Chapter XXII: Appendix: 2 (2)

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. Dunphy, who, being duly sworn, on his oath says:

My name is John M. Dunphy; I reside in the city of Chicago; I have resided here for the past forty-seven years. I was city treasurer of Chicago for one term; was commissioner of buildings for one term in this city; I have been engaged in the contracting business for the past forty years; I have been in the employ of Mr. S. Krug, contractor, of Chicago, for the past three years; I am very familiar with construction and wrecking work.

In regard to the sale of the salvage of the St. Louis Exposition I desire to make the following statement:

Through a friend, Mr. Krug received specifications and instructions for the wrecking and removal of certain buildings at the St. Louis Exposition. These specifications were obtained from Mr. Isaac S. Taylor, director of works of the Louisiana Purchase Exposition. After we had looked over the specifications Mr. Krug suggested that we go to St. Louis and look over the plans and the buildings, with a view of submitting a bid on the work. Mr. Krug, Mr. Powers, and myself arrived in St. Louis on October 24, 1904. We called at Mr. Taylor's office that day. I asked for Mr. Taylor, but was informed by some clerk there that Mr. Taylor was too busy and could not see us. I talked with his secretary, Mr. Carl Hoblitzelle, in the presence of Mr. Krug and Mr. Powers. He told us he could answer all questions. I told him I wanted to look at the plans, as we desired to figure on some of the buildings that were to be disposed of. He took us into another room where the plans were stored and introduced us to some gentleman in charge there. I requested the plans from this gentleman. I asked for the plans for the Agricultural and Horticultural buildings. After we had finished looking these two plans over I looked around for the young man to ask for more plans, but could not find him, and we went to the shelves and got down the plans ourselves.

While we were there looking over the plans some gentleman came into the room and spoke to Mr. Krug. Later on I asked Mr. Krug who the gentleman was, and he told me it was a Mr. Frank Harris, of the Chicago House Wrecking Company. Mr. Krug further stated that Mr. Harris was a resident of Chicago, but was then interested in the Ferris Wheel at the exposition. We remained in St. Louis for two days longer looking over the plans and buildings, and then returned to Chicago. I never saw any notice in the newspaper requesting sealed proposals for the wrecking and removal of the exposition buildings. The first I knew about it was when Mr. Krug received the specifications from his friend. We talked over the matter of submitting bids on the work. On the 9th of November, 1904; Mr. Krug and Mr. Schmitt, a bookkeeper for Mr. Krug, went to St. Louis to submit a bid on the work, according to the specifications and instructions prepared by Mr. Taylor, director of works. The bids were to be in Mr. Taylor's office by 12 o'clock noon Thursday, November 1 1904. Mr. Schmitt returned to Chicago on Friday night. Mr. Krug remained in St. Louis. Mr. Schmitt went to St. Louis again on Monday, November 14. On Tuesday, November 15, Mr. Krug and Mr. Schmitt returned to Chicago and told me that all the bids had been rejected. Mr. Krug desired that some one be on the ground to look after his interests, and suggested that I go to St. Louis and keep in touch with affairs there and try and ascertain what was going on. I left Chicago for St. Louis on Sunday, November 20, 1904, and arrived at St. Louis morning of November 21. After I was informed that all bids had been rejected I did not see any published notice requesting additional or new bids, although I watched the papers pretty close and tried to keep in touch with what was going on. I went to Mr. Taylor's office several times while I was there and sent in my card, as agent for Mr. Krug. I was informed each time by some clerk in the office that Mr. Taylor was busy and could not see me. I remained in St. Louis until the evening of November 26, when I was compelled to return to Chicago. I requested Mr. Wm. H. Ranstead, a friend of mine who lives in St. Louis and who was in pretty close touch with what was going on, to look after matters there for me during my absence, and to keep me advised of what went on, and if new bids were requested to telephone or telegraph me. On the morning of Tuesday, November 29, 1904, I received a telegram from Mr. Ranstead requesting Mr. Krug and myself to go to St. Louis at once, as Mr. Taylor and President Francis desired to have a talk with us. We left Chicago for St. Louis on the first train out--11.03 a. m.--and arrived St. Louis at 6 p. in. November 29. We met Mr. Ranstead at the Lindell Hotel. We talked over matters that evening. The next morning, November 30, Mr. Krug, Mr. Ranstead, and myself went to the office of Mr. W.B. Stevens, secretary of the Exposition Company. We waited in Mr. Stevens's office some time. After a while Mr. Stevens took us to Mr. Taylor's office. The salvage committee was in session in Mr. Taylor's office. There were present at the time President Francis, Mr. Taylor, Mr. Samuel Kennard, and Mr. J.A. Holmes. We talked with the salvage committee, and asked them how they wanted us to submit a bid, and what they had to sell that they wanted us to bid on. President Francis said that he wanted us to bid on all the buildings shown in the specifications, and to include the intramural stations, the bridges, and the fence around the grounds; also the railroad rails and the copper wire. President Francis said that the bid must be in by 4 o'clock that afternoon. It was then about 12 o'clock noon. Mr. Krug said that he could not make an intelligent bid on such short notice and asked for more time. Mr. Kennard then spoke up and said: "Mr. Krug, you can give us a bid on the buildings, including the intramural stations, the bridges, and the fence this afternoon, and have it in by 4 o'clock, and we will give you until Friday, December 2, to put in your bid on the rail and the copper wire." President Francis then stated, "Mr. Krug, there are 2,000 tons of steel rail to be disposed of." Mr. Krug asked for a statement showing the amount of rail and copper wire, and stated he would be able to put his bid in before Friday if he was furnished the statement. President Francis stated they could not furnish such a statement. We then left the office and walked around the grounds looking over the stations, the bridges, and the fences. We did not look over the rail and wire that afternoon, as we thought we would have more time for that the following day. After we had gone over the ground we went and figured out a new bid and returned to the office of Mr. Taylor about 4 o'clock. The salvage committee was in session at the time. Mr. Frank and Mr. Abraham Harris, of the Chicago House Wrecking Company, were holding a conference with the committee at the time. About 5.30 p.m. the Harris brothers came out of the committee room without their overcoats and hats on. They had left them in the room where the committee was meeting. As soon as they came out we went in. We were asked if we had prepared our bid. I handed the bid to Mr. Francis, who in turn handed it to Mr. Kennard, who opened it and read it aloud. The bid was for $101,000. This was only for the buildings, as shown by the specifications, and on the intramural stations, bridges, and fences, it being agreed during the talk in the morning that these latter items should be included. President Francis then told Mr. Krug that he could not wait until Friday for the bid on the railroad steel and the copper wire; that it would have to be in by 11 p.m. that night, and that the salvage committee would be in session until that hour. He said, "To-morrow is the closing day of the Fair--Francis Day--and I will be very busy." During our talk there then, President Francis told Mr. Krug that he had made a mistake that morning in saying there were 2,000 tons of steel rail; that there were 4,000 tons. Mr. Krug then asked for a list of the rails and wire, or rather for a statement of the amount they had purchased, so he could figure on it, but he was unable to get same. We then left the fair grounds and went to the Lindell Hotel. As we were leaving the room President Francis asked our names and where we were stopping, and stated they would call us up over the telephone during the evening. When we arrived at the hotel we held a conference and agreed on a new bid. I went to the telephone at about 7.30 p.m. and called up Mr. Taylor's office. I was informed by the party who answered the telephone that the salvage committee had adjourned at 7 o'clock. I presumed they had adjourned to get something to eat and would return shortly. About 8.30 p.m. I again called up Mr. Taylor's office and was informed that, the salvage committee had adjourned at 7 p.m. and would not be back that night. Shortly after this I called up President Francis's house and was informed that he was not at home. I then called up Mr. Taylor's house and was told that he was not at home. About 10 p.m. I called up Mr. Holmes's residence and was informed that Mr. Holmes had gone to bed. I tried every way I could to reach some member of the salvage committee, but could not. The next morning, December 1, about 8.30 a.m., I called up Mr. Holmes's house and was informed that Mr. Holmes was then on his way to his office. I told Mr. Krug this, and he suggested that I go to Mr. Holmes's office and see him. I went to the office of Mr. Holmes and waited there some time. I think I was there about thirty minutes before he came in. When he came he invited me into his private office. I asked him what the salvage committee had done about the bids. He asked, "Did they not call you up?" I said "No; nobody called us up." He said, "Why, that is singular; it was understood that they would call you up before doing anything." I told him that I had telephoned the office of Mr. Taylor the night before, and was informed that the salvage committee had adjourned at 7 o'clock. I asked him if the contract had been awarded, and he told me that it had been given to the Chicago House Wrecking Company before they adjourned at 7 o'clock on the evening of November 30. I went back to the hotel and told Mr. Krug and Mr. Ranstead that the deal had been closed and that the contract had been given to the Chicago House Wrecking Company. I asked him for what amount the contract was closed and he refused to tell me. I came back to Chicago the next day, December 2.

While we were in the salvage committee room talking about the bids I asked President Francis for a list of all the property to be disposed of, so that we would know what to figure on and make an intelligent bid. He said that they were not furnishing lists to anyone; that they were only giving out the specifications, and that we could go out on the grounds and gather our own data. I never saw, by the papers or otherwise, that new bids were requested after I was informed that the first bids had been rejected.

I consider the manner in which the bids were handled very irregular, in that the bids were opened in secret, and not in public, as demanded by a majority of the bidders, and as is customary on large contracts. The manner in which the bids were handled was not in accord with the way the Government and the city handle bids.

I have had a great deal of experience in the past thirty years in figuring on specifications for the construction and wrecking of buildings, and never before saw specifications drawn up in the manner in which these specifications were drawn up. They required such a large deposit to accompany the bid and made the time limit too short, namely, three months. The usual amount required to be deposited with a bid runs from 5 to 10 per cent of the amount bid.

I have seen a list of the property acquired by the Chicago House Wrecking Company under the terms of the contract, and will say that I consider the market value of all the property at the time it was turned over to the Chicago House Wrecking Company, on November 30, 1904, to have been at least $1,000,000.

I will say further, that had the Exposition Company properly advertised the sale of the property, and had disposed of same in piece lots, they would have realized at least $1,200,000.

It was very apparent to me that the Chicago House Wrecking Company was being furnished inside information, and it was also evident that they were being favored in the deal.

I consider the awarding of the contract to the Chicago House Wrecking Company for the sum of $450,000 was detrimental to the interests of the United States, the city of St. Louis, and the stock-holders of the exposition.

JOHN M. DUNPHY.

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_.