208 A. L. Bishop — The State Worhs of Pennsylvania. 



from Middleto-\vn to Pittsburg as originally designed was, as has 

 been shown, $3,000,000. Moreover, the time to construct the works 

 was put down as six years. Hence it is clear that the provisions 

 made, at this time, for financing the Pennsylvania canal were 

 entirely inadequate and unsafe, even though the original plan of 

 construction had been adhered to, and the estimated cost had been 

 correct. 



Since j^cav York's canal had been completed before Pennsyl- 

 vania's works were commenced, and since both states depended upon 

 loans to pay the cost of construction, the question, naturally arises 

 at this point as to whether the latter state modelled its system for 

 financing the public works iipon that of the former. In order to 

 answer this question it may be well before entering upon a con- 

 sideration of the actual working out of Pennsylvania's financial 

 arrangements to compare the "internal improvement fund" with 

 the "canal fund" of New York. 



In 1817, when the construction of the Erie and Champlain canals 

 was about to be commenced, a sound policy for financing the works 

 was adopted.* It appears that no reliance whatever was placed 

 upon prospective tolls. But a fund was constituted which, without 

 possibility of failure, should meet the interest on the loans con- 

 tracted to construct the public works. To this end, the taxes on 

 steamboats, on salt, on goods sold at auction, and some other minor 

 dues were diverted from the "general fund" to a special "canal 

 fund." The latter was placed under the charge of the canal com- 

 missioners, who were expressly required to limit their loans so that 

 the total annual interest should, in no case, exceed the income of that 

 fund. Again, after the canals were constructed, and when tolls were 

 coming in freely, the latter^ along with the salt and auction duties, 

 were put into a sinking fund, for the extinguishing of the debt of 

 $7,737,771 incurred in building the canals. Moreover, it was 

 definitely provided that no use should be made of these revenues for 

 any other purpose whatsoever. In making these arrangements it 

 was generally understood that the object was to discharge the debt, 

 to restore to. the "general fund" the moneys diverted from it, and 

 to remove forever all danger of a resort to taxation. Thus it 



* The facts given here regarding the provisions made for finajicing the 

 Erie and Champlain canals are found in Hunt's Merchants' Magazine, Vol. 

 XVIII, 1848, p. 245, and in a Report of the Ways and Means Committee of 

 the Assembly of New York, March, 1838. 



