USA > Pennsylvania > Pennsylvania, colonial and federal : a history, 1608-1903, Volume Two > Part 22
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The remark of the board of canal commissioners that a million and a half dollars were needed to render the canals "adequate to transact the business which may and should be done upon them," led to a legislative investigation, and the committee found that "the amount required for repairs was greatly exaggerated." The committee could not overlook the fact that in the late reports made by the engineer, occasion seemed to be taken and a disposition was strongly manifested to swell the estimates to an unreasonable amount. This circumstance, taken in connection with some ex- pressions used by the canal commissioners, evinces an earnest desire to create an impression upon the public mind that under the late administration the public improvements had been neglected, and had suffered from the want of timely repairs. Of such negligence the committee found no evidence. The com- mittee deprecated the introduction of anything like political or party feeling in the prosecution or management of our internal improvement system, but the inference was too glaring to escape
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ALBERT GALLATIN
Etched for this work by Max Rosenthal from the painting by Gilbert Stuart Owned by the Gallatin National Bank of New York varit Colonial and Federal
dere i upo productive objects. It has only been w thin the last few hat This infraction of the internal improvement
carried to the greatest extent. To a person nal intim waited with the facts it would be a question no!
man an examination of the recent appropriation wer the main lines of our improvements were prose- cont of their own intrinsic importance, or merely as or lawrendig upen numberless other subordinate objects os nf dollars of the money of the people. In some instances. Ihar . the bill under consideration, the appropriations to mary Objects have been made first, while the appropriations Que main Ines have thus far failed entirely. It will be hut one Vai Farther in the departure from the original system to drop the warm lhes altogether and henceforth disperse the treasures of the Commonwealth among inc rporated companies, local prejudices Aoc l interest and expert birgnions Secure in the gereral scramble the largest share (i the pill the gey."
The remark of the board " caval - toners that . million w li half dollars were ne lel mu enury to panals "adequate to mans .ct the business which wywo and shop " done upon them." (b) to a legislative Investig war and the commit e found that "the amount required for rojo was greatly exaggerated." The mittee could not overloc fact that in ille late reports made 0 The engineer, occasion spegel to be wley and at disposition w . trongly manifested to see the es hate to an unreasonable mh int. This circumstan when in conne to with some ex- 1)1. mons used by the commissioner . cvinces an earnest death to create an impreso of 10 the public mind that under tite Mte administration Wie public im- ements had been neglected and had suffered toen The word of lomely repairs. Of ich negligence the committee april a fence. The com- militee deprecated the introd it er o wy like political or marty feeling in the prosecution or wo event of our internal in.1 ement system. Int the coco o loo glaring to escape
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Biched by Now Rosenthal
Gilbert Stuart Paris
Papyright Ing The Pannorgivani Factorial, Publishing Ham . Phobie. 196.
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observation, and too palpable to be permitted to pass unrebuked. The committee then proceeded to show in detail how greatly the estimate made by the board for repairs surpassed what a liberal policy demanded. The plot now thickens and henceforth our legislative records are full of the story of internal improvements, which for several years overshadows all others. There was a vast amount of floating indebtedness to be paid off that was affecting the credit of the State. Party politics, too, was playing havoc with all the appointments. Appropriations were irregularly made and all work was fitfully done, costing far more than it would if made in a regular manner. One of the investigations relating to the Gettysburg railroad may be briefly described. It was a parallel line to the main works to a considerable extent, and if completed would have diverted trade from Pennsylvania to the Baltimore and Ohio road. A road was to be built from Columbia to Gettysburg and then there would be a through line to the Balti- more and Ohio. The committee remarked that of all the works of doubtful expediency constructed by the State, there was none so useless, so expensive or of as little value as this. It was com- menced by fraud and intrigue and will end in disgrace and loss to the Commonwealth. The road was to cost $77,340 per mile, nearly double as much as any other road at that time built in the country. Six sections which were estimated to cost $37,660 had cost $99, 181. Sections had been relet at greatly advanced prices to the old contractors, without abandoning the former contracts or stopping work under them, or without advertising for pro- posals. Politics had, indeed, played its disastrous part. During the election of 1838 those who were conducting the works inter- fered in the pending election for Governor. The superintendent raised the contractors' prices by a connivance at the provisions and injunctions of the law, and the contractors in turn taxed the men engaged upon the work as laborers large proportionate amounts of their hard earnings to bet upon Mr. Ritner's election, and to bear the electioneering expenses. In some cases this sys-
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tem of oppression and robbery was resisted and the money col- lected by an appeal to the law.
When Governor Porter came to have a knowledge of the public improvements his zeal for them greatly cooled. He de- clared in his first annual message that it was incumbent on him to exhibit the actual productiveness of our internal improvements in a light somewhat less flattering than that in which it had usually appeared. "It had been customary to state the gross amount of tolls derived from the canals and railroads in such a manner as to convey the impression that they yielded that sum clear of all deductions for management and repairs. The con- stant yearly increase of tolls had served as a powerful stimulant to the prosecution and extension of the entire system of our im- provements. Men of sanguine feelings had confidently looked forward to an early day on which the tolls arising from our improvements would not only pay the interest on the whole State debt, but yield, in addition, a large surplus to be applied to the extinguishment of the principal. Local interest and ardent public enterprise readily concurred in this opinion. We had embarked in the system too deeply, both in pecuniary investments, and in a State pride, to turn back. The great undertaking must go through ; we had pledged our faith, our firmness and our ability to that effect, and we gathered hope and confidence wherever they could be found. It is not surprising therefore, that our governors, legislators and people have deceived themselves and deceived each other in pursuit of the favorite object. It forms no just ground of censure against the active supporters of our system of internal improvements that they have fallen short, far short, of public expectation, in the amount of revenue they afforded. The time may perhaps arise, at no very distant day, when the increase of our population, business and wealth will enable us to realize the flattering anticipations of the early friends of the system."
The income from tolls and motive power for 1835 had been $684,357 ; repairs and cost of motive power. $431,626. 1836,
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income $671,849; repairs, $551,024. 1837, income, $975,350; repairs, $883,516. 1838, income, $966,029; repairs, $1,069,657 ; debts due, $275,000 ; deficit, $378,628. 1839, income, $1, 101,904; repairs, $656,460.
Thus the State made a poor showing as a builder and manager of canals and railroads. Those in charge had covered up the truth, and the public had been fooled into believing that the improvements paid. As long as the people were not taxed they did not care. The State, instead of paying, kept borrowing and telling the people that eventually enough would come from the works to pay all expenses, interest, and the debt itself. The time was rapidly coming when the truth would be known and the people be compelled to foot the bill. Indeed, the time had now come when the Governor had to tell a part of the truth. "The affairs of the Commonwealth," he said, in his message of 1840, "have been for several years gradually verging on towards deeper and deeper embarrassment, until we have at length reached this unexpected deficiency of funds in the treasury to meet the de- mands upon it. The people have been told again and again that our fiscal condition was flourishing and prosperous, while in fact our prosperity was all based on paper calculations and loans, which we are just now beginning to perceive bear interest, and are some day to be paid." The sale of the public property was imprac- ticable and the Governor was firmly opposed to more loans. Tax- ation, therefore, was the only expedient.
Accordingly, on the IIth of June, 1840, a tax "to create addi- tional revenue to be applied towards the payment of interest and the extinguishment of the debts of the Commonwealth," which was to bring in $600,000 annually, was imposed. It was to be collected for five years. Its advocates believed that the sum thus raised, together with other resources, would "probably liquidate the interest account without further resort to loans for that pur- pose." It provided "such a rate for the assessment of taxes as to fall with gentle weight on those who are little able to bear any
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addition to their expenses." The articles taxed were those purely of luxury, gold watches, pleasure carriages, household furniture exceeding in value $300, together with bonds, bills, and notes of solvent obligors, bank stock, or stock in other corporations, yield- ing dividends of at least one per cent., salaries of public officers and real estate. Although this act undoubtedly operated with some hardship upon those who fell within its provisions, still they did not suffer much, for they did not belong to the poorer classes. Governor Porter defended his scheme of taxation in his next message. He said: "I recommended taxation ; that recommend- ation was adopted by the legislature and it is a source of proud gratification to me when I consider that the people of Pennsyl- vania, almost to a man, so far as I have been informed, with a firmness and patriotism worthy of themselves, have yielded to this necessity without murmur or repining. I feel fully con- vinced that at the expiration of the five years at farthest, with a reasonable degree of prudence, and with strict economy in the management of our affairs, the income of our improvements will render renewal of this law wholly unnecessary."
Still, all did not pay the taxes so willingly. The Governor had presented a too rosy view. Indeed, his own language be- trayed the truth. "If," he said, "any difference of opinion exists as to the necessity of this tax, let these questions be answered by those objecting. Does not Pennsylvania owe this debt? Is she not morally and legally bound to pay it and its interest as it falls due? Can they point out any other mode by which this can be done?" At that time no tax had yet been collected. The act was amended in various ways in 1841 to make it more palatable. The county commissioners were delinquent and some of them made no returns, consequently the Governor was quite unable to give the legislature much information on the subject, except that only a small amount of taxes had been collected. This was not strong proof that the people were willing to pay and to save the State credit. The Governor talked well, declared that the debt
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must be paid, and that taxes must be imposed. On this subject there was, he said, no diversity of opinion among the great mass of the citizens of the State. All agree that whenever the consti- tuted authorities of the Commonwealth have entered into engage- ments conformably to the constitution and laws, whether these
John Dickinson
Member of Assembly, 1764; the Colonial Con- gress, 1765; and the first Continental Congress, 1774; commissioned brigadier-general, 1777; member Federal Constitutional Convention; founder Dickinson college, Carlisle, 1783; president of Supreme Executive Council, 1782- 1785
engagements have been characterized by due prudence and a proper regard to the interests of the public or not, the honor of the State, the permanence of our republican institutions, and a sacred regard to the sanctity of public engagements, require that the resources of the Commonwealth and the energies of her citizens be put in requisition to meet her public engagements promptly, punctually, and unhesitatingly. But the uncomfortable
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fact is, if they thought so, they set their good intentions aside by not paying their taxes. They were strangely delinquent for a people who believed in maintaining the faith of the State. They were more interested in escaping the payment of their taxes, which would save the honor of the State, than in preserving it at a slight sacrifice, perhaps, to themselves.
Another remedy was to sell the State stocks, railroads and canals. This was intimated by the Governor in his first message in 1840, especially the sale of the bank stocks. There were two strong reasons for doing this; they would bring a good price, yield some much-needed money, and again the State would thereby be divorced from the banks. Once more they had sus- pended specie payments and were discredited institutions. "The interest of the State," said the State treasurer, A. H. Read, in 184I, "as a banker is necessarily subjected to all the fluctuations, suspensions, and explosions of the present miserably defective system. The aid and countenance accorded to suspended banks, in virtue of a partnership with the Commonwealth, naturally tends to lower the standard of morals in the community, to de- press the character of the State for high moral sentiment, and to impress a withering stain upon our national escutcheon. The only objection ever made to the sale of these stocks is, they are productive. This is not even a plausible objection. They are productive stocks, and therefore will command a fair price in the market, with the advantage of a prompt and ready sale, and hence peculiarly adapted to the pressing exigencies of an exhausted treasury. Even were it morally honest, under other circum- stances, to continnie a partnership with suspended banks, it cannot be right, when the public creditor, who has confided in the faith and honor of the State, is daily knocking at your treasury in vain." The productive character of this investment of the peo- ple's money is not a legitimate argument, because governments are instituted for specific purposes, and not at liberty to engage in any and every pursuit which may present the stimulus of large
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profits. If admitted as an argument, it would prove too much ; it would justify the Commonwealth in commencing the manu- facture of leather and iron, and in growing silk and wool, or any other business of equal profits with that of banking. What would be the conduct of a prudent individual in like circumstances ? His credit exhausted, his notes at a discount, further loans re- fused, no means of paying interest on his accumulated debts, large investments previously made in reference to his principal business lying dead and unproductive for the want of a small additional sum, would he hesitate? Would he not instantly part with his bank stocks to relieve his embarrassment and put his affairs in a prosperous condition. I am not aware of any other resource for the payment of interest on February I but the sale of a portion of these stocks." The Governor also recommended at the same time the sale of the motive power on the State railroads, including locomotive engines, cars, tenders, workshops, engine-houses, depots, wells, water-power, sheds, mechanical instruments, and all other appurtenances of motive power.
In Governor Porter's first message he strongly urged a separa- tion of the State and banking institutions. He said : "The asso- ciation of private individuals with the State in banking institu- tions results almost entirely to the advantage of the former. Whatever hopes may have been founded on such association by- the legislature, that the banks thus owned would be at all times ready to aid the Commonwealth, have been illusory. Although the State owns 3,750 shares of stock in the Pennsylvania bank, 5,233 shares in the Philadelphia bank, and 1,708 shares in the Farmers' and Mechanics' bank, yet she has not such a share in the direction of either as to control any of their proceedings, and derives no benefit from the partnership. Her capital is used by her indi- vidual associates for purposes of private gain and speculation, and the Commonwealth, when she wants money, is compelled to look elsewhere. I, therefore, recommend the passage of a law authorizing the sale of the State's stock in said banks, at such
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time and in such manner as will yield the greatest amount to the State; or, if it be found that such sale cannot be made without too great a sacrifice, owing to adverse circumstances or other causes, that authority be given to declare their charters annulled and to divide the assets among the State and private stockhold- ers."
Never did sounder reasons exist for selling public property, yet the legislature refused to give the Governor authority to sell. Did the banks oppose the sale of them? Did they fear that they would decline in value by the sale of such a large quantity, or by the retirement of the State as a shareholder? Whatever the reasons might have been the stocks began to decline. And still the legislature declined to sell, though the value of the stocks was depreciating and the credit of the State was sinking still lower. Although the bankruptcy of the State was staring the Governor in the face, and he was putting forth his best efforts to save its credit, he continued to urge the completion of the public improve- ments. If they were not, various enterprises would be revived; if they were, it was doubtful if they would pay much. These were the North Branch extension from Lackawanna to the New York line, to connect there with the New York system; the Erie exten- sion from Greenville to Erie harbor, and the Wiconisco canal from Duncan's island to Wiconisco creek, and a short road to avoid an inclined plane at Columbia. In 1840 $3,322,333 had been spent on these and $4.553.503 were needed to finish them ; and the Governor urged their completion, notwithstanding their doubtful utility. The Gettysburg railroad was dead, for all time; that sink was finally closed, but the time had not quite come for ex- tinguishing the rest of these ill-conceived enterprises. The true policy, so Governor Porter thought, was to finish these and build no more. The State treasurer in 1841 still declared that the policy heretofore pursued of negotiating loans for the construc- tion of our public works, thereby stimulating industry, maintain- ing the character and dignity of the State, and placing us in the
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front rank in the march of improvement, is in the main approved, that the public debt is a matter of regret only in so far as the fruits thereof have been recklessly squandered on local projects. But a public debt should always be limited by the amount of avail- able resources. There was a point, however, beyond which that
Jesuit Mission Relic
The illustration shows the obverse and reverse sides of a cross which is one of several relics found on the north side of the West Branch of the Susquehanna river about one mile west of Great Island. The original of the above is owned by Dudley H. Martin, the finder. These crucifixes were probably given the Indians by Jesuit missionaries. An unauthenticated story tells of a mission where Evangeline, immortal- ized by Longfellow, stopped in search for her lover, which, if true, might explain the many relics found in the locality. To give further color to the story, a warrant of land near by was taken out in 1794 by Robert Ritchey and named Acadia, which name it still retains. Photographed especially for this work by C. Alex. Shempp
policy should be abandoned, and that point in Pennsylvania had already been reached. The credit of the Commonwealth had been pushed to its utmost limit and any further effort to extend it would, if successful, sever the cords of our social compact, part us from the anchor of our hope, and wreck us in the gulf of State bankruptcy. The system of loans was at an end. The source of revenue had failed; that fountain had become dry ; we could not, if we would, obtain further loans. The tax law of the last session, contrary to expectation, had failed to revive our waning credit; our stocks continued to decline in the market. The eagle- eyed capitalist, comparing our resources with the liabilities in- curred, refused to receive them, and if not from an enlightened policy, from imperative necessity, we must change our mode of
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action; we must have recourse to our vendible and available re- sources for the completion of our splendid system of internal improvements. At last the borrowing power was exhausted, while the people who were so willing to come to the rescue and save the declining credit of the State by paying their taxes were scarce. But was there no income from their gigantic system of canals and other modes of transportation? Nearly twenty years had expired since beginning them, and it was quite time that some revenue should come from them unless this was to utterly fail.
The main line of improvements, though built at a cost far greater than to a private individual, would have paid a handsome profit if it had been managed by the State after its completion. But individuals who are always alert to make a fortune quickly stepped in and undertook to use the means of transportation thus prepared for their own gain, and so the State reaped no profit from its undertaking. It had simply prepared a splendid way for a fresh set of individuals to reap great fortunes at the expense of other people of the State. But others besides them profited. The contractors and employees were legion and their claims against the State were innumerable. If a contractor bid far below another and less than he ought, he did not hesitate to go on with his work, confident that the legislature would reimburse him in the end. Such a method destroyed the whole force and effect of competition in bidding for contracts, because the contractor did not care how low he took the contract, provided he had some assurance that the legislature would remunerate him "and which he had a strong assurance they would do from the legislation of the last few years on the subject."
A few dissatisfied contractors and others imposed on the cre- dulity and stimulated the ambition of some member of the leg- islature to offer a petition complaining of public grievances. A committee to investigate was appointed, subpoenas were issued, and straightway swarms of hungry confederates repaired to the seat of government to prosecute their claims before the legis-
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lature, to lounge at the public expense and join in a wholesale pillage of the treasury. In the close of the session the com- mittee reports, "the witnesses return to their homes and laugh at the trick as they pocket the spoils." A large portion of the legislative expenses is incurred in this way. The extraordinary increase of these expenses, over those of all other departments of the government, has been of late years a matter of just com- plaint. At last, in 1842, the Governor began to think it was time for the State to retire from the transportation business. He had reached this conclusion with respect to banking business before he became Governor, but it needed some more hard experience of sham contracts, worthless officials, and a lack of income to convince him that the State was not prepared to build and manage canals and railroads. The story of trying to complete the North Branch and Erie extension canals was disheartening. They had cost far more than the estimates; the contractors had taken all they could get and serenely continued to work, confident that the legislature would amply compensate them for their patriotic en- deavors to complete the canals after the commissioners were unable to supply any more funds. Notwithstanding all this the Governor hesitated to call a halt. One reason, and a potent one, was that contractors would have a new class of claims for remuneration for the losses sustained by the State's abandonment of its work. "Contractors who have gone on to the work, and perhaps executed the least profitable part of it, will have fair claims on the justice of the legislature for remuneration for the losses they have sustained by an abandonment of the work by the State." "Judging from the success which usually crowns per- severance in similar applications before the legislature, there can be but little doubt that this class of claimants will not go away unanswered and unsatisfied." The Governor declared that if the State were out of debt he would not favor selling the transporta- tion lines, but, oppressed as the State was, its credit gone, unable to borrow any more, he proposed to sell the Columbia railroad
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