« PreviousContinue »
of which his own voice was necessary, he held a patronage, which violated the principles of self-government, and which tended directly to the consolidation of all the powers of government in the hands of one of its branches. Gradually the evils flowing from this mingling of powers, which never would have taken place even in an inexperienced age, had the people, to whom all the powers belonged, been actively protected when conventions met to confer powers upon their delegates, have become manifest, and nearly all the new constitutions have placed the judiciary upon its true ground of direct responsibility to the people by election; and has also, in most cases, made all the executive officers, both local and general, elective. The executive head is thus severed from the judiciary, and his powers circumscribed to their more just proportions, as superintendent of the administration of the laws. In the following states, where the appointment of judge was, under the old constitution, in the hands of the governor, the elective principle has succeeded, viz., in NewYork, Indiana, Kentucky, Maryland, New-Hampshire, Michigan. In the following the elections were by joint ballot of the two houses of law makers, and now by the people—New Jersey, Ohio and Illinois. In the new states the elective principle prevails, and, in nearly all the states where the judges are elective, the period of holding office is limited. To the same extent as the election of judges has been restored to the people, has the patronage of the executive been shorn of the appointment of local officers, which has been restored to the people, among whom and for whom their duties are exercised. By these means the three powers of government have become more effectually separated, and the political influence of the executive chief much diminished.
Reform has also extended to the law-making branch, and the powers and influence of those bodies restrained. For a long time the doctrine was sought to be inculcated, that as the immediate representatives of the people, the Legislature possessed the whole power of the state, including the granting of special privileges—the loaning of credits, and the unlimited power of borrowing money. Experience has brought with it the necessity of very clearly and pointedly forbidding the Legislature to exercise such powers-of circumscribing the power to grant charters, and depriving them altogether of the right of borrowing money on their own responsibility. The power of granting special privileges to corporate bodies endowing them with larger credit and less liability for their engagements than is permitted to individual citizens, thereby building up a powerful influence adverse to impartial legislation, and also of becoming not only a monopoly builder of public works upon a grand scale, but the source of credit for corporate companies engaged in hazardous speculations, have been not only the means of serious pecuniary loss to the public at large, but the groundwork of political influence, on which has been reared the fortunes of parties and cliques, aided by a scaffolding of corruption.
To be convinced of this, one need bút review the history of banking in this state for the last half century. The first applications for bank charters were made under the Constitution of 1777. Through the imperfections of that instrument-imperfections which sprang entirely from the inexperience of those who drew it, and of those by whom it was adopted--opportunities for such gross and flagrant corruption were afforded, that on three different occasions a majority in the Legislature was controlled by direct and unequivocal bribery. To propitiate the outraged feelings of the public, as well as to prevent the recurrence of such scandals in our legislation, the Convention who revised the Constitution in 1821, gave the subject a careful examination. The result was, the introduction of a clause requiring the assent of two-thirds of both Houses to create a moneyed corporation. Though this provision may have prevented much impure legislation, yet the remedial principle had only been approached, not reached. The delegates to that Convention had not then the experience in the operation of special legislation which the last twenty years have furnished. They little dreamed that in less than three years from the time their deliberations terminated, fifty thousand dollars would be disbursed among the members of the New-York Legislature in purchasing a single banking privilege-that of the Commercial Bank of New-York city—which since failed, involving the public in great loss; and that it would become a notorious fact, that in nearly every banking institution to be established by that body for the next twenty years, a large number of its members would have a deep pecuniary interest—that they would be the first, in one way or another, to participate in the profits of those very institutions which they, by their own votes, were to aid in creating.
The granting of these charters, which were to exert direct influence in their several localities, was an effectual means of organizing political support to the granting power, coming in aid of the appointment of local officers and the vast army of contractors, brokers, jobbers, and dependants, which resylted from the power to borrow money and construct public works, formed altogether a means of controlling and consolidating power at the expense of towns and counties, which was accumulating strength daily, until it even set at defiance the provisions of the Constitution. Thus the Constitution of 1821 provided that the assent of two thirds of the members elected to each branch of the Legislature should be requisite to every bill granting public money to private purposes. Notwithstanding which, over $3,000,000 of state bonds were granted to the Erie Railroad by a simple majority, and those illegal bonds are now a part of the state debt. In order to legalize them, the opinion of William H. Seward was purchased by the company to the effect that the Erie RailRoad Company is not a private company, because the road is a “long one." The learned gentleman, with that flimsy sophistry for which he is remarkable, did not, however, define the length required to confer publicity upon a private road. The system of Jog-rolling for charters and loans necessarily reached a culminating point, and the revulsion of 1836-7 broke down, at a ruinous loss to the people of the state, many of the banks which had originated ten years previously in political corruption. Amid the universal panic and loss which these disasters occasioned, the general banking law was passed April, 1838. This provided that any number of persons might prosecute the banking business at any time, by complying with certain formalities, and depositing with the Comptroller of the state securities, which were gradually, under the spur of experience, restricted to bonds and mortgages, and New York or United States 6 per ct. stocks, as a guarantee for the redemption of the circulating notes issued by them. The state debt had already reached a very high figure, $28,000,000, and works had been projected by speculators which, under the log-rolling system, were entitled to 75 millions of state credits to aid them. The means of paying the interest of the existing debt without borrowing, were already exhausted, and direct taxes, with a suspension of all state works, and loans of credits, had become inevitable. All these abuses made so vivid an impression upon the public mind, that they became a leading motive for summoning the Convention which formed the Constitution of 1846– which instrument restrains the Legislature from contracting debts or granting special charters to corporations, allowing it to enact only general laws for that object. In relation to debts, the provisions are as fol. lows:
Section 9. The credit of the state shall not, in any manner, be given or loaned to, or in aid of any individual association or corporation.
Section 10. The state may, to meet casual deficits or failures in revenues, or 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; and the moneys arising from the loans creating such debts, shall be applied to the purpose for which they were obtained, or to repay the debt so contracted, and to no other purpose whatever.
Scction 11. In addition to the above limited power to contract debts, the state may contract debts to repel invasion, suppress insurrection, or defend the state in war; but the money arising from the contracting of such debts shall be applied to the purpose for which it was raised, or to repay such debts, and to no other purpose whatever.
Section 12. Except the debts specified in the tenth and eleventh sections of this article, no debt shall be hereafter contracted by or on behalf of this state, unless such debt shall be authorized by a law, for some single work or object, to be distinctly specified therein; and such law shall im pose and provide for the collection of a direct annual tax to pay, and sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal of such debt within eighteen years from the time of the contracting thereof.
In relation to corporations, the powers are thus defined :
Section 1. Corporations may be formed under general laws ; but shall not be created by special act, except for municipal purposes, and in cases where, in the judgment of the legislature, the objects of the corporation cannot be attained under general laws. All general laws and special acts passed pursuant to this section, may be altered from time to time, or repealed.
Section 2. Dues from corporations shall be secured by such individual liability of the corporators and other means as may be prescribed by law.
Section 3. The term corporations, as used in this article, shall be construed to include all associations and joint-stock companies, having any of the powers or privileges of corporations not possessed by individuals or partnerships. And all corporations shall have the right to sue, and shall be subject to be sued, in all courts in like cases as natural persons.
Section 4. The legislature shall have no power to pass any act granting any special charter for banking purposes; but corporations or associations may be formed for such purposes under general laws.
Section 5. The legislature shall have no power to pass any law sanctioning in any manner, directly or indirectly, the suspension of specie payments, by any person, association, or corporation, issuing bank-notes of any description.
Section 6. The legislature shall provide by law for the registry of all bills or notes, issued or put in circulation as money, and shall require ample security for the redemption of the same in specie.
Section 7. The stock-holders, in every corporation and joint-stock association for banking purposes, issuing bank-notes or any kind of paper credits to circulate as money, after the first day of January, one thousand eight hundred and fifty, shall be individually responsible, to the amount of their respective sbare or shares of stock in any such corporation or association, for all its debts and liabilities of every kind, contracted after the said first day of January, one thousand eight hundred and fifty.
The “ ample security ” here required, is defined to be the bonds and mortgages on productive property, worth double the amount in New York and United States stocks. The progress of banking, under the present law, has been such as to absorb nearly all these securities, and to raise the price of the lowest available descriptions to 8 per cent. premium. But the banking interest is an immense one, and the demand it creates for stocks for securities was a powerful lever in enabling the party in power to evade the above apparently sufficiently stringent provisions in relation to debt. Thus, inasmuch as that the canals yield nearly $800,000 per annum, in excess of the state expenses, interest on debt and sinking fund, and the constitution permits that surplus to be annually appropriated to the enlargement of the canals, the present legislature, which, in truth and justice, has command only of the surplus of the present year for which it is elected, undertakes to borrow nine millions of dollars, on pledge of the future revenues, which may not exist, and which, if they do, are under the control only of the future legislatures, during the existence of which they accrue. So palpable a violation of the constitution, on such terms, would be frustrated by the refusal of capitalists to take the scrip so issued; but the bank interest, which is compelled to find security for notes that it is anxious to issue, is allowed to deposit these scrips, which prudent capitalists will not buy, as security for notes issued to the public. Thus the contracts on the works are given to partizans of the so-called “woollyhead” party or Seward-men, who receive in payment these scrips, and sell them to the banks, who receive for them, from the comptroller, an equal amount of notes to circulate as money. This latter is circulated among the people, who will ultimately lose it. It is obvious that the existence of the surplus, on which the issues of these scrips are based, depends upon the rates of tolls and the amount of business done; consequently it is in the power of the next legislature to put the tolls at a rate which shall yield no more than the amount of money appropriated by the constitution—thus cutting off the supposititious surplus, on which this fraudulent loan is based. By attempting, through this violation of the constitution, to realize the surplus of ten future years in the present one, an immense political patronage is derived to the Seward party, who alone enjoy the expenditure; and these persons, including the Speaker of the House, openly jeer the “silver-grays,” or old whigs, for their blind folly in aiding them to procure the means of consolidating their power, the accomplishment of which will be the signal for ostracising their goodnatured friends. That Seward party has its origin in disregard for the federal Constitution, and finds its support in violating that of the state.
The abuse of this debt-creating power, has been the fruitful source of evil in many of the other states of the Union, particularly in Mississippi, where the term “ repudiation,” as applied to state debts, has its origin, in relation to the bonds of that state, issued in violation of the express provisions of the state constitution; and, although it is a disgrace to that state to have had a Legislature which would wilfully violate the terms of the instrument whence they derived their powers, it is no disgrace to the people that they would not suffer their organic laws to be violated with impunity. If New-York is now disgraced by a legislature which seeks to obtain money for party purposes, by committing a fraud upon the organic law, the people will know how to punish disobedient servants and their accomplices.
However much the course of Mississippi has been clamored against, by those who oppose legislative accountability, those events have had a powerful impression upon the public mind; and all the constitutions, new and revised, contain more stringent restraints upon the debt-contracting power. As an instance of the wide-spread and universal jealousy of the legislative action in this matter, we append the debt clauses from all the new constitutions :
CONSTITUTIONAL RESTRAINTS UPON PUBLIC DEBTS.
Michigan.—The Legislature shall provide for an annual tax, sufficient, with other resources, to pay the estimated expenses of the State Government, the interest of the state debi, and such deficiency as may occur in the resources.
The state many contract debts to meet deficits in revenue. Such debts shall not in the aggregate at any one time exceed fifty thousand dollars.
The credit of the stute shall not be granted to or in aid of any person, association or corporation.
No scrip, certificate, or other evidence of state indebtedness shall be issued, except for the redemption of stock previously issued, or for such debts as are expressly authorized in this Constitution. The state shall
not subscribe to or be interested in the stock of any company, association or corporation.
The state shall not be a party to, or interested in, any work of internal improvement, nor engaged in carrying on any such work, except in the expenditure of grants to the state, of land or other property.
CALIFORNIA; State DEBTS.-- The Legislature shall not in any manner create any debt or debts, linbility or liabilities, which shall, singly or in the aggregate, with any previous debts or liabilities, exceed the sum of three hundred thousand dollars, except in case of war, to repel invasion, or suppress insurrection, unless the same shall be authorized by some law for some single object, or work to be distinctly specified therein, which law shall provide ways and means, exclusive of loans, for tho payment of the interest of such debt or liability as it falls due, and also to pay and discharge the principal of such debt or liability within twenty years from the time of the contracting therof, and shall be irrepealable until the principal and interest thereon shall be paid and discharged; but no such law shall take effect until at a general election it shall have been submitted to the people, and have received a majority of all the votes cast for and against it at such election, and all money raised by authority of such law, shall be applied only to the specific object therein stated, or to the payment of the debt thereby created, and such law shall be published in at least one newspaper in each judicial district, if one is published therein, throughout the state, for three months next preceding the election at which it is subınitted to the people.
Illinois.—Section 37. Each general assembly shall provide for all the appropriations necessary for the ordinary and contingent expenses of the goveroment until the adjournment of the next regular session, the aggregate amount of which shall not be increased without a vote of two-thirds of each house, nor exceed the amount of revenue authorized by law to be raised in such time; Provided, the State may, to meet casual deficits or failures in revenues, contract debts never to exceed in the aggregate fifty thousand dollars; and the moneys thus borrowed shall be applied to the purpose for which they were obtained, or to repay the debt thus made, and for no other purpose ; and no other debt, except for the purpose of repelling invasion, suppressing insurrection, or defending the state in war, (for payınent of which the faith of the state shall be pledged,) shall be contracted, unless the law authorizing the same shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for members of the general assembly at such election. The general assembly shall provide for the publication of said law for three months at least before the