The Register of Pennsylvania : devoted to the preservation of facts and documents and every other kind of useful information respecting the state of Pennsylvania, Vol. IX, Part 38

Author: Hazard, Samuel, 1784-1870
Publication date: 1828
Publisher: Philadelphia : Printed by W.F. Geddes ;
Number of Pages: 440

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Now, if the privilege granted by this act was a dis- tinct and new power, intended for, and solely applica- ble to the payment of the interest upon the six per cent. to the new subscribers, it is a privilege conferred by this act above, and not by any former laws. Why then ex- cept from the operation of the proviso that portion of the privilege which is authorized by existing laws? No portion of this privilege to raise money exclusively to pay interest to new subscribers out of a lottery fund distinct from the old one, was authorized by any other act than the one containing the proviso. Why then, when restricting the exercise of a power conferred by the act of eighteen hundred and twenty-one alone, ex- cept from the operation of the restriction that portion of the power which was authorized by other laws when no other law conferred any portion of the power. The privilege therefore which is designated in the phrase " the privilege hereby granted of raising money," is not merely a new and distinct grant; but the old grant recognized and re-sanctioned by this act, and the further power of continuing the lottery as just given above. If we adopt any other construction we render the excep- tion absurd. But by this one we render plain the mean- ing of the terms " except so far as is authorized by ex- isting laws," as having reference to the old privilege which it was permitted to pursue, whether the tolls co- vered the six per cent. or not. The phrase "existing laws," is equivalent to prior acts, and refers to those of eighteen hundred and eleven, and seventeen hundred and ninety-five. If the tolls were adequate to the pay- ment of the six per cent. the new power was to cease its operations, but the old power was permitted to op- erate as formerly, without restriction short of raising the whole amount; but its proceeds "in no event" were to be divided over six per cent. on the stock of the compa- ny, but the excess was to be reserved to meet any defi- 1

ciency that might occur in the tolls of the following year.

There is another strong argument in favor of this construction of the act, drawn from the suspension of the pledge of the lottery proceeds to the old subscri- bers. Is it not too manifest to be mistaken, that if it were not the proceeds of the old lottery, this with the aid of the tolls, were to be applied to pay the interest on the new subscription, under the provisions of the act of eighteen hundred and twenty-one, that there would be no propriety in suspending the right of the unforfeited shares to receive the proceeds of it, so as to enable them to pay the new subscribers? The act says: "In order to avoid, as far as possible, all disability to pay such interest, (that is, the interest on the new stock, ) so much of the act of eighteen hundred and nineteen, as pledges any portion of the avails or nett proceeds of the lottery to the payment of an annual interest to the holders of shares not forfeited in the old companies, be and the same is hereby suspended." Now if "the lot- tery granted" by the act of eighteen hundred and twenty-one, was a new and distinct grant, the proceeds of which were alone applicable to the payment of the six per cent. its proceeds surely had never been pledg- ed. Why would you suspend an application of its pro- ceeds to the old stock, when, if the lottery power owed its origin to the act of eighteen hundred and twenty-one, its proceeds could not have been pledged by the act of eighteen hundred and nineteen? This would be liber- ating it from a burthen to which it never had been sub- ject: it would be relieving its proceeds from an applica- tion to which they had never been bound. If " the lot- tery" mentioned in the first part of the first section of the act of eighteen hundred and twenty-one, the pro- ceeds of which were applicable to the payment of the six per cent. were not the old lottery of eighteen hun- dred and eleven, there was no necessity of discharging it from such application, to enable it, the better, to pay the new subscribers. Ifit were a new distinct lottery, indebted for its existence to the act of eighteen hundred and twenty-one alone, how could its proceeds have been pledged by an act passed two years before.

The argument, that if the act of eighteen hundred and twenty-one, intended to apply the proceeds of the old lottery to the payment of the six per cent. to the new subscribers, it were very easy for it to say so; and that the omission to do so expressly is evidence of itsinot being intended, falls to the ground, when we find the act so evidently makes the appropriation.

The fact of the company's selling the privilege con- ferred by the act of eighteen hundred and twenty-one, shows that they viewed it as a branch of the old concern, and that they considered it necessary to preserve the connexion with the act of eighteen hundred and eleven, for the purpose of maintaining the power to sell, which is not alluded to in the act of eighteen hundred and twenty-one. If the privilege granted in the act of eighteen hundred and twenty-one is distinct and cumulative, having no connexion with that of eigh- teen hundred and eleven, there might be very strong ground for doubting the power to assign it; but as the company, by their contracts of eighteen hundred and twenty-one and eighteen hundred and twenty-four, acknowledge their only authority as derived from the act of eighteen hundred and eleven, they necessarily are clear of any difficulty as to the ability of disposing of the additional continuing power. They have, in the contracts, given a contemporaneous construction to the lottery privilege, consistent with the true meaning of the act of eighteen hundred and twenty-one.

There is another view of the matter which strengthens the committee in their construction. When the act of eighteen hundred and twenty-one was about to pass, the friends of the canal, ever sanguine of their success, and not disheartened by the obstacles they continually encountered, confidently anticipated an ample remune-

1832.]

REPORT UPON LOTTERIES.

135

ration for all their toil. High hopes of profit had, from the earliest period of their project, chcered them in their efforts. To be satisfied of this, we need only ap- peal to the acts of Assembly that gave them existence, and extended their privileges. The act of seventeen hundred and ninty-one, and seventeen hundred and ninety-two, talk of a profit of twenty-five per cent. -that of eightcen hundred and seven of a sur- plus fund; the act of cighteen hundred and eleven, even of raising a fund out of an excess of dividends over twenty-five per cent. to buy out the canal and make it free; and the act of eighteen hundred and nineteen of reducing the dividends to twelve per cent .; and it was confidently predicted that five hundred thousand dol- lars, the amount to be subscribed by individuals and the state, would finish the whole work. But dams and feeders, steam engines and tunnels, were to be encoun- tered and provided, and instead of the new subscription answering the purpose, the company have been obliged to involve themselves in loans, to the amount of one mil- lion, four hundred and thirty thousand dollars. How easy was it, however, under the flattering anticipations of eighteen hundred and twenty-one, for the company to say to the legislature, "only give us the pledge of the state for twenty-five years, to induce a new subscription, and a further continuance of the privilege, and we will soon relicve the commonwealth from her engagement, by the proceeds of the lotteries and the tolls." They would say that "the proceeds of the lottery fund alone, will nearly pay the interest till the canal is completed, when the tolls will surely be adequate to such purpose. Weexpect yet, from the proceeds of the lottery, nearly forty thousand dollars, which, with the proceeds from that fund on hand, amounting to seventy thousand five hundred and one dollars, and fifty-seven cents, now in- vested in good stock, will, with the interest thereon, certainly keep the state clear for nearly four years; and by that time we will be in the receipt of tolls, which will be daily increasing. The state, perhaps, may not be called upon for a dollar, especially if we have the power of continuing the lottery privilege when it may become necessary; and we will agree to draw cach year no more than is necessary to keep down the interest." The legislature granted their request, with all the re- strictions upon the spirit of gaming, consistent with the safety of the public treasury, which had, under the same act, appropriated to the aid of the company fifty thousand dollars, by the subscription of two hundred and fifty shares.

If the preceding reasoning on the construction of the act of eighteen hundred and twenty-one is sound, the company could not, in making their estimates, claim to draw any lotteries under the continuing power until the old lottery should be exhausted, and the tolls are inade- quate to the payment of the six per cent. on the new subscription. The company having long ago exhaust- ed the balance of the three hundred and forty thousand dollars, have no similar privileges except the power to continue the lottery, provided the tolls will not pay the six per cent. on the new subscription of four hundred and fifty thousand dollars.

The company however, in opposition to the plain meaning of the act of eighteen hundred and twenty- one, say, that no portion of either the tolls or the old lottery is applicable to the payment of the interest on the new stock, the proceeds of both being mortgaged to loan holders, the interest duc whom amounts to eighty- five thousand eight hundred dollars per annum. And they make their estimates in this manner:

Balance of the lottery at date of act of cigh- teen hundred and eleven, $340,000

-Raiscd, up to the date of the act of eighteen hundred and twenty-one, 136,250

Balance of old lottery, $203,750

This sum of two hundred and three thousand seven hundred and fifty dollars of the old lottery, they say,

is yet to raise; all the money they have raised since the act of eighteen hundred and twenty-one being, they allege, procured under the power conferred by that act has been exclusively apphed to pay the interest to the new subscribers.

Since the act of eighteen hundred and twenty-one, from sixteenth January, eighteen hundred and twenty-two, till fourth January, eighteen hundred and thirty-two, they say they have raised in pursuance of that act

$269,210 40

Of which they have applied to pay interest on the new subscription, 189,532 94

Leaving over drawn and to be preserved to supply any deficiency of the tolls to pay the interest on the new subscrip- tions, $79,677 46

Now it does seem to the committee upon this very mode of computation the company are transgressing their privileges, in continuing the exercise of the new lottery grant. Here they have, under the new lottery power, nearly as much accumulated from the proceeds of the sale of it as will pay three years interest of the new sub- scription, and yet they persist in their lotteries under this act, although it enjoins "that it shall in no event be lawful to divide any sum arising from said lottery over six per cent. upon the stock of said company, it being the intent and meaning of this act that all such excess shall be reserved to meet any deficiency thereof that may occur at any time in the tolls." Now, if this sur- plus is to be reserved to meet the deficiency in the tolls, why not apply it and so save the necessity of drawing lotteries for three years.

But the proper mode of making the estimate by the company, (taking the old lottery as applicable to the payment of the six per cent. on the new subscription, ) would be as follows:

Balance of old lottery to be raised at the date of the act of eighteen hundred and eleven, $203,750 00

Raised since, up to fourth January, eigh-

teen hundred and thirty-two, 269,210 40

Leaving against the company over drawn of $65,459 40

It is manifest therefore, on the company's own posi- tion (that the proceeds of the sale of the lottery is the moncy they have raised from them, ) they have over- drawn their privilege sixty-five thousand four hundred and fifty-nine dollars and sixty cents, even without em- bracing the tolls, though expressly directed to go in aid of the payment of the interest. But the company as- sume the untenable position that neither the proceeds of the old lottery nor the tolls are applicable to the payment of the six per cent. to new subscribers. If these positions are wrong, the company, on their own mode of computation, have entirely exhausted their lottery privileges; and that they are wrong the commit- tec entertain but little doubt. They think that as to the first, they have clearly established the point, that it is the proceeds of the old lottery, which by the act of eighteen hundred and twenty-one, were to go in aid of the tolls to pay the six per cent. on the new subscrip- tion. The company however, say, that the proceeds of that lottery were pledged by the act of eighteen hun- dred and nineteen, to the payment of six per cent. to the new subscribers, and being given as a bounty, have been legally appropriated by the company to pay the interest on their loans. The power of doing so the committee do not desire to dispute, but they are decidedly of opin- ion, that if the stockholders, instead of applying its proceeds to the payment of the six per cent .. choose to relieve themselves by paying their own debts with it, they have no right to call on the public treasury to in- demnify them for a disability of their own creation.

136

REPORT UPON LOTTERIES.

[MARCH

The old lottery avails were, by the act of eighteen hun- dred and twenty-one, to pay the six per cent., and have been exhausted in such payment, and a surplus from the whole lottery fund ' remains in the hands of the com- pany.

Have the company a right then to go on and draw lot- teries under the continuing power conferred by the act of eighteen hundred and twenty-one. The committee say not, for two reasons: First, the company could only use that power when the lottery proceeds failed to pay the six per cent :-- Second, when the tolls were inade- quate to do so. The first disability does not now exist, for there is now on hand of the lottery proceeds as much as would pay the interest on the six per cent., for more than two years.

The tolls of the company are so far from being inad- equate to the payment of the six per cent. on the new subscription, that even this year, ending first Novem- ber, eighteen hundred and thirty-one, their gross pro- ceeds are now more than double the amount of the six per cent. the first year the canal may be said to be en- tirely complete, and to need no further repairs than those that are ordinary. The tolls of the year ending first Novemher, eighteen hundred and thirty, amount- ed to thirty-five thousand, one hundred and thirty-three dollars and eighty-two cents, and this year to fifty-nine thousand, one hundred and fifty-three dollars, nearly double the amount required to save the state from the liability of her guarantee. And yet the Union Canal company can stand up and allege that they have a right to continue the drawing of extensive lotteries, in the face of these proceedings of the legislature.

But it is alle ged by the company that these tolls are pledged to the loan holders, who have lent money on the faith of this pledge, and that they cannot be called nett proceeds of tolls, and applicable to the six per cent. to the new subscribers whilst they are applied to the payment of the interest on loans of the company. The committee do not undertake to dispute the proprie- ty and power of such application; it is not necessary for them to do so. For if the tolls are pledged to pay the stockholders by the act of eighteen hundred and nineteen, if they belong to them, they may mortgage them as they can: as the company is bound for the pay- ment of the interest to their loan holders they may as well pay it with the tolls as from their pockets. But the committee are decidedly of opinion that they must relinquish the right to call on the guarantee of the state pro tanto. If they take the tolls to pay the interest on the loans, instead of applying them to pay the six per cent. to the new subscribers, as directed by the act of eighteen hundred and twenty-one, they cannot call upon the state to redeem her guarantee, as it is expressly con- fined to the cases in which the tolls are not inadequate to that purpose. The insufficiency of the tolls collect- ed is made a condition precedent to the attaching of the liability of the public treasury. Every year therefore that the nett proceeds of the tolls are competent to the payment of the six per cent., the state is no further bound. It was certainly not contemplated, at the time of the passage of the act of eighteen hundred and twen- ty-one, that the company would be necessitated to bor- row money; at least to any great extent. The report of the commissioners of internal improvement that year, is decidedly of the opinion that the five hundred thousand dollars to be subscribed by subscribers and by the state, would be adequate or nearly so to the construction of the works. As the necessity of borrowing money and appropriating their tolls to the payment of the interest on the debt, was not in the view of the legislature at that time, the guarantee of the state was cheerfully accepted upon the positive condition, that if the tolls "which may be collected shall not yield a sum equal to an annual interest of six per cent." upon four hundred and fifty thousand dollars to be subscribed by new sub- scribers, then the deficiency is to be made up by war- rants drawn by the Governor on the treasury. Certain- ly then whenever the "tolls which may be collected,"

are equal to an interest on the instalments paid up under the new subscription, there is not that state of things to justify a call by the company on the funds of the state. They have only a right to call on the Governor to draw his warrants to supply what may be wanted. If then the tolls are inadequate to such purpose, how can there be a deficiency to justify the call on the treasury. If the stockholders choose to apply the tolls to other purposes, they forego the payment to themselves-can any one insist with the least plausibility that the appropriation of tolls to other purposes by the company herself, lessens their amount or changes the state of things under which the guarantee of the state comes into operation.

The House must feel satisfied therefore, that as long as the tolls of the Union Canal company, which by the last report amounted to fifty-nine thousand one hundred and fifty-three dollars, and will certainly increase from year to year; will cover the twenty-seven thousand dollars, (the six per cent. to the new subscribers) the state has nothing to fear respecting her guarantee.

The committee will leave this point, which they con- ceive to be as plain as any of the others they have en- deavoured to establish, and proceed to show that the company have exhausted their lottery privileges even upon the most extravagant mode of estimating the amount their ingenuity can suggest. Giving the com- pany more than they can ask; that they have two distinct lottery grants, the last of which is alone applicable to the payment of the six per cent. and giving them the right to take away the fund which the state has placed between her and the operation of her pledge, and al- lowing that this right of drawing lotteries is to be prac- tised for the whole period of the twenty-five years, and afterwards to raise the two hundred and three thousand seven hundred and fifty dollars of the old grant; they have even upon all these presumptions "raised by way of lottery," on the principles which the committee hope they have satisfactorily established, more money than they were entitled to raise four times over.

Granting for argument's sake then to the company, that they were entitled by the acts of eighteen hundred and eleven, and eighteen hundred and twenty-one, to raise the balance of the old lottery, which they elaim to do, of two hundred and three thousand seven hundred and fifty dollars; and that they have also a right to raise the interest on the new stock as it was paid in, for the whole twenty-five years, amounting to five hundred seventy- six thousand five hundred and thirty-three dollars; ma- king an aggregate of seven hundred eighty thousand two hundred and eighty-three dollars-yet upon this ex- travagant estimate they have extended their privilege beyond conception.

The following list of schemes in each year, as furnish- ed by the company, in pursuance of a resolution of the House, shows the amount of the lotteries drawn in each year from the passage of the act of eighteen hundred and eleven, till the beginning of the present year:

Year. Amount of Schemes. Year. Amount of Schemes.

1812

$350,000

1822

$178,295

1814

400,000

1823

132,976

1815

400,000

1824

318,300

1817

555,000

1825

1,209,640

1818

528,000

1826

1,127,875

1819

200,000

1827

1,210,172

1820

475,000

1828

1,308,763

1821

160,000

1829

2,705,748

Raised 'till

1830

4,772,882

the act of

1831

5,216,240

1821, $3,068,000

Raised since

the act of

1831

18,180,891

3,068,000

21,248,891

Ten per cent. on the above, is

$2,124,889

1832.]

PROCEEDINGS OF COUNCILS.

137

· It appears from the ahove list of lottery schemes, that they have amounted, from the date of the act of eighteen hundred and cleven, until that of eighteen hundred and twenty-one, to three million sixty-eight thousand dollars, and from the passage of the latter act till the beginning of the present year, to eighteen million one hundred and eightythousand one hundred and ninety-one dollars, making an aggregate of twenty-one million two hundred forty-eight thousand eight hundred and ninety- one dollars; ten per cent. upon which will show that the company has raised by way of lottery, through the medium of their assignees, a " nett profit" of two mil- lion one hundred twenty-four thousand eight hundred and eighty-nine dollars. If we take from this amount raised, the sum of seven hundred eighty thousand two hundred and eighty-three dollars, which they pretend to claim a power to raise, we find they have exceeded their own estimate, by one million three hundred forty- four thousand six hundred and six dollars.

There is one more light in which the committee ask the indulgence of the House to place this subject, and they are done.

The Union Canal company say they have received, on their own mode of estimating the proceeds of the lotteries,

From the act of eighteen hundred and eleven

till that of eighteen hundred and twenty-one, $136,250 And since the latter act to the present year, 269,210

Making an aggregate of 405,460

From which deduct what they were entitled to raise, 340,000

Leaves more than they were entitled to raise under the old act, 65,460

The above sum of sixty-five thousand four hundred and sixty dollars, over what they were entitled to raise bythe act of eighteen hundred and eleven has been raised under the continuing power given by the act of eigh- teen hundred and twenty-one up to this time, when the tolls are more than doubly sufficient to relieve the state from all responsibility.

If this monstrous system, as now pursued, will be permitted to continue-if it must be prosecuted till eighteen hundred and forty-six, the end of the twenty- five years, to the same extent they have been the last year, before that distant day arrives lotteries to the amount of perhaps seventy million of dollars, will have" tarnished the moral purity of Pennsylvania. If we add to this prodigious sum the amount already drawn under the auspicies of the company since the act of eighteen hundred and eleven, we will have an aggregate of at least eighty-eight million one hundred eighty thousand eight hundred and ninety-one dollars.

Your committee submit it to the House, to any human being of the most towering credulity to say if it can be credited for one moment that the legislature could have supposed they were entailing on themselves and their posterity, so galling a burthen without any expectation of redress. But they hope they will be permitted to say that the usurpations of this corporation will stand as a lofty beacon to warn us of the danger of trusting to any system of finance that is based upon an immoral foundation; and they confidently hope that when this blot is wiped away, the legislative power of the state will never again be allured to tarnish her fair fame to protect her treasury; but that that "VIRTUE" which shines conspicuous upon the escutcheon of our com- monwealth, will remain as unsullied as her " LIBERTY and INDEPENDENCE."

From the Philadelphia Gazette. PROCEEDINGS OF COUNCILS.

Thursday, Feb. 23, 1832.

SELECT COUNCIL .- Mr. JonNsox presented pe- titions praying that Schuylkill Fifth street and Lom- VLO. IX. 18

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The Register of Pennsylvania : devoted to the preservation of facts and documents and every other kind of useful information respecting the state of Pennsylvania, Vol. IX, Part 38

Author: Hazard, Samuel, 1784-1870 Publication date: 1828 Publisher: Philadelphia : Printed by W.F. Geddes ; Number of Pages: 440

Author: Hazard, Samuel, 1784-1870
Publication date: 1828
Publisher: Philadelphia : Printed by W.F. Geddes ;
Number of Pages: 440