No. 7. [Special Orders No. 56.] HEADQUARTERS OF THE ARMY, By direction of the Secretary of War, and in pursuance of the provisions of the act of Congress approved January 13th, 1879, entitled "An act for the relief of the legal representatives of George Williams, deceased," a board of engineers, to consist of Colonel John N. Macomb, Colonel Z. B. Tower, Captain L. C. Overman, is hereby appointed to meet at Chattanooga, Tennessee, on the 18th day of March, 1879, or as soon thereafter as practicable. The board is authorized to visit such localities as may be deemed necessary to enable it to comply with such of the requirements of the act mentioned as are contemplated for its action, and will also report: 1st. The actual expenditures of the said contractor, George Williams, and his legal representatives, upon the works described in said act. 2d. The character and quality of the work done. 3d. Whether the expenditures in the prosecution of the said work were reasonable and proper. 4th. What would be a reasonable compensation for the use of tools and for money advanced in the prosecution of said work. 5th. What sum, if anything, should be allowed under the provisions of said act, in adjusting and settling the claim upon just and equitable terms. 6th. Any other matter or recommendation which may occur to the board as proper to be submitted. The junior member of the board will act as recorder. By command of General Sherman. 5. By direction of the Secretary of War, Col. O. M. Poe, aide-de-camp (major Corps of Engineers), is detailed for duty as a member of the board of engineers appointed to meet at Chattanooga, Tennessee, on the 18th instant, by Special Orders No. 56, March 10th, 1879, from this office, vice Colonel Z. B. Tower, Corps of Engineers, hereby relieved. By command of General Sherman. Official. E. D. TOWNSEND, SAML. BRECK, Asst. Adjutant-General. No. 9. KEOKUK, IOWA, 9th April, 1879. To the Hon'l G. W. MCCRARY, Secretary of War, Washington, D. C.: SIR: I have the honor to transmit herewith the report of the board of engineers constituted by S. O. No. 56, dated Headquarters of the Army, A. G. O., Washington, D. C., March 10th, 1879, & S. O. No. 60 (par. 5), dated Headquarters of the Army, A. G. O., Washington, D. C., March 13th, 1879, in the case of the claim of the estate of the late Geo. Williams, for payment on account of work done as contractor on the Muscle Shoals Canal of the Tennessee River. The report is accompanied by Exhibits A and B, & the affidavit of C. L. Williams, administrator, &c. I remain, very respectfully, your mo. ob't s'v't, (Four enclosures.) J. N. MACOMB, No. 10. KEOKUK, IOWA, April 9th, 1879. To the Honorable the SECRETARY OF WAR: SIR: The Board of Engineers, constituted in pursuance of "An act of Congress, approved January 13th, 1879," and by Special Orders No. 56 and 60, Headquarters of the Army, A. G. O., copies of which are hereto appended, respectfully report that they assembled at Chattanooga, Tennessee, on Wednesday, March 19th, 1879. Mr. C. L. Williams, administrator of the estate of George Williams (deceased), being present, submitted to the board a large number of papers in regard to the claim the board was called to consider, and progress was made in their examination until the evening of the next day, when the board, accompanied by Mr. Williams and by Major W. R. King, engineer officer in charge of the Muscle Shoals Canal" improvement, proceeded via Florence, Ala., to examine the work done under the contracts of George Williams and that of Matthew G. Kennedy. The party arrived upon the work next day (Friday, March 21st), and devoted the remainder of that day and more than half of the next to the special object of the visit, reaching Chattanooga again via “Milton's Bluff" and "Whaler's Station," on Monday evening, March 24th. The next three days and part of the fourth, were devoted to further examination of the papers of Mr. Williams in the case, as well as such as the board had obtained from Major King and his Ass't Engineers, Messrs. J. C. Long and Robert Hooke, both of whom have been engaged upon the work during the whole period of time covered by the claim, under the contracts of George Williams and M. G. Kennedy. The board, finding it impossible to arrive at final conclusions in regard to the claim, from the data brought by Mr. C. L. Williams to Chattanooga, then at noon on Friday, March 28th, started for Keokuk, Iowa, where all books and papers of the late Geo. Williams were supposed to be stored, reaching there on the evening of Monday, March 31st. Here the work of the board was greatly facilitated, but it nevertheless involved a large amount of patient labor, extending over the period of an entire week. The duty which the act of January 13th, 1879, prescribes for the Board of Engineers therein provided for, is "to inquire into and report upon the character and value of the work done and the merits of the claim." With regard to the character of the work done, the board find that it is essentially as provided for in the contracts, being slightly modified by the mutual consent of the parties thereto. The modifications were of such a character as not to increase, but rather to lessen the aggregate cost of the work. It is extremely difficult, if not impossible, to arrive at a measure of the "value of the work done." It is probably not much, if any, less than the amount already paid under the terms of the contracts themselves, and it is not probable that it exceeds the amount of the disbursements by the contractor and his legal representatives. These two extremes differ by more than a hundred thousand dollars, which is nearly fifty per cent. of the smaller amount; with so great a difference between the probable limits of value, the board find it impracticable to fix a definite sum as the actual "value of the work done." Next, as to "the merits of the claim." Upon the basis of the contracts alone, it is the opinion of the board that a fair and just settlement has been made by the local engineer officer. But the large excess of expenditures by the contractor and his legal representatives, over and above the amount paid on account of the contracts, indicates a considerable loss, and in view of the spirit of the act of Congress, the claim is meritorious. To what extent will be discussed further on. The orders convening the Board of Engineers, makes it their duty after complying "with such of the requirements of the act mentioned as are contemplated for its action," to "also report:" “1st. The actual expenditures of the said contractor, George Williams and his legal representatives, upon the works described in said act. 2nd. The character and quality of the work done. "3d. Whether the expenditures in the prosecution of the said work were reasonable and proper. 4th. What would be a reasonable compensation for the use of tools and for money advanced in the prosecution of said work. 5th. What sum, if anything, should be allowed under the provisions of said act, in adjusting and settling the claim upon just and equitable terms. "6th. Any other matter or recommendation which may occur to the board as proper to be submitted." The records of the late George Williams, and of C. L. Williams, the administrator of his estate, have been examined, vouchers compared with them, and the abstract of disbursements, marked Exhibit B, accompanying this report, verified so far as to show that the several amounts were actually expended, and for objects appropriate to such works as those in question. It further appears that the greater portion of the disbursements were made at or in the vicinity of the "Muscle Shoals Canal," thus strengthening the inference that they were actually made on account of the works. With these preliminary remarks the board report: 1st. That "the actual expenditures of the said Geo. Williams and his legal representatives, upon the works described in said act," amount to the sum of three hundred and thirty-seven thousand four hundred and ninety-five dollars and twenty-three cents ($337,495.23). 2d. That "the character and quality of the work done" was essentially the same as specified in the contracts, the difference being in the items "timber and plank," "concrete," "wrought iron," and "cast iron." Except a very small quantity of conerete, no portion of the material or labor covered by these items has been used in the construction. Their omission was determined upon with the free consent of the contractor, for reasons satisfactory to the engineer in charge, and in the exercise of powers reserved to him in the contracts themselves. The changes involved in this course, were manifestly to the advantage of the contractor, as is shown by the prices named in the contracts for such materials and labor, notably in the item of "timber and plank." "The quality of the work done," so far as it is now practicable to inspect it, is such as to justify the acceptance it has already received at the hands of the local engineer officer. It is apparently good work of the kind specified in the contracts. 3d. That in finding upon the question, "Whether the expenditures in the prosecution of said works were reasonable and proper," the board has been embarrassed by the natural inference that the contractor, in undertaking the work, did so with a desire to make a profit, and brought into the enterprise a considerable degree of experience, which, with the end in view, would direct him in the way of a reasonable economy. To determine, if possible, whether the facts confirm this inference, the board has analyzed the expenditures covered by Exhibit B, the result being such as to lead to the conclusion that whilst the expenditures are in their nature "reasonable and proper" enough, yet, in amount, some of them cannot well be called reasonable. Amongst them may be named Traveling expenses... Interest & exchange. Feed for stock..... Telegrams.... Boats, skiffs, &c.... $7,035 56 12, 688 61 1,478 90 1,438 07 1,169 61 These items, whilst they are not very great in the aggregate, yet indicate some degree of extravagance in the prosecution of the work. Two-thirds of the amount of the disbursements is made up of pay-rolls for labor. An inspection of these showed that the rates of pay were high, and the board cannot resist the conclusion that this was due, in some degree, to the high rate charged the men for boarding, namely, $4.00 per week or 57 c. per day. A proper economy in this respect would have suggested some arrangement by which the men could have been boarded for one-half that amount (the government now boards laborers at the same point for still less), resulting in a corresponding reduction of laborers' wages, still leaving the laborer the same net pay, but reducing the aggregate amount of the pay lists about $40,000. The computation upon which this estimate is made is as follows: There were probably not less than 160,000 days' labor expended upon the works included in the contracts in question. A saving of 25 c. per day in the board bill of each man would be $40,000 in the aggregate. 4th. "What would be a reasonable compensation for the use of tools and for money advanced in the prosecution of said work?" The compensation for use of tools has been difficult to determine, for the reason that the administrator of the late contractor could not furnish the board with an inventory and appraisement of the tools, machinery, &c., &c., taken to the works at the conmencement of operations. The administrator's estimate of their value is, however, sixty thousand dollars ($60,000), which the board has accepted in the absence of the detailed information. On that basis the board are of the opinion that twenty-one thousand dollars ($21,000) would be "a reasonable compensation for use of tools" for 28 months' time, the period covered by the contracts. This amount ($21,000) the board have tested by various calculations, upon both the estimate and present inventories, all of which give practically the same sum. As to what would be a reasonable compensation "for money advanced in the prosecution of the work," attention is invited to the aggregate admitted in the abstract of disbursements under the heads of interest (see Exhibit B), amounting to twelve thousand three hundred and six dollars and twenty-one cents ($12,306.21). At ten per cent. per annum it represents a capital of one hundred and five thousand four hundred and eighty-one dollars and eighty cents ($105,481.80) for a period of fourteen months, or half the time occupied in the prosecution of the work. The moment this item of interest is allowed in the disbursements, i. e., is assumed by the United States, that moment the capital represented by it becomes the capital of the United States, and stands exactly in the same light as if the amount had been advanced to the contractor by the United States, and nothing further remains due the contractor in the form of compensation for money advanced (capital), unless the difference between the total disbursements (exclusive of interest) and the total payments made under his contracts exceeds this represented capital. This difference is ninety-three thousand eight hundred and ninety-nine dollars and eighty-five cents ($93,899.85), and being less than the capital represented by the interest allowed, it is the opinion of the board that nothing further is due the contractor or his legal representatives under the head of "compensation for money advanced in the prosecution of the work." 5th. In determining upon "what sum, if anything, should be allowed under the provisions of said act in adjusting and settling the claim upon just and equitable terms," the board have been influenced to a great extent by the language, contained in the report of the Committee on Claims of the House of Representatives, as printed on pages 10 and 11 of the Congressional Record of December 21st, 1878, viz: Your committee have not undertaken to determine what sum the claimant should receive in full compensation for his damages, but it is submitted that the Secretary of War may, with great propriety, be authorized to settle the claim upon just and equitable terms, by allowing the claimant not more than his actual expenditures, with a reasonable compensation for the use of his tools, and for money advanced in the prosecution of the work. Upon the report of the committee, the House at once passed the bill approved January 13th, 1879, and by such action give a construction to the terms "just and equitable," which the board have not felt at liberty to ignore. They therefore state the claim "by allowing the claimant not more than his actual expenditures, with a reasonable compensation for the use of his tools and for money advanced in the prosecution of the work," as follows, viz: Actual expenses (including interest, exchange, and protest fees) of George Compensation for the use of his tools in the prosecution of the work.... Total credits From which should be deducted the following debits, viz: Approximate amount allowed in Major King's purchase of machinery, Total debits $337, 495 23 21,000 00 $358, 495 23 $231, 287 29 14,629 85 2,708 75 8,332 62 $256,958 51 RECAPITULATION. Total credits... Total debits... Remainder, to the credit of the legal representatives of Geo. Williams, deceased, constituting the measure of relief prepared under the act of January 13th, 1879 $358,495 23 $256, 958 51 $101, 536 72 6th. In conclusion, the board desire to say, that in recommending the payment to the legal representatives of the late George Williams of the balance ($101,536.72), as determined by the statement immediately preceding, they aim to cover all the losses incurred in the prosecution of the work on locks 2, 3, and 4, of Muscle Shoals Canal, ander his contracts, and that done by him on section work as attorney under the contract of Matthew G. Kennedy, such being their understanding of the intention of the act of relief of January 13th, 1879, as construed in the light of the report of the Committee on Claims of the House of Representatives, which was duly read in the House, and immediately after the reading of said report the act in question was passed by that body. The following is a list of the papers appended to and forming part of this report, viz: 1st. Special Orders No. 56, Headquarters of the Army, Adjutant General's Office, Washington, March 10th, 1879. 2nd. Paragraph 5, Special Orders No. 60, Headquarters of the Army, Adjutant General's Office, Washington, March 13th, 1879. 3d. Analysis of disbursements, as shown by Exhibit B. 4th. Copy of the act, Private No. 7, entitled an act for the relief of the legal representatives of Geo. Williams, deceased, approved January 13th, 1879. And the following papers accompany the report, viz: 1st. Exhibit A, being pamphlet in the matter of Senate bill 1244, for the relief of Geo. Williams, 1878. 2nd. Exhibit B, abstract of disbursements and receipts on account of Muscle Shoals Canal, by Geo. Williams and his legal representatives, under his contract for lock work. Also section work under "power of attorney from Matthew G. Kennedy." 3d. Affidavit of C. L. Williams, administrator of the estate of George Williams, deceased, in the matter of his claim against the United States of America. All of which is respectfully submitted. J. N. MACOMB, To the Board of Engineers convened to report upon the claim of the estate of George Williams : MESSRS.: In compliance with your request I have the honor to submit the following memoranda: L. Referring to the Kennedy contract, Mr. Williams claims that he engaged in that work "because the engineer in charge had not the plan of the locks completed and was not ready for me [him] to begin work upon them." The power of attorney under which he begun this work was dated August 11, 1876. In his letter of May 24, 1877 (page 47 of his pamphlet), he says his "skilled laborers and workmen actually commenced work on locks 3 and 4 in June, 1876, and have continned at work ever since with such diligence as the locality and elements would permit." From his own statement, then, he had been at work on the locks some two months when he took up Kennedy's contract. I may add that he did not do this "at the earnest solicitation of the engineer in charge of the work." The first I heard of the proposed power of attorney was by a telegram asking if I would recognize an arrangement. The pretended damage on account of not having to remove the old tow-path embankment and build unnecessary slope wall has been fully discussed in reports which are, no doubt, familiar to the board. |