honor of the country. The fortunate conclusion of the affair restored the public mind to tranquillity, and strengthened the administration of the state in the esteem of the people.*

CHAPTER XI.

GOVERNOR, CONTINUED CANALS ENLARGEMENT FINANCIAL CRISIS - PANIC- SUSPENSION OF PUBLIC WORKS

RAILROADS.

THE Erie and Champlain canals were completed in 1825. This great enterprise of internal improvements had been brought to a prosperous completion by De Witt Clinton, against the strenuous opposition of the Albany regency. But even before these works were finished, it was seen that they could not attain the objects of their construction without the addition of lateral canals, connecting with the Susquehanna and other rivers on the south, and with Lake Ontario on the north. The Erie canal was but forty feet wide,

and four feet deep. It was soon evident, that, instead of a canal of such limited capacity, a ship-canal was necessary to unite the navigation of the lakes with that of Hudson river. As early as 1835, it was found necessary to replace the locks and other structures of the Erie canal. At the same time, the state debt incurred in its construction, and that of the Champlain canal, had been virtually paid. Under these favorable circumstances, the legislature voted the enlargement of the Erie canal, on a scale to be fixed by the canal board. The scale adopted was seventy feet wide and seven feet deep, with double instead of single locks, as before used. But the act limited the expenditures for the enlargement to the annual surplus of the tolls after deducting a large amount for the general purposes of the state treasury.

* See Correspondence, Vol. II., pp. 547–586.

In 1836, the construction of the Genesee Valley and the Black River canals was decided on by the legislature. These works were intended as branches of the system of internal improvements which had previously been completed, including the Oswego, Seneca, and Cayuga and Crooked Lake and Chenango canals. A loan of three millions of dollars had been made, during the same year, to the New York and Erie Railroad Company, for the aid of their enterprise. The next year saw the progress of all these works, while the canal commissioners recommended a more vigorous prosecution of the enlargement of the Erie canal. The recommendation was urgently renewed by Governor Marcy and the canal commissioners in 1838. But the state was then suffering from a commercial revulsion. The comptroller, Mr. Flagg, indirectly opposed the recommendations, in a report insisting on the necessity of taxation for the support of the treasury. This report was answered by Hon. Samuel B. Ruggles, chairman of the committee of ways and means in the assembly, who showed that the increase of tolls on the canals would sustain a loan of thirty millions of dollars, reimbursing it in twenty years, or of forty millions of dollars, reimbursing it in twenty-eight years. In accordance with this estimate, the legislature, in 1838, made an appropriation of four millions of dollars for the prosecution of the enlargement, and authorized the loan of eight hundred thousand dollars on the credit of the state, in aid of the Central and other railroads.

Such was the condition of internal improvements in the state, when Mr. Seward entered upon the executive office on the first of January, 1839. The state debt was then eleven millions of dollars; but there were four millions of dollars in the treasury available for the public works, reducing the actual debt to about seven millions of dollars. Governor Seward vigorously followed up the legislative policy of 1888. He recommended that measures should be adopted to secure the enlargement of the Erie canal,

and the completion of the lateral canals, before the year 1845.

The report of Mr. Flagg, the comptroller, who retired on the coming in of the whig administration, presented an alarming picture of debt, taxation, and bankruptcy, as the consequences of perseverance in the public works. Mr. Flagg was supported by the opposition party in the legislature and throughout the state, while Governor Seward was sustained by the whigs with great unanimity.

To increase the embarrassments of the whig administration, and to shake the public confidence in the ability of the state to complete the system in which it was engaged, it was now discovered that the canal commissioners who had recommended the new enterprises had made too low an estimate of their cost, which, instead of fifteen millions, three hundred and seventy-five thousand dollars, for the enlargement of the Erie and the construction of the Genesee Valley and the Black River canals, would amount to thirty millions, four hundred and forty-four thousand dollars.

The people were alarmed by this unexpected announcement. Oppressed by pecuniary difficulties in every department of business, the public was divided in opinion. The whigs maintained the wisdom and necessity of completing the public works in spite of the errors of the estimate. But the opposing party condemned the policy in very decided terms. They predicted an insupportable burden of taxation, and ultimate repudiation as its inevitable consequence. This was the great issue between the two parties during the whole of Governor Seward's administration.

A crisis at length came. The failure of Pennsylvania, Michigan, Illinois, Mississippi, Maryland, and other states which had largely engaged in schemes of internal improvement, produced in 1841 a general depreciation of American credit in Europe. The stocks of New York, which had been pledged abroad, were returned, glutting the market in our commercial cities. The capitalists became alarmed.

With a view to prevent a further decline in securities, they combined with the opposition party against the prosecution. of the public works. Their measures were met by Governor Seward with decided resistance. In his messages to the legislature, he forcibly remonstrated against suspending the improvements already commenced. Maintaining that, in spite of the fall of public credit abroad, the true policy of the state was unchanged, he clearly set forth the evils. that would ensue from the abandonment of the enterprise. But it was all in vain. Political managers took advantage of the prevailing panic to counteract the policy of the governor. The moneyed interest chimed in. His sagacious admonitions were unheeded, and the legislature, in 1842, put a stop to the progress of internal improvement. In his message, at the extra session of 1842, he thus alludes to the sudden and humiliating close of these prosperous and well-directed enterprises :

"For the first time in the quarter of a century which has elapsed since the ground was broken for the Erie canal, a governor of the state of New York, in meeting the legislature, finds himself unable to announce the continued progress of improvement. The officers charged with the care of the public works have arrested all proceedings in the enlargement of the Erie canal and the construction of the auxiliary works. The New York and Erie railroad, with the exception of forty-six miles from the eastern termination, lies in unfinished fragments throughout the long line of southern counties stretching four hundred miles from the Walkill to Lake Erie. The Genesee Valley canal, excepting the portion between Dansville and Rochester, lies in hopeless abandonment. The Black River canal, which was more than two thirds completed during the last year, has been left wholly unavailable. As if this were not enough, two railroads, toward the construction of which the state had contributed half a million of dollars, and public-spirited citizens large sums in addition, have been brought to a forced sale, and sacrificed with almost total loss to the treasury, without yielding any indemnity to the stockholders, and without even securing a guaranty that the people would be permitted to enjoy the use of the improvements."

Such was the condition of affairs on the first of January, 1843, when Governor Seward resigned the administration of the state into the hands of his successor. A convention was called in 1846 to revise the constitution, containing a

72

RE-ESTABLISHMENT OF GOVERNOR SEWARD'S POLICY.

large democratic majority. It incorporated provisions in the constitution, prohibiting the enlargement of the public works, except under stringent, and, as it was thought at the time, impracticable conditions. Still the canals, exceeding the largest estimates of the late whig administration, furnished the means for a gradual prosecution of the contemplated improvements until 1850. The whigs being in power at that time, it was ascertained that the sum of nine millions of dollars would suffice to complete the public works on the original plan. It was also ascertained that this object could be accomplished without pledging the credit of the state, by a simple transfer of the surplus tolls of the canals for a short term of years. Daniel Webster, John C. Spencer, and other eminent jurists, to whom the question had been submitted, expressed the opinion that such a measure would be in accordance with the provisions of the constitution. After a vehement party struggle, the legislature of 1851 decided on its adoption. The adverse party brought the question before the state courts, which finally declared that the law was unconstitutional. Still, few can now doubt the wisdom of the policy maintained by Governor Seward.* It only remains to determine how the constitutional prohibitions of 1846, as expounded by the court of appeals, shall be modified so as to allow the speedy attainment of the great object.†

The agency of Governor Seward in behalf of internal im

* See Vol. II., pp. 183-212.

+ Since the above was written, Governor Seward's views have been signally vindicated by the legislature and the people, and his policy re-established. By an amendment of the constitution, the proposed enlargement is to be speedily accomplished, the legislature of 1854 having passed the amendment by an almost unanimous vote. In the senate the ayes were twenty-nine, and the nays none; absent three. In the assembly there were one hundred and fifteen ayes, and one nay; absent twelve. The voice of the people, sanctioning the act of the legislature, was no less emphatic. The amendment, having been submitted to the people at a special election, was confirmed by the following vote: for the amendment, 185,802; against the amendment, 60,556.