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It was manifest, too, that the canal had not completely accomplished the objects of its construction, inasmuch as a considerable portion of the western trade continued to seek a market by other routes. It seemed important, therefore, to increase its capacity and thereby reduce the expense of transportation. It was maintained that by the use of boats of one hundred tons, instead of thirty tons burden, the expense of transportation would be reduced fifty per cent. In this view the expediency of the enlargement was incontrovertible, if the expense should not be disproportionate, and the requisite funds could be provided without injustice to other claims upon the public munificence. The act of 1835 directed the enlargement to be undertaken when the canal board should be of opinion that the public interest required the improvement, and its extent was submitted to their discretion. It will not, I hope, be deemed disrespectful to remark, that the first step in this great undertaking, the delegation of the legislative power to a board not directly responsible to the people, was a departure from the spirit of the constitution, so unfortunate in its consequences, that it should remain a warning to all future legislatures. The expense of the enlargement is now estimated at $23,402,863; yet the law by which it was authorized passed without any estimate having been submitted to the legislature, and with scarcely any discussion. If completed on the present scale, the canal will surpass in magnitude every other national work of internal improvement; yet all the responsibilities in reference to the dimensions and cost of the enlargement seem to have been cast off as unworthy the consideration of the legislature. The same act provided that after the year 1837 the expenditures upon that work should be so limited as to leave, without reference to auction and salt duties, an annual income from the canal revenues of at least three hundred thousand dollars, over and above all ordinary repairs and expenditures on the Erie and Champlain canals.

In 1836, for the first time, an estimate of the expense of the enlargement was submitted to the legislature by the canal board, by which it was calculated at $12,416,150 17. The canal commissioners had previously estimated the expense of the Genesee Valley canal at $1,890,614 12, and that of the Black River canal at $1,068,437 20. With this information before them, the legislature of 1836 increased the annual income to be applied to the

uses of government to four hundred thousand dollars. They also directed the construction of the Genesee Valley and Black River canals, and provided that their deficiencies of revenue should be paid out of the treasury, and authorized a loan of the credit of the state to the New York and Erie railroad company to the amount of three millions of dollars.

The subject was again agitated in 1837. The canal board reported that they did not believe the enlargement could be completed at the cost before estimated, for the reason that the plans of some of the mechanical work had been changed, and that parts of the line had been, and others probably would be, varied. They stated that the cost of construction was greater than when the estimates were made; that they did not believe, if prices were the same as at the time the estimates were made, that the cost of the work would exceed the estimates, except the increase occasioned by changes of the plans or of the line. They added that they could not form an opinion of the additional cost of the work beyond the estimates, but they did not believe it would amount to a large sum, exclusive of damages; that the amount would greatly depend upon the prices of labor and provisions, and that there had been no estimate of damages to individuals. They also gave it as their opinion that it was for the interest of the state to proceed with the enlargement so that it might be completed sooner than was contemplated by the act of 1835. It is evident that this report did not shake the confidence of the legislature in the ability of the state to complete the public works, because the house of assembly rejected, by an almost unanimous vote, a resolution contemplating the repeal of the laws directing the construction of the Genesee Valley and Black River canals.

In 1838, the late executive recommended a more speedy enlargement of the Erie canal. It was obvious, from the condition of the finances of state at that time, that this could not be effected without contracting a debt. The assembly responded to this recommendation by passing a bill directing the commissioners of the canal fund to borrow on the credit of the state one million of dollars for that object. The senate amended the bill so as to authorize the borrowing of four millions of dollars instead of one million. In this shape the bill became a law. This law required the canal commissioners to put under contract, with as little

delay as possible, such portions of the work as were mentioned in their report of that year, and such other portions as, in the opinion of the canal board, would best secure the completion of the entire enlargement with double locks on the whole line.

It was reserved for the assembly of 1839 to discover that the estimates which had been the basis of such important legislative action during the preceding three years had been widely erroneous. The canal commissioners were required to review their estimates of the unfinished works. They reported that the expense would be as follows:

Of the Erie Canal enlargement.

Of the Black River canal

Of the Genesee Valley canal.

Making and aggregate of

$23,402,863 02

2,141,601 63
4,900,122 79

$30,444,587 44

instead of $15,375,201 49, the original estimated cost of those works.

The practice has recently obtained to some extent of testing the expediency of any proposed improvement by adding to its estimated cost the real and nominal indebtedness of the state, together with the sums for which the credit of the state is pledged or in any event authorized to be pledged, and of assuming that the aggregate will be the debt of the state if the proposed improvement should be adopted. This test has also been applied to the undertakings in which the state has already engaged with the following result:

The existing canal debt for works completed (exclusive of the Erie and Champlain canal debt, for the payment of which a fund has accumulated). $3,476,839 66 The debt of the general fund..

The aggregate sum for which the credit of the state has been heretofore pledged and directed to be pledged in aid of canals and railroads

2,472,217 92

30,444,587 44

4,610,000 00

Estimated cost of the enlargement of the Erie canal, and the construction of the Genesee Valley and Black River canals.......

Making an aggregate of.....

.$41,003,645 02

The confidence of the people in the policy of internal improvement, has sustained a severe shock from the discovery that the state was committed by the legislature to an expenditure of thirty millions of dollars, for the completion of three works alone, upon estimates of the same works rising only to about fifteen millions; and calculations exaggerating the liabilities of the state to forty millions of dollars have not been unsuccessful in adding imaginary

alarm to the consequences of past errors, in themselves sufficiently embarrassing.*

The only act which was passed at the session of 1839, appropriating money for purposes of internal improvement, was one directing the sum of seventy-five thousand dollars to be expended in improving the navigation of the Oneida river. With the exception of an act authorizing a variation in the plan of constructing the locks on the Genesee Valley canal, by which a saving of about five hundred thousand dollars will be made in the construction of that work, and several acts directing surveys in various parts of the state, there was no other legislation during that session upon the subject of internal improvement. Aside from the duties prescribed by these acts, all that the agents of the state have been called to do in relation to internal improvements, has been to comply with legislative directions, given previously to the session of 1839, and to provide, in pursuance of pre-existing laws and pre-existing contracts, for the expenses incurred in the prosecution of the public works by the canal commissioners.

Such are the circumstances under which the public interests have been confided to our care. The discovery of the errors of our predecessors, has happened at a time when confidence is impaired, property depreciated, the sale of real estate arrested, and the currency disordered. At such a period the financial difficulties of the state are liable to be exaggerated, its resources undervalued, and its liabilities magnified.

In ascertaining the true financial condition of the state, there may be deducted from the debt of the general fund, the sum of $1,080,000 borrowed from the canal fund. Both of these funds being the property of the state, this is a loan made by the state to itself. We may also deduct from the liabilities of the state the pledges of its credit to railroad and canal companies, these pledges having been made upon conditions, as is understood, which afford an ultimate indemnity to the state. Regarding the Erie and Champlain canal debt as extinguished by the means provided for its redemption, the actual debt of the state, as it stood at the close of the last fiscal year, would then be as follows:

It will be remembered that, among the political charges against the administration of Governor Seward at this time, was, that he was creating a public debt of forty mil

lions of dollars.-Ed.

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Aggregate state debt......

$1,392,217 92 3,476,839 66

$2,500,000 00

591,446 10 2,000,000 00

25,000 00

5,116,446 10

$9,985,503 68

But there remains on hand a balance of funds borrowed for the

construction of the Genesee Valley canal.....

For Oneida river improvement...

$939,604 48
25,000 00

State debt over funds in hand......

964,604 48 $9,020,899 20

The amount required to complete the enlargement, as ascertained by deducting the sum already expended, and the sum borrowed and remaining in hand at the close of the last fiscal year from the last estimate made by the canal commissioners, would be......

To complete the Genesee Valley canal...
To complete the Black River canal..

Aggregate required to complete the canals, according to the last
estimates..

The interest on this sum, at 5 per cent., would be..

$19,292,886 93 2,900,122 79 1,550,155 53

$23,743,165 25 $1,187,158 26

The surplus revenue from the canals during the past year was $1,057,802 74. The interest, at five per cent., on the sum estimated as necessary to complete the canals, to wit, on $23,743,165 25, would be $1,187,158 26, exceeding such surplus revenue by the sum of $129,355 52. The surplus revenue would, with the ordinary increase, furnish sufficient funds for completing the unfinished works, if applied exclusively to that purpose. But, by the laws of 1835 and 1836, an income of $400,000 was directed to be retained annually from this surplus revenue, and the sum of $126,250, which is required to pay the interest on loans which had been contracted for the enlargement of the Erie canal and the improvement of the Oneida river, at the close of the last fiscal year, is chargeable upon the canal tolls. Deducting these items, there is left a surplus of $531,552 74, applicable to purposes of internal improvement, which leaves a deficiency of $655,605 52 in the amount necessary to meet the interest on the sum required to complete the works now in progress according to the corrected estimates. Stating the result in another form, the net annual revenue of the state, applicable to purposes of internal improvement, without taking into consideration the anticipated increase of canal tolls, would sustain a debt of only

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