canals, but also the sum of $3,370,000 for their superintendence, and the following sums on account of the original debt, viz : For interest on money borrowed. Total sum paid on account of debt...... -- $5,254,870 70 4,423,571 40 $9,678,442 10 And at the same time there remained in the hands of the fund commissioners, a sum more than sufficient to cancel the whole of the stock then outstanding, which constituted the balance of the original canal debt. This was the result of the ample provision made by the act of 1817, in providing auxiliary funds for the payment of interest; and the unprecedented success of the Erie and Champlain Canals in accumulating revenue from tolls, as shown in the preceding table. MANAGEMENT OF THE SURPLUS REVENUES OF THE ERIE AND CHAMPLAIN CANAL Fund. When these canals were completed, it was estimated by the commissioners of the canal fund, that there would be an annual surplus, applicable to the payment of the debt created for their construction, of $610,000 for ten years, succeeding 1825, of which sum over $400,000 it was supposed would be derived in each year from auction and salt duties. One portion of the debt was payable in 1837, and another portion in 1845; and it rested with the commissioners of the canal fund to determine how the surplus revenues should be disposed of in the meantime. In constructing the canals, the large sums which were borrowed for the purpose, and the revenues derived from auction and salt duties were deposited in the Manhattan Bank in the city of New York, and the State Bank, and the Farmers and Mechanics Bank at Albany, without interest. In fact, the money with which the canals were commenced, in 1817, was loaned by the Albany Banks before named, on condition that the $200,000 borrowed by the State should remain in deposit in these banks until required to be paid out on contracts, and when this period arrived, the notes of these same banks were to be used in payment; and to ensure a fulfilment of the last condition, the banks, in some cases, sent a clerk along the line with the commissioner, who acted as paymaster. Anticipating an accumulation of several millions of dollars which by the constitution and the laws, could not be used for any other object than the cancelment of the canal debt, which was payable at the end of 10 and 20 years thereafter, the welfare of the fund required that an arrangement should be made to obtain interest on the surplus as it accrued, until it could be applied to the payment of the debt for which it was pledged. The commissioners of the canal fund therefore resolved to offer the money to such banks in Albany or Troy, as would pay interest therefor, and at the same time answer the drafts of the commissioners at sight, for the current expenditures of the canal fund. In pursuance of this resolution, the Controller, (Gov. Marcy,) in June, 1826, addressed a circular to the banks in Albany and Troy, soliciting propositions for the deposits, which resulted in an agreement with the Bank of Troy and the Farmers Bank of Troy, for an interest of 5 per cent on the first $100,000, 33 on the second, and 3 per cent on all sums over $200,000. The next year, the Mechanics and Farmers, and State Banks at Albany obtained the deposits at 3 per cent interest, and they have continued to the present time, as depositories for the moneys required for the current expenses of the canals. In 1830, the accumulations in the Albany banks were so great that the fund commssioners made arrangements with the banks on the lines of the canals which received the tolls from the collectors, to retain the amount at 4 per cent or pay it over at their option. This arrangement took effect in the spring of 1831, and during that season the collecting banks received $803,000, of which amount they voluntarily paid to the Albany banks $488,000, retaining $315,000 at 4 per cent. During the same season, the sum of $500,000 was loaned to seven banks in the city of New York, on condition of being drawn on a notice of 60 days, or paid over on a similar notice. At the close of the fiscal year in 1832, there was deposited in thirty banks, $2,500,000, and invested in stocks and bonds, $465,000, at 31, 4 and 5 per cent interest. At the time a sum sufficient to pay the entire debt of the Erie and Champlain Canals was set apart in 1836, there had been realized for interest on investments and deposits of the canal fund surplus, the sum of $843,176 03; and at the date of the payment of the last instalment of the debt, 1845, the interest realized on investments and deposits amounted to the sum of $2,065,796 77. The mode of investment adopted by the fund commissioners, enabled them at all times to command the surplus moneys, when they could be advantageously used for the payment of the debt, and at the same time to add over 2,000,000 to the fund from interest on deposits; although several hundred thousand dollars of the loans to banks were at one period unavailable, the actual loss to the fund will be limited to a few thousand dollars. PAYMENT OF THE CANAL DEBT. When the Erie and Champlain Canals were finished, the outstanding stock which had been issued in making loans for these works, amounted to the sum of $7,737,770 99. Of this amount $270,000 was paid from the surplus revenues of 1826, the loan being a temporary one, and payable in that year. The general fund at that time had $450,000 of canal stock, which in subsequent years was redeemed by the surplus canal revenues and the money was used for the support of the State government. Although the act of 1826, in relation to the canals, authorized the fund commissioners to purchase and cancel the stock for which the surplus canal revenues were pledged, whenever, in their opinion, it could be obtained on advantageous terms, yet the ruling price in the stock market was such that none of it was bought from individuals from 1826 to 1833. The annual report of 1833, showed a balance in the hands of the commissioners applicable to the debt, of $3,055,000 of which more than $2,500,000 was deposited in fifty or sixty banks. The commissioners in the annual report made to the Legislature on the 2d of January, 1833, called the attention of the Legislature to the amount and condition of the surplus fund, and of their desire to apply these funds to the extinguishment of the debt which they were designed to pay, "but hitherto all efforts to purchase these stocks on advantageous terms have failed." After alluding to the distribution of the money among the numerous banks of the State, the report said :-" The commissioners cannot in justice to themselves, leave this topic without expressing to the Legislature their great fears of the effect upon the banks, when in July 1837, it shall become their duty to draw from them about $3,500,000 to pay off the stock which will then be redeemable. Should the time be one of ease and plenty in the money market, they have no doubt that the call may be met without distress or disaster; but should a scarcity of money prevail, this heavy amount might draw too largely upon the disposable means of these institutions for the entire safety of the community." A few days after this report was made, Mr. Wright was chosen U. S. Senator, A. C. Flagg Controller, and John A. Dix, Secretary of State. And in the course of the same month a proposition was made to the fund commissioners for the sale of 6 per cent stock of 1837, at a premium of 9 per cent. The board, then consisting of Lieut. Gov. Tracy, Greene C. Bronson, Simeon De Witt, and A. Keyser, in addition to the persons before named, resolved to purchase the 5 per cents of 1837 at a premium of 6 per cent, and the per cents, at a premium of 9 per cent, until the 1st of August following when the commissioners reduced the premium 1 per cent. time the Controller sent a circular to the holders of the stock of 1837, offering to pay the premiums of 5 and 8 per cent until January 1834. At this The following is an extract from this circular, as given in the annual report of 1834:— "The holders of the Erie and Champlain Canal Stock are reminded that the surplus moneys now in the hands of the commissioners, are, by the constitution of the State, pledged to reimburse the principal of this stock, and cannot be diverted from that object. It is therefore morally certain, that on the 1st of July 1837, the entire sum which shall remain unpaid of the stock which is redeemable in that year, will be paid off at par; and with the means of redemption in the hands of the commissioners, it is equally certain, that as the time approaches when they can legally redeem this stock at par, the premium which is now offered will gradually diminish until it reaches that point. "The holders of this stock will perceive that if they can re-invest their money at 4 per cent it will be for their interest to sell at the premiums now offered. The surplus canal fund upon which the commissioners are drawing for the redemption of this stock, are deposited in sundry banks, and yield an interest to the State of 3 and 41 per cent. The commissioners readily admit, what must be inferred from the high premium offered, that they are very anxious to apply the money in their hands to the redemption of the Erie and Champlain Canal Stock. In making a small apparent sacrifice to effect this object, the State gets rid of the hazards incident to the management of $3,000,000 or $4,000,000; and by gradually possessing itself of the stock of 1837, the serious pressure upon all the monied operations of the State will be avoided, which might result from allowing the canal money to accumulate in the State banks-to be diffused by them through every department of business-and then to be drawn for on the 1st of July 1837, to the amount of $3,500,000 for the redemption of the stock then payable." In eight months, from the 28th of January, to the 30th of September, 1833, stock was redeemed and cancelled to the amount of $1,478,376 87, on which there was paid a premium of $87,933 46. This included about $30,000 of the 5 per cents, of 1845, on which a premium of 18 per cent was paid, and also $393,347, held by the Savings' Bank of New York, for which other stocks were exchanged at par. On the 30th of September 1835, there had been paid for stocks $2,773,326 67, and for premium, $213,974, making a total of $2,987,300 67, and yet, such was the productive power of the canal fund, that there remained a balance in the hands of the commissioners, of $3,406,809 72, exceeding the amount in hand when the purchase of the stock commenced, by the sum of $350,000. In June, 1835, the commissioners gave notice that means were provided to pay the whole debt of 1837, and that interest on the stock would cease on the 1st of July, 1837; at the same time offering to redeem the certificates at a premium of 5 per cent on the 6's, and 3 per cent on the 5's. On the 1st of October, the rates were reduced to 4 and 2 per cent until January 1836, adding the current interest from October to the date of purchase. In 1835, a premium of 12 per cent was paid for the 5's of 1845, and a premium of 24 per cent for 6's of the same year. In September, 1835, the rate was reduced to 22 per cent on the 6's. At the close of the fiscal year in 1836, there had been cancelled of the stock in four years, the sum of $3,418,803 13; amount paid on account of premium, $254,233 14; total, $3,673,036 27. The report of 1837, says: "If this course had not been adopted, the accumulations of the surplus deposited in the banks would have amounted at the close of the year for which this report is made, (Sept. 30, 1836,) to seven millions and a half of dollars, besides the investments in stocks." On the 18th of July, 1836, the whole amount necessary to extinguish the Erie and Champlain Canal debt, had been collected and invested. It consisted of investments in the 5 per cent stocks.. Annual interest. $16,696 67 $333,933 59 3,557,198 58 170,420 41 The amount of interest on the funds invested, was not equal to that on the outstanding stock, but there was an excess in the principal set apart to pay the debt of $168,875 68. And as interest to the amount of $81,788 20 was to rease on the debt of 1837 in the subsequent year, by the application of less than $1,500,000 of the principal, the provision was considered fully adequate for the cancelment of the debt. After July, 1836, the auction and salt duties were transferred to the general fund, as authorized by an amendment of the constitution. During a period of about 20 years, these sources of revenue had yielded to the canal fund $5,647,497 11, being $392,626 41, more than the whole sum paid for interest on all the money borrowed from 1817 to 1836 for the construction of the Erie and Champlain Canals. The outstanding stock in 1836, was held as follows: Amount held by foreigners ... held in the State of New York.. held in other States of the Union.. Total...... $2,946,903 45 624,232 71 42,107 29 3,613,243 45 Notice was given in July, 1837, that 1 per cent premium would be paid on the 6's of 1837 until January, after which they would be paid at par. Before July, the debt payable in that year was reduced to about $1,250,000. The banks, in the meantime, had suspended specie payments, and the commissioners paid the holders of the stock $109 in the paper of the New York banks for each $100 of stock. It was decided by Mr. Gallatin, Mr. Newbold, and Mr. White, to whom the commissioners submitted the question, that this rate of payment was equivalent to a payment in gold and silver. Art. IV. THE MERCANTILE AGENCY. THIS institution, which has now been many years in operation, has grown to be so important to the mercantile community, that we feel it due to our subscribers to notice it in our pages. There are several such agencies in the city of New York.* They all have, we presume, the same objects in view, and the same general system of management. Our present remarks, while they are intended to cover the system, have reference more particularly to the oldest and most extensive of these agencies, conducted by Messrs. Tappan & Douglass, which we have personally inspected. This is not only an extensive, influential, and, as we believe, useful institution in New York, but is extended by associate offices to Boston, Philadelphia, Baltimore, Cincinnati, St. Louis, and Louisville ;† and contemplates a still farther extension, so as to embrace all the important centers of trade in the United States. But, though known and appreciated by a majority of the merchants in the large cities, we are aware that a prejudice exists against it in some quarters. Our object is, if possible, to remove that prejudice, by presenting the matter to our readers in the light in which it now appears to us. We say now, for we are free to acknowledge that our own "first impressions" were unfavorable. On a full examination of the subject, however, we are convinced that those impressions were founded in ignorance of the system. We have recently taken pains to inform ourselves, and do not hesitate to say, that the agency is conducted on high and honorable principles, and is truly and extensively useful, not only to the city merchants, for whose immediate benefit it was devised and established, but to all sound, upright, industrious traders, throughout the land. In our review of this system, we shall briefly advert, first, to the object of the mercantile agencies, and then to their operations. And, first, as to their object. Immediately after the terrible mercantile revolution in 1837, when our whole system of internal commerce was prostrate, and nearly all its operators bankrupt, this agency was planned, and put into operation, as a remedy for some of the difficulties which had just been so heavily experienced. Its design was to uphold, extend, and render safe and profitable to all concerned, the great credit system, on which our country had thriven, doing business to an immense amount with all the world, and using the capital of the world to do it with. At the outset it was mainly intended as an aid to the Jobber. His customers, scattered over many States, were periodically visiting him for the purpose of renewing their stocks of goods; generally cancelling, in whole, or in part, previous obligations, while they contracted new ones. The intelligent jobber would necessarily need to be informed, on the opening of a new account, respecting the then circumstances of his customer. From year to year, he would desire to be freshly advised of the good or ill success attending him. Information of this character can, in general, be satisfactorily The Mercantile Agency-Tappan & Douglass, 70 Cedar-street; The Commercial Agency-W. A. Cleveland, 60 William-street; Commercial Agency-Woodward & Dusenbury, 45 William-street; The City Trade Agency-Potter & Gray, 5 Nassau-street. The offices associated with Messrs. Tappan & Douglass are-The Mercantile Agency-E. Russell & Co., (late G. W. Gordon,) Boston; W. Goodrich & Co., Philadelphia; J. D. Pratt & Co., Baltimore; W. B. Pierce & Co., Cincinnati; W. B. Pierce & Co., Louisville, Charles Barlow & Co., St. Louis. |