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MEMORIAL

Of Cornelius W. Lawrence, chairman of a committee of citizens of New-York, for the repeal of the law subjecting to taxation, debts due to non-residents.

TO THE HONORABLE THE SENATE AND ASSEMBLY OF THE STATE OF NEW-YORK.

The memorial of the undersigned, chairman of the general committee of the citizens of New-York, and in their behalf,

RESPECTFULLY REPRESENTS:

That according to the best information which the committed have been enabled to obtain, an amount of property, exceeding in value seventeen millions of dollars, was utterly destroyed by the calamitous fire of the sixteenth instant; nor is this statement materially affected by the circumstance that much of the loss will ultimately be paid by the fire insurance companies. The stock holders of these institutions belong, in general, to the same community with the assured; and, after making every proper allowance for the partial indemnification to be obtained from elsewhere for the merchandize held on foreign account, it is very evident that, without taking into view the expanding wants of the city and country at large, to replace the goods lost, and to rebuild the warehouses and other edifices which have been destroyed, will require many millions of capital, for which the inhabitants of New-York must themselves make provision.

As among a people possessing the enterprise which has ever characterized Americans, no resources are permitted to remain inactive, the capital rendered necessary by the recent unforeseen calamity can only be obtained in one of two ways. It must either be diverted from pursuits in which it is now profitably used in this city or in other parts of our own State; or it must be drawn from other States, or from foreign countries. The first course, by obliging the agriculturists, merchants and manufacturers of the interior to refund, without the anticipated notice, those loans heretofore ob

tained from the public institutions and wealthy individuals of this city, on which they had based the operations of their business, could hardly fail to lead to a general panic, and to bring about such a state of pecuniary suffering, as would render our late misfortunes no less disastrous to the citizens of the remotest sections of the State, than to those whose property experienced the direct effects of the conflagration.

Should the loans within the State not be called in, there remains no other resource than to procure capital from the other States of the Union, or from foreign countries. The relief from our sister States, (though the capital derived from them is virtually exempted from the operation of the law to which reference will hereafter be made,) must, owing to their comparatively small accumulations, and the internal demands on their resources, be but inconsiderable. It is, therefore, to foreign countries that we are to look for our principal aid; and this view of the subject is justified by all the measures, proposed here and elsewhere, having in contemplation the contracting of a loan for the use of our citizens, under the guaranty of public authority.

To make the late awful dispensation of Providence fall with as little severity as possible upon our city and State, is believed to be the obligation of an enlightened Legislature; and no doubt is entertained that there exists every disposition, on the part of your Honorable Bodies, to mitigate the present sufferings, and advance the future prosperity of those who have confided their dearest interests to your care. On this occasion, the undersigned is not instructed to approach the Legislature with any request involving the State, or any portion of it, in pecuniary responsibility. He is simply directed to solicit permission for the inhabitants of this city and State to avail themselves, unshackled by legislative restriction, of the advantages which their local position and their own individual pecuniary credit may afford them. It is, indeed, a source of no small satisfaction to the undersigned to find that the application entrusted to him may be granted, without any interference with the ordinary policy of the commonwealth. On recurring to the legislative proceedings connected with the passage of the act of the 27th of April, 1833, entitled "An act to subject certain debts owing to non-residents, to taxation," and particularly to the report of the committee of the Assembly by whom it was introduced, (Assembly Documents of 1833, No. 162,) it will be found that the law

was enacted in consequence of the petition of the inhabitants of some of our western counties, and with reference to a peculiar state of things which then prevailed among them, but which, it is understood, now no longer exists. The expediency, at the time it was made, of the enactment, the repeal of which is now sought, therefore, in no wise conflicts with the prayer of this memorial.

As the present application is brought forward during the existence of an unprecedented condition of things affecting this community, and as the law which it is desired to abrogate is an admitted exception to the ordinary policy of the State, it might seem unnecessary to offer in support of the memorial, any considerations of a general nature. The undersigned cannot, however, refrain from remarking, that the State of New-York has long been distinguished among the other members of our confederacy, for the liberal system which has governed her proceedings. By the facilities which she has from time to time afforded to aliens for the holding of real estate, she has brought among us large amounts of capital, which are now indissolubly incorporated with the improvements of our great western region. By placing the legal interest at a higher rate than her sister States, she has not only led foreigners to make investments here, but has invited the citizens of other parts of the Union to employ their surplus revenues within our territory. In these measures, your predecessors have been influenced by a just estimate of the nature and functions of capital.

Capital is essential to bring labor into action, and to render skill and industry efficient for any valuable object; and as it is never borrowed by persons of ordinary prudence, unless the returns from its use are expected to exceed the interest paid for it, it follows that every dollar of foreign capital which is introduced among us, increases our resources to the extent of the difference between the interest paid, and the profits derived from its employment. When, then, on the one hand, we take into consideration the low interest in some of those countries where large capitals were accumulated under happier auspices, but where an impoverished soil and inordinate taxation have reduced the rate below the one half of the usual interest with us; and, on the other hand, look to the intelligent enterprise of our fellow-citizens, favored as they are with a boundless territory and a virgin soil, and protected by the freest institutions of the universe, we cannot but see, in the mutual in

terests of the parties, every possible motive for the transfer of foreign capital to our shores; nor can your memorialist doubt the disposition of an enlightened Legislature to promote a measure so conducive to the prosperity of this city and State.

It cannot be necessary for the undersigned to remind your Honorable Bodies, that whatever may be the effect on that portion of it, which at the time is actually invested, the necessary consequence of a tax on foreign capital is to diminish pro tanto the revenue of the lender, and, in the same degree, the motives for transferring additional amounts from other countries. There is always a disposition with capitalists to retain their property within their own control; and it is only for great incentives that they can be induced to place it in countries, with the laws and usages of which they are not conversant, and where the intervention of agents is required. It may well happen that the taxes on the debts due to non-residents, inconsiderable as they may be regarded by us, may, in relation to millions of dollars, constitute the turning point in the minds of the fundholders of Europe, and cause that capital to be retained at home, which, under other circumstances, might have been made to conduce to the prosperity of our agriculture, commerce and manufactures. The effect of a tax on foreign capital may indeed be counteracted, and rendered inoperative as to the lenders; but this can only be done by the borrower on bond and mortgage, who is also liable to pay on his land a contribution equivalent to that laid on the unincumbered property of his neighbor, refunding in some form the tax nominally imposed on the nonresident creditor. Assuredly such a distinction as this would induce in the burdens of the different members of the community, and to the prejudice of the least wealthy portion, was never within the purview of an enactment proceeding from an American legislature.

In conclusion, the undersigned, in the name and in behalf of the general committee of the citizens of New-York, would, as well from general and permanent considerations, as from those of a temporary nature affecting the community with which he is immediately connected, solicit from your Honorable Bodies the repeal of the law subjecting to taxation debts due to non-residents. And your memorialists, as in duty bound, will ever pray, &c. C. W. LAWRENCE, Chairman of the Committee of Citizens.

New-York, December 31, 1835.