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LETTER XII.

Salt Springs.Appropriation Laws. — State Credit. — Borrowing Money. - Invasion. - Debt Laws. - Voting upon.

THE following proviso is similar to that concerning canals :— "7. The legislature shall never sell or dispose of the salt springs belonging to this state. The land contiguous thereto, and which may be necessary and convenient for the use of the salt springs, may be sold by authority of law, and under the direction of the commissioners of the land office, for the purpose of investing the moneys arising therefrom in other lands alike convenient; but by such sale and purchase the aggregate quantity of these lands shall not be diminished."

It is superfluous to tell you my opinion about this clause; it belongs not to the constitution, and is a political error; besides, governments are bad salt manufacturers.

"8. No moneys shall ever be paid out of the treasury of this state, or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law; nor unless such payment be made within two years next after the passage of such appropriation act; and every such law making a new appropriation, or continuing or reviving an appropriation, shall distinctly specify the sum appropriated, and the object to which it is to be appplied; and it shall not be sufficient for such law to refer to any other law to fix such sum."

There is no better proviso on this subject than that found in the Fed. Const., clause 7, sect. vii., art. I.

"9. The credit of the state shall not, in any manner, be given or loaned to, or in aid of any individual, association, or corporation."

This is very just, and a matter-of-course, because states are no money brokers or bankers.

“10. The state may, to meet casual deficits or failures in revenues, or for expenses not provided for, contract debts, but such debts, direct and contingent, singly or in the aggregate, shall not, at any time, exceed one million of dollars; and the moneys arising from the loans creating such debts, shall be applied to the purpose for which they were obtained, or to repay the debt so contracted, and to no other purpose whatever."

It is utterly impossible that, if our states have nothing to do

with speculations and improper business, they will ever be in need of borrowing money, for there can not happen a deficit.

"11. In addition to the above limited power to contract debts, the state may contract debts to repel invasion, suppress insurrection, or defend the state in war; but the money arising from the contracting of such debts shall be applied to the purpose for which it was raised, or to repay such debts, and to no other purpose whatever."

This seems to be superfluous under our federal constitution, because expenses for the mentioned events Congress has to bear.

"12. Except the debts specified in the tenth and eleventh sections of this article, no debt shall hereafter be contracted by or on behalf of this state, unless such debt shall be authorized by a law for some single work or object, to be distinctly specified therein, and such law shall impose and provide for the collection of a direct annual tax to pay, and sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal of such debt within eighteen years from the time of the contracting thereof.

"No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election.

"On the final passage of such bill in either house of the legislature, the question shall be taken by ayes and noes, to be duly entered on the journals thereof, and shall be: 'Shall this bill pass, and ought the same to receive the sanction of the people?'

"The legislature may at any time, after the approval of such law by the people, if no debt shall have been contracted in pursuance thereof, repeal the same; and may, at any time, by law, forbid the contracting of any farther debt or liability under such law; but the tax imposed by such act, in proportion to the debt and liability which may have been contracted in pursuance of such law, shall remain in force and be irrepealable, and be annually collected until the proceeds thereof shall have made the provision herein before specified to pay and discharge the interest and principal of such debt and liability.

"The money arising from any loan or stock creating such debt or liability shall be applied to the work or object specified in the act authorizing such debt or liability, or for the repayment of such debt or liability, and for no other purpose whatever.

"No such law shall be submitted to be voted on within three months after its passage, or at any general election, when any other law or any bill or any amendment to the constitution shall be submitted to be voted for or against."

There is no 66 single work or object" imaginable which a real good state government has to undertake besides what belongs to the state establishment itself. Most of the state burdens are borne either by Congress or the towns and counties. The whole clause

should not occur in the constitution, because it may induce to all kinds of speculations. Suppose the government would try to make the canals pay, by using the water-power for manufacturing flour, snuff, or paper, with a capital of one million, could people hinder it consistently under this constitution, which makes the government an everlasting canal and salt manufacturing concern. I am not sure that such speculations will not spring up from this article. Selling out is the best policy, if we would have New York salt cheap and plenty. The present is old English royalty policy making a beautiful show in New Caledonia.

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THE Constitution ordains further:

"13. Every law which imposes, continues, or revives a tax, shall distinctly state the tax and the object to which it is to be applied, and it shall not be sufficient to refer to any other law to fix such a tax or object."

This seems to be superfluous because self-evident and ministerial.

"14. On the final passage in either house of the legislature, of every act which imposes, continues, or revives a tax, or creates a debt or charge, or makes, continues, or revives any appropriation, of public or trust money or property, or releases, discharges, or commutes any claim or demand of the state, the question shall be taken by yeas and noes, which shall be duly entered on the journals, and three fifths of all the members elected to either house shall, in all such cases, be necessary to constitute a quorum therein."

All this is very well so far as it goes. But a definitive, absolute prohibition of applying public funds for other purposes than those required for the support of the state institution itself, can alone check abuse of state means and power. The financial affairs of an American municipal state, as it ought to be, are exceedingly simple. And of the same character ought to be the constitution itself. The less detail the better. While this young state constitution has been already repeatedly amended, the old federal constitution has stood the fiery ordeal of factions, civil commotions, wars, and other important changes of time, during almost a cen

tury, without requiring the least alteration! It is so good that we can still, a long, a very long time, profit by it.

Macchiavelli advises his prince to imitate a great monarch. In making state constitutions we will do well to imitate our federal constitution. No better pattern exists in the world.

LETTER XIV.

Corporations. General Law. - Banking Corporations. Suspension of Payment. Registry of Bills. - Paper Money.-Insolvent Banks.Boards. Conflict of State Laws, and the Federal Constitution, respecting Banks of Issue. - Paper and Metallic Money. - Credit System. - Agriculture. Hunt's Merchants' Magazine.

AT the time when this constitution was made there was much popular excitement against incorporated companies, especially bank corporations.

A corporation is, as the name indicates, an association for business purposes, endowed by law, with the rights of a person. A single person may be sued and sue, but a company or partnership, as such, can not, unless it is incorporated, or made a political person. Then the president alone, or with the directors, sue and may be sued on account of the concern and their members, who generally are called stockholders, and may reside where they please. Copartners sue and are sued upon their names. On this subject, and in consequence of those events, the constitution has a separate article, as follows:

ARTICLE VIII.

Corporations.

"1. Corporations may be formed under general laws; but shall not be created by special act, except for municipal purposes, and in cases, where in the judgment of the legislature, the objects of the corporation can not be attained under general laws. All general laws and special acts passed pursuant to this section, may be altered from time to time or repealed."

This proviso is wise and good, although little regarded by the legislature, when freely chartering all kinds of corporations not belonging to the excepted class, as for turning, pure milk, hospi

tals, etc. Municipal purposes means, incorporations of counties and towns (cities and villages). I have mentioned elsewhere that the constitution should contain the general provisoes about their organization, because such an organic law is, in fact, nothing but a state, county, and town charter. The expansion of industrial enterprise, or, in other words, large business, requiring more means than a single person usually commands, as the building of canals, railroads, etc., is the cause of this business form or formality. It can be perfectly well arranged, with the help of the county courts or administration, where the business is located, reserving to the state government the supervision; for which purpose the general law on the subject should contain explicit provisions, the principal aim of which should be to prevent and check irresponsible monopolies and too great centralizations by consolidations, etc. The cases mentioned in the proviso where the objects of the corporation can not be attained under general laws, can be, methinks, only such, whose business is not located within the state, as Isthmus transit companies, and the like. But this being no municipal business, it is doubtful whether such concerns should not derive their charters elsewhere. If Rhode Island may charter such a company, why should not all our states have the same right? The restriction from the words, “and in cases,” should be expunged, because they unsettle the intention of the main part of the clause.

Governments whose financial powers are little restricted, will always be made use of, by influential parties, for their speculations. The constitution should, therefore, be drawn up with a view to avoid such contacts, ending in special legislation, log-rolling laws, lobby regimen, debts, bankruptcy, repudiation, etc. Whoever is against such governing must restrict the governments to the care of realizing justice. Formalities for legalizing associations, general laws should prescribe for the guidance of the courts and all in concern. The constitution steered that way, but stopped before

reaching its end.

"2. Dues from corporations shall be secured by such individual liability of the corporators and other means as may be prescribed by law."

Here the text refers to a special law, to which, rather, the whole clause belongs.

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