224 .1. L. Bishop — The State Works of Pennsylvania. 



public works were being constructed; luid that the uccomi)unying 

 bloated system of credil;s had considerable influence in bringing 

 about the subsequent general collapse affecting alike govejnments 

 and private concerns. Moreover, the disturbed condition of the 

 money market in Great Britain,* Avhei-e large blocks of the state 

 stocks Avere held, helped to make the situation in America all the 

 more strained. jSTot to underestimate the influence of any or all 

 of the foregoing and other factors, it seems fair to say that Penn- 

 sylvania's financial embarrassment at this time was, at least to a 

 large extent, the resiilt of three circumstances all of which w^ere 

 more or less related to one another. These were, — first, too exten- 

 sive a system of internal improvements; second, alliance with an 

 unsound banking system, especially with the United States Bank of 

 Pennsylvania ; third, unsound financial legislation. 



The way in which the wholesale building of public w^orks con- 

 tributed to state bankruptcy is apparent. The more works under- 

 taken, the faster the loans had to be floated, with the result that the 

 public debt soon became a serious burden, and the semi-annual 

 interest payment constituted an enormous drain upon the treasury. 

 Had it been possible to limit the improvenient system to the main 

 line and one or t^vo of the more important branches, it seems 

 highly probable that the interest payments, during the years of 

 financial embarrassment, could have been met. On the other hand, 

 had all or even the larger part of the various divisions been as 

 productive as the works in the original system were expected to be, 

 the more widely the system was extended, the greater would have 

 been the income therefrom. But, as has alread}^ been indicated, 

 even the divisions that earned the largest revenues fell far short 

 of the expectations of the friends of the public works. Conse- 

 quently, during the years of financial embarrassment, when the great 

 problem was to secure sufficient funds to pay the enormous interest 

 on the loans contracted for constructional purposes, the receipts 

 from canal tolls helped but little to ward off bankruptcy. 



With regard to the part played by the banks in causing state 

 insolvency, it seems fair to say that it was not inconsiderable. They 

 were intimately connected with the whole subject of finance, and 

 their influence in bringing about an inflated system of credits was 



* See Dewey, Financial History U. S., p. 230; and Governor Porter'3 

 message in Exec. Docs., 1844, p. 4. 



