In each of the years 1800 and 1801, a section was inserted in the supply bill for a mill tax. It is worthy of remark, that at the time these taxes were levied, the General Fund, besides the annual receipts from auctions and quit rents, consisted of the following items, viz: Debt due from the Bank of New-York,........ $1,366,150 21 772,513 42 153 shares in the stock of United States Bank, Loans to individuals and Directors of Western In- Inland Navigation Cos.. 60,000 00 500,000 00 101,800 00 .... 118,650 26 700,798 23 $3,750,712 12 In 1799, under the authority of an act passed the previous year, for the defence of the State, the Governor loaned from the Bank of New-York the sum of $200,000. A small sum was also borrowed on account of the State Prison at New-York, making a debt against the treasury, of about $212,000; the interest upon which was $13,069.97 annually. The aversion to a State debt, and the desire to preserve the finances in a sound condition, may be inferred from the recommendations of the Comptroller and the acts of the Legislature at this period. The Comptroller, SAMUEL JONES, in his annual report on the 22d of January, 1800, alludes to the debt and the condition of the treasury, as follows: "From the preceding statements, as well as those formerly made, it appears that the annual revenue is more than sufficient to defray the ordinary expenses of the government; but that the surplus is not equal to the additional allowances and particular appropriations made by the Legislature, in each session, for several years past. The sufficiency having been yearly supplied by loans, has occasioned the present debt to the Banks of New-York and Albany, and produced the necessity of a tax, as well to support the credit of the State, as to discharge the immediate demands on the treasury. What sum will be necessary to be raised by tax, in the present year, will depend on the amount of the particular appropriations to be made, and the decision of the Legislature respecting the balance claimed by the United States, and the propriety of any further payments for the encouragement of schools. The whole amount of the sums that may be appropriated to either of those objects, or for any other purpose, as well as the interest of the loans, ought to be provided for by a tax, in order that the whole surplus of the ordinary revenue may be applied to the gradual discharge of the principal of the loans. This has become necessary to support and preserve the credit of the State. And by these means, if the produce of the revenue is neither diverted to other purposes nor diminished by the Legislature, the whole of those loans may be discharged in a few years." The sum due the State at this time from the Bank of NewYork, exceeded the debt against the treasury, by the sum of eleven hundred and fifty thousand dollars; and yet a mill tax was deemed "necessary to support and preserve the credit of the State." Accordingly, the Legislature authorized the collection of a mill tax, and directed the Comptroller to apply any surplus in the treasury, to the extinguishment of the loan made from the Bank of New-York, by enacting, "That whenever there shall be any moneys in the treasury exceeding the sums necessary for the support of government, and the specific appropriations made or to be made by the Legislature, it shall be the duty of the Comptroller to apply such surplus moneys towards payment of the sums borrowed from the Banks of New-York and Albany." After adopting these efficient measures to replenish the treasury, pay the debt against the State, and preserve the capital of the General Fund, the Legislature of 1801 passed a law (§ 20, Chap. 185 of 1801) authorizing the Comptroller, if at any time legal demands were presented which the treasury had not the means of paying, to borrow, "in the name and on behalf of the people of this State," so much money as should be required to meet such demands. The section provided, that the Comptroller should draw a warrant in favor of the Treasurer for the money borrowed, and charge him with the amount thereof; "but shall take care to draw a warrant on the Treasurer for the repayment thereof, as soon as there shall be money sufficient for that purpose in the treasury." [Assem. No. 5.] 4 The same principle was retained in the revision of 1813, § 21, p. 480, 1 R. L.; also in the 1 R. S. p. 171, §§ 11 and 12. It never was intended by those who passed these laws, that a permanent State debt should be created by virtue of these enactments. The Legislature of 1801, by making ample provision for replenishing the treasury, and requiring the application of any surplus to the payment of the debt, gave only a temporary character to these debts; and the Revised Statutes only authorize the Comptroller to make "temporary loans," to be repaid as soon as there is sufficient money for the purpose in the treasury. If, however, that portion of our system of internal improvement which is unproductive, is made a charge upon the treasury, without providing a tax to meet the demands thus created, a debt, of the amount and duration of which no estimate can be formed, will necessarily be made by the Comptroller, under the law, to meet the "legal demands upon the treasury." The precedents to which reference has been made, derive much force from the fact, that in the Legislature of 1800-1, there were a number of eminent n.en who were active participators in laying the foundations of our republican institutions; and including several distinguished patriots of the revolution. The following are among the names of the members of Assembly, viz: George Clinton, James Clinton, Horatio Gates, Brockholst Livingston, John Broome, Henry Rutgers, Samuel Osgood, &c. &c. It is worthy of notice, that the judicious measures adopted in relation to the finances at the period referred to, preserved the debt due from the Bank of New-York unincumbered; and by an act passed in 1818, the Comptroller was authorized to borrow a million of dollars, and pledge the debt due from the bank, (amounting, in 1818, to $1,262,000,) and 400,000 acres of unappropriated land in addition, to secure the repayment of the money borrowed on the credit of the State. In 1824, the sum of one million of dollars was paid into the treasury by the bank, which sum was applied to the redemption of the stock issued by the State, and the 400,000 acres of unappropriated lands, originally pledged for this stock, were appropriated to the Common School Fund. In 1814, at the November session, a tax of two mills on the dollar of valuation, was levied for the years 1815 and 1816. The Comptroller was authorized to borrow such sums as were requir ed by the exigencies of the war, and the Legislature pledged not only this tax, but the continuance of it, and the imposition of further taxes, if required, to repay the money borrowed. In March, 1816, it was enacted by the Legislature, "that this State will pay into the treasury of the United States of America, its quota of the direct tax laid upon the United States by the act of Congress." In April following the sum of $365,620.38 was paid from the treasury of this State to that of the United States. The State tax of two mills was continued in 1817, which for that year brought into the treasury $524,934.92. In 1818, the tax was reduced to one mill, which produced to the treasury, in 1819, $263,887.20. The mill tax continued for six years, when, in 1824, it was reduced to half a mill. This continued for two years-the average proceeds of the tax being $141,000 for each. In 1826, the State tax was entirely removed, and has not since been renewed. The Comptroller has annually recommended a tax, as the only means of preserving the capital of the General Fund, and as the best means of sustaining a sound financial system, and a wholesome administration of all the moneyed operations of the State government. The preservation of the capital of the General Fund, has not been regarded of importance by the Legislature, and by its enactments, the bonds and mortgages belonging to this fund have been converted into money, and the proceeds used for the current expenses of the treasury. Whether the extinction of the General Fund, as heretofore constituted, shall prove a detriment to the interests of the State, will depend very much upon the course of measures now to be adopted by the Legislature. If efficient means are taken to fortify the treasury, and guard against a ruinous system of borrowing and rolling up an endless debt, the annihilation of the General Fund can do no harm, and will occasion no regrets. As has been observed in a former report, the preservation of the General Fund has been regarded of importance by the Comptroller, only as the means of paying the annual charges upon the treasury, and by its revenue, warding off a State debt. When the policy of spending the capital of the General Fund was discussed, eight or ten years ago, it was contended by many of those who were in favor of the course which has been pursued, that the possession of a fund for the ordinary expenses of the government, produced an indifference in regard to appropriations, which would not exist, if the expenditure was to be followed by an annual tax to the full extent of the appropriations made. And the advocates of this doctrine insisted, that it was in strict accordance with the dictates of sound policy, to spend the General Fund, and thereafter to support the government by a direct tax. The soundness of this proposition, taken as a whole, was not denied by the Comptroller; and the first branch of it, the spending of the General Fund, having been carried into complete effect, the time has arrived for considering the other branch of the proposition. If the Legislature should deem it expedient to follow out this policy, and should authorize a tax to be levied for the support of the government, the auction and salt duties might be applied to pay interest on the debt created, and to be created, for the construction of lateral canals, and to aid in other expenditures in relation to them. Whether the revenue is applied to one of these objects or the other, the treasury ought to be replenished by a light tax. If new canals are to be commenced, or if stock is to be issued for any object whatever, on the credit of the people, the establishment of a system of revenue, on a firm basis, should precede any further use of such credit; and this system ought to be made sufficiently broad to cover $150,000 annually, to pay interest on the lateral canal debts. According to Mr. Jefferson's rule, which has been substantially adhered to in this State, up to the year 1824, a government "which is disposed to cherish its credit, and at the same time, to restrain the use of it within the limits of its faculties," never should "borrow a dollar, without laying a tax, in the same instant, for paying the interest annually, and the principal within a given term." The Legislature of Ohio, in authorizing money to be borrowed for the commencement of the canals of that State, acted strictly up to the rule laid down by Mr. Jefferson, and levied a direct tax for a series of years, sufficient to pay the annual interest on all the money borrowed, and gradually to reimburse the principal: a measure which has elevated the character of that State, and established its credit upon a firm basis. The funds of the State, with the exception of the General Fund, and the lateral Canal Funds, are in a condition of unexampled prosperity. |