Final Report of the Louisiana Purchase Exposition Commission Part 31

Yours, truly, S. Krug.

Hon. D.R. Francis, _President Louisiana Purchase Exposition Company, St. Louis, Mo._

I never received a reply to either of the letters referred to.

In the specifications as prepared by Mr. Taylor it was stipulated that a charge of $6 per car would be made for switching empty cars into the exposition grounds, while I notice the contract between the Chicago House Wrecking Company provides that only $3 per car shall be charged for this service.

The specifications as prepared by Mr. Isaac S. Taylor, director of works, provides that--

All bids must be made out upon blanks furnished by the director of works, and with each bid there shall be deposited a certified check, payable to the exposition, upon a responsible bank doing business in St. Louis, for the amount of 50 per cent of the amount of bid submitted, the sum indicated in said check to be forfeited to the Exposition Company in case the party or parties to whom award is made does not enter into contract with the Exposition Company within five days from date of said award for the work called for in these specifications and instructions--

while I see by the contract between the Exposition Company and the Chicago House Wrecking Company, which is of record in office of recorder of deeds, city of St. Louis, in book 1811, page 195 and following pages, that the bid of the Chicago House Wrecking Company was accompanied by a check for $100,000, which amount represented less than 25 per cent of the amount of their bid, viz, $450,000.

The specifications further stipulate that "A contract will be written by the Exposition Company for the faithful performance of this work, and upon the signing of same by the parties thereto, the full amount of said contract, less the amount of the certified check held and to be appropriated by the exposition Company, must be paid to the said Exposition Company by the contractor," while the contract between the Chicago House Wrecking Company and the Exposition Company, which is of record, provides that the Chicago House Wrecking Company shall execute and deliver to the said Exposition Company at the time the contract is signed four promissory notes three for $100,000 each, and one for $50,000, making a total, all told including the certified check, of $450,000, and allows them six months in which to make the payments.

The specifications further required--

That a surety company's bond for an amount equal to the amount of contract must also be given to the Exposition Company by the said contractor to protect the said Exposition Company from loss during the execution of the work and for faithful performance contract--

while the contract referred to shows that the Chicago House Wrecking Company furnished a bond in the small sum of $40,000, or less than one-tenth the amount required by the specifications.

From the above it is my belief that the Chicago House Wrecking Company was shown favoritism and that they were favored from the beginning of the deal.

I was never furnished a full list of the property to be disposed of by the Exposition Company. I personally requested a list two or three times, as did Mr. Dunphy, but we were unable to get one. Had I been furnished a list of the property that I learn has since been turned over to the Chicago House Wrecking Company under their contract I would have gladly bid $800,000, and would have made a very handsome profit on the deal at that price.

I consider the value of all the property turned over to the Chicago House Wrecking Company on November 30 was more than $1,000,000.

I consider the manner in which the bids were handled was very irregular and not the usual custom in that the bids were opened in secret and not in the presence of the bidders, as requested by a majority of the bidders present, but as requested by Mr. Abraham Harris, who represented the Chicago House Wrecking Company. This is not the customary procedure when bids are called for by the city or the Government.

From what I saw there in the anteroom and in the presence of the salvage committee the several times we were there I am convinced that the Chicago House Wrecking Company was furnished inside information and that they were shown favoritism.

Mr. W.B. Stevens, the secretary of the Exposition Company, was not present in the committee room at any time while I was there talking over the bids and he does not know what was going on in there, except what has been told him and what he has gained from the papers he handled.

The contract between the Exposition Company and the Chicago House Wrecking Company, which is of record in St. Louis, bears date of November 30, 1904, while I note by a letter dated March 7 and signed by Mr. W.B. Stevens, he states the contract was not closed until December 13, 1904, on which date the board of directors of the exposition met.

This was eight days after my letter of December 5 was delivered to Mr.

Stevens in person by Mr. Ranstead.

If the sale of the exposition buildings and the property to be disposed of had been properly advertised there would have been much more compet.i.tion in the bidding. If a list of all the property to be disposed of had been furnished the bidders much higher bids would have been made.

If the property had been sold at public auction, building for building, and other property in detail, so anyone could have bought what he wanted and had use for, I am confident that the Exposition Company would have received more than a million and a half dollars.

I consider the manner in which the salvage committee handled the bids very irregular in that great secrecy was observed, and will state that the awarding of the contract to the Chicago House Wrecking Company for the sum of $450,000 was unjust to other bidders, and detrimental to the interests of the United States, the city of St. Louis, and the stockholders of the Exposition Company.

S. KRUG.

Subscribed and sworn to before me this 28th day of March, 1905. My commission expires on the 15th day of October, 1905.

[SEAL] HARRIET A. Dumas, _Notary Public._

STATE OF ILLINOIS, _County of Cook, ss_:

Before me, this, the 28th day of March, 1905, personally appeared Mr.

George J. Schmitt, who, being duly sworn on his oath, says:

My name is George J. Schmitt. I reside in Chicago, Ill.; have resided here for the past thirty-five years. Am employed as clerk and bookkeeper in office of Mr. S. Krug, contractor, of Chicago. I have been in Mr.

Krug's employ for the past eight years. On November 9 I left Chicago for St. Louis with Mr. Krug, to look after his bids and do any clerical work that he might want done. We arrived St. Louis on morning of November 10, 1904. Mr. Krug had his bid made up, and upon arrival at St. Louis we immediately went to the National Bank of Commerce, where Mr. Krug wanted to have his draft cashed and his check certified. We then went to the Administration Building and called at the office of Mr. Isaac S.

Taylor, director of works, where Mr. Krug handed his bid to Mr. Taylor's clerk. This was about 12 o'clock noon on November 10. We were requested to go into the anteroom and wait until called for. There were present in the anteroom at the time Mr. Albrecht, Mr. McDonald, Mr. Schaeffer and son, Mr. Ware, of the Columbia Wrecking Company. One or two other gentlemen were present. I do not now recall their names. After we had been there some little time, Messrs. Frank and Abraham Harris, of the Chicago House Wrecking Company, came in. We all waited there until about 2 p. m. About this time President Francis pa.s.sed through the room and went into Mr. Taylor's office. He came back shortly and said to us to come back in about an hour, as the salvage committee was going to lunch then. We went back again about 3 p. m. The same crowd of bidders present in the room. There, was some gray-haired gentleman who came in with the Harris brothers. When I first saw him I thought he was a member of the salvage committee, on account of his running back and forth into the room where the salvage committee was in session. I learned from Mr.

Albrecht later on that the gentleman referred to was working for the Harris brothers. While we were waiting there to be called in he made two trips into the room where the salvage committee was in session, and came back each time and went and held a whispered conversation with the Harris brothers in the hall.

We waited in the room there until 4 o'clock, when Mr. Taylor's private secretary requested all the bidders to go into Mr. Taylor's office, where the salvage committee was in session. We all went in there.

President Francis asked the bidders how they wanted the bids handled, whether opened in their presence or opened in secret session of the salvage committee. All the bidders present requested that the bids be opened in their presence, except Mr. Abe Harris, who got up and told President Francis that he did not want his bid opened in the presence of the bidders, as he did not want everybody to know what he had bid, and that if he was the successful bidder we would all know later on what he had bid, and if he was not the successful bidder he did not want his bid to be known. Mr. Albrecht got up and stated that he wanted his bid to be opened in the presence of the bidders, as he wanted everything to be open and aboveboard. President Francis then held a whispered conversation with Mr. Taylor and some other gentleman there, and then in a few minutes turned to the bidders and said, "Gentlemen, we have decided to open these bids in secret session of the salvage committee."

and requested us to go into the anteroom and wait until called for. We all went back into the anteroom. In a few minutes President Francis requested the Harris brothers to come in the room where they were holding the meeting. They did so, and remained in there about ten or fifteen minutes. As soon as they came out Mr. Albrecht went in, and when Mr. Albrecht came out Mr. Krug and myself went in. President Francis spoke to Mr. Krug and said, "Mr. Krug, you seem to have some very good letters of recommendation here, and from the letters I judge you have done considerable work." Mr. Taylor asked Mr. Krug if he knew a Mr.

Schluetter, of Chicago. Mr. Krug said that he was acquainted with Mr.

Schluetter, had done considerable work for him, and had always been paid his money. I inferred from their actions that they had had some trouble with Mr. Schluetter. President Francis said, "Mr. Krug, your bid is very satisfactory." Mr. Krug had only submitted a bid on part of the buildings, as shown by the specifications. President Francis asked Mr.

Krug if he could not put in a bid on all the buildings, and why he had not done so. Mr. Krug said that he was afraid he would have some trouble getting insurance on all the buildings, and for that reason only submitted a bid on buildings that were more isolated and less liable to fire. President Francis told him it would be an easy matter for him to get insurance, and he asked Mr. Krug what he would bid on all the buildings, according to the specifications. Mr. Krug said that he would be willing to bid $76,600 on all the buildings as shown in the specifications. President Francis asked Mr. Krug what he would wreck the buildings for on a percentage basis, or if he would take the work on a contract at a figure to be agreed upon, and they to own and dispose of all the material themselves. Mr. Krug studied awhile and said that he would be willing to do the work for President Francis, but it would take him some time to figure on the proposition so as to submit an intelligent figure. President Francis said that if they decided to wreck the buildings themselves on a contract that he would let him know when his bid would be wanted. At this time President Francis requested Mr.

Krug to submit in writing his bid for $76,600 and have it in by 10 o'clock the next morning. We then left the room, and they requested us to remain in the anteroom. We were there until about 6 o'clock. During that time they called in other bidders. About 6 o'clock Mr. Taylor's secretary came into the room and announced that the salvage committee had adjourned until the next day at 2 p. m. We then left the grounds and went to the Lindell Hotel. When we reached the hotel that night we made up a revised bid. The next day we went to Mr. Taylor's office about 10 a. m. and gave to Mr. Taylor's clerk the bid in writing for $76,600, and he said he would bring it to the attention of the committee when they met. We waited there from 10 a. m. until 2 p. m. In the meantime Mr.

Krug sent in his card to Mr. Taylor's office and asked if any action would be taken on the bids that afternoon. We were informed that nothing would be done with the bids that day, and that the salvage committee had adjourned until the following Monday. I left St. Louis that night for Chicago. I returned to St. Louis on Monday, November 14, 1904, arriving there at 10 a. m. Mr. Krug remained in St. Louis all the time. When I returned to St. Louis Mr. Krug and I went to Mr. Taylor's office. We reached there about 10 a. m., Monday, November 14. We waited there until about 2.30 or 3 p. m. While we were waiting in the anteroom Mr. Taylor's private secretary came in and told us that all bids had been rejected.

We then left the grounds, and Mr. Krug and I returned to Chicago that night.

I never saw by the papers or otherwise where new bids were requested after the announcement that the first bids had been rejected. I watched the papers very closely, as we were desirous of submitting a new bid when called for.

From what I saw while I was in the anteroom and in the committee room I am fully convinced that the Chicago House Wrecking Company was given inside information as to what property was to be sold, and I consider that they were given privileges and favored from the beginning of the deal, in view of the fact that a majority of the bidders desired their bids opened in public, while the Harris brothers protested against such procedure, and they were sustained in their protest by the salvage committee.

I have had considerable experience in handling bids and being present when bids are opened, and I never before saw such proceedings as took place in the meeting room of the salvage committee on November 10, 1904.

I am sure that had the Exposition Company properly advertised the sale and furnished a list of the property to be disposed of, which I have since seen published in a catalogue gotten out by the Chicago House Wrecking Company and listed in the contract between the Exposition Company and the Wrecking Company, was turned over to the Chicago House Wrecking Company, that much higher bids would have been made, and considerably more money realized from the sale than they received from the Chicago House Wrecking Company.

Between the 15th and 20th of December, 1904, I came in possession of one of the catalogues that the Chicago House Wrecking Company sent out, showing all the property they had for disposal. It contained cuts and descriptions and computations that would take at least one month or more to compile and print. I have had considerable experience in getting up catalogues of material and property, and am confident that they could not have compiled all the figures, secured all the cuts and descriptions, and had the catalogue printed and on the market in a month's time.

I consider the manner in which the bids were handled very irregular, and that the awarding of the contract to the Chicago House Wrecking Company for $450,000, in view of the amount and value of the property turned over to them, as shown by their catalogue and their contract, to have been detrimental to the interests of the United States, the city of St.

Louis, and the stockholders of the Exposition Company.

GEORGE J. SCHMITT.

Subscribed and sworn to before me this 28th day of March, 1905. My commission expires on the 9th day of November, 1908.

[SEAL.] S.E. KELLOGG.

STATE OF ILLINOIS, _County of Cook, 88_:

Personally appeared before me this 28th day of March, 1905, Mr. John M.