Chapter 14

Your representative did not entertain the proposition for arbitration, according to the suggestions submitted, but proposed to change the first clause so as to confine the impeachment of an award or awards to fraudulent conduct on the part of the superior jury, and thus to exclude inquiries concerning fraud, if any, practiced on any jury by successful competitors, or misconduct on the part of individual jurors, or misconduct on the part of any officer or representative of the Exposition Company, amounting to fraudulent influence and affecting the character of an award, or the course of procedure in reference thereto. The representatives of the Exposition Company declined to consider the third clause suggested.

A communication was received from Mr. Knapp, a member of your arbitration board, under date of November 11, submitting amendments to the suggestions transmitted by the Commission under the same date, as follows:

(1) Change in the first clause so as to read as follows:

"The awards as made by the superior jury are final and binding upon the Exposition Company and the National Commission, except as to any award or awards which are impeached by said company or Commission for fraudulent conduct on the part of said jury in making the award."

(2) Omit entirely the third clause.

The restrictions thus sought to be placed upon the investigation of charges of fraud or misconduct as proposed by the amendment were unsatisfactory.

First. Because the impeachment of an award, as construed by your Mr. Knapp's letter, was to be confined exclusively to the company and the Commission, whereas in the judgment of the Commission any party feeling aggrieved, and having knowledge of the fraud or misconduct complained of, should be permitted to come forward with the charges and proofs.

Second. In confining the investigation of alleged fraudulent conduct to the superior jury alone, the proposed amendment would obviously operate to preclude any inquiry into any charge of fraud or misconduct on the part of any group or department jury or jurors, or any person or persons not connected with the juries, who might, through fraud, bribery, or misrepresentation have illegally or wrongfully influenced or procured an award, the facts concerning which may not have been brought to the attention of the superior jury for investigation.

Third. In confining the investigation to the action of the superior jury your proposed amendment practically precluded the possibility of any investigation, for the reason that the good faith of the superior jury is not regarded by the Commission as open to question, nor has the Commission contemplated as possible any necessity to question the findings of the superior jury on any subject properly and fully presented to, and decided by, that body on the merits.

It has been, and is, the contention of the Commission that fraud or corruption at any stage of the proceedings, whether discovered before or after action by the superior jury, if not investigated and adjudicated by that jury on the merits, should be open to the freest and fullest investigation by the Company and the Commission before final approval of the award.

In conclusion we briefly recapitulate the following points of law and fact, which we hold to be beyond dispute:

First. The law provides that the appointment of all judges and examiners for the exposition shall be approved by the Commission.

Second. The rules provide that all nominations of group jurors shall be made not later than August 1, 1904, except that nominations made to fill vacancies may be made at any subsequent time.

Third. That the nominations of jurors were not made to the Commission prior to August 1, as required by the rules.

Fourth. That no appointment of a juror could be legal or effective until approved by the Commission.

Fifth. That a large number of jurors were not nominated to the Commission until after they had performed their functions and repaired to their homes.

Sixth. That nominations of jurors were not made to the Commission in time to permit of any reasonable notice or investigation as to their fitness or willingness to serve.

Seventh. That in contemplation of law the Commission in approving or disapproving of an award would be called upon to exercise a quasi-judicial rather than a mere ministerial function, or, in other words, that the approval was not contemplated as a perfunctory act, and that, therefore, under no theory of construction can it be held that the Commission, not having been consulted in the appointment of jurors, as provided by the rules, is estopped from investigating charges of fraud or misconduct in procuring or making the awards.

Eighth. That before approval, it is the right, and is, therefore, the duty of the Commission, under the law, where the charges are of a character sufficiently grave and adequately sustained by affidavits, or otherwise, to investigate any charge of fraud made at any stage of the proceedings, either in the selection of the jurors or in procuring or making the awards.

Ninth. That under special rule No. 27 neither the superior jury nor the Exposition Company has the right to issue or promulgate any diploma, certificate, or other evidence of award for exhibitors without the signature of the president of the Louisiana Purchase Exposition Commission having been previously attached thereto by authority of the Commission.

Holding these views and representing the Government of the United States in these important transactions, the Commission can not permit the use of its name, nor the name of any of its officers or members, in connection with any diploma, certificate, or other evidence of award while any part of the proceedings rest under adequately supported and uninvestigated charges of bribery, attempted bribery, corruption, fraud, or misconduct amounting to fraud.

In view of the position of your company, as announced in your letter of November 8, from which quotations are herein made, by direction of the Commission, I hereby notify you to refrain from using the name of the Commission or of any of its officers or members in or connected with any diploma, certificate, or other evidence of award for any exhibit or under special rule No. 27, until such time as the proposed award shall have been by you submitted to the Commission for approval, as provided in section 6 of the act of Congress and rule 6 of Article XXII of the general rules and regulations, which rules we hold to have the effect of law until modified or repealed by the consent of the Commission.

Respectfully, THOS. H. CARTER, _President_.

Hon. D.R. FRANCIS, _President Exposition Company_.

A formal acknowledgment of the receipt of the foregoing communication was received from the Exposition Company on November 30, 1904.

No reply has ever been made to the letter or the subject-matter thereof on the merits. The allegations therein contained of flagrant violation of the rules and regulations in the selection and organization of the juries are strongly supported by the records and the silence of the officials of the Exposition Company. The charges of fraud and corruption in connection with certain awards, referred to in the letter, have never been denied nor explained.

The fact that there was a disagreement between the National Commission and the Exposition Company regarding awards became known through the public press, and thereupon the files of the Commission were quickly supplied with letters from exhibitors charging fraud and favoritism, and asking for information as to the status of the awards in the event of certificates of award being issued without the approval of the Commission.

The situation was aggravated by the fact that a concern known as "The Official Ribbon Company," acting under a concession from the Exposition Company, was disposing of ribbons certifying over the signatures of the president and the director of exhibits of the Exposition Company that awards had been made to the holders for the specific exhibits therein named.

Judging from the letters received by the Commission, these ribbons were disposed of indiscriminately and regardless of the fact as to whether or not the purchaser was entitled to the award set forth on the ribbon. Thus exhibitors who had been awarded silver medals by the jurors could and (the Commission is informed in some cases) did buy and display for advertising purposes ribbons certifying that they had received higher awards.

The relations of the Official Ribbon Company to the Exposition Company were based upon a contract, under the provisions of which the Exposition Company received 60 per cent of all moneys paid by the purchasers of the said ribbons.

The Official Ribbon Company carried on its correspondence under the letter heads of the Louisiana Purchase Exposition Company, bearing the names of the president and other officers of said company.

Notwithstanding these communications, the ribbons continued to be advertised and sold, and, at the date of writing this report, they are prominently displayed in the place of business of a director of the Exposition Company, who was an exhibitor at the exposition.

The ribbons were sold to a large number of exhibitors before any awards were legally made, and bore notice that the holder thereof had received the award shown thereon.

Litigation has arisen between the Exposition Company and various exhibitors, seeking redress of wrongs or investigation of alleged fraud, which is now pending in the courts.

Within a few days of the time for filing this report under the provisions of the law, a director of the Exposition Company requested the Commission to specify the awards it would approve without investigation, to the end, presumably, that unchallenged awards might be submitted for approval. The Commission declined to enter upon the matter in this form for four reasons:

First. Because in its judgment every award should be subject to challenge on account of fraud, or misconduct amounting to fraud, at any time before the approval thereof.

Second. Because, through the means suggested, awards made by the company which were under charges of fraud and corruption would escape investigation, and the guilty parties would thereby be relieved from probable prosecution on account of criminal connection therewith, should the subject to be investigated disclose criminal action.

Third. The proposal did not come officially from the Exposition Company.

Fourth. That the proposition was made at so late a day as to preclude the possibility of investigation during the life of the Commission.

Thus it unhappily occurs that the awards must be made, if made at all, without the approval necessary to give them legal effect. This approval the Commission could not give without investigation, in the presence of unexplained charges of irregularity and fraud in certain cases.

By means of procrastination and evasion in the preparation of the subject-matter, in disagreement for arbitration, and finally by the issuance by authority of the company of official ribbons for a money consideration without the knowledge or approval of the Commission, the whole subject of the awarding of premiums is left without final action by the Commission at the date of the termination of its existence.

No list of the awards made has been submitted by the company to the Commission for approval, nor has the Commission ever been advised of the reasons for the persistent refusal of the company to submit the awards for its examination, save and except as set forth in the correspondence on the subject embodied in this report.

The whole matter turns upon the insistence of the Commission to investigate the charges of fraud made and fortified by affidavits in certain cases.

The company was notified that the Commission would accept the findings of the superior jury as conclusive in all cases excepting those in which fraud or misconduct amounting to fraud was charged. Under these circumstances, for the apparent purpose of avoiding such investigation and for no other reason known to the Commission, the company elected to decline agreement upon the matter to be arbitrated and to withhold all of the awards from the Commission. At the time of writing this report the Commission is not advised of any award made by the superior jury, nor does any award seem to have been promulgated, except through the Official Ribbon Company herein referred to, whose operations and whose relations to the Exposition Company should be inquired into by some competent authority.

At midnight on December 1, 1904, the Louisiana Purchase Exposition closed, and thereafter the disposition of the salvage was called the attention of the Commission by a communication from an attorney in St. Louis, which set forth charges of irregularity and discrimination on the part of the company in awarding a contract for the wrecking of the exposition buildings and the sale of the salvage. The attention of the Commission was called to statements from various contractors who had bid on the salvage of the exposition, that their bids had been ignored, and that favoritism had been shown to the wrecking concern which eventually obtained the salvage contract. The Commission decided that in view of the seriousness of the charges the subject required attention, and that statements supported by affidavits should be received setting forth all the facts in connection with the transaction. Prior to taking this step, however, the president of the Commission addressed the following communication to the president of the Exposition Company:

WASHINGTON, D.C., _February 28, 1905_.

SIR: I am directed to advise you that in the judgment of the National Commission the interest of the United States in the disposition of the property of the Exposition Company is manifest from a perusal of section 20 of the act of Congress approved March 3, 1901, making an appropriation for the exposition and for other purposes.

In the proceeds of the sale and disposition of the property purchased with the funds supplied by the General Government, the city of St. Louis, and the Louisiana Purchase Exposition Company, the United States is interested to the extent of one-third. Believing that this view of the law is correct, the Commission feels called upon not only to report the amount received from the sale or sales of the property of the exposition, but likewise where the bona fides of transactions is called in question to ascertain and report to the President of the United States the facts and circumstances therewith connected.

These suggestions are called forth by certain statements presented to the Commission, which, if true, affect the interests of the United States as defined by section 20 of the aforesaid act of Congress. These statements relate to the specifications and instructions dated October 1, 1904, signed by Mr. Isaac S. Taylor, director of works, under which bids were to be received for wrecking buildings and structures on the exposition grounds, together with a certain contract bearing date November 30, 1904, between the Louisiana Purchase Exposition Company and the Chicago House Wrecking Company, said to be of record in the office of recorder of deeds in the city of St. Louis, book 1811, page 195 and following pages.

There is obviously a marked variance between the property referred to in the specifications and instructions and the property enumerated in the recorded contract. The specifications seemed to require that 50 per cent of the amount of the bid should accompany the same in the form of a check certified by some banking institution in the city of St. Louis, and that the remainder of the amount bid should be paid upon the execution of the contract.

Further, the specifications required that a bond should be filed with the Exposition Company in an amount equal to the bid to guarantee faithful execution of the terms of the contract by the bidder. The specifications expressly reserved copper wire, the intramural railway, the railroad tracks in the buildings, all machinery, etc., whereas the contract executed on November 30 seems to include all the items referred to and many other pieces of property not mentioned in the specifications.

The contract as executed seems to call for the payment of $450,000, of which only the sum of $100,000 was to be paid in cash and the remainder at stated periods in the future. Instead of requiring a bond equal to the amount of the bid the bond called for in the contract is less than 10 per cent of the amount of the bid.

It is alleged:

First. That secrecy was observed in handling the bids for the wrecking of buildings.

Second. That the Chicago House Wrecking Company was favored from the beginning.

Third. That the exposition officials rejected higher bids than that of the Chicago House Wrecking Company, so that the latter might have further opportunity to raise its figures.

Fourth. That only a partial list of the property, which did not include many valuable articles, was submitted to bidders outside of the Chicago House Wrecking Company, and that a complete list was refused other bidders.

Fifth. That a written offer of $400,000 cash, and more if lists could be secured, was ignored.

Sixth. That a bid of $450,000, half cash, was presented to the Exposition Company after the announcement of the sale of the salvage to the Chicago House Wrecking Company for $386,000.

Seventh. That the contract was eventually given to the Chicago House Wrecking Company for $450,000, with contract provisions inferior to the former $450,000 bid made by a party outside the Chicago House Wrecking Company.

Eighth. That the contract with the Chicago House Wrecking Company does not adequately protect the Government, the city of St. Louis, and the stockholders, the $40,000 bond being out of all proportion to the size of the sale.

Ninth. That the sale of the salvage to the Chicago House Wrecking Company was consummated over the protests of some of the directors of the Exposition Company.

Tenth. That the specifications were misleading, in that one item of copper wire, valued at $650,000, was omitted; also 5,000 electric lights, 5,000 tons of iron piping, 3,500 tons of other piping, the railway system on the exposition grounds, the fire apparatus, etc., were omitted.

Eleventh. That, according to an estimate made by several reputable contractors, the property sold was of the reasonable value of $1,955,000.

Twelfth. That the Chicago House Wrecking Company, through undue advantage, obtained inside information as to the extent and value of the property to be sold, and thereby, to the material injury of the United States, secured a contract with the Exposition Company insuring a profit of more than $1,000,000.

The above matters have been called to the attention of the Commission by Mr. Frank E. Richey, attorney and counselor at law, Oriol Building, Sixth and Locust streets, St. Louis, Mo., who accompanies his statements with copies of the contract and specifications referred to and many statements which he believes corroborate the charges he presents.

As the Commission may feel called upon to refer to this important transaction in its final report, it desires to afford the Exposition Company an opportunity to submit such statement or to take such action as it may deem proper in the premises.

Respectfully,

THOMAS H. CARTER, _President._

Hon. DAVID R. FRANCIS, _President Louisiana Purchase Exposition Company, St. Louis, Mo._

To the foregoing communication the secretary of the Exposition Company made the following reply:

ST. LOUIS, U.S.A., _March 7, 1905._

SIR: At a meeting of the executive committee of the Louisiana Purchase Exposition Company held this day the secretary, in the absence of the president, was instructed to prepare and to forward at once a response to the inquiries embodied in the letter of the National Commission bearing date of February 28, as regards the disposition of the salvage of the exposition.

At a meeting of the board of directors of the Exposition Company held September 13, 1904, on the recommendation of the executive committee a special committee on disposition of salvage was provided for "to consider and report at a date as early as practicable a plan for disposing of the property of the Exposition Company." Records and correspondence of the Exposition Company upon the disposal of the property are voluminous and definite. They show frequent meetings of the salvage committee, together with progress reports, consideration, and action by the executive committee and by the board of directors at almost every meeting, until, on the 13th of December, the salvage committee reported its recommendation, with the approval of the executive committee, to the board of directors that the property, with certain exceptions, be sold to the Chicago House Wrecking Company for $450,000. From this sale were excepted the intramural cars and equipments, the property of the General Service Company, and certain other items, which are specified in the contract of sale.

For the cars and equipments the Exposition Company, as shown by the report of the auditor forwarded monthly to the National Commission, has received about $150,000. The property of the General Service Company, including buildings, horses, vehicles, and other physical property, is still in the possession of the Louisiana Purchase Exposition Company.

At the meeting of the board of directors held December 13, fifty-four members of the board being present, the recommendation of the committee on salvage, approved by the executive committee, that the physical property be sold to the Chicago House Wrecking Company for $450,000, was approved. Not only was the vote unanimous, but the terms of the sale were made the subject of much congratulation by directors. No word of protest or of adverse criticism by any director of the Exposition Company is of record in the proceedings of the board and of the several committees or has come to the knowledge of the officers of the Exposition Company.

The salvage committee, before arriving at terms of sale, as the records show, held many meetings and resorted to various methods to elicit proposals for the property. Early in October sealed bids were invited for the wrecking and removal of the exhibit buildings. These advertisements were published in daily papers and in technical journals not confined to St. Louis. In addition to the advertising, circular letters were sent out to a long list of addresses of persons who had from time to time addressed letters on the subject of the salvage or parts of it to the exposition. Correspondence was taken up by the director of works with persons and firms in various parts of the country who were known to be in the wrecking business. Specifications were prepared and furnished to all who desired them.