lars, shewing a deficiency in the receipts to meet the ordinary expenses of one hundred eighty-eight thousand seven hundred dollars. Included in this estimate of expenses, are the deficiencies of the income of the Oswego, Cayuga and Seneca canals, which are by law made chargeable upon the general fund.

It is necessary for a true understanding of the financial condition of the state to know, that the actual annual expenditures of the government, always far exceed the estimates, owing to contingent appropriations, which are not susceptible of calculation. Thus the estimate of expenses for the last year was two hundred and sixty-four thousand dollars, whereas the actual expenditures, including legislative appropriations, have amounted to the sum of three hundred forty-nine thousand one hundred thirteen dollars. For the purpose of more precise information, I have caused an average to be made, both of the estimated expenses, and the actual expenditures, chargeable upon the general fund from the year 1825, to 1829, both inclusive, and find the result to be, that the average estimated expenses for each of these years is two hundred and eighty-two thousand five hundred and twenty dollars, while the actual average payments from the treasury, is three hundred and seventy-six thousand seven hundred and forty-seven dollars; a sum, greater in each year, than the estimate, by ninety-four thousand two hundred and forty-seven dollars. This difference is made principally by the annual legislative appropriations.

The resources of the treasury have been lessened, by the annual consumption of principal of the general fund, the appropriations of the public lands, and other funds to common schools, literature, and canals, and by the withdrawal of the state tax, and the diverting of other sources of revenue.

Thus in 1816, a state tax of two mills upon a dollar was imposed; in 1819, it was reduced to one mill; in 1825, it was farther reduced to half a mill; and in 1827, it ceased by its own limitation. Since the last period no tax has been levied, although the treasury has been aided in its operations by the receipts of arrears of taxes. So also in 1817, the duties on salt, and sales at auction, were diverted from the general fund, and added to the revenues of the canal fund.

By these means the amount of the general fund has become so far reduced, that it is able no longer, either by its revenue or capital, to meet the annual demands for current expenses.

No government can be administered without money, and the means of defraying its expenses, must in some shape be furnished by those for whose benefit it is administered. It therefore becomes necessary to consider from what sources our exhausted treasury can be replenished. This involves an inquiry into the means placed at the disposal of the Legislature for that purpose.. These means are taxation, or loans on the credit of the government. If money is borrowed, the interest must be paid, and eventually the capital. If in addition to the current annual disbursements, the money to pay the interest on previous loans must also be borrowed, it is obvious that with compound interest there will be a rapid accumulation of debt, and the public creditor will ultimately require some further security for his loans, than the credit of the state. Such measures would result in impaired public credit; taxation could not be long delayed; and it is to be feared, that when it becomes necessary to levy upon the people the amount of the current expenses, together with the interest accruing upon debts incurred for the expenses of preceding years, swelled by compound interest, the taxation will be found burdensome and may become perpetual.

There is no mystery in financial operations, save what ingenious men have found necessary to throw around them, to conceal their measures from the public knowledge. What would be said of a farmer who should thus manage his private concerns, and trust to borrowing on the credit of his farm, for the annual expenses of his living, instead of deriving support from it by his earnings?

I should be wanting in duty, if I should forbear to pursue this interesting subject still farther, for I deem it of vital importance. We are still a young nation, and have experienced nothing but increasing prosperity, and having now arrived at a point where our treasury must be permanently supplied, or a hazardous experiment upon our credit made, it is our own fault if we do not choose that alternative which we know to be safe, and to which common prudence directly points.

As we have little to appeal to, in our own experience, we should not shut our eyes to the light reflected by the history of other nations. An able English historian, in noticing a temporary debt, created in the reign of Henry the sixth, makes the following remarks: "The first instance of a debt contracted upon parliamentary security, occurs in this reign. The commencement of this practice

deserves to be noted; a practice the more likely to become pernicious, the more a nation advances in opulence and credit. The ruinous effects of it are now become too apparent, and threaten the very existence of the nation."

Shortly before the commencement of the last century, when Wil- ́ liam the third came to the throne, and found it necessary, in order to defend his continental possessions and to restrain the ambition of France, to have more money than could be raised by the ordinary means of revenue, a resort was first had to temporary loans, pledging the annual income to repay them. As this necessity for money continued from year to year, the debt was left unpaid, and the revenues were appropriated to pay the interest of it; and it then occurred to his ingenious financiers that a national debt was a national blessing. Thus within eight years after he ascended the throne, a public debt had accumulated, equal in amount to one hundred millions of dollars. To pay the interest of that debt, and to defray the current expenses of the government, independently of indirect taxation by means of customs, direct taxes were imposed upon the people in every possible shape. They were imposed upon their persons, upon the value of their real and personal property, upon their income, upon their stock in trade, upon births and burials, upon beer, cider, perry, and all the productions of industry, commercial, manufacturing and agricultural. These taxes have been continued, and additional ones imposed upon every new object, created by the trade or industry of the nation, as it was developed, until the British empire, with a population of twenty-two millions of persons, is burthened with a debt amounting to about three thousand five hundred millions of dollars.

It is an extraordinary fact, and shows the evils which a mal-administration may bring upon a community, that the period of time, which enlarged the constitutional privileges of the English people, gave birth to legislative measures, which drew a new line of distinction between the people, and divided them into public creditors and laborers. All the wealth of the nation has been grasped by the comparatively few holders of government stock, and the privilege to support them, by the earnings of their labor, is nearly all that has been left to the many.

When we look at our means of raising revenue, it will be perceived that a state debt is a mortgage upon the persons, the property and the industry of our citizens, and the public creditor will soon call for a contribution from those sources. With our present laws,

which secure to every man the enjoyment of the profits of his industry, talents and ingenuity, we can look without concern or envy, upon the greatest amount of wealth which any individual has accumulated by industry and economy. He has a right to enjoy it, and it will be soon distributed by his successors. But there is great danger in creating a mass of wealth, in the hands of individuals, which suffers no diminution, but accumulates from generation to generation, sustained by the industry of the country, and guaranteed by the laws. We have in vain abolished entails, if a more durable species of property is created, levying contributions, not by rents, but by means of taxes.

It is a plausible doctrine, which has been urged with some success, that it is no matter how much money is expended by government, provided it is employed upon suitable enterprises for improving our. internal condition; because the money remains among the people, and gives them employment.

This is indeed true, when the money is disbursed from a full treasury. But when the money expended, is borrowed of individuals, on legislative security, and interest is to be paid for its use, to be collected by taxation, upon the annual products of the labor of the people; the money remains among us; the aggregate wealth of the country may by increased; but it is unequally divided: an undue proportion goes into the hands of the few who monopolize the stock, while the remainder of the people are impoverished by the operation.

I have entered into much detail upon this important subject, from a deep conviction, that it is too intimately connected with the public welfare to be lightly passed over, and that the time has now arrived, when it becomes a duty of the people to understand and reflect upon this matter.

I have been placed at the head of the government at a period when it must determine upon the policy to be pursued, in a new and untried state of things. Hitherto the state has been rich in lands and public funds, and aided by taxes, which have ceased, it has been able to meet the payment of temporary loans, the revolutionary claims, and the annual expense of administering the government. This public property is now nearly exhausted, not by the ordinary expenses, but by contributions to public works, and as the basis of special funds.

Internal improvements, by means of canals and rail-roads, have become fixed objects of legislative care, and are among the most interesting subjects which will claim your attention. Their influence in diversifying the pursuits of labor, and equalizing the value of its products, in adding to individual and aggregate wealth, stimulating enterprize, and binding society together in ties of amity and interest, is not only acknowledged in theory, but has been practically demonstrated by our experience. These considerations will induce you to examine with industry and lively solicitude, into the means within your control for their further prosecution.

Our country is peculiarly well adapted to the construction of canals and rail-roads, and affords in all directions, from its soil, its forests and its mines, those ponderous productions, which owe most of their value in market to the cheapness of transportation. Each of these modes of communication has its peculiar merit, and is yet susceptible of much improvement. It remains to be seen what elevations of surface may be overcome by stationary power, as part of the line of a canal, an improvement deserving more attention from those conversant with such subjects, than it seems to have received.

Experiments made in England, during the past year, with locomotive engines, upon a rail-road between Liverpool and Manchester, have produced results more favorable than were anticipated. Loaded carriages now pass regularly between those cities, at the rate of eighteen miles an hour. Indeed light carriages have been moved with a rapidity which almost exceeds belief. An enterprizing company is now constructing a rail-road between this city and Schenecdy, which, as a specimen of such works, and as affording means to judge of their usefulness and cost, will be of great public advantage. It will probably be finished during the present year.

While canals, peculiarly adapted to the transportation of bulky articles, may be made in suitable situations, rail-roads, on account of their fitness for rapid transmission, to operate at seasons when canals are useless, and perhaps to overcome elevations insurmountable by them, will no doubt, in future times, be extensively disiributed throughout the state. There are few obstacles in any part of the state, which may not be overcome by one or the other of these improvements.