The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1859-04-13


our sionreisi Condssion-a. Oasis ira sne
Dss.rs--A s~ns.bse Doeumenx In our state
Legislature.
The most sensible document which has N, iue
ito appearance this session ia omr state leei-is-
ture is the minority report of Mr.. Richard Scneil
III The Senate, on the question OF. bocro ing no.
ney to pay The interest on the rev canal d bit
1t is an oasis in the arid wilderness of waste
paper.
The majority Of the commite e TO whom was
referred the special report Of the Commissioners
OF the Canal Fund, in relation to the inability of
the Stale 10 pay the interest upon the new canal
debt of Sl2000,0 900, aud other liabilities therein
specified, report in favor of the policy of borrow
irg money to pay the interest and thus create
compound interest, which would be continually
running up at ruinous rate; and that the
$500, Temporarily borrowed last year, for me-
cessary work on the canals, and due next year.
be postponed, like the repentance of Felix, to ia
more convenient season. season viii h, it is
probable would never arrive.
Senator Schell makes q minority report, in
which b. shows that this proposition is uuconsti.
tutionaN that when the Sinking Fund fails it
must Ie replenished by taxation, AMI not
by borrowing more money, and getting
deeper aud deeper into debt and bankruptcy.
The constitution sets apart from the revenues
of thecanals, after paying the expenses of COL
lection, superintendent and ordinary repairs.
the sun of Sl,700,000 annually, to pay the inte-
rest md redeem the principal of the old canal
debt which existed on the LIST of June, 1916, and
declares that "the principal and interest of said
fundshall be sacredly applied to that purpose"
Anoher section appropriates $4,000 annually
unit the old canal debt is provided for under the
foregoing section; and after that, $l,5O0,OOO to
pay the interest and redeem the principal of the
Geieral Fund Debt. The third section, as amend
ed under which the new canal debt was created.
ant in which il is claimed by the majority of the
committee that the power Of borrowing exists
reds us follows
fec. 8. After paying the said expenscs Of collection
sperintendence and repairs Of the canals and tho sums
appropriated by the first and second sections OF this
c there shall be appropriated and set apart in each fiscal
yer Of the surplus Of the Canals sink
In fund.- sufficient to pay tho interest 1t falls DUE
aid expgush the principal within eighteen years, of any
made under this section aud If the said sinking fund
slll be sufficient redeem any part Of the principal
the stipulated times of payment, pay auy part of
Tie interest Of such loans stipulated the
y any such deficiency shall BIO procured on credit Of
be said sinking fund.-
The fifth section, relating to this subject, runs
bus
Sec. s. the Sinking Funds either OF them provid.
d In this article, shall prove insufficient to enable the
State on the credit Of such fund.- to procure the means
satisfy the claims of the creditors Of the State as they
become payable the Legislature shall by equitable taxes
increase the revenues OF the said funds TO make
them respectively, sufficient perfectly 10 preserve the
public faith.
The tenth section provides that the State may,
"to meet casual deficits or failures in revenues,
OF for expenses not provided for, contract debts,
but such debts, direct and contingent, singly or
in the aggregate, shall not at any time exceed one
million of dollars" The 18th section provides
that in addition to this limited power to contract
debts the State may contract debts only to "repel
inoasion," and the following section absolutely
prohibits the contracting Of any debt by or on be-
half Of the State except the debts specified 10 the
two foregoing sections, unless the same are SUBJ
mitted to the people in the manner therein pre-
scribed
Mr.. Schell very properly takes all these provi-
sions together, and makes them harmonic, by
proposing, in pursuance Of section fifth, that tax
shall be raised to increase the revenues to enable
the Sinking Fund to meet the claims of creditors
and thus perfectly preserve the public faith
On the other hand, the majority of the commit
tee propose to borrow money for the purpose
but forget to show how il is ever to be paid. The
net revenue of the canals last year was less than
million Of dollars. The interest and prin-
cipal of the old canal debt and the gene
raj fund debt must be paid before the re-
venues will reach the new debt at all. The
principal of these two debts is nearly
s20,OOO,O00, which it will require twenty years
to discharge by the yearly application Of
sl,OOOOOO, to say nothing of the interest.
The principal of the new debt all becomes due
from 1872 to 1875. Under the loose and incon-
sistent construction given to the constitution by
the majority report, what would be our condition
in 1875, when the last of the principal must be
paid? By continuing to borrow, to pay up the iu-
terest to that time the debt of SIP 900 900 would
then amount to S30,000,0OO, the annual interest
of which will be $4,000, OOO-morc than double
the present net revenues Of the canals. By the
terms Of the constitution, the whole debt must be
paid by that time, viz: in eighteen years. If the
system of borrowing, instead of paying as we 60,
is allowed to prevail, the probability u.s. that, tax
ing into account the falling off in the revenues Of
the canals, owing to increasing competition, the
whole debt will then amount to about 100000
600. This is just the very thing the constitution
was framed TO guard against.
The majority of the committee contend that
because million and half of dollars Isl $780,
O0O) was raised on the credit of the sinking fund
last July by the Commissioners, to pay the in
terest and also that their predecessors raised a
loan for the same purpose on the same security
therefore the loan system ought to be extended
still further So far from this being good rea-
son for continuing the abuse, it is on excellent
argument for putting stop to it, before it is toe
late, and before it becomes bad precedent fol
future imitation. 1t was illegal and unconstitu.
tional then-it is equally so now; and its further
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