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the banks. The immediate issue of more than a million sterling of bonds of the Bank of the United States of Pennsylvania, designed to serve as remittances, had no perceptible effect. There was very little real exchange to meet the great and pressing want. Exchange based on credit had ceased to exist ; nothing remained but to send specie, and of course it could not be obtained in the great sums which were needed, without causing all the banks sooner or later to fail.

But it should be remembered, that this suspension took place, not in a state of exhaustion, but after

years

of unexampled gains, and after the country had made real and great advances in all its permanent sources of wealth. The fearful rate at which we had been moving rendered some check inevitable; but we had been all the time moving onward, and mainly in the right direction. The check was sudden and violent. It stopped us short, and we stood still. For some months, all the energies of the country were employed in liquidating and paying debts. It is speaking within bounds, to say, that, within a few months, engagements amounting to many hundreds of millions were paid off. Imports almost ceased, our crops went to market, specie flowed in, and, at the end of the year 1837, our foreign commercial debt was nearly paid.

The country was then in a condition to resume the payment of specie through its banks. But the United States Bank of Pennsylvania, and some other great institutions, were not ready. During the years of high prices, they had lent their capital on paper which rested only on the exaggerated and unreal values of that period ; and an immediate return to specie payments would have shown, that their capital had been very seriously impaired. The United States Bank of Pennsylvania, therefore, at first opposed the resumption of specie payments; and subsequently, when compelled to come into the arrangement, it seems to have adopted the bold measure of attempting to bring back the unnatural state of things which had existed before May, 1837 ; hoping, that, by means of high prices and unlimited credit, it might be able gradually to withdraw itself from its dangerous position. It entered largely into the purchase of State stocks, speculations in cotton, and other transactions. It was impossible, in the nature of things, that this scheme should succeed ; but it had some effect. Many began to think that the reverses of 1837 were small affairs, and that they were already overcome ; that the disease was cured, and the patient restored to a sound state and ready for action. Our foreign commercial debt had been paid with so much promptness, that European capitalists formed a very high opinion both of our resources and our honor, and they took the stocks of the States as freely as if they had been gold and silver.

But the day of calamity was again at hand. The Bank of England again found itself in a critical condition. Money became scarce, beyond all precedent, in England ; prices fell ; stocks were unsalable ; the Bank of the United States of Pennsylvania again stopped payment, and its example was followed by every bank south of Philadelphia. Men's eyes were at last opened. They saw, that the country had not recovered from the effects of the years of speculation, and that the attempts to return to a false position had but increased their difficulties. A panic succeeded. All property seemed for a time to have lost its value.

These were necessary results of the former distempered state of affairs, and this depression was the only method by which a sound condition of things could be produced. But it was a severe operation.

In some of the new States, it was difficult even for the wealthy to obtain money for the daily uses of life. We have heard of farmers, owning large and well stocked farms, who could hardly get money enough to pay the postage on a letter. They had scarcely any currency, and most of that which they had was bad. In the commercial States, matters were but little better. Failures were almost innumerable. Trade had fallen off, and, when prosecuted, was

, hazardous. A deep gloom settled upon men's minds. Governments felt it as much as individuals. Their ordinary resources were diminished. Their means of obtaining extraordinary supplies were lessened in proportion to the general distress. The physical means of making payment of their debts were wanting in some States, for there was no money to be had. The people were amazed at the extent of their own disasters, and afraid to act in any way, lest they should run into new mistakes. In was in such a posture of affairs, that some of the States, to which we shall more particularly refer, VOL. LVIII. No. 122.

16

refused, and others onitted, to provide for the interest which had become payable on their debts.

The first of these cases which we shall notice is that of Pennsylvania. On the first of August, 1842, the interest on its funded debt became due and was not paid. It having been foreseen, that there would be no money in the treasury with which to meet the dividend, amounting to eight hundred and seventy-one thousand dollars, an act was passed by the legislature, directing the treasurer to borrow the sum necessary for its payment, and, in the event of his being unable to obtain it on the terms proposed, authorizing the issue of certificates, to the persons entitled to dividends of interest, for the sums due to them, payable in August, 1843, with interest at the rate of six

per

cent. A law was subsequently passed, authorizing the issue of certificates in payment of the two succeeding dividends, bearing interest at the rate of six per cent. per annum, and redeemable in August, 1846. These certificates, with the interest which has accrued upon them, are yet unpaid.

The whole amount of the funded debt of this State on the first of January, 1843, was $ 37,937,788.24, payable at different periods, and in different sums, the last of which will fall due in the year 1870.* The internal improvements, for the construction of which the great bulk of the debt is due, consist of seven hundred and ninety-three miles of rail-ways and canals which are completed, and one hundred and forty miles of canals in progress and nearly completed in January last. The principal work, or rather chain of works, is that between Philadelphia and Pittsburg, extending nearly the whole length of the State, a distance of three hundred and ninetyfive miles, and connecting the Atlantic with the Ohio River and the great Western waters.

* This debt was contracted for the following purposes : For canals and rail-ways,

$ 30,533,629 15 To pay interest on the public debt,

4,410,135.03 For the use of the treasury,

1,571,689.00 Turnpike, State roads, &c.,

930,000.00 Union Canal,

200,000.00 Eastern Penitentiary,

120,000.00 Franklin Rail-road,

100,000.00 Pennsylvania and Ohio Canal,

50,000,00 Insane Asylum,

22,335:06 To this may now be added the amount of cer. 37,937,788-24

tificates authorized to be issued in payment of the last two semi-annual dividends of interest, amounting to

1,787,454:89 Making a total of

$ 39,725,243:13

These are the objects on which far the greatest part of the money borrowed by the State has been expended. It is manifest, that such works must be highly important and useful to Pennsylvania, independently of the revenues which they may yield. From various causes, which our limits do not permit us to notice, these revenues have thus far disappointed the expectations of the people. But the Governor presented to the legislature, in January last, a very encouraging account of the income from the works during the year then just elapsed, and facts may be cited which go far to prove, that the profit which the State will hereafter derive from them must be very great.

Pennsylvania contains 1,724,000 free people, inhabiting a territory of 47,000 square miles. The soil is generally fertile, and, being under good cultivation, the amount of its agricultural products is very great.

Their annual value was estimated in 1842 to be $ 126,620,617. The manufactures during the same period, including iron, were estimated at upwards of $ 64,000,000. The coal mined in the State during the same time was worth about $ 9,000,000. It appears, then, that the annual products of the State amount to the enormous value of $ 200,000,000. The annual charge upon the State for the interest upon its debts is, in round numbers, $ 2,000,000. Suppose the public works were to yield no revenue at all, and the whole of this charge were to fall on the people in a direct tax; it is only one per cent. on their annual products. A capitation tax of one dollar a head would nearly pay it. Of course, no burden of debt can be pronounced heavy or light except by comparing it with the resources and means of the debtor, and such a comparison will show, that Pennsylvania is not heavily burdened. Her vast and easily wrought mines of the best kinds of coal, lying side by side with inexhaustible treasuries of the richest iron ore, her abundant supply of water-power, her fertile soil, temperate climate, and industrious and frugal population, are resources so immense, that even her great debt appears but a light incumbrance. There cannot be the smallest doubt, that she is able, without the least embarrassment, to fulfil all her engagements. It is a lamentable fact, that she has not done so ; but there has been a concurrence of causes to produce this result, most of which have no connexion with the honesty of her people. We deny, that any man has the right to say, that Pennsylvania has acted fraudulently. Mistakes in judgment have been committed, and we are sorry to add, that there has been some remissness of conduct. There has, also, been clearly shown a disposition to do right. The measures taken by the legislature to raise the necessary revenue, under the peculiar circumstances of the times, have proved insufficient ; but they were adopted for that purpose, and were such as not fairly to be open to the charge of being mere pretences. Besides raising more than $ 300,000 for the support of the schools, the ordinary expenses of the government are fully provided for by taxes of some years' standing. In addition to these, which are indirect taxes, the legislature voted a direct tax of one mill upon every dollar of taxable property in the State, and by a law passed in 1842, which was designed to go into effect in 1843, this tax was doubled. The produce of the first-mentioned tax of one mill was about half a million of dollars, and if another half million were raised by the law last mentioned, as the legislature designed to do, the sum, together with the revenue actually realized from the public works, would pay about nine tenths of the interest on the funded debt. But there was some ambiguity in the law, and in some counties advantage was taken of the doubt thus created to avoid payment of the tax. This is one of the embarrassments in the details of a law which often occur in practice ; but it will undoubtedly be remedied by further legislation. The State has also had a large unfunded debt, due chiefly to contractors on the public works ; and to the payment of this sum the revenues of the State have been applied. We understand, that this unfunded debt is now paid, and that, for the future, the revenues from direct taxation and the public works will be applicable to the payment of the interest on the State stock. We have already said, that they will be sufficient to pay about nine tenths of it, and, if the income from the public works should not increase, it will only be needful to provide for the arrears of interest since August, 1842, and for the remaining tenth part of the interest hereafter to accrue. Those who know Pennsylvania entertain no great doubt respecting her future

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