, this being the amount overdrawn at that date, since which date and up to the first of September, 1873, amounts aggregating $248,768.26 had been transferred to the same fund, and on the latter date the fund showed a balance of $33,270.77 on the wrong side of the ledger.
4 Nor shall any appropriation be made by any City Council, officer or board, having any control thereof, unless the City Auditor shall first certify to the City Council, or board, that there is money in the treasury, not otherwise appropriated, for the payment thereof .- Act of the Legislature, passed April 18, 1871.
5 Mr. Everett entered upon his duties as City Treasurer in April, 1869. In June of the same year he went to New York and endeavored to nego- tiate the notes of the city to the amount of $200,000 through the Ocean Bank, which institution had been doing business for the city for some years. The bank declined the paper ; Mr. Everett thereupon called upon the American Exchange National Bank, and through his personal ac- quaintance, as a banker, with its officers and directors, secured the loan at seven per cent., three per cent. less than the city had been paying. The city's balance was withdrawn from the Ocean Bank and the Ameri- can Exchange National has since been the Eastern agent of the city. All Cleveland city bonds are made payable at that institution. By this transaction a saving of $25,000 in interest was effected in the first year of Mr. Everett's incumbency, and the failure of the Ocean Bank, shortly after the transfer of the funds, would have resulted in a loss of from $30,000 to $40,000 to the city had the balance remained.
6 In his annual message, delivered to the City Council April 11, 1876, Mayor Payne says: "The terse, intelligible yet comprehensive presenta- tion by City Treasurer Everett, in his annual report of the fiscal transac- tions.of the government for the year, cannot but have attracted the atten- tion and received the unqualified approbation of all. But not even here are
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HISTORY OF CLEVELAND.
Mr. Everett's services to the city seen to best advantage. The high credit our securities command in the Eastern markets is in no small degree due to the masterly manner in which he has handled our bonds. Instead of employing agents on commission, as had been done, Mr. Everett has taken our bonds to the Eastern money centers, put himself in communi- cation with the heaviest dealers in these securities, whose respect and confidence he has, and invited competition. His success in securing the highest rates is remarkable. It enabled us in our last transactions, the first and only city in the West, to dispose of one hundred thousand dol- lars six per cent. twenty year Water-Works bonds at a premium of five- eighths of one per cent. above par and all accrued interest."
And again one year later the same authority says: "Two years of intimate acquaintance with the working of our municipal government has convinced me of the efficiency of our civil service. The issue of the immense number of bonds required to meet the obligations imposed by the improvements in progress has made fidelity and judicious manage- ment in the treasury department indispensable. To ascertain whether the city received the best possible rates for the securities it offered in the markets, on two occasions, when large amounts of bonds were to be sold, I accompanied the City Treasurer to the Eastern money centers -visited the principal dealers in municipal and other bonds with him, and witnessed his method. I learned that no city in the West realized more on the same grade of bonds than Cleveland, and few, if any, as much. I returned thoroughly satisfied that the universal public confidence mani- fested in this officer was not misplaced."
7 In 1882, $100,000 Water-Works bonds bearing 3.65 per cent. inter- est were disposed of at one per cent. premium.
8 Reference is here had to the policy pursued in meeting maturing . bonds, issued to pay for special improvements, by using moneys in the treasury, instead of re-issuing bonds.
9 The increase in the debt from January 1 to July 1, 1887, is accounted for as follows:
General bonds were issued as follows:
For Elevated Roadway. ... $175,000
For Kingsbury Run bridge. ... ..... 10,000
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HISTORY OF CLEVELAND.
For Petrie Street bridge.
5,000
For Pearl Street bridge 25,000
For street improvements 19,000
For sewers
36,000
For notes, miscellaneous.
5,200
Total.
$275,200
Debt canceled :
School bonds paid. $ 50,000
Street improvement bonds paid. 33,000
Sewer bonds paid
8,500
Notes paid
9,555
Total $101,055
10 In his Annual Report for the year 1877 the City Auditor dwells at length on this subject. After recounting briefly the history of other special improvements, he says :
"In most instances, the property owners along the line of any improve- ment, to all appearances, acted spontaneously and unitedly in petition- ing the Board of Improvements to approve the application, and recom- mend it to the Council for adoption. In a few cases, some of which have been made conspicuously prominent by very general discussion as to their merits and demerits, certain large property owners, or speculators, as it may be, made up for their lack of numbers by their activity and personal influence in securing a majority of the smaller owners in en- dorsement of a certain method which, on further reflection, or it might be said adverse representation, the latter were dissatisfied with, as not being so much to their own private advantage as to that of other large owners! Had the cases been reversed, the dissatisfied ones would have been reversed also.
Hence if the improvement was well done, impartial citizens, not inter- ested in these street gift schemes, could look on with serene indifference at the disappointment of those who drew blanks in the pavement lot- tery.
But the best illustration of the "true inwardness" of some of these speculative projects, devised especially for the benefit of certain property owners but masked under the thin veil of "public utility," is the propo-
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HISTORY OF CLEVELAND.
sition, made in 1874, to open a new street between Euclid avenue and Superior street, and running between Bond street extension and Erie street, to be called Vincent street.
The petition for the new street was signed only by a few persons, and probably by an even less proportion than in the case of the Sheriff street extension; and none, perhaps, except the few original signers, out of a wide territory in every direction, on which the tax for the new street would have been assessed, would have known of their prospective liabilities till they were called upon to pay for what could have been of no real advantage except to the Superior street and Euclid avenue owners of the abutting prop- erty! Yet the application was unhesitatingly recommended by the Board of Improvements to the Council, which approved it and passed an ordinance authorizing the appropriation of the land needed for Vin- cent street. The value of the land to be appropriated was estimated by a jury in the Probate Court, at $90,000. Had no opposition arisen, and from an unexpected source, not from those who were nominally to pay for it-the scheme might have been successfully carried through. Prior, however, to the issue of city bonds for the payment of the $90,000, the matter was referred to the Finance Committee, then consisting of Messrs. James Barnett, Stephen Buhrer and George T. Chap- man. They made a careful investigation of the case, and reported that on the basis of the extreme limit of the legal assessment, namely twenty- five per cent. of its value on the abutting property, only about $40,000 to $45,000 could be realized, and further, that a tax on an indefinite amount of territory in the vicinity to meet the remaining cost would not probably be sustained if opposed in the courts, as it seemed appar- ent that no other property would be directly or indirectly benefited by Vincent street except that on the street itself, as it was not a necessary outlet for anything else; and hence, that the city at large would have to pay not less than $45,000 additional for the benefit of the projectors of the scheme. Although, as stated, the Council had already authorized the appropriation of the land for the street, yet when the Finance Com- mittee and City Auditor made an adverse recommendation to that of the Board of Improvements, the Council adopted that of the committee and auditor, and refused to issue bonds in payment of a risk which the
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HISTORY OF CLEVELAND.
owners on the line of the street were unwilling to take upon themselves. The Finance Committee offered to accept a bond from these very prop- erty owners, waiving their statutory rights, and guaranteeing the city against any possible claim which might thereafter be made from the excess of the cost of the land over the legal rate of the assessment; but this, as was expected, they were unwilling to do, and the project of course fell through." [Vincent street was opened in 1886, by private enterprise, so far as the cost and expenses therefor is concerned .- ED.]
11 This matter is in itself of importance sufficient to justify a far more extended consideration than is practicable in an article of this character, and the following compilations, furnished by request by Mr. R. F. Jones, Deputy City Auditor, August 1, 1887, must suffice to show the bearing had upon our municipal finances and indirectly upon the material pros- perity of the city. The figures are eloquent, and tell a marvelous tale of the enrichment of the private citizen at the expense of the public :
"The total amount of indebtedness for special or local improvements, which for various reasons the city of Cleveland has been unable to meet by direct taxation upon the abutting property, or the property benefited, and amounting to $1,027,435.98, has been paid by the city as follows:
From the Sinking Fund of 1862 $466,486 51
By issue of funded debt bonds. 544,148 70
From the General Fund, being the remaining surplus of the 'Scott Law' liquor tax. 16,561 48
From the General Sinking Fund. 239 29
Of this amount $994,181.38 has been permanently enjoined by the courts.
The following accounts were credited by payments made from the Sinking Fund of 1862, being improvements in 'the first seven wards:'
Allen street opening $ 7,012 73
Bank street extension paving. 6,968 97
Bond street opening. 89,764 41
Central Place opening, Huron to Prospect 54,128 93
Marquette street opening 11,230 46
Orange street extension. 1,209 57
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HISTORY OF CLEVELAND.
Payne avenue opening, Superior to Willson 277,851 44
Seneca street opening, grading and grading damages 18,320 00
Total. $466,486 51
Paid from the proceeds of funded debt bonds :
Arlington street opening. $ 409 46
Broadway sewer, east of Kingsbury Run 127 83
Becker avenue widening
2,887 86
Broadway paving, Union to Miles. 67,817 29
Beech street grading and culverts. 712 30
Bailey street opening.
1,467 13
Bucton street grading and damages
444 72
Brownell street paving.
1,605 44
Broadway paving, Independence to Union street.
10,075 78
Columbus, Pearl and Walworth Run bridge improvements .. 111,440 09 Custead avenue opening. 120 00
Detroit street paving, Kentucky to 220 feet west.
928 11
East Prospect street opening.
5,925 89
Franklin street paving.
6,653 18
Grand avenue opening
4,354 39
Herald street grading, etc.
804 16
Junction street grading, etc.
20,887 49
Jennings avenue paving
1,025 91
Kinsman street paving and culverts
148,811 39
Lincoln avenue culverts. 325 16
Lake street paving
4,870 94
Long street paving ..
240 23
Mulberry street paving
1,223 35
March street opening
3,663 82
Miles street damages.
338 54
Pearl street paving, Detroit to Monroe.
3,822 34
Russell avenue opening.
3,457 83
Superior street sewer, west of Doan brook
841 20
Slater street opening
8,761 51
Summit street opening
511 15
St. Clair street widening, east of Willson avenue.
28,476 12
Seneca street grading and paving.
1,384 86
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HISTORY OF CLEVELAND.
Superior street widening, east of Willson.
760 00
Sewer Districts 1 and 2, East Cleveland. 31,496 00
Woodland avenue widening, Willson to East Madison. 5,801 40
Woodland avenue, macadamizing, Willson to East Madison 4,860 00
West River street improvements. 1,750 57
Willson avenue grading, etc., Euclid avenue to Lake Erie. 2,109 87
Wade Park avenue opening .. 10,423 08
Willson avenue opening, North of St. Clair street. 7,687 48
Willson avenue opening, Sawtell to Broadway
18,635 90
Willson avenue grading, etc., Maurice to Sawtell 3,358 21
Willson avenue grading, etc., Julia to Maurice.
12,850 72
Total $544,148 70
Paid from the General Fund :
Columbus, Pearl and Walworth Run bridge improvements .. $ 2,338 00
Sewer Districts 1 and 2, East Cleveland. 5,585 16
St. Clair street paving, Erie to Willson 3,977 52
Orange street extension
1,766 00
Superior street sewer, east of Doan brook
2,894 80
Total.
$ 16,561 48
Paid from the General Sinking Fund :
Bailey street opening .. ... $ 239 29
It must be understood that this sum represents only so much of the taxes upon local property which have been permanently enjoined by the courts, and bonds for which indebtedness, together with the interest, have matured. Other cases of a similar nature are now pending before the courts, the result of which is yet uncertain, but doubtless will cause an addition to the already enormous debt of at least $500,000."
12 In his report for 1877 the City Auditor very pointedly fixes the responsibility, so far as it attaches to city officials. He says:
"With the account of these instances alone, out of the long list of others which were characterized by a similar indifference or negligence on the part of successive Boards of Improvements for many years past,
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HISTORY OF CLEVELAND.
many of whose members are still living among us, the burdened public may well in sentiment, if not in reality, address them as follows:
You are constituted the fiduciary agents of the city in all these special improvement projects. You were expected to examine into the merits of each with intelligence, fidelity and care. You were not expected to be swayed in your actions by any considerations of wealth, standing, or political or other influences of any petitioners. The Council relied and acted upon your recommendations-unless proved worthless, as in the Vincent street case-in assuming the original cost and issuing bonds therefor, which were to be paid, principal and interest, by taxes on the property benefited. You were not expected, from this very reliance of the City Council in your judgment, to recommend any project which would involve the city in cost beyond that which could, without contest or injunction, be realized from taxes assessed on the property improved. You made contracts upon which there is yet due the city eighty-three thousand dollars for paving that portion of the several streets occupied by street railroads, the cost of which should have been immediately paid or provided for by the railroad companies themselves, but for which the city, through your agency, was compelled to issue bonds in payment. Your contracts contained no guarantee for the re-payment of the money so expended, and the final collection of it is extremely doubtful. The fail- ure to collect any portion of this will make the amount remaining unpaid a permanent charge against the city, as it cannot now be as- sessed against the abutting property.
Would these gentlemen, if they had been appointed by any court as guardians of even a comparatively insignificant trust, have risked it so hastily and readily without investigation by loaning it, without any positive security for its re-payment, or without even knowing, as in the cases cited, who was to make that re-payment ? Would they have risked their own money in a security so intangible, so far as the time and vague sources of payment are concerned, as this? If they would not have taken these risks, either as guardians or personally, why did they peril thus recklessly and improvidently the interests of all the tax-payers of Cleveland thus committed to their care ?
The original estimate for the whole cost of the Viaduct, and all its col- lateral improvements, was made under their charge, and the citizens
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HISTORY OF CLEVELAND.
relied on their calculations that it would not exceed one million one hundred thousand dollars.
The Legislature authorized the issue of city bonds to that amount. The project was submitted to the citizens, who voted for it with the un- derstanding that that sum was all which would ever be needed or called for to the end. The first contract for the work was made by them in 1874, under the authority to incur only one million one hundred thou- sand dollars of cost. Yet the latest estimates have shown that the total cost of the Viaduct and Canal improvements, not including the sinking of the railroad tracks, will reach at least two million four hundred thousand dollars.
Nocriticism of the Viaduct itself is here intended. It is admitted to be a work of great public utility, whose value as a needed thoroughfare be- tween the two sections of the city will be more and more recognized each succeeding year. But it is intended to criticise the fact, that before entering upon the work, more intelligence and comprehensive investiga- tion's were not made to determine what would be the real cost of the structure, including the right of way, that the citizens might have known by a clear approximation at least the extent of the responsibility to be incurred in the undertaking.
By this very lack of, or failure to exhibit, at least, the indispensable qualities which should have characterized their action, they are respon- sible, even beyond the Council which merely confirmed their recommen- dations, for this great special improvement debt, the condition of which is so unsatisfactory at present to all. It is a fitting epitaph for those departed Boards of Improvements-
' The evil which men do lives after them.'
The present Board of Improvements, created since the passage of the Burns law, is not responsible for any portion of the debt, as no new im- provements were or could be undertaken during the past year."
13 Mayor Payne, in his annual message, delivered to the City Council April 11, 1876, refers to this matter in the following terms: "A mo ment's examination of Treasurer Everett's clear, concise statement of the transactions and conditions of the various general and special funds forcibly impresses us with the extent of its unfortunate results. This report shows the funds which constitute the general revenue of the city
.
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HISTORY OF CLEVELAND.
(among them the sinking fund, the use of which for any other purpose the law expressly prohibits), with an aggregate credit of $274,444.87. It also appears that there is but $6,109.48 in the city treasury. Where is this money, every dollar of which was provided for a particular pur- pose? The report explains this also; it shows special improvement accounts overdrawn to an aggregate of $419,000. That is, assessments. have been delayed and no collections made to meet these special bonds, and to save the credit of the city the treasurer has been in the past compelled to apply all moneys in his hands, for whatever purpose raised, to discharge. these obligations."
And again, a year later, Mayor Payne says: "Bonds were issued as these improvements were made, running from one to five or more years in anticipation of the tax. They matured from time to time, and no tax having been collected to redeem them, re-issues were resorted to in many cases; in others they were redeemed by the use of funds on hand provided for other uses. In either case the result is unfortunate. If the bonds are re-issued the interest account accumulates unnecessarily. If other funds. are used our fiscal concerns are disturbed by it. The effect is seen at a glance in the admirable statement of City Treasurer Everett. In his. special accounts, the aggregate amount of money thus diverted from its. proper purpose, as shown by the overdrafts, is $364,308.89.
14 The act of the Legislature creating the Board of Sinking Fund Com- missioners was passed March 28, 1862, hence the name. Previous to. this date the railroad stocks, etc., comprising the fund, were in the cus- tody of three Boards of "City Commissioners." The act of 1862 named the Sinking Fund Commissioners as follows : Messrs. H. B. Payne, F. T. Backus, Wm. Case, Moses Kelly and Wm. Bingham, and gave them power to fill vacancies, subject to the approval of the City Council. The following changes have occurred : Charles Hickox, elected May 3, 1862, vice Wm. Case, deceased; Leonard Case, elected May 28, 1870, vice F. T. Backus, deceased ; J. H. Wade, elected January 2, 1871, vice Moses Kelly, deceased; S. T. Everett, elected January 26, 1880, vice Leonard Case, deceased.
A Citizens Investigation Committee, consisting of Messrs. A. K. Spen- cer, Jno. H. Farley, H. M. Claflen, E. S. Flint, W. H. Hayward and Hub- bard Cook, authorized by a resolution of City Council, to examine the
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HISTORY OF CLEVELAND.
books and accounts of every department of the city government, after six months exhaustive search, made with the assistance of an expert accountant, reported to the City Council at considerable length, October 15,1877. The following extract from the report embodies its sentiment throughout: "We would here state that we find nothing in any depart- ment that looks like fraud or the misappropriation of the funds of the city, nor have any transactions been found that cause us to question the integrity of any of the officers of the city.
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