The New York herald., 1845-01-08

whenever the annual revenue from ine o,ate Ca
mails, ascertained in the manner pointed out by the
act, shall exceed the expenditures upon the Canals
TO be made to the General Fund, by more than
One.thlrd In amount of the annual interest upon
the Canal debt The revenues of the last fiscal
year have produced that excess, as has been be-
tore seen, and have surpassed il and consequently
the collection of the entire milax for the current
year, must enure to the benefit OF the General
Fund, and, after The current year, the collection OF
hat halt OF the tax, imposed Tor the use ef the
Canals, is to cease. Nothing further, therefore,
is to be realized from this source, to aid in the
demptlon OF The Canal stocks.
II his be a correct represen entation of the means
and Liabilities OF the Canal Fund, for the current
year, there would seem to be an end TO discussion
as to the appropriation of these means to any other
object than to The payment Of the debt, unless the
payment Is to be postponed. have already ex-
pressed my views In relation to such diverslen !;
and am constrained to believe that, whether con-
s,dered as question of principle or one Of econo-
my, the policy would be equally unsound.
Our Canal revenues are very large, and nothing
but e.enormous debt charged upon them, keeps the
fund poor to require the aid of direct taxation
to meet its liabilities. Separate from the old debt
more than one million annually OF these revenues
are consumed in the payment of interest alone =.
This must be constant drain upon the fund, and
nothing but the payment of the debt arrest the
relief. andFmay bring accumulated dangers
departure from the sound rule of using our
means rather than our credit has brought this debt
upon our favorite and favored fund. The only ne.
cessarily dangerous stage in our Canal policy was
passed, when the Erie and ChampaIn Canals were
completed and became productive; and asound and
wise financial policy, faithful administration, and
that stage with safety. % to that period, borrow.
ing was necessarily the principal resource, and
some OF the richest revenues Of the State were set
apart to meet the payments of interest, while the
Constitution of the State was made to pledge the
m nfo thArv rvyrth thaca for he
return OF the principal. And even under all these
safe guards, loans were made with moderation, land
the works were prosecuted IN measured pace
After they were completed, payment of the debt
accumulated, and the stocks purchased and can
celled in advance of their falling due, when they
could be obtained on reasonable terms.
n .ne ,b U.ses m
its of the Canal revenues, without losing sight of
ample provision for the payment of the existing
debts. As an evidence of this, before the policy
was changed, the payment made and Inc moneys laa
less than five mill,ops of the Canal debt unprovded
for. The surplus revenues of the Canals were &C
compshing much annually towards the construc-
ton OF new Canals, and the enlargement and i'm.
provement of the old, apd still yielding their an
nual contributions to a Sinking Fund, iatended
to remove the small remaining debt, as the princi
pal should fall due.
: In this state of things change Of policy came
rule of action. The existing revenues were look
ed upon merely as fund to meet the interest upon
further loans; it being assumed ss safe to depend
upon anticipated improvements OF those revenues
for the payment of the principal OF the debts. In
deed, it 10 believed the principle was carried even
farther and that anticipated revenues were depend
ed upon, to meet accumuations of interest, beyond
the power of the existing revenues, as well aR TO
cover the. payments of principal.
TRe reflection does not seem to have occurred to
the authors of this new financial policy, thata
disappointment in their anticpations Of improved
revenues must give their system shcck II could
not survive, by imposing tax upon the people, or
disappointment and loss upon the public creditors
either of which alternatives could not fail to arrest
the further accumulation Of debt upon such q ba-
Sis 1t would seem also, to have been overlooked,
that the money.lender could draw rs accurate
distinction as themselves between their means, and
their anticipatons, and that whe the means should
Lave been exhausted, the anticipations mieht not
command the required capital even to test their
soundnees, or their fallacy.
In any event, loans were obtained in unexam-
pied amounts, until the limit OF the existing reve-
nues was reached, when the public credit wholly
failed them. Works OF internal Improvement were
prosecuted upon a scale SO extensive as to bring
the Stale into competition with ITSELF and the wa.
ges OF labor and the cost of subsistence upon one
contract were enhanced BY the demand for labor
and subsistence upon another. An arrest Of the
means by failure of the credit Of the State put an
end to this strife and to the new public works to-
gether, and when areturn to the old andsafe policy
was attempted, 1t was found that large proportion
of the moneys, which had been accumulated to
meet the old canal debt, were rendered unavailable
by having been loaned to banks which could not
pay that the accruing surplus of the Canal reve-
nues, beyond the current annual expenses, was CO.
vered by claims tor INTEREST," that the general fund
ing demands upon it Tor interest upon public stocks
loaned to railroad companies, which had failed, or
were in failing condition; that temporary loans
had been made to the amount of more than mil
halt Esaht Trvxv<m S{sua "a
Treasury, without the means Of payment, and tnat
contrac lors and labOrers upon the public works
ere without pay, or with the unmarketabe stocks
ol the State in the place of the money to which
their contracts entitled them.
The issue was therefore present and unavoidable
The people must be taxed, or the public creditors
must suffer loss and the public stocks be diskonor-
ed. A resort to the credit Of the State was made
to meet these urgent and instant de-
msnds, the accruiDg interest upon the enlarged debt,
and to put the canals in repair for the approaching
season of navigation. Public distrust had taken
the place of public confidence, and a substitution
Of the paying for the borrowing policy was made
indispensable, before resort 70 credit could COM
mand response in capital.
This was done by the act Of lS42. The effect of
this measure was almoet electric, and was felt
not merely throughout the State, but throughout
the Union Under its solemn assurances money
was obtained upon loan to relieve the pressing ne
cessites of the public Treasury, and to preserve
the public faith and honor or by prompt payment,
at the specie value, Of the instaments of lnerest
upon the public securities. From this time the
credit of the State rapidly, and soon attained
the par Of money I; and BY the scrupulons adhe-
renee to the policy and the pledges Of that law,
which has characterized our subsequent legisla-
ton, il has now reached lts accustomed honorable
elevation.
We must not blind ourselves to the fact, how
ever that the recent disasters in the affairs OF pub
lie and private oredi,e,. and especially con-
nected with the credits OF several States of the
Union, have caused distrust, q watchfulness,
sensitiveness, in reference to State credits, which
will not permit Of hazardous experiments, Our
practice has been to pay ct the day, both principal
and interest, and such is the theory Of finance
upon which we have restored the credit of the
State. If that theory shdll be abandoned in prac-
ce, and the appropriate funds to pay the principal
Of the existing cana! debt, as it falls jue. shall be
diverted to other objects Of expenditure, and those
payne nts be indt faltely postponed, can we hope
that the credit OF the State will remain unshaken
Have we any right to expect that the effect will
be other than that recently witnessed, when the
attempt made to substitutes anticipated revenues
for real means and disposition TO sppy them, to
mn iuts in the nOhlic falSh 4Nt