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diverted from the fund, it is reasonable to anticipate that be fore the first of January, one thousand eight hundred and thirtyeight, means will have been realized for the entire extinguishment of the whole of this canal debt; but should the change now con templated, as to two important items of this revenue, be effected, the period at which the Commissioners will be in possession of the means to discharge the whole debt, will be proportionably deferred. The views of the Commissioners of the Canal Fund, as presented in their last annual report, have been substantially realized, in relation to the Oswego canal fund, and the Cayuga and Seneca canal. The revenues have been less than the estimates, and the deficiencies to be drawn from the treasury have a little exceeded them. The estimated deficiency for the current year in the revenues of the Oswego canal fund, is nineteen thousand, three hundred and sixty-seven dollars, and thirty-six cents; and that of the Cayuga and Seneca canal, four thousand, three hundred and fifty dollars: making together a total of twenty-three thousand, seven hundred and seventeen dollars, and thirty-six cents.

The expenditures upon the Chemung canal, during the last fiscal year, were eighty-nine thousand, nine hundred and thirty-nine dollars, and sixty-eight cents; and the balance of moneys in the hands of the Commissioners, on the thirtieth of September last, appropriated to the construction of this canal, was thirteen thousand and eighty-six dollars, and thirty-nine cents. I learn, however, that the Commissioners are authorized, by existing laws, to make further loans for this object, to the amount of twenty-five thousand, seven hundred and thirty-seven dollars, and that this sum was supposed to be sufficient for the completion of the work. Not having received from the Canal Commissioners any intimation that further means will be required, or that any further legislation is called for in reference to this canal, I am not aware that the subject will claim your particular attention.

The Crooked lake canal is also in progress, and the expend tures upon it, between the twelfth of October, one thousand eight hundred and thirty-one, and the thirtieth of September of the following year, amounted to sixty-seven thousand, nine hundred and six dollars, and forty-six cents. The unexpended balance, on the lat ter day, of moneys applicable to this canal, was nineteen thousand, two hundred and five dollars, and eighty-seven cents; and twenty thousand dollars of the appropriation had not then been borrowed. [S. No. 1.]

2

I am not advised that the work will require additional appropriation. The Canal Commissioners will communicate to you the present condition of the two last named canals, and their opinion as to the period when they will probably become navigable.

The fund set apart for the encouragement and support of common schools, is safely vested, and in a highly prosperous condition The constitution declares that this fund "shall be and remain a perpetual fund, the interest of which shall be inviolably appropriated, and applied to the support of common schools throughout this State." This injunction has been faithfully observed. Since the adoption of the constitution, the nett increase of this fund has been five hundred and seventy-nine thousand, three hundred and fortyseven dollars; and the whole of it now amounts to one million, seven hundred and thirty-five thousand, one hundred and seventyfive dollars. The capital is now sufficiently productive to yield the one hundred thousand dollars required by law to be annually distributed for common school instruction.

The Regents of the University are enabled to apportion annually to the academics ten thousand dollars, from the revenues of the literature fund.

The general fund is almost exhausted, by the liberal contributions it has yielded to all the other funds, by the payment of the State debts, and by furnishing, unaided for the last five years, all the means for the ordinary and extraordinary expenses of the government. The revenue from this fund has at no time been sufficient, without the avails of a general tax, to satisfy the demands upon the treasury. In order to meet these demands, and to relieve our fiscal affairs from embarrassments, it became necessary, in eighteen hundred and fourteen, to impose a tax of two mills on each dollar of the valuation of real and personal property in the State. This tax was continued until eighteen hundred and eighteen; then it was reduced to one mill; in eighteen hundred and twenty-four, to half a mill, and in eighteen hundred and twenty-seven it was wholly discontinued. When the Legislature refused to continue the tax it was well understood that the general fund could not long sustain the burden cast upon it; that its capital would be rapidly reduced, and soon exhausted. Though this event has not approached so rapidly as was anticipated, it is now at hand, and this session should not, in my judgment, be permitted to pass away without providing

the means, by the adoption of some settled plan, to satisfy the demands that must inevitably be made upon the treasury. The an nual expenses of the government, in future years, will not fall far below three hundred thousand dollars, and all the available means for the current year, other than a resort to the remaining capital of the general fund, will be less than one hundred thousand dollars.

According to the statement of the Comptroller, the capital of this fund is now only five hundred and seventy-eight thousand, three hundred and ten dollars; and if from this amount, be deducted the debt due for the stock issued to John Jacob Astor, now payable at the pleasure of the State, this capital may be regarded as almost entirely expended. At the period when the State tax was discontinued, I had the charge of the financial department of the government. Disapproving of the policy of impairing the general fund, I recommended the continuance of the tax; and in subsequent years I deemed it my duty to urge a return to it. It would be useless to attempt now to determine whether the policy thus recommended, and I believe every year since, urged upon the Legislature by the head of that department, and for the three last years by the Executive, was preferable to the course which has been pursued. We are now brought to a condition in which the expedient heretofore used for meeting the demands on the treasury, can be no longer resorted to, and a new system of revenue must be devised.

A movement has been made for the purpose of releasing the auction and salt duties, from the constitutional pledge, by which they are secured to the canal fund. If this measure should be consummated, and the avails of these duties restored to the general fund, and the amount of the income from these sources should not be materially affected, by the anticipated change in the salt duty, or the possible legislation of Congress, in relation to auction sales,—the revenue would in this manner, receive an augmentation which will render it nearly, or quite, equal to the demands upon it. But it will be perceived, that this proposed measure is beset with contingencies which cannot be effectually controlled by your legislation. The people may not approve of the proposition to release the pledge; and if they should, it may not be deemed wise to draw, after the canal debt is paid, a large revenue from these sources, or to devote what may be thence drawn, to the support of the government.

The canals are rapidly accumulating the means for the extinguishment of the debt for which their income is hypothecated. When this object is accomplished, the tolls may, with fair claims of justice, be resorted to, for the means of replenishing the treasury, to an amount, at least, equal to the sum abstracted, for the benefit of the canals, from the general fund. On whatever principle this account shall be stated, the sum that will be found due, will probably be sufficient, not only to reimburse any loans which may be made for defraying the expenses of the government, but to afford a temporary aid to such works of internal improvement as the State may think it wise and prudent to undertake.

The money diverted from the general fund to the use of the canals, belonged equally to the citizens in all parts of the State; but the object to which it was appropriated, though eminently beneficial to all, was not so to all, in an equal degree. The inhabitants, in districts of the State remote from the canals, do not derive as much advantage from them, as those in their immediate vicinity; they will therefore naturally prefer to have the treasury replenished by a repayment of the contributions made to the canals, rather than by resorting to a general tax. The justice of a claim upon the revenue of the canals to some extent, in favor of the general fund, will probably not be denied; but the amount which shall be repaid, and the objects to which it shall be appropriated, will doubtless give rise to much diversity of opinion. If we were prepared to settle these questions, we have not the power to do so; they must be left for our successors. Shall we then anticipate their decision, and accumulate a debt for the ordinary expenses of the government, trusting to the future appropriations of the income of the canals, for its repayment? Without a confident reliance on this, or some other certain and specific resource for its redemption, there are, in my mind, strong objections to the creation of such a debt. A national debt has been regarded by the true friends of a republican government as a national evil. When the public funds are not drawn immediately from the people, a proper sense of dependance on the part of those who have the appropriation of them is lost; and a salutary check to improvident and profuse expenditure is removed. When the motive for the constituent to scrutinize the conduct of the representative is enfeebled, the latter ceases to feel and act under the consciousness of a due accountability. If the force of this relationship in a

government like ours be weakened, the action of the whole politi cal system is deranged: economy is no longer regarded as a political virtue; public spirit loses its true aim, and its energies are directed to personal and ignoble ends. A large funded debt has a tendency to create artificial distinctions among the people-to divide society, into the rich and the poor, and to bring about a state of things, in which labor is made tributary to wealth, and power purchased by influence. At this time, when the General Government is presenting for the admiration of the world, the unprecedented fact, of the total extinguishment of a large national debt, it would ill become this State, eminently distinguished for her wealth, her resources, and the enterprising spirit of her citizens, to counteract in any degree, this impressive political lesson, by the commencement of a debt for the purpose of defraying the expenses of her government.

A national debt may be the result of inevitable necessity.The efforts which nations are sometimes required to make, to recover their civil liberty, or to defend their rights, may involve an expenditure beyond their present ability to pay. A debt thus contracted, confers no reproach, and its payment may be deferred until the people that incurred it, have replenished their resources, and become able to sustain the burden of discharging it, without withering their prosperity. Such was the origin of our national debt, and such has been our course in regard to its payment. The debt contracted by this State on account of the canals, is justified on a different principle. The object for which it was incurred, was specific, and ample means for its speedy redemption were provided in the very act which authorised it. It could in no event have been forwarded on to a future age, as an incumbrance upon it, to be paid by a general tax, without a violation of the most solemn pledges.

Whether a resort to a general tax, moderate in amount, in order fo provide the means to meet the exigencies of the government, shall be foreborne, and a reliance be placed on the chance of deriving sufficient aid for that purpose from the duties on salt, and auction sales; or a debt shall be contracted, with a view to its redemption from the canal revenue, after it is relieved from its present hypothecation, are questions which may with propriety be left to the immediate representatives of the people. If upon due deliberation, you should determine to levy a tax, and leave the other reve