The main goal of the Auburn System was to have the prisoners defray the costs of their incarceration through their own labor. A key factor in locating the state prison in Auburn was the availability of water power. A dam and power house on the Owasco Outlet was one of the prison’s first construction projects. Wooden workshops using the water power were built as early as 1819. Manufacturing- spinning, weaving, tailoring and shoe-making- began in 1819, completely directed by the State.
Private tradesman in the village objected frequently to the cheap goods produced by convict labor. In 1821, the State authorized contract labor, permitting the labor of convicts to be leased to outside contractors. At first, the “piece-price system” prevailed, in which a contractor provided all materials and equipment, paid a fixed price per item for the convict labor, and sold the goods produced. By 1828, the “contract system,” which leased the convict labor at a specified rate for a specified time, replaced the piece-price system. The contract system benefited the State with revenue from manpower, and benefited Auburn with the availability of cheap labor for manufacturing. Seven shops were in operation, cayugamuseum.org just over 400 convicts.
Several important Auburn industries got their start with prison contracts. The Auburn Tool Co. first took out a contract in 1823, when Nathaniel Garrow contracted for convicts to make carpenters’ planes. Josiah Barber renewed contracts year after year for weaving carpets and other cloths. John Seymour, of what later became McIntosh & Seymour, had a contract for producing locomotive parts. Dunn & McCarthy, the shoe manufacturer, started with a prison contract in 1865.
The cheap prison labor enabled many Auburn businesses to gain capital. As they became financially secure, most of these businesses moved their production back to private shops around town. By the 1880’s, there was a marked decline in new prison contracts.
The contract labor system was discontinued at Auburn Prison in 1890. It was replaced by the “state use system” in which the prison shops produce items solely for the use of other state departments. The goals of the state use system, which is still in force, are to reduce state expenses while reducing idleness among the incarcerated.