Chapter 13: Contract Awarded and Work Begun

From nycsubway.org

Rapid Transit in New York City and in the Other Great Cities · Chamber of Commerce, 1906

The legal and financial difficulties which had so long prevented active steps having been overcome during the fall of 1899, the Board decided, in November of that year, to advertise the contract as provided by law. In order not to exceed the limit of the debt-incurring capacity of the city, bids were invited on the basis of dividing the whole route into four sections, the right being reserved by the Board to award contracts for the several sections, beginning with the first, at intervals of not more than one year.

Route Divided Into Four Sections. The several sections and their lengths were as follows:

Section 1.-From the southern terminus at the City Hall to and including a station at Fifty-ninth street and Broadway; 5 miles of 4-track subway.

Section 2.-All of the railroad on the north of such station at Fifty-ninth street, to and including a station at the intersection of One-hundred-and-thirty-seventh street and Broadway; and on the East Side from the junction at One-hundred-and-third street and Broadway to and including a station at One-hundred-and-thirty-fifth street and Lenox avenue; 3.43 miles of 2-track subway, and 0.51 miles of 2-track viaduct.

Section 3.-All of the railroad on the West Side north from a station at One-hundred-and-thirty-seventh street to and including a station at Fort George; and on the East Side from a station at One-hundred-and-thirty-fifth street to and including a station at Melrose avenue; 4.32 miles of 2-track subway.

Section 4.-The remainder of the railroad from Fort George to Kingsbridge, and from Melrose avenue to Bronx Park; 5.29 miles of 2-track viaduct.

Amounts of Bids. At noon on January 15, 1900, two bids were opened in the office of the Board, in the presence of all the Commissioners. The first was that of John B. McDonald, of New York, as follows:

If for Section 1$15,000,000
If for Sections 1 and 226,000,000
If for Sections 1, 2, and 332,000,000
If for all four sections$35,000,000
Equipment-estimated at6,000,000

The second was by Andrew Onderdonk, of New York, as follows:

If for Section 1$17,000,000
If for Sections 1 and 228,000,000
If for Sections 1, 2 and 335,500,000
If for all four sections39,300,000
Equipment-estimated at$6,000,000

Percentage-5% on first million after $5,000,000
of gross receipts, and 2.5% for each added

million thereafter up to a maximum of 15%.

Contract Awarded. After a full investigation of the comparative merits of these two bids, the Board on January 16, all the Commissioners being present, unanimously voted that it would be for the best interests of the city to accept the proposal of Mr. McDonald; and at the same time the Board directed that the President should, in the name of the Board, exercise the option reserved to the city by the contract for the construction and operation of Sections 2, 3 and 4, as well as Section 1. In accordance with this decision, the contract for the whole line was signed and executed February 21, 1900.

Even after Mr. McDonald had been notified that his bid had been accepted, it was by no means certain that the contract would be executed by him. He was required to furnish a continuing bond for the payment of rent, etc., in the sum of $1,000,000, and at the same time deposit with the comptroller securities of the value of $1,000,000, which were ultimately to be substituted for the bond of that amount. A construction bond of $5,000,000 was also required.

When the bid was accepted by the city, no provision had been made for the capital necessary to execute the contract. Mr. McDonald's efforts to obtain financial assistance from the surety companies failed. Although the plans had been pronounced feasible, capitalists were timid about investing. This was due, not so much to the magnitude of the sum needed to build the road, as to feelings of uncertainty regarding its earning power when completed. The scheme was regarded as a colossal experiment.

August Belmont. A few days before the expiration of the limit of time, Mr. McDonald sought the assistance of August Belmont. Mr. Belmont took the matter up with the Rapid Transit Commission, to whom he proposed a plan for the incorporation of a company to obtain the security required, to provide the capital for the undertaking, and to assume control of the entire work. Application was made to the Supreme Court to change the ruling requiring sureties to justify in double the amount of the bond, and to reduce the minimum amount of surety to be taken from $500,000 to $250,000. This application the Court granted.

Construction Company Organized. The Rapid Transit Subway Construction Company* [* This was the constructing company. The Interborough Rapid Transit Company, the operating company, was formed in the spring of 1902, the incorporators being: W. H. Baldwin, Jr., C. T. Barney, August Belmont, E. P. Bryan, Andrew Freedman, James Jourdan, G. M. Lane, John B. McDonald, DeLancey Nicoll, W. G. Oakman, John Peirce, W. A. Read, Cornelius Vanderbilt, G. W. Wickersham, and G. W. Young. In January, 1903, this company acquired the elevated railway system from the Manhattan Company by lease for 999 years.] was organized with a capital of $6,000,000, the incorporators being Charles T. Barney, August Belmont, John B. McDonald, Walter G. Oakman and William A. Read. This corporation executed a bond for $4,000,000, the additional sum of $1,000,000 being furnished by others.

Subletting Contract. Immediately after signing the contract, the contractor sublet the work to fifteen different companies, each of whom executed a bond for faithful performance of the stipulations. In addition the city had a first lien upon the entire equipment of the railroad, so that it was protected in every possible way.

On March 24, 1900, the work of construction of the Rapid Transit Railroad was formally begun in front of the City Hall, the Mayor of the city turning the first spadeful of earth.

Work During 1900. During the year 1900 no work was done on the first section, as the plans were being modified. The loop at this point, as originally laid out, encircled the Post Office. At the suggestion of the construction company it was finally decided to shorten and simplify the construction at this point by having the loop turn north instead of south of the Post Office, and so arranged that local trains could all be turned around the single track loop thus laid out, passing under the express lines at Park Row without crossing at grade; or along Park Row to connect with an extension south under Broadway if one should be built. The express tracks under Park Row were designed to permit express trains to continue along a possible Broadway extension or be switched back through a "tail track." A station on the loop was located in City Hall Park so as to be conveniently reached from points to the west and south, and relieve the pressure at the Brooklyn Bridge station. Actual construction was begun on this section in March, 1901. During the previous year work had been started on the other sections.

Marking the spot in front of the City Hall where the first excavation was made is a tablet bearing the following inscription:

"At this place, 24 March, 1900, Hon. Robert A. Van Wyck made the first excavation for the underground railway. Rapid Transit Commission, Alexander E. Orr, President; John H. Starin, Woodbury Langdon, George L. Rives, Charles Stewart Smith, Morris K. Jesup. Robert A. Van Wyck, Mayor; Bird S. Coler, Comptroller. Wm. Barclay Parsons, Chief Engineer. Contractor, John B. McDonald. Rapid Transit Subway Construction Company, August Belmont, president."

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