100 The Financial History of Connecticut. 



was the largest source of revenue. The income from the permanent 

 fund (which after 1833 consisted entirely of bank stock) remained 

 the third in importance. Until March 31, 1830, the revenue from 

 duties and licenses continued to be the fourth in amount, but it 

 was surpassed the next year by the amount paid into the state 

 treasury from the surplus earnings of the state prison. After this 

 date the revenue received by the state from duties and licenses 

 never regained its original importance. In 1837, the state . received 

 its quota of the United States surplus funds and distributed it among 

 the towns to be held as a permanent fund. This was called the 

 "Town Deposit Fund" and one-half of the income (later the entire 

 income) was to be appropriated to the support of schools.^ A new 

 form of taxation (used before in the case of the Phoenix Bank in 

 1814) appears during this period in the bank bonus. This was in 

 the nature of a franchise tax, as it was a payment which the banking 

 corporation had to make in order to receive its charter. Although 

 during this period very little money came into the state treasury 

 from this source, the legislature availed itself of this means to make 

 grants to various undertakings which it wished to encourage. 



3. Financial Prosperity. 

 From one point of view this period was an exceedingly prosperous 

 one for the state. It was not burdened with a public debt. It 

 had a permanent fund of about four hundred thousand dollars 

 which for the last half of the period yielded a large annual return. 

 The principal and interest of its school fund greatly increased. Fi- 

 nancially, the state was in a sound and prosperous condition. When 

 a man prospers, one of two thing soccurs ; he either raises his stand- 

 ard of living or he becomes miserly. The same is true of political 

 bodies. If they are financially strong, they should make many 

 improvements and extend their activities. Otherwise, they will 

 tend to be satisfied with what they have, will refuse to tax them- 

 selves, and thus progress and development wiU be slow. A stud}- 

 of this period shows that the latter statement well describes the 

 condition of Connecticut at this time. Instead of devoting the 

 income of the accumulated funds to the betterment of the schools 

 and to desirable public improvements, the state used the income 

 of these funds merely to reduce the taxes. It is questionable, there- 

 fore, whether these permanent funds really benefited, or injured 

 the state at this time. 



1 Cf. p. 77. 



