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that I think is equalled by no other class of citizens. It is
for this reason that this charity commends itself to the sym-
pathy, to the confidence, to the encouragement and support of
the whole people. I am informed, also, that in terms this
institution is not confined to any nationality or any creed, but
that its beneficent care is freely tendered to all poor and unfor-
tunate, and that at least 20 per cent of your benefactions are
to races and creeds different from your own. I trust, ladies
and gentlemen, your fair will transcend in its success your
expectations and your hopes.



XLV.

THE second Annual Message of Governor Tilden was sub-
mitted to the Legislature on the 4th of January, 1876. It was
at a moment of profound business depression, which had en-
dured already for three consecutive years with no prospect of
relief. Wages continued falling, incomes and property were
shrinking, and chilling distrust seemed to have arrested the
circulation of the nation's wealth. To explain this state of
things, to trace its cause and suggest the remedies, was the
special and distinguishing feature of this Message. Though
applied to a temporary situation, the doctrines here expounded
belong to the ripest science of political economy.



SECOND ANNUAL MESSAGE.

EXECUTIVE CHAMBER, ALBANY, Jan. 4, 1876.
To the Legislature.

THE annual meeting of the legislative assemblies at the
beginning of the new year finds the people of this common-
wealth in the enjoyment of blessings which ought to fill us
with reverent thankfulness to Him from whom conieth every
good and perfect gift. Whatever the earth could yield to the
labor of man under the fructifying and genial forces of nature
we have garnered. Health, peace, and domestic tranquillity
have been ours. Capacities to produce in largest abundance
and with least sacrifice, or to acquire by exchange through the
best natural and artificial machinery of transport and travel,
all things which minister to material well-being, to the pros-
perity and wealth of a State, and to the comfort and felicity
of its individual members, have been and are subject to our
use.

It was early discovered that New York possessed within her
territory the natural passes of military operations which, in the
wars for colonial existence and for national independence,
cross-tracked our soil with fire and blood. Our territory was
also found, on the later development of the national growth, to
occupy the natural thoroughfares of travel and traffic. It
touches the ocean with a harbor ever open, accessible, and safe,
close by whose gates the ocean currents compel to pass nearly
all transatlantic navigation to and from this country. It con-



1876.] SECOND ANNUAL MESSAGE. 239

nects that harbor and the tranquil Hudson, on the north with
Lake Champlain and the Canadas, and on the west by a level
crossing the bases of the mountain ranges that traverse the
continent, with Lake Erie and its chain of great inland seas,
bordered by rising commonwealths which are the marvels
of modern times.

We are, with our fellow-citizens of the other States, joint
inheritors of a system of government, the selected product of
the oldest existing civilization, formed according to the best
ideals evolved from human experience, but freed from the over-
growth of habits and interests elsewhere incident to such
experience, and planted in the virgin soil of an unoccupied
continent, abounding in all the gifts of nature. Our popula-
tion, by the census just taken, is nearly four and three quarter
millions. Our annual product of agriculture is still greater
than that of any of our young rivals, whom we contemplate
with admiring pride as in part the creations of our policy
and the swarming homes of our own children. Our domestic
manufactures are larger than those of any other State. Our
foreign commerce is once and a half that of all the rest of the
Union.

Common schools, in which are taught a million of youths,
and seminaries of higher learning, are training our successors
to improve on whatever they can inherit from the present gen-
eration. Institutions of charity dispense everywhere their bene-
factions ; and the surface of our whole domain is dotted thickly
by edifices whose spires point to heaven.

If on this fair picture there are spots that indicate a recent
prevalence of private waste or folly, or that disclose evils or
wrongs by government, resulting in much temporary distress,
let us remember with humility that we have been in part the
authors of what we deplore, or at least consenting witnesses ;
and let us be grateful that we can reform what is amiss,
and that to our hands, under God, is committed our own
future.

The nominal amount of the debts of the State, as they appear



240



THE WORKS OF SAMUEL J. TILDEN.



[1876.



Debts of the State.



on the books of the Comptroller, without deducting the sinking

funds applicable to their payment, on the 30th
of September, 1875, the close of the last fiscal

year, was $28,328,686.40, classified as follows :

General Fund ... * $3,119,526.40

Contingent 68,000.00

Canal 10,086,660.00

Bounty 15,054,500.00

$28,328,686.40



The amount of those debts on the 30th of September, 1875,
after deducting the assets in the sinking funds at
that time applicable to their payment, is exhib-
ited by the following statement, furnished by the Comptroller :



The sinking funds.





Debt,

Sept. 30, 1875.


Sinking Fund,
Sept. 30, 1875.


Balance.


General Fund


$3,119,526.40


$3,029,605.70


$89,920.70




68,000.00


36,677.64


31,322.36


Canal


10,086,660.00


1,448,345.51


8,638,314.49


Bounty


15,054,500.00


*9,066,753.29


5,987,746.71










Totals


$28,328,686.40


$13,581,382.14


$14,747,304.26











The actual reduction during the year of the debts by cancel-
lation of matured stocks and by the purchase of $858,000 of the
bounty loan for the sinking fund is $1,870,770. The diminu-
tion during the year of the debt, after deducting the assets of
the sinking fund, is $2,744,505.06.

But even this exhibit does not completely show the situation
of the sinking funds as we are to deal with them
in the legislation of your present session. The
appropriations made at the last session became operative on
the 1st of October, 1875. The taxes levied for the fiscal year
beginning on that day are in process of collection.

The appropriation for the Bounty Debt Sinking Fund was
$4,260,000. If that sum be deducted from the balance of

*

* Deducting interest accrued to Oct. 1, 1875, payable Jan. 1, 1876.



The Bounty Debt.



1876.] SECOND ANNUAL MESSAGE. 241

$5,987,746.71, as shown in the table for the 30th of September,
1875, there would remain but $1,727,746.71 to be provided for
by your legislation.

The near approach of the extinction of the Bounty Debt sug-
gests a retrospect. If it had been a necessary condition to a
restored union, our people would not count its cost. But it
was essentially an after-war adjustment ; and if the criticism
of the Comptroller in his Report of 1875 be just, that though
created " nominally to pay bounties to the volunteer soldiers
who enlisted in the service of the United States during the

c_?

rebellion, but only an inconsiderable part of this sum is believed
to have reached the soldiers who were actually engaged in the
contest," the experience would be chiefly useful in illustrating
the magnificent costliness of improvident debt. The appropria-
tion for it in the last ten years amounts to $39,983,862.97, and
interest would swell the present cost to at least $50,000,000.
When the appropriation of the present year shall be added, the
people of this State may be congratulated on its extinction.

The appropriation at the last session for that portion of the
canal debt known as the floating canal debt

Canal debt.

was $266,000, which will complete its payment
and leave a small surplus in the sinking fund. On the other
hand, the sinking fund for the canal debt proper will fail to
derive from the revenues of the canals the whole amount of
the instalment required ; and a deficiency of $625,610.70 will
have to be supplied.

The application of the sums appropriated from taxes now in
process of collection would reduce the State debts w hole amount
to about ten and one quarter millions of dollars, of debts>
exclusive of accruing interest. Another observation ought to
be made in respect to the sinking funds. Nearly twelve hun-
dred thousand dollars of the assets consist of premiums on its
stocks at cost or at present market rates. It is clear that
the operations of the sinking funds should be revised. The
best investment, certainly the safest, for a State as for an
individual is in the payment of its own debts, if that be

VOL. II. 16



242 TEE WORKS OF SAMUEL J. TILDEN. [1876-

possible on reasonable terms. Individuals seldom find easy
credit anything but a snare ; States never. A large mass of
cash on hand, even if in sinking funds, tempts to improvident
expenditure and to illegitimate use.

Thirty years ago, in June, the Convention sat which formed
Constitutional our present Constitution. It was called into being

restrictions on , . . .

public debts. chiefly to impose restraints on the power ot the
Government of this State to contract debts. The purpose of
the people to establish these guards against their agents was
the result of years of animated discussion. The restraints
were carefully devised. They have been useful, and, in the
main, effectual. In 1846 our State debts were nearly twenty-
four millions. In 1876 they will be reduced to ten and a quarter
millions.

The Convention considered plans for applying such restric-
tions to all municipal bodies and local governing officials.
They did not feel able, in the period of their session, to mature
satisfactory provisions. They devolved the duty on the Leg-
islature, commanding its performance. Their injunction has
been unexecuted ; and in 1876 the city of New York has a
debt of one hundred and twenty-two millions, after deducting
its sinking funds, against a debt of less than fourteen millions
in 1846. The other cities of the State owe sixty millions, and
many counties and towns are also largely burdened.

Sole surviving member of the committee which prepared
the constitutional restrictions on the creation of State debts, I
might be permitted, in honor of the illustrious dead, to trace
the moral our experience has since proved of the utility of
their work ; but I have recounted the results to show that the
policy was then, and is now, absolutely necessary to the safety
of the people in all State and local governments.

The taxes levied by the Legislature of 1874 were 7J mills
Taxes for state on a valuation of 82,169,307,873. Their produce,

purposes in 1874

and 1875. when all realized, is 815,727,482.08. The taxes

levied by the Legislature of 1875 were 6 mills. They were
computed in the Comptroller's office and in the Legislative



i8 7 6.]



SECOND ANNUAL MESSAGE.



243



The reduction.



committees on the valuation of the previous year. On that
basis their produce would have been $13,015,847.24.

The reduction would have been $2,711,634.84. But the
valuation was increased to $2,367,780,102. The
produce of a 6 mills tax on that amount is
$14,206,680.61. The increase of the valuation gives an excess
over the estimated amount of $1,190,833.37. The reduction
actually effected is $1,520,801.47.

A reduction of taxes, without reduction in appropriations,
would but create a deficiency and a floating debt. Appropriations
These would have to be paid by a subsequent of
increase of taxes. The appropriation bills were framed to
correspond with the lower valuation, and much effort was
made to keep down the appropriations. The result is shown
in the following table :

APPROPRIATIONS AND TAXES OF 1875 COMPARED.





Mills.


Appropriations
nf IRT^i


Tax computed
on valuation of


Tax computed
on valuation of


Excess.








1874.


1875.




Schools ....


u


$2,712,000.00


$2,711,634.84


$2,959,725.13


$248,090.29


Bounty Debt .


2


4,260,000.00


4,338,615.75


4,735,560.20


396,944.45


Capitol


A


1,000,000.00


1,084 653.94


1 183,890.05


99 236.11




2










Canal Floating












Debt ....


4


266,000.00


271,163.48


295,972.51


24,809.03


Canal awards


i

5


422,766.90


433,861.57


473,556.02


39,694.45


General pur-












poses ....


If


2,986,825.00


2,982,798.33


3,255,697.64


272,899.31


Deficiency and












asylums . . .


11

20


1,525,213.53


1,193,119.33


1,302,279.06


109,159.73






$13,172,805.43


$13,015,847.24


$14,206,680.61


$1,190,833.37



Excess of appropriations over tax, computed on valuation of 1874 .
Excess of tax, computed on valuation of 1875, over tax computed

on valuation of 1874

Excess of tax, computed on valuation of 1875, over appropriations

of 1875 .



$156,958.19
1,190,833.37
1,033,875.18



The reduction in the appropriations of 1875 below the taxes
of 1874 counting, at its true construction, one item about
which there may be some doubt is $2,554,677.65. This



244 THE WORKS OF SAMUEL J. TILDEN. [1876.

leaves the sum of $1,038,875.18 applicable to the reduction
of taxes for the coming fiscal year.

The appropriations for ordinary expenses and repairs of the
Reduction of ap- canals made at the last session for the fiscal year
S3?S~ beginning. Oct. 1, 1875, were, $1,109,150, and for
the current fiscal year a special contingent pro-
vision of 1150,000, making $1,259,150. The like appropriations
made at the session of 1874 were $1,424,510, and a provision
for the then current year for deficiencies of $250,000. The
reduction in 1875, as compared with 1874, is $415,360. The
Canal Heappropriation Bill in 1874 reappropriated $917,319.63 ;
that of 1875 reappropriated $340,079.19. The diminution is
8577,240.44. The amount raised by former taxes reclaimed
into the treasury by striking out items in the Reappropriation
Bill of 1875 is $67,765.69.

The objects in respect to which a reduction of taxes was
effected were,

1874. 1875. Reduction.

Extraordinary canal repairs . . $1,898,144.39 None. $1,898,144.39

Asylums and reformatory . . . 813,490.45 $479,800.00 333,690.45

General purposes 4,189,475.84 3,696,117.66 493,358.18

$2,725,193.02

1. In respect to the first item, the Memorandum assigning
reasons for withholding the Executive sanction from the Bill
making appropriations for extraordinary repairs to the canals
contains the following observations :

"The budget for extraordinary repairs, as originally prepared,
proposed an expenditure of 1,400,000. In the ordinary course
of things, the additions which would have been made to it during
its passage through the two Houses by the friends of local objects
able to influence those bodies would probably have swollen it to as
great a magnitude as the Bill of last year for the same purpose,
which amounted in tax to nearly $1,900,000.

"It was in this condition of things, when the routine, which
had become so firmly established, was likely to bring for my ac-
tion bills which could not be totally rejected, and perhaps could
not be effectually altered, and which would practically continue
the existing systems of canal expenditure, against which I had



1876.] SECOND ANNUAL MESSAGE. 245

objected in my Annual Message, and invoked retrenchment and
reform, that I felt it my duty to enter upon the investigation
which resulted in the Special Message of March 19, 1875.

" The discussion which ensued, generated a spirit in the legisla-
tive bodies and among the people that triumphed over and broke
up the routine, hitherto dominating, and which, like an enchanted
ship, moving onward in its course without a crew, was drifting us
into a repetition of all improvidences, abuses, and frauds so long
infesting this department of the public administration.

" The results of this discussion will be found in a reduction of
the appropriations for the expenses of collection, superintendence,
and ordinary repairs, and in the extinction of expenditures for
extraordinary repairs.' 7

2. The reduction in the second item was the result of a
policy adopted by the finance committees of the two Houses,
with my concurrence, of confining the appropriations to such
sums as would make available and bring into use the portions
most nearly approaching completion of the asylums and reform-
atory, now in the course of construction. The appropriations
allowed to pass, conform, in the main, to that plan.

3. The Memorandum assigning reasons for withholding the
Executive sanction from certain items of the Supply Bill ex-
pressed the belief that " with the reductions made in the legis-
lative bodies, and by the refusal of the Executive sanction to
items and bills passed by the Legislature, the expenditures
and appropriations ought not to exceed the taxes levied ; and
the reduction of taxes will be a clear saving to the people."
It added that " the failure of sundry items and bills to receive
the Executive sanction will reduce the appropriations as fol-
lows." And it enumerates such items to be paid by taxes
amounting to $332,169 ; and items struck out which reclaim
cash to the treasury, $67,765, making a total of 8399,934;
besides items to be paid out of canal revenue to the amount of
1365,946.

The failure to keep the appropriations down to the taxes
levied on former occasions has led to deficiencies in the
treasury and floating debts which are forbidden by the Consti-



246 THE WORKS OF SAMUEL J. TILDEN. [1876.

tution, and to violations of the sinking funds. We cannot too
vigilantly guard against a recurrence of these evils, or insist
too inflexibly that no appropriation shall be made until the
means of paying it shall have been provided.

The taxes for State purposes in 1874 were 7-J mills on a valua-
Reduction of state tion of $2,169,307,873, producing 815,727,482.08.
oS'haff'th? taxes The taxes for State Purposes in 1876, if reduced
of 187 *- to 3 T % 2 ^- mills on the valuation of 1874, or S^Vo

mills on the valuation of 1875, which is 82,367,780,102, would
yield 87,863,741.04.

After a careful consideration of the elements of the question,
I have arrived at the conclusion that a reduction, substantially
of this extent, can be effected without detriment to the public
interests if there exist no deficiencies yet undiscovered in the
public accounts, and if no extraordinary necessity for new
appropriations shall arise.

It may be proper to indicate some of the chief particulars in
which this reduction can be made.

1. Payment on debts of the State.

Appropriations in 1874. Necessary in 1876.

For Bounty Debt $4,260,000.00 $1,727,746.00

For Canal Debt 198,888.00 625,610.70



$4,458,888.00 $2,353,356.70

Eeduction 2,105,531.30

2. Canal expenditures.

1874. 1876.
For extraordinary re-
pairs $1,898,144.39 None.

For awards . . . 474,536.10 $172,680.49



$2,372,680.49

Eeduction which, as to canal awards, is esti-
mated 2,200,000.00

3. Eeduction by means of surplus

of taxes in 1875 1,033,875.18



Carried forward $5,339,406.48



1876.] SECOND ANNUAL MESSAGE. 247

Brought forward $5,339,406.48

4. The taxes provided for general
purposes in 1875 were less than
those of 1874 by $493,358.18

The excess of appropriations over
taxes, computed on the old valua-
tion, was 156,958.19



Balance $336,399.99

Counting on the same appropria-
tions this year, there will be a
reduction of 336,399.99

5. The tax for new asylums and

reformatory in 1874 was . . . 813,490.45

The appropriation for 1875 was . 479,800.00



Balance $333,690.45

If the same appropriations were
made in 1876 as in 1874, the re-
duction would be 333,690.45



The reductions effected in these items would be . . $6,009,496.92

In order to effect the diminution of taxes one half,
there would remain to be effected out of the other
appropriations a further reduction of .... 1,854,244.12

The other taxes in 1875, as appropriated, were,

For new capitol 1,000,000.00

For asylums and reformatory 479,800.00

Remainder of taxes appropriated for general pur-
poses, 1874 3,696,117.66

Taxes appropriated for schools, 1874 2,660,000.00



Total $7,835,917.66

A quarter of that would be 1,958,979.41

The balance of the reduction proposed is .... 1,854,244.12

Three quarters of the reduction contemplated will have been
effected out of half the taxes in the items mentioned. There
would seem to be no difficulty out of the remaining half of the
taxes to make the remaining quarter of the proposed reduction.
The subject will be further discussed when the principal objects
of the expenditures are separately considered.



248 THE WORKS OF SAMUEL J. TILDEN. [1876.

It is not intended to insist on positive exactness of results.
The permanent ^ ll tnc exigencies of a great State, unforeseen
necessities may arise. But in private business,
and in the administration of those great corporate bodies
which are the growth of modern times, and some of which
receive and disburse larger sums than the treasury of the
State, it is found to be wise and even necessary to work up to
a systematic plan. The State ought to do the same. It is one
of the evils of unsystematic legislation and administration that
results are never certain, that expenditures exceed appropria-
tions, and appropriations exceed taxes. A floating debt is thus
created by some subordinate officer or authority, which the
Constitution expressly prohibits the law-making powers of the
Government from creating, except to the extent of a million
dollars. But there seems to be no reason to doubt that, on
the scale of our present population and our present policy, the
remission of taxes may be permanent.

In 1877 the million and three quarters required this year
for the bounty debt will be unnecessary. It is possible, if
the canals are well managed, that the demand from them on
the treasury may be somewhat reduced. The State prisons, the
quarantine, and the salt works all afford scope for retrench-
ments ; they now share the fate of all other business and
speculations which the State undertakes. A decay of income
and a growth of expenditures indicate the incompetence of the
State, in its sleepy indifference, to compete with the ever vigi-
lant and earnest activity of private interests. The deficiency
in the State prisons for the year is nearly $550,000, and of the
quarantine about $62,000, making $612,000. This sum and
the last instalment of the Bounty Debt, amounting to a million
and three quarters, which is a charge on this year, and the defi-
ciency in the canal sinking fund, amount in the aggregate to
$2,960,000.

The result, expressed in round numbers, is, that after you
have reduced the taxes for State purposes from sixteen millions
to eight millions, three of the eight millions remaining are or



1876.] SECOND ANNUAL MESSAGE. 249

ought to be for exceptional expenditures. That amount, there-
fore, ought to form a fund adequate, after this year, to meet the
exceptional expenditures of the State for improving the main
trunks of the canals and finishing all public buildings that
ought to be finished, and for an ultimate further remission of
taxes.

I have made this explicit exposition of the subject, at the
opening of your session, in order that in all the formative
stages of legislation involving expenditures, appropriations, and
taxation, the considerations suggested may be present to your
minds. The amendment to the Constitution, first brousrht into

" ^j

operation at the last session, imposing on the Governor the
obligation to revise every item of appropriation, works a change
in official practice amounting to a revolution. Hitherto, as
the appropriations were embraced in bills that had to bo
accepted or rejected as a whole, the items have been, in effect,
withdrawn from the action of the Governor. The responsi-
bility now devolved on him is very laborious and difficult.
It tends, perhaps, to work some change in the customary
relations of the departments. In ordinary legislation it is
stretching the function of the Executive veto too far to apply
it to every case in which the Governor, if a member of the
Senate or Assembly, would vote against a Bill. There seems
to be a disposition to hold the Executive to the extreme of
accountability in respect to appropriations. This tendency
may be carried so far as to disturb the constitutional equi-
librium of the executive and legislative forces. Not desir-



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