FINANCE. At the close of the War the State, by the sale of public lands, formed a general fund, the revenues of which were to de fray the expenses of government. and for some time this was actually accomplished. Another fund was established for school purposes. In 18'14 the State even paid out of this fund the direct tax levied by the National Government. A State tax became necessary after that. but was dis continued in 1826. In 1817 the State entered upon the system of public improvements, mainly canal construction, and a public debt of more than $7,000,000 was created for that purpose. At the same time a sinking fund was organized, and the tolls of the canals. as well as the salt duties, were assigned to it so as to prevent financial difficulties. After the construction of the main Erie Canal, other lateral canals were undertaken, which increased the public debt. In 1827 the State entered upon a new policy of lending its credit to private companies for public improvements, and $5,228,700 was loaned to tell companies. chiefly railroads. Some of them failed, the most important one being the Eric Railroad (in 1842). Their indebtedness ($3,005, 000) became a burden upon the State fund. The total debt then amounted to more than $20,000, 000, and the State was threatened with in solvency. A new course was therefore adopted in 1842. All expenditures upon public works were stopped, outstanding debts funded, and a tax imposed to meet the expenses of government and the payment of interest. The new Constitu tion of 1846 provided for a special canal sinking fund and a general sinking fund, and prohibited the creation of a new indebtedness except for war purposes, and even then only after popular sanction by a referendum. This last provision
has been preserved in the present Constitution. Under these strict regulations the bounty State debt of $30,000,000 was created in 1865 to meet the expenses of the Civil War, and at that time the State debt reached its maximum of $53,000, 1101). After that the debt was rapidly reduced by means of the sinking fund. In 1870 it was only $32,400,000; in 1880, $8.9SS.000. The year 1893 saw the total extinction of the debt.
But a public debt was again created toward the year 1900 for purposes of canal improvement. After 1842 the main source of the State income was a direct tax upon all assessable property. Between 1890 and 1000 other sources, such as licenses, fees from foreign corporations, etc., became more important, and at the end of the nineteenth century several energetic efforts were made to separate the SOUrc•Cs of State and local New taxes were laid upon banks. trust eompanies, public franchises of corporations. Further efforts in the same direction were made in 1902. On 'January 1, 1903, the debt of the State amounted to $10,000,000. The aggregate receipts Of the 1.4m funds for which separate accounts :ire kept were $27,049,558, or, subtract ing transfers from one fund to the other, $24,042, -h;2. The main sources of income were a State tax for general and for school purposes. 29 per vent.; inheritance tax, 14 per cent.; excise tax, 171(2 per cent.; and corporation tax. per cent. The expenditures were $26,609,055, or, ex cluding transfers. $23.601,959. leaving a surplus of $440,503. Balance in treasury (1903), $6,092,599.