was one hundred and four thousand three hundred and ninety dollars and seventy-five cents, which somewhat exceeds the sum annually distributed to the common schools.

The capital of the Literature fund is two hundred and sixty-two thousand five hundred and seventy-three dollars and ten cents, and it produced last year a revenue of fifteen thousand five hundred and ten dollars and eight cents. Of this sum twelve thousand dollars is to be distributed by the Regents of the University to the academies subject to their visitation, and appropriated exclusively to paying the salaries of tutors. The remainder is put at the disposal of the Regents, for the purpose of instructing teachers of common schools.

The income from all the canals and the Canal Fund for the last fiscal year, was one million eight hundred and thirteen thousand four hundred and eighteen dollars and seventy-three cents. The whole canal debt on the 30th of September last, was seven millions and thirty-four thousand nine hundred and ninety-nine dollars and sixty-eight cents, of which four millions nine hundred and thirty four thousand six hundred and fifty-two dollars and sixty-eight cents is the unpaid balance of the debt created for the construction of the Erie and Champlain canals. For the payment of this balance, funds had accumulated on the 30th September last to the amount of three millions and two thousand five hundred and seventy-six dollars and thirty cents.

The Erie and Champlain canal fund has yielded a revenue dur ing the last fiscal year, beyond all the charges upon it, of one million and thirty-five thousand six hundred and sixty-four dollars and ninety-two cents: the tolls alone exceeded these charges five hundred and eighty-seven thousand eight hundred and fifty dollars and sixty-one cents.

The Bank fund is two hundred and eighty-nine thousand and forty-six dollars and forty-three cents. It has increased during the last year more than one hundred thousand dollars. The extent to which the banks are required to contribute to this fund is half of one per cent on their respective capitals for six years only, unless some of it should be needed for the purposes for which it was created—an event scarcely to be apprehended considering the present stability of these institutions, and the almost certain assurance the public has for their prudent management, by reason of the wise supervision to which they are subjected.

The General Fund is now reduced to one hundred and ninety thousand five hundred and ninety-six dollars and sixty-two cents. It was not, I believe, originally intended that the capital of this fund should be used to furnish the means of supporting the government. The income from it was never adequate to that object, though it might have been so, but for the encroachments made upon it to establish useful institutions, and to promote the improvement of the State. More than seven millions of dollars of its capital, and of income from sources which belonged to it, have been taken for the Canal Fund, and the Literature and Common School Funds.

From the origin of our government down to a late period, taxes were imposed whenever the condition of the treasury required it, to raise the means of defraying our ordinary expenses. Taxation was discontinued in 1826, not because the income of the General Fund (the capital of which was then only two millions thirty-seven thousand nine hundred and thirty-six dollars and thirty-five cents) was supposed to be sufficient to meet the charges on the treasury; but with the deliberate intention of relicving the people from further burdens, until the capital of that fund should be exhausted. The policy of this course was questionable, and was decidedly opposed by the officer who then had the charge of the finances of the State. What was then foreseen by all as inevitable-the exhaustion of this fund--has happened; but not so soon as was anticipated. Without being aided by the avails of any general tax upon the property of our citizens, it has, for the last eight years, supplied the principal means not only of supporting the government, but of paying the numerous and liberal appropriations made within that period for other objects. These appropriations have absorbed a large proportion of it. Since the discontinuance of the general tax, more than five hundred and eighty thousand dollars have been paid for deficiencies in the revenues of lateral canals; for Indian annuities; for draining the Cayuga marshes, and for the support of the deaf and dumb; and three hundred and twenty thousand and three dollars and seventy-four cents, for the State prisons, which have now ceased to be a charge upon the treasury. The sums for these five objects alone, together with two hundred and eighty-three thousand six hundred and sixteen dollars and sixteen cents of the capital of the General Fund, transferred to the Literature and Common School Funds in 1827, amount to nearly three-fifths as much [Senate No. 1.]

2

as the entire General Fund at the time the State tax was discontinued.

In this way the treasury has at length become exhausted, and the public exigencies will admit of no longer delay in providing funds to defray the ordinary expenses of the government, and to satisfy appropriations already made, and such as may be made

hereafter.

I do not indulge the expectation that so unwise a course will be taken as to supply the means required for these purposes, by loans, without creating some special fund to pay the debt that will be thus contracted. Such a fund can only be raised by taxation, or by providing at this time for the restoration (when the existing pledge will permit it to be done) of the whole or some part of the monies which have been diverted from the General Fund to constitute the Canal Fund.

These sources have contributed to the Canal Fund, five millions of dollars; and you ought now to settle the question, whether any and what part shall be returned to the treasury. If it shall be determined that none of it shall be refunded, then, in my opinion, the levying of a general tax is inevitable, and should not be delayed.

Proceedings were commenced by the last Legislature, to release the auction and salt duties from the constitutional pledge by which they are appropriated to the Canal Fund, and to restore them to the General Fund. As this can be effected only by an amendment of the Constitution, your concurrence, as well as that of a majority of the electors, in the measure, will be necessary to carry it into effect. If it should be adopted, and the revenue from these sources be as abundant as it has been hitherto, it will be nearly or quite sufficient to defray the ordinary expenses of the government: But two years or more must elapse before it can be made available as the means of replenishing the treasury.

The operations of the canals for the last year present most gratifying results: The business done on them has exceeded in amount that of any previous season. Notwithstanding the rate of tolls was reduced in January last, twenty-five per cent on merchandize; ten per cent on wheat, flour, beef, pork, butter and cheese, and considerably on many other articles, the income of the Erie and Champlain canals, from this source alone, during the last fiscal

year which ended on the thirtieth September, was one million three hundred and thirteen thousand one hundred and fifty-five dollars and eighty-four cents. The tolls of the last fiscal year are only eleven thousand two hundred and sixty-five dollars and seventy-nine cents less than those of the previous year; the business on the Erie and Champlain canals has, therefore, increased nearly in the ratio of the reduction of the tolls.

Provision was made at the last session of the Legislature for doubling the locks on the Erie canal, between Albany and Syracuse. I regret that this measure was not accompanied with another, almost equally necessary, providing for the enlargement of the capacity of the canal: For I deem it important that the new locks should be made with reference to this latter improvement. As the Commissioners have not yet begun to construct them, it is worthy of your consideration whether you should not now authorize this enlargement, and direct the new locks to be made in conformity thereto.

On each of the other canals, the tolls of the last year, although the rates were reduced as above stated, have exceeded those of the preceding year; and the business on them has therefore considerably increased. Although the tolls collected on these minor canals have increased, they have been insufficient to pay the interest on the debt created for their construction, and to defray the expenses for repairs. An advance from the treasury, for the year ending thirtieth September, has been required, of twelve thousand six hundred and forty-nine dollars and eighty-three cents, for the Oswego canal; three thousand seven hundred and sixty-one dollars and seventy-six cents, for the Cayuga and Seneca canal; forty thousand seven hundred and twenty-three dollars and fifty-five cents, for the Chemung canal; and twelve thousand eight hundred and twenty-nine dollars and eighty-two cents, for the Crooked lake canal. It is proper to observe that these canals receive no credit on account of the increase of business on the Erie canal, to which they in some measure contribute.

The whole of the Chenango canal, together with all the works connected with it, except two reservoirs, (which may not be necessary,) is under contract, and is to be completed before the first of November, 1836. The circumstances of the times have been very favorable in regard to the expense of this work, and it is be

fieved it will be completed for a sum not much exceeding one million seven hundred thousand dollars.

Your deliberations on the subject of internal improvements will be regarded by the whole State with interest, and by many sections of it with intense anxiety. It is important to the general welfare, that our system should be carried on progressively in the manner best calculated to diffuse its benefits as generally and equally as practicable. With a view to obtain the best results in this respect, your particular attention should be turned towards settling a system of finance in relation to this branch of public expenditure. Our own experience on the subject of internal improvements, as well as that of other States, forbids the hope that any public works hereafter to be constructed by the State, will yield an income, for a considerable time after they are completed, sufficient to keep them in repair and pay the interest on the debt created for their construction. The suggestion now made in relation to a system of finance is not new. Every State which has embarked in undertakings involving large expenditures has, at the same time it authorized them, provided the means for paying the interest on the public debt to be thereby created. Our treasury was deprived of the revenue from some of its most prolific sources, for the purpose of constituting the Canal Fund, by the very act which provided for the construction of our first public works. The States of Pennsylvania and Ohio laid a general tax on the people for the same purpose, when they commenced their system of internal improvements. Such a measure was considered necessary, by us and by them, to sustain the public credit; and public credit was rightfully regarded as necessary to insure success to these undertakings. We have omitted this important part of the system in regard to our lateral canals, and the consequence has been, that the fund for the general support of the government, has had to sustain them for the last five years, and has advanced for that purpose, two hundred and forty-nine thousand, six hundred and forty-six dollars and twenty-nine cents; of which the sum of ninety-three thousand, eight hundred and eighty-one dollars and sixteen cents was paid during the last year.

The burden of supplying the deficiency in the revenues of these canals, which is estimated by the Commissioners of the Canal Fund at sixty thousand two hundred and thirty dollars and fifty-three cents for this year, (and it will not probably be much less for se