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 THE HISTORY 
 
 OF 
 
 The Surplus Revenue of 1837 
 
 AN ACCOUNT OF ITS C RIGIN, ITS DISTRIBUTION AMONG THE 
 
 STATES, AND THE USES TO WHICH IT 
 
 WAS APPLIED 
 
 BY 
 
 EDWARD G. BOURNE, B.A. 
 
 FOOTE SCHOLAR IN YALE COLLKGK 
 
 
 NEW YORK & LONDON 
 
 G. P. PUTNAM'S SONS 
 
 Stije $nirktibock« ^rtss 
 
 1885
 
 COPYRIGHT BY 
 
 G. P. PUTNAM'S SONS 
 1885 
 
 Press of 
 
 G. P. Putnam's Sons 
 
 New York
 
 I 
 
 
 lit 11 
 
 "> 1 » t 
 
 
 g TO 
 
 3£ 
 
 MY FATHER AND MOTHER 
 
 111 
 
 386339
 
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 ^ r «■
 
 PREFACE. 
 
 In the following pages I have endeavored to present a complete 
 and impartial history of the origin and growth of the Surplus 
 Revenue of 1837, and more especially of its disposition by the 
 States among which it was divided. 
 
 The work may seem to the general reader more like a collection 
 of facts than the story of an important incident in our history. 
 Of this defect, if it be a defect, I am as well aware as one can be; 
 but if I am not mistaken this is the natural function of first 
 works in a new field. Some one must clear the ground, loosen 
 the soil, and raise a plain but useful crop before the finer growths 
 can flourish. 
 
 Until after most of my material had been collected I supposed 
 I was an absolute pioneer in making a thorough investigation of 
 the history of the surplus in the States. I was then informed 
 that Mr. Eaton, U. S. Commissioner of Education, had touched 
 upon the subject in an address delivered in 1877. Some ten pages 
 of this address were devoted to the appropriations for education 
 which thirteen of the States had made from portions of the sur- 
 plus that had been deposited with them. 
 
 Mr. Eaton, however, studied the matter only in its relation to 
 the question of national aid to education, and so took note of 
 only such appropriations of the money as were made for schools; 
 he merely looked in upon the field rather than explored it. 
 
 Some prefatory remarks upon the method and scope of the in- 
 vestigation are prefixed to the Bibliographical Index. 
 
 I wish to acknowledge my obligations to the correspondents 
 who have kindly helped me in gathering the facts. To Prof- 
 Sumner I am under especial obligations for directing my attention 
 to this subject, and for encouragement since the work was under- 
 taken. 
 
 Corrections of errors or any additional information will be grate- 
 fully received. 
 
 E. G. B. 
 
 New Haven, May, 1885. 
 
 V
 
 CONTENTS. 
 
 CHAPTER I. 
 
 PACK 
 
 The surplus question — Early proposals of distribution . . . . i 
 
 CHAPTER II. 
 The growth and disposition of the surplus ...... 12 
 
 CHAPTER III. 
 The different opinions of the measure ....... 21 
 
 CHAPTER IV. 
 
 The specie circular — The growing surpluses — Succeeding surplus, and the 
 
 action taken by the States upon tlie deposits ..... 27 
 
 CHAPTER V. 
 
 The steps taken to carry out the act — The panic and the fourth in- 
 stalment ............ 35 
 
 CHAPTER VI. 
 The surplus in the States ... ...... 44 
 
 CHAPTER VII. 
 The surplus in the States. (Continued) . . . . ... 56 
 
 CHAPTER VIII. 
 The surplus in the States. (Continued) ....... 70 
 
 CHAPTER IX. 
 The surplus in the States. (Continued) ... .... 82 
 
 CHAPTER X. 
 The surplus in the States. (Continued) 95 
 
 CHAPTER XI. 
 The surplus in the States. (Concluded) ....... 107 
 
 vii
 
 Vlll CONTENTS. 
 
 CHAPTER XII. 
 
 PACE 
 
 Some general effects of the accumulation and distribution of the surplus, 
 
 especially upon the internal improvement system .... 125 
 
 APPENDIX I. 
 
 A supplement to "Examiner's" views, mentioned on page 16. The 
 attempt is simply to calculate what would have been the excess of 
 receipts over expenditures of the Government if there had been no 
 fever of speculation . . . . . . . . . .137 
 
 APPENDIX II. 
 
 Statement of amount on deposit in the New York banks, to the credit of 
 the Government, January i, 1837, also the same April 26th, and the 
 amounts credited to the State April 26th. By subtracting the sum of 
 the last two columns from the first, we get, as a remainder, the amount 
 of Government funds withdrawn from New York in less than four 
 months 139 
 
 APPENDIX III. 
 A list of the towns in Massachusetts that appropriated more or less to 
 
 education, from the surplus revenue, during the years 1841 and 1846 . 145 
 
 APPENDIX IV. 
 
 The appropriations for schools made from the " Surplus Revenue " by the towns 
 in New Hampshire during four years ...... 149 
 
 Bibliographical Index . . . . . . . , . .151
 
 THE HISTORY OF THE SURPLUS 
 REVENUE OF 1837 
 
 CHAPTER I. 
 
 THE SURPLUS QUESTION — EARLY PROPOSALS OF DISTRIBUTION, 
 
 The Secretary of the Treasury, in his annual report, dated De- 
 cember 3, 1883, announced that according to present estimates all 
 bonds payable at the pleasure of the Government would be re- 
 deemed before June 30, 1887. The debt then remaining will 
 consist chiefly of " four and a half per cents.," redeemable Sep- 
 tember I, 1891, and "four per cents.," redeemable July i, 1907. 
 Before these dates these bonds can be redeemed only by paying a 
 large and growing premium. 
 
 Within less than three years, then, supposing no serious dimi- 
 nution of the national revenue to be effected by legislation or 
 treaty, the country will be brought face to face with a very urgent 
 financial question. For either some sudden and radical reduction 
 of taxation must take place, or the debt must be bought at a great 
 disadvantage, or a surplus of upward of $85,000,000 a year must 
 be disposed of. 
 
 This prospect of a great surplus has aroused some discussion, 
 but it has hardly received the attention that it deserves. Some 
 attempts, also, have been made to reduce the revenue, but as yet 
 they have been unavailing. 
 
 Roughly speaking, three ways are proposed to meet this surplus 
 question ; two by the protectionists, and one by the revenue re- 
 formers, or free-traders, as they are commonly called. 
 
 The revenue reformers demand a reduction of taxation suffi- 
 cient to forestall any troublesome surplus. They do not consent 
 to the abolition of the excise taxes on spirits, fermented liquors,
 
 2 SURPLUS REVENUE. 
 
 and tobacco, because these taxes collect a large revenue without 
 increasing the cost of the necessaries of life. 
 
 On the other hand, a large number of the uncompromising pro- 
 tectionists demand the immediate repeal of our internal revenue 
 laws as the surest and safest way to lessen the national income. 
 
 These two propositions strike at the root of the evil by reducing 
 taxation. The other division of the protectionists, however, take 
 the bull by the horns, and, instead of regarding a surplus as dan- 
 gerous and likely to be a nuisance, they look upon it as an un- 
 mixed blessing. 
 
 This party is led by men belonging to the National or Pennsyl- 
 vania school of political economy. They agree with the revenue 
 reformers in considering the excise too useful a tax to be dis- 
 pensed with ; but, on the other hand, they hold that, apart from 
 questions of revenue, a high protective tariff is a good thing in 
 itself. With these views, they are strictly logical when they 
 declare that the surplus should be used rather than that steps 
 should be taken to prevent its accumulation. If their premises 
 in regard to protection and the excise are sound, their position is 
 impregnable ; for it would be folly to give up a great good like 
 protection to avoid the little trouble of rightly using a possible 
 surplus. 
 
 This party accordingly propose, as a solution of the problem, 
 the distribution of the surplus among the States.' To disarm 
 
 ' See Thompson and " The Surplus Question." The following bills were 
 introduced during the first session of the Forty-eighth Congress (1884) : 
 
 January 8th, Mr. Goff, of West Virginia, (by request,) introduced a bill to 
 appropriate a portion of ihe surplus revenue of the United States among the 
 several States and Territories (H. R., 2886 ; 15 Cong. Record, 294). 
 
 January 2gth, Mr. Evans, of Pennsylvania, (by request,) introduced a bill 
 (H. R., 4268) to provide for the general welfare by the advancement of education 
 and the extinction of the public debt in the several States of the United States 
 through the utilization of the surplus revenue (15 Cong. Rec, 737). This is, I 
 suppose, what was known through the press as the " Wharton Barker scheme " 
 of distribution, and Prof. Thompson's pamphlet was written to expound and 
 defend it. To meet any constitutional objections it is so worded as to find ref- 
 uge under the broad shelter of the " general welfare clause." 
 
 May I2th, Mr. Barbour, of Virginia, introduced a joint resolution to complete
 
 SURPLUS REVENUE. 3 
 
 prejudice, they affirm that it is no new thing ; that the idea was 
 favorably entertained by the great men of the past ; and that, in 
 fact, it has been tried once, in 1837, under some disadvantages, 
 but even then with encouraging results. 
 
 To enable people to judge whether the so-called distribution of 
 1837 is a precedent for what has been lately proposed, and to set 
 forth for the first time a full account of a once exciting, but now 
 almost forgotten, incident in our financial history, is the aim of 
 this work. 
 
 So far as the writer knows, Thomas Jefferson was the first to 
 propose a distribution of surplus revenue. Such a proposition he 
 advanced in his second inaugural address, delivered March 4, 
 1805, while speaking of the import duties. ''These contribu- 
 tions," said he, " enable us to support the current expenses of the 
 Government, to fulfil contracts with foreign nations, to extinguish 
 the native right of soil within our limits, to extend those limits, 
 and to apply such a surplus to our public debts as places at a 
 short day their final redemption, and that redemption once 
 effected, the revenue thereby liberated may, by a just repartition 
 among the States, and a corresponding amendment of the Consti- 
 tution, be applied, in time of peace, to rivers, canals, roads, arts, 
 manufacturers, education, and other great objects within each 
 State." ' 
 
 The excess of revenue which Jefferson expected appeared in 
 Gallatin's report of December, 1805, where it was shown that 
 " the surplus in the Treasury, after meeting all the regular ex- 
 penditures and Navy deficiencies, French claims, and the 
 $1,750,000 of the Louisiana purchase, for which a loan had been 
 authorized, would still exceed one million dollars on a reasonable 
 estimate." The debt would be paid within four years. The next 
 year there was a surplus of $4,000,000 in the Treasury, and " only 
 
 the deposits of the fourth instalment of the surplus revenue of the United States 
 with such of the States as were entitled thereto under the act of June 23, 1836 
 (H. R., 249 ; 15 Cong. Rec, 4078). 
 
 No one of these bills has yet been discussed, so far as I know. 
 
 ' 8 Jefferson's Works, 41.
 
 4 SURPLUS REVENUE. 
 
 three years remained before the day when some disposition must 
 be made of the excess of revenue." ' 
 
 With this problem in view, Jefferson, instead of suggesting a 
 gradual reduction in the revenue, said : " Shall we suppress the 
 impost, and give that advantage to foreign over domestic manu- 
 factures ? On a few articles of more general and necessary use 
 the suppression in due season will doubtless be right, but the great 
 mass of the articles on which impost is paid are foreign luxuries, 
 purchased by those only who are rich enough to afford themselves 
 the use of them. Their patriotism would certainly prefer its con- 
 tinuance and application to the great purposes of the public edu- 
 cation, roads, rivers, canals, and such other objects of public 
 improvement as it may be thought proper to add to the constitu- 
 tional enumeration of federal powers." ^ 
 
 It will strike the reader perhaps that Jefferson's ideas have 
 been carried out practically by the great log-rolling appropriation 
 bills of later times. This is true in a sense, but Jefferson's propo- 
 sitions nevertheless deserve mention in an account of the attempts 
 at distribution, 
 
 Jefferson and Gallatin had large plans for a National University, 
 but they were not destined to be realized. To be sure, there was 
 a surplus of over five million dollars in 1807, but it rapidly dis- 
 appeared as Jefferson's great gun-boat scheme was carried into 
 effect. What was left after this waste ^ was soon absorbed in 
 general expenditures, since the embargo, another favorite measure, 
 well-nigh destroyed the commerce which filled up the Treasury. 
 
 1 Adams' " Gallatin," 348-9. 
 
 " It is but justice to JefTerson to remember that the tariff was lower then than 
 it has ever been since. The ratio of that tariff to ours is roughly that of fifteen 
 to forty. The similarity between the views of Jefferson and the ideas of 
 modern protectionists who favor distribution is one of principle. Those, how- 
 ever, who are familiar with Jefferson's views, may well doubt whether he would 
 have advocated such a measure under the conditions now prevailing. He kept 
 his constitutional objections to distribution and to national appropriation for 
 improvements, etc., till the end of his days. As late as 1825 he repeated in his 
 letters his conviction that a constitutional amendment was necessary to provide 
 for such cases. — 73 Niles, 264. 
 « Adams' "Gallatin," 352.
 
 SURPLUS REVENUE. 5 
 
 Jefferson still expected in 1808 a surplus soon after freedom of 
 commerce should be restored ; but freedom of commerce was not 
 restored, the Embargo Act was followed by the Non-Intercourse 
 Act, and in 1809 Gallatin announced a deficit.' The trouble in- 
 creased rather than lessened, and war soon followed. 
 
 It is in 1S16 and 181 7 that we next hear of excessive revenues. 
 The large importations which succeeded the long period of re- 
 striction produced "a casual surplus of five or six millions." It 
 was unexpected and was quickly and extravagantly spent ; but it 
 was before the eyes of Congress long enough to arouse expecta- 
 tions of more, so that twenty millions were disposed of " upon the 
 strength of these six millions." ^ 
 
 A season of distress soon followed, during which the Govern- 
 ment had to borrow. 
 
 At this time, too, the distribution theory appears again in a 
 modified form. After the charter of the Second United States 
 Bank, a bill was brought forward providing that the dividends on 
 the seven millions of stock in the bank, owned by the General 
 Government, as well as the bonus which the bank paid for its 
 charter, "should be expended in each State respectively in propor- 
 tion to the number of its inhabitants "; and secondly, that " the 
 money should be applied in constructing such roads, canals, and 
 so forth, in the several States, as Congress might direct with the 
 assent of the State." ' This measure, commonly known as the 
 " Bonus Bill," was vetoed by Madison on constitutional grounds.* 
 
 During the following ten years there was an annual " surplus of 
 
 1 revenues over all expenditures of from two to six millions of 
 
 j dollars." ' But this excess was steadily applied to the payment of 
 1 • ~ " ~~~ 
 
 ' Ibid., 412. 
 
 "In 1827 Mr. Dickerson, of New Jersey, said that this surplus " produced an 
 effect upon the body politic something like that produced in the human system 
 by the pressure of blood upon the brain, — it produced a political vertigo, the 
 effects of which may still be seen and felt." — 3 G*ales and Seaton, 214. 
 
 ^ 4 Webster's Works, 514. * 12 Niles, 36 and 67. 
 
 ^ Knox, 167. Mr. Knox's interesting and valuable study of the distribution 
 of the surplus was not published till after this work was written, but I have 
 availed myself, where it was possible, of some of his facts. His chapter treats 
 one or two points at much greater length than I have done.
 
 6 SUJiPLUS HE VENUE. 
 
 the public debt. By 1827, however, the country had become so 
 prosperous that visions of surplus revenues exceeding the charges 
 of the debt began to appear. As regards revenue the country was 
 then in much the same state as in 1805-6, or as at the present day. 
 The income exceeded the regular expenditures to a degree that 
 allowed large annual payments of the principal of the national 
 \debt. In 1827 the total extinction of the debt was sure within a 
 'dozen years ; now all the debt, which can be redeemed with advan- 
 tage, will be paid within three years, that is, by June, 1887. 
 
 In view of the similarity of the two periods, it is interesting to 
 note that in both cases long before the crisis the danger to the 
 tariff was foreseen, and very similar schemes were devised to 
 save it. 
 
 On the 13th of December, 1826, Mahlon Dickerson, a Demo- 
 cratic Senator from New Jersey, introduced a bill prescribing that 
 $5,000,000 a year, taken from the Sinking Fund, should be dis- 
 tributed for four years among the States in the ratio of direct 
 taxation, beginning January i, 1828, and ending January i, 1831, 
 He prescribed no especial use to which this money should be 
 applied, but the object was to aid internal improvements and 
 education. If the plan worked well, it was to be made perma- 
 nent ; after the payment of the debt, the amount for yearly dis- 
 tribution would be $15,000,000. ' 
 
 Mr. Dickerson tried to bring his bill up again January 30th, 
 and he succeeded in so doing February ist, when he supported 
 it in a long speech. 
 
 He advocated distribution because the debt would shortly be 
 paid at the existing rate, when either the country would enter 
 upon a career of extravagance, or duties would be most suddenly 
 and disastrously reduced. Furthermore, distribution removed 
 the temptation for the National Government to spend its funds 
 on internal improvements, which action was both contrary to the 
 genius of our Government, and creative of bad patronage and 
 corruption. He also advocated an excise tax on domestic spirits ; 
 
 ' 31 Niles, 260. See also Thompson, " Relief of Local and State Taxation," 
 p. 12.
 
 SURPLUS REVENUE. J 
 
 for the States, being forbidden to lay imposts, and not daring to 
 lay excises for fear of driving away industries, were forced back 
 upon direct taxation, an odious method by which it was difficult 
 to get revenue enough for education and internal improvement.' 
 
 The bill was laid upon the table, on motion of Mr, Benton.^ 
 Though the measure was brought up again December 17, 1827, 
 and ordered for a second reading, nothing further came of it. 
 In reference to this proposition, Calhoun stoutly and rightly main- 
 tained that the chief object in view was to protect, strengthen, 
 and perpetuate the protective system." The plan, notwithstand- 
 ing the two defeats, was still cherished. In the following March, 
 iMr. Johnston, of Louisiana, in the course of some remarks on a 
 resolution of Senator Benton's, in reference to the public debt, 
 affirmed that if there should be a surplus, he was in favor of in- 
 ternal improvements on a large scale. If this should not meet 
 the favor of the people, he greatly preferred the distribution of 
 the surplus among the States to the abolition of duties. " If the 
 distribution," said he, " was for no other purpose than to levy a 
 fund for the support of the State governments, it would be infi- 
 nitely preferable to the abolition of duties." " 
 
 The next proposal to distribute the surplus came from a man 
 who afterwards repented having made it. Jackson, in his first 
 message, December, 1829, discussed the prospects of a surplus 
 revenue, which he expected would soon exist,' as no satisfactory 
 
 ' 3 Gales and Seaton, 210. It will be seen, by comparing Prof. Thompson's 
 discussion of this plan (Relief, etc., p. 12) with his own plan, that the Demo- 
 crats of 1827 occupied the same position in several respects now held by the 
 Penn. Republicans. The proposition to levy an excise on spirits, to increase 
 the sum for distribution, recalls Mr. Blaine's proposition. 
 
 ^ 31 Niles, 268. 
 
 }: Calhoun's Works, 53 and 573. 
 \^9 Benton's Abridgment, 537. 
 
 ' Secretary Ingham, in his Treasury report, at the same time estimated a 
 surplus of income over expenditures of twelve million dollars yearly for the 
 next five years. As the amount of debt which would be payable or fall due in 
 this period was only $48,522,869, there would be a surplus, after paying this 
 indebtedness, of about twelve million dollars. This indebtedness was all paid 
 January i, 1833. During 1833 the debt had to be bought at market prices. 
 Knox, 168 and 178.
 
 8 SURPLUS REVENUE. 
 
 adjustment of the tariff seemed possible. On account of the 
 doubtful constitutionality of national improvements, he considered 
 that "the most safe, just, and federal disposition which could be 
 made of the surplus revenue would be its apportionment among 
 the several States, according to the ratio of their representation ; 
 and that should the measure not be found warranted by the Con- 
 stitution, it would be expedient to propose to the States an 
 amendment authorizing it." ^ 
 
 A year later his mind had begun to waver ; after noting that 
 unequal distribution of funds for internal improvements would 
 cause irritation and log-rolling, he went on to say that he had 
 previously recommended some plan of distribution of any surplus 
 among the States in proportion to their representation, to be ap- 
 plied to internal improvements. Although this plan had met with 
 favor in some quarters, objections had been brought up that the 
 /ratio of allotment was unfair ; that such a procedure would en- 
 courage oppressive taxation ; that the plan would bring about im- 
 provements of a local rather than of a general nature ; and, lastly, 
 that the States would become discreditably and injuriously depen- 
 dent upon the federal power.^ The principal alterations proposed 
 by the critics of Jackson's plan were two. Some proposed that the 
 importations of a district should be the standard by which the 
 share of any district should be calculated, while others proposed 
 the relative area. It is perfectly apparent that the first proposi- 
 tion came from Eastern men who regarded the surplus as the 
 product of duties, while the second is no less apparently the sugges- 
 tion of Westerners who looked upon the surplus as made up of 
 the proceeds of the sales of public lands. Each district proposed, 
 too, a method by which it might get more. Jackson defended 
 his plan as one of obvious equity, because of its being the ratio of 
 contribution whether the funds were derived from the customs or 
 from direct taxation. But the equity is not at all obvious. In 
 I the first place, the surplus was not raised by direct taxation ; and, 
 ' secondly, the impost duties can not be said to bear upon a com- 
 
 i ' I Statesman's Manual, 705. 
 ^ " I Statesman's Manual, 740-1.
 
 SURPLUS REVENUE. 
 
 munity in proportion to its representative population. Jackson 
 himself acknowledged later the unfairness of the ratio. Further- 
 more, the results of raising a revenue by imposts, and of distributing 
 it by any ratio based upon population, would be very different in 
 different communities. Take South Carolina and Pennsylvania 
 in old times, and suppose the surplus to have been raised by a 
 high protective tax on commodities made in Pennsylvania. The 
 surplus is then divided on a ratio of direct taxation or of popula- 
 tion between the two States. But the agricultural State has paid 
 a tax to the manufacturing community on the home-made goods 
 it may have bought, which does not come into the calculation. 
 The result is, roughly, Pennsylvania would get two bounties and 
 pay one. Her people would pay part of the imposts and get 
 part of the surplus and the excess of price on their commodities 
 arising from protection. South Carolina, on the other hand, would 
 get one bounty and pay two ; for she would pay impost duties to 
 the Government and a tax to the people of Pennsylvania, and she 
 would receive her share of the surplus. 
 
 In a measure this inequality, would have been balanced, in those 
 times, by the Southern States receiving an allowance, on the basis 
 of direct taxation, upon two thirds of their slaves. If the sur- 
 plus had been raised by direct taxation, its division among the 
 States on the same ratio would be as nearly just as is possible, but 
 the justice vanishes if the money is divided per capita or among 
 the towns afterward. In short, there is no conceivable way of 
 collecting taxes and distributing the proceeds according to the 
 contribution. The minute such a method were discovered it 
 would be no object for anybody but the tax-gatherer, an unpopular 
 minority, to propose taxation. 
 
 Jackson henceforth recommended economy and reduction of 
 the tariff, and his annoyance at having countenanced distribution 
 grew, till he declared that his views had so changed that he could 
 give no sanction whatever to any such scheme.^ 
 
 The seed, however, had been sown and was now springing up. 
 The suggestion of Jackson, or of Senator Dicker son was reechoed 
 
 ' In Dec, 1836. See p. 20.
 
 lO SURPLUS REVENUE. 
 
 in 1 83 1 by the Legislature of Pennsylvania, which passed almost 
 unanimously a resolution in favor of distribution.' 
 
 The first notable Congressional discussion of these projects 
 came up in the spring of 1832, under the leadership of Henry 
 Clay, who continued to advocate the distribution of land revenues 
 for many years. 
 
 The design, at bottom, was to maintain a high protective 
 tariff, but this was very difficult to accomplish in the face of a 
 fast diminishing debt and rapidly increasing land revenues. Clay, 
 therefore, devised a plan to distribute the land revenues, and thus 
 by withdrawing them from the treasury to make a high tariff 
 necessary. But who was to report such a bill? It came within 
 the duties of the committee on public lands, of course, but nothing 
 could be hoped from that body, as it was made up of Senators 
 from the new States, who were not particularly interested in the 
 welfare of the "American System," and were probably hostile to 
 the scheme in question, for the new States desired the cession of 
 the public lands to themselves. This difhculty, however, was 
 cleverly met by getting a resolution passed, under the color of 
 considering a revenue bill, that the Committee on Manufactures 
 should report on the land question. This cunning device did not 
 work, for though the Committee on Manufactures responded, 
 as might have been expected,' with a report and a bill favoring dis- 
 tribution,^ it was all so clearly out of place that the Chairman of 
 
 1 Prof. Thompson, "Relief," etc., 14. 
 
 ^ Four out of five of tlae committee "were known to be devoted advocatesof 
 the 'American System,' " while the Chairman was Mr. Diclcerson, who had pre- 
 sented a distribution bill in 1827. Clay, too, was a leading member of the 
 committee. (11 Benton's Abridgment, 431.) 
 
 * The chief point of the report is in the following : " After deducting the ten 
 per cent, proposed to be set apart for the new States, a portion of the committee 
 would have preferred that the residue should be applied to the olijects of in- 
 ternal improvement, and colonization of the free blacks, under the direction of 
 the General Government. But a majority of the committee believes it better, as 
 an alternative for the cession of the new States, and as being more likely to give 
 general satisfaction, that the residue be divided among the twenty-four States, 
 according to their federal representative population, to be applied to education, 
 internal improvement, or colonization, or to the redemption of any existing debt
 
 SURPLUS REVENUE. II 
 
 the Committee on Public Lands moved that the bill be referred to 
 his own committee, which was immediately voted, though a 
 majority of the Senate were in favor of the bill/ 
 
 The Public Lands Committee reported against the measure. It, 
 however, passed the Senate after much debating, but was killed in 
 the House by a small majority.'' 
 
 In the following winter Mr. Clay introduced his bill again ; it 
 passed the Senate the 28th of January by a vote of 24 to 
 20, and the House, with some amendments, March ist, by 96 to 
 40, only to receive a pocket veto from the President. This he 
 supplemented, however, with a special veto message at the open- 
 ing of the following session.' 
 
 Questions of greater moment, such as the bank war, the re- 
 moval of the deposits, and the relations with France, now arose 
 to push distribution for a time into the background. 
 
 contracted for internal improvements, as each State, judging for itself, shall 
 deem most conformable to its own interests and policy." 
 
 ' I Benton, 275-76. 
 
 "^ I Benton, 279. 
 
 ' See I Benton, 362-9.
 
 CHAPTER II. 
 
 THE GROWTH AND DISPOSITION OF THE SURPLUS. 
 
 It was a favorite proposition with Mr. Calhoun, that the tariff 
 of 1828 was the cause of the surplus, and the surplus of the re- 
 moval of the deposits, whence followed the disasters in the cur- 
 rency, which befell the country in 1837. ' 
 
 The operation of a high tariff in making a surplus is clear 
 enough, but there was a secondary influence after this which 
 vastly increased the surplus in a way not so clear. The secondary 
 influence was the new method of managing the public deposits. 
 When the Second United States Bank was incorporated in 1816, 
 its charter provided that the deposits of public money should be 
 kept in it, or its branches, unless the Secretary of the Treasury 
 should direct otherwise, in which case he was to report the 
 reasons of his action to Congress as soon as possible. 
 
 Of this valuable privilege Jackson resolved to deprive the bank. 
 This resolution was carried through with all his characteristic ob- 
 stinacy and recklessness, and the execution of it, with the attend- 
 ant circumstances, was one of the most exciting incidents in the 
 history of American politics. 
 j To this removal ^ of the deposits to certain chosen and favored 
 \ banks in different parts of the country, may be traced the source 
 of the enormous surplus which accumulated in 1836. 
 
 1 3 Calhoun's works, 428-g. 
 
 " There was no physical removal. Future receipts were to be deposited in 
 the chosen banks, and the deposits in the United States Bank remained there 
 till drawn out for ordinary government disbursements, (i Benton, 373.) In a 
 speech, April 27, 1836, Mr. Benton said : " No part of the revenues of 1833 was 
 ever transferred to the deposit banks ; all remained in the Bank of the United 
 States until expended." {50 Niles, 205.) The removal is fully discussed by 
 Prof. Sumner : " Life of Jackson," 297-321. 
 
 12
 
 SURPLUS KE VENUE. 1 3 
 
 The proceeds from the sale of the public lands were the largest 
 item in the Government income, after the customs. Credit on these 
 sales was withdrawn between 1820 and 1832.' 
 
 The annual income from this source averaged 2.3* million dol- 
 lars in the ten years preceding the removal, /. e., from 1824 to 1833. 
 The excess of the receipts of 1833, under a credit system, over 
 those of 1832 was 1.3 million dollars. In 1834 the increase was 
 only .9 million dollars. The influence of the deposits had not 
 begun to be felt, because they had not accumulated fast since the 
 reduced tariff brought in 12.8 million dollars less revenue than 
 was received the previous year. But in 1835 the effects of the new 
 deposit system appeared ; the debt had been paid, and " an im- 
 mense amount of capital was being collected by taxes, and this 
 was being distributed to favored corporations, as a free loan for 
 an indefinite period, on which they could make profits by lending 
 at interest." ' Furthermore, these favored corporations were en- 
 couraged by the administration to extend their accommodations so 
 that people might not miss the help of the United States Bank, 
 which narrowed the range of its operations on the removal of the 
 deposits. 
 
 The extraordinary privileges which the "pet banks" enjoyed' 
 were eagerly sought for, and frequently granted as rewards for 
 political services.* 
 
 ' Wirth, 145. 
 
 ^ Five figures omitted. 
 
 * Prof. Sumner's Jackson, 319. 
 
 ^ For example : The pet Commercial Bank of Cincinnati did a discount 
 business of nearly $4,000,000. It had $1,000,000 capital and $2, 500,000 /«3//<; 
 money. From auditor's report from Cincinnati Gazette, in Nezo York Spectator, 
 April 7, 1837. 
 
 ' See the letters in 52 Niles, 91-3. To take an example : The president 
 of the Seventh Ward Bank, in New York, offered the services of the bank to 
 the Secretary of the Treasury, October 2, 1833. The letter contained the 
 following: "The directory feel much confidence in this application, being 
 (without exception), as well as the stockholders, with few exceptions, friends of 
 the administration." ..." The directors, having the highest personal 
 consideration for General Jackson, respectfully request the Secretary to lay this 
 letter before the President." This ofifer was not accepted, whereupon, De-
 
 14 SURPLUS REVENUE. 
 
 There is no question that this tempting bait was used to 
 strengthen the hold of the administration on the Government. 
 New banks sprang up everywhere to partake of the good things. 
 The banking capital of the country in 1820 was $102,100,000 ; 
 in 1830, $110,000,000 ; in 1834, $196,250,000 ; and in 1836, 
 August, $281,250,000.' 
 
 The payment of the public debt left foreign capital seeking 
 investment, and at the same time raised American credit to a 
 high place ; consequently much of the foreign capital was put 
 into state stocks.'' This made money cheap and plenty, besides 
 inciting the States to contract debts for internal improvements. 
 ' In the West particularly the banks which received deposits 
 sought to loan them on easy terms, and so men found no trouble 
 in borrowing. The new banks, at the same time, were putting 
 out notes with great recklessness.' These two influences worked 
 together to excite a fever of speculation. The improvement 
 scheme would raise land values ; but the public lands sold for 
 the fixed sum of $1.25 per acre, no matter how high the market 
 price of other land rose. 
 
 Consequently everybody who could borrow money bought 
 public lands to sell again at the market value, or to hold for a 
 further rise.* In this way the deposits were borrowed, paid over 
 
 cember 16, 1S33, the president, cashier, and twelve directors sent the following, 
 signed with their names : " We, the subscribers, officers, and directors of the 
 Seventh Ward Bank, in the city of New York, friends of the administration, 
 and of the revered chief at the head of the Government, do solicit a portion of 
 the fiscal patronage of the United States Treasury for the Seventh Ward Bank. 
 The terms are those most favorable to the Government." This appeal was 
 successful. 
 
 ^ 51 Niles, 162. 
 
 "^ E. g. : In 1842 the debt of Pennsylvania was $34,454,356.47, of which 
 $23,738,206 was held abroad. — 62 Niles, 332. 
 
 ^ Abbot Lawrence, in March, 1837, estimated that since the veto of the bill 
 to renew the charter of the U. S. Bank in 1S32 there had been an increase of 
 bank notes in circulation of $80,000,000. — 52 Niles, 89. 
 
 * " A gentleman purchases land at $1.25, or more, per acre, returns, repre- 
 sents it a first quality, and counts it worth from $10 to $15 or $20. Multi- 
 plying the number of acres by this amount, he finds out his real wealth, and
 
 SURPLUS REVENUE. I 5 
 
 to the land receiver for land, to be by him deposited in the banks ; 
 then the operation was repeated again and again, the growing 
 surplus consisting of bank credits mainly.' 
 
 Under this deceptive process the land sales rose from an aver- 
 age of $2,300,000 a year to 114,757,600 in 1835, and in 1836 to the 
 unparalleled amount of 124,877,179 ! All this time speculation in 
 other things besides lands, feeling the contagion, went on wildly, 
 fancy stocks were put on the market, city lots rose enormously in 
 value, and money was drawn out of slow-goingenterprises. The rise 
 of prices here increased importations of all kinds, even'of provisions.* 
 
 the amount so produced stands good for credit equal to it; an endorser is easily 
 found, for in these speculating times dependencies are mutual, and the bank 
 looses its purse strings. The investment is made as soon as possible. The 
 money thus obtained cannot be refunded. Land will not sell, and if sold, the 
 depreciation in value prevents its realizing the estimate. In this way is the 
 ruin of many, no doubt, involved, and the banks must meet with heavy losses." 
 — The Richmond Compiler in the N'ezv Haven Register, May 13, 1837. 
 
 ' "The facility of purchasing was not less than the quantity to be purchased 
 (about 200,000,000 acres). The deposits of the Government in the State banks 
 selected as its fiscal agents were upwards of forty millions of dollars [this 
 estimate is a little too high probably, except toward the last. October i, 1835, 
 the deposits amounted to $18,000,000, and October i, 1836, to $41,000,000], 
 consisting almost exclusively of bank notes. From this vast source speculators 
 and political partisans drew their funds, in the form of discount or loan, in 
 exchange for which they gave their own promissory notes, and received the 
 notes deposited by the Government, or what was the same, a credit in bank 
 founded on them. These, in turn, were exchanged for public lands, when they 
 passed into the hands of the receivers, and were by them returned to the banks 
 as new deposits, to take the same rapid round again and again, and sweeping 
 away from the people, by means of their own funds, a corresponding amount of 
 their land, and swelling, in the same proportion, the amount brought to the 
 credit of the Government by the banks, under the fallacious name of public 
 money in the treasury, but which in reality was nothing more than the notes in 
 bank given by speculators and partisans in exchange for the public lands." — 
 Anonymous " Life of J. C. Calhoun," p. 56, Calhoun himself gave a rapid 
 and vivid survey of this period, and of this process, in his speech of February 5, 
 1840, 3 Works, 428-9. See also Mackenzie's "Van Buren, 136 (note) ; Jack- 
 son's Message, Dec, 1836, 51 Niles, 235 ; Von Hock, 424-5. and 50 Niles, 351. 
 "^ " For a series of many years the value of the grain and flour imported did not 
 exceed a few thousand dollars, while that exported was, on an average, quite
 
 1 6 SURPLUS REVENUE. 
 
 The revenue from customs was $16,200,000 in 1834, $19,400,- 
 000 in 1835, and $23,400,000 in 1836, a higher figure than was 
 reached again till 1844, after the tariff was raised. March i, 1836, 
 the surplus on deposit amounted to $33,700,000,' and by June ist 
 it had risen to $41,500,000.'^ The further inflation of this credit 
 surplus ^ was stayed by the specie circular which took effect Au- 
 gust 15th, so that on the first of January, 1837, the actual surplus 
 was $41,468,859.97.' 
 
 From these considerations it appears that the verdict of a con- 
 temporary writer, that there would have been no surplus had there 
 been no removal of the deposits, has very strong grounds of proba- 
 bility in its favor. It would perhaps be too much, though, to ac- 
 cept this statement without a little modification. To quote his 
 own words : " had the deposits not beeti removed there could have 
 been no surplus revejiue. It was the act of sending part of those 
 deposits to the Western States which furnished the means for the 
 first speculations in public lands. The public money was lent to 
 persons to buy lands with, and the same identical money, being 
 returned to the deposit banks by the receivers, was loaned over 
 and over again, until the amount was upward of forty-four mil- 
 lions of dollars in three years, being seven millions more [really $16,- 
 000,000 more] than the amount distributed amongst the States." ^ 
 
 To give another exa'mple of the extent of this speculative buy- 
 
 $6,oco,ooo. Sometimes it exceeded even $14,000,000, and so late as 1833, '4, and 
 '5, amounted to nearly $5,000,000 annually. But in the year ending September 
 30, 1837, the exports of grain fell off nearly a million, while the imports were 
 augmented in value to the unprecedented amount of more than four and a half 
 millions." See Woodbury's Report, Dec. 5, 1837 ; 53 Niles, 242. Between 
 January i and April 19, 1837, 851,000 bushels of wheat were imported. — 52 
 Niles, 147. 
 
 ' 50 Niles, 91. ^ 50 Niles, 313. 
 
 ^ The term " credit surplus," used above, is authorized specifically by the 
 chairman of a legislative committee in South Carolina, organized to report on 
 Independent Treasury. He referred to the late surplus as one " consisting of 
 bank credits." — 55 Niles, 310. ■* 51 Niles, 289. 
 
 * "An Examiner" in the National Gazette, April 29, 1837. — i Financial 
 Register, 146. The fact that Raguet reprinted this series of articles is a testi- 
 mony to their trustworthiness. See Appendix of this work.
 
 SURPLUS REVENUE. 1/ 
 
 ing : in Michigan the sales in 1836 exceeded $5,000,000, but in 
 1838 they amounted to only 1154,284 ; in Mississippi, in 1835 and 
 1836, the receipts exceeded $3,000,000 each year, but in 1838 they 
 fell to %C)(>,6i(i.^ It is worth remarking that the ratio between the 
 receipts in these two States is the same in both periods. It will 
 be noted further on that when the distribution took place the de- 
 posits were not forthcoming from Michigan and Mississippi, 
 because the banks could not collect their loans. 
 
 During 1835 and the first part of 1836 the opposition party 
 looked with alarm at the growing surplus of many millions of dol- 
 lars kept in administration banks, which had the use of the capital 
 for nothing. 
 
 The opposition perceived that the system was exciting wild 
 speculation, and that by it money was drawn from the great com- 
 mercial centres and stored in remote banks to be loaned to 
 the profit of those who had proved their loyalty to the administra- 
 tion and its " revered chief." The Whigs felt they had no hopes 
 of gaining an election against such odds^ ; what was to be done, 
 
 1 Woodbury's Report, January, 1840. 
 
 ''Mr. Ewing, of Ohio, said in a speech in the Senate, March 17, 1836 : " I 
 could not but be struck, and forcibly, with the perfect control which the Execu- 
 tive has, if he see fit to exercise it, over all these banks, and with them, also, over 
 the whole long list of directors, stockholders, and debtors. Of the thirty-five 
 banks in which the public money is deposited, there are but eight which could 
 not be crushed at once, if the public deposits should be at once withdrawn from 
 them. There are twenty-seven of them that could not pay the amount of those 
 deposits on demand, even if no other creditor should call on them. They are 
 fettered, bound by a golden chain, the ring of which is in the hands of the Secre- 
 tary of the Treasury. They could not, and they dare not move contrary to his 
 bidding, if he see fit to direct them to any end or object." — 50 Niles, 119. 
 
 In this session a committee, consisting of Calhoun, Webster, Benton, Bibb, 
 Southard, and King, considered the surplus question. It assumed there would be 
 a surplus of nine millions a year for the next eight years, and to dispose of this 
 surplus they proposed an amendment of the Constitution authorizing the distri- 
 bution of the yearly surplus on the basis of representation. This proposition was 
 never brought to a vote. Benton, as the leader of the administration in the Sen- 
 ate, opposed it, as was natural, for it was a blow aimed at the increasing power 
 of the administration coming from the support of the pet banks. For a fuller 
 notice of this report see Knox, 175-6. 
 
 V/cstminster Odd Fellows' 
 
 Free Library and Reaa-.^oom • 
 
 WESTy,lNSTER, CALlFORNm
 
 I 8 SURPLUS REVENUE. 
 
 for something must be done right quickly ? January 27, 1836, 
 Mr. Ewing, for the Committee on Public Lands, reported in favor 
 of distributing the proceeds of the land sales among the States, for 
 a limited time, to be devoted to education, internal improvements, 
 etc. There was too much revenue, and the best plan was to give 
 it back to the people.' 
 
 Clay brought forward a land bill which set apart ten per cent, of 
 the net proceeds of the land sales for the ten new States, and pro- 
 vided for the distribution of the residue.^ Calhoun, who was in 
 opposition, presented a joint resolution for an amendment to the 
 Constitution sanctioning distribution, ^and also a bill to regulate the 
 public deposits. A distribution bill was introduced. Mr. Benton 
 favored spending the money on fortifications ; for the administra- 
 tion did not relish the effects of the surplus and the responsibilities 
 it entailed. Silas Wright thought it would be a good plan to buy 
 State stocks with the surplus. Mr. Grundy introduced a bilP to 
 use it to secure for the Government the freedom of the railroads — 
 /. e., free transportation of mails, munitions of war, etc., forever- 
 Nobody of importance suggested a reduction of the tariff, because 
 the compromise bill, which was working slowly, was regarded as 
 the settlement of that question for some years to come, and it 
 must not be interfered with. In fact, many looked upon it as 
 a sort of temporary appendix to the Constitution, and conse- 
 quently sacred. Furthermore, most of the opposition were protec- 
 tionists. But perhaps the chief reason was that it was the vicious 
 deposit system and not the tariff which was working the mischief. 
 
 The land bill after passing the Senate, May 4th, by a vote 
 of 25 to 20, was laid upon the table by the House, 104 to 85, 
 June 22d. Through Webster's ^ influence the Senate committee 
 added a clause to the deposit bill providing for the division 
 among the States, according to population, of the excess of 
 the revenue above, some amount thereafter to be reserved, 
 
 ^ 50 Niles, I and 12. The surplus at this date exceeded thirty millions. 
 ^ March 25th, the lower house of the General Assembly of New York passed 
 a resolution in favor of the distribution of the land revenue. — 50 Niles, 118. 
 ' See note 2 on p. 17. 
 ^ 50 Niles, 83. * 50 Niles, 235.
 
 SURPLUS REVENUE. 1 9 
 
 The bill was thus amended and passed the Senate, June 17th. 
 On the 20th it was considered in the House, and an attempt was 
 made to break it up into two bills ; one for the regulation of the 
 deposits, and one for the distribution of the surplus, but without 
 avail. It was then made the order of the day until it should 
 be disposed of. After many hours of debate on the 21st the dis- 
 tribution clause was stricken out, and, on the motion of Mr. 
 Anthony, of Pa., a clause inserted in its place, making the States 
 merely the depositaries of the surplus, which should be subject to 
 the demands of the Treasury ; and changing the ratio of division 
 from the ratio of population to the ratio of representation in Con- 
 gress. In this shape the bill passed, 155 to 38. The Senate imme- 
 diately accepted the amendments, and the President signed the 
 bill on the 23d of June.^ 
 
 ' Two days later Webster wrote : " The deposit and distribution bill has be- 
 come a law, and money is already getting to be much easier, as the phrase is." — 
 2 Webster's Correspondence, 21^ 
 
 The following is the text of the 13th section of the Deposit Bill : ''And be it 
 further enacted. That the money which shall be in the Treasury of the United 
 States on the first day of January, 1S37, reserving the sum of five millions of dol- 
 lars, shall be deposited with the several States, in proportion to their respective 
 representation in the Senate and House of Representatives of the Congress 
 of the United States ; and the Secretary of the Treasury shall deliver the 
 same to such persons as the several States may authorize to receive it, on receiv- 
 ing certificates of deposit, signed by the competent authorities of each State, 
 each for such amount and in such form as the Secretary of the Treasury 
 may prescribe, which shall set forth and express the obligation of the State 
 to pay the amount thereof to the United States, or their assigns ; and which said 
 certificates it shall be competent for the Secretary of the Treasury, in the name 
 and behalf of the United States, to sell and assign, whenever it shall be neces- 
 sary, for want of other money in the Treasury, to meet appropriations made by 
 Congress, all sales and assignments, however, to be ratable, and in just and equal 
 proportions, among all the States, according to the amounts received by them 
 respectively ; and all such certificates of deposit shall be subject to, and bear an 
 interest of five per centum per annum, payable half-yearly, from the time of 
 such sale and assignment, and shall be redeemable at the pleasure of the States 
 issuing the same." 
 
 The 14th section prescribed that the deposits were t8 be made in four instal- 
 ments, one quarter January ist, April 1st, July 1st, and October ist respec- 
 tively. — 50 Niles, 291.
 
 20 SURPLUS REVENUE. 
 
 There is no doubt that Jackson would liave vetoed a distribu- 
 tion bill. The Globe said so/ and his criticisms of the act showed 
 that he was dissatisfied with it as it stood. 
 
 Indeed, his mind had undergone a thorough change on the sub- 
 ject. He declared in his message of Dec, 1836, that his first two 
 messages had been misunderstood ; he had wanted to discourage 
 loose construction and big appropriations for internal improve- 
 ments, at a time when duties could not be reduced without exten- 
 sive mischief, while great evils attended keeping the surplus in the 
 Treasury. He had suggested an amendment to the Constitution to 
 authorize distribution as an alternative for what were deemed 
 greater evils, as a temporary resort to relieve an overburdened 
 Treasury, till without commercial disturbance the Government 
 could return to raising revenue just sufficient for its support. 
 
 Even this had not been proposed as advisable without a consti- 
 tutional amendment. He now considered distribution of surpluses 
 as prohibited by the Constitution ; his opinion had changed till 
 he did not approve of an amendment at all. The whole thing 
 was bad, worse than any transient mischief coming from lowering 
 duties.^ 
 
 ' 50 Niles, 281. 
 
 "51 Niles, 234. In the message he argues very fully and strongly against dis- 
 tribution and against the deposit bill.
 
 CHAPTER III. 
 
 THE DIFFERENT OPINIONS OF THE MEASURE. 
 
 There can be no question legally that this act of June 23d was 
 to be interpreted as merely a temporary deposit of the surplus 
 with the States ; such is the wording of the act and such has been 
 the decision of the Supreme Court," yet the distributionists then 
 and afterward regarded it as a substantial victory, and their 
 opinion has so far prevailed that ordinarily the surplus is far more 
 often said to have been distributed than deposited in 1837. Many 
 States, indeed, continued for several years to count the deposit 
 among their liabilities, though oftentimes with the remark that it 
 probably would never be called for. Mr. Clay told his fellow- 
 citizens, on his return to Kentucky, that he "did not believe a 
 single member of either house imagined that a dollar would be re- 
 called." ' In 1841 he reiterated this belief more emphatically.^ 
 On the other hand, Calhoun (1841) affirmed: "I regarded it 
 then (1836), and still do, as simply a deposit — a deposit, to say the 
 least, as constitutional as that in Stale banks or State stocks held by 
 speculators and stock jobbers on both sides of the Atlantic, and far 
 more just and appropriate than either. But while I regard it as a 
 
 1 See p. 43. '^ 51 Niles, 14. 
 
 ' " The Senator from New York has adverted, for another purpose, to the 
 twenty-eight millions of surplus divided a few years ago among the States. Was 
 not that, in effect, distribution ? Was it not so understood at the time ? Was 
 it not voted for by Senators as practical distribution ? The Senator from North 
 Carolina (Mr. Mangum) has stated that he did. I did. Other Senators did ; 
 and no one, not the boldest, will have the temerity to rise here and propose to 
 require or compel the States to refund that money. If in form it was a deposit 
 with the States, in fact, and in truth, it was distribution. So it was then re- 
 garded. So it will ever remain." — Speech of January 28, 184 ; 6 Clay's 
 Works, 248. 
 
 21
 
 22 SU2?FLUS REVENUE. 
 
 deposit, I did then, and now do, believe that it should never be with- 
 drawn but in the event of war, when it would be found a valuable 
 resource." ' Others asserted that the bill provided for a deposit, 
 rather than for a distribution, only to avoid a presidential veto.' 
 
 On the question whether it was constitutional to distribute the 
 surplus revenue or to raise revenue for distribution, the Whig 
 position was that the existing surplus was not raised by taxation 
 and was not properly revenue, but the property of the people, 
 which should be given to them. If the Government needed the 
 money it might use it ; otherwise the money should be paid to its 
 rightful owners, the people.' 
 
 These ideas are illustrated by the attitude of the party news- 
 papers. 
 
 The opposition press rejoiced at their victory, as they deemed 
 it, prophesied that the money would never be recalled because 
 it was the " people's money," ' or because the States ' would 
 not give it up. They pronounced any man who, for party reasons, 
 could vote against a bill which brought so much money into the 
 
 ' Speech of Jan. 23, 1841 ; 3 Calhoun's Works, 581. 
 
 ^ It cannot be denied that when the distribution was made, it was well under- 
 stood by Congress that the form of a deposit was adopted only to save the bill 
 from the veto of the Federal Executive. Nor is it less apparent that the several 
 Legislatures, in disposing of the funds deposited, by no means contemplated a 
 contingency in which they should be repaid to the General Government." — Gov. 
 Seward's Message, Jan., 1841. 
 
 He asked if the people of New York were going to withdraw from educa- 
 tional purposes four million dollars, to pay into a treasury which, if well man- 
 aged, overflowed with the tribute of their own commerce. — 2 Seward's Works, 
 267 ; 4 Hazard, 36. 
 
 ^ Hartford Courant, in New Haveji Herald, March 13, 1S37. 
 
 * " It is the people's money, and the Government will never ask for it." — 
 Nc7v Haven Palladium, Dec. 3, 1836. 
 
 ^ " We abjure, however, the idea that the National Government ever will, or 
 can, effectually call for its return — a fact which is so palpable in itself that a 
 motion has already been made in Congress to divest the question of any kind of 
 doubt, (See page 29.) The idea is ridiculous that it can ever be returned in a 
 mass." 
 
 If all the States were called upon, they would not all act, an inequality with- 
 out remedy. — Nezv Haven Herald, Dec. 15, 1836.
 
 SURPLUS REVENUE. 23 
 
 State, politically depraved/ and declared that the country was 
 deeply indebted to Webster and the Whigs.* 
 
 Some papers asserted that the only reason why the administra- 
 tion, and especially Van Buren, the coming President, disapproved 
 of distribution was because it took money out of their control that 
 they wanted for political managing and electioneering purposes." 
 On the other hand the Giol'e claimed the credit of the deposit 
 bill for the administration in the early part of 1837, a claim which 
 the opposition papers refused to allow at all, and which the Globe 
 abandoned as soon as some evil effects of the measure began to 
 appear. 
 
 But notwithstanding the heat of these newspaper discussions we 
 are constrained to believe that there was no lively popular feeling 
 on the subject.'' While the politicians and the press wrangled as 
 to who should receive the credit of having benefited the country, 
 the people took no interest in their rival claims, and, so far as the 
 measure may have been calculated for winning political capital, it 
 must have been unsucessful. Before we criticise the deposit bill 
 too harshly or show that it failed to satisfy the expectations it 
 
 ^ The bill " will bring into this State, at the lowest calculation, $496,000; 
 at the highest, $544,000. A Senator or Representative who could bring himself 
 for mere party grounds to vote against a proposition, the result of which must 
 be so favorable to the most important interests of his constituents, must have 
 been far gone in political hardihood as well as depravity." 
 
 Cotin. (Hartford) Cotirant, June 27, 1836. " The country," it said, " is in- 
 debted to the public spirit, clear discernment, and distinguished talents of the 
 Hon. Mr. Webster, of Mass." 
 
 ^ " We are well aware that the Tory Democrats have fought against the meas- 
 ure of distributing the surplus among the people, so long as they thought it of 
 any avail, and that to the Republican-Whig Party alone are the States indebted 
 for the benefits arising from the distribution of the accumulated millions in the 
 National Treasury of the hard earnings of the laboring classes."— Bn'ifge/ort 
 Republican, in the New Haven Palladium, Jan. 28, 1837. 
 
 ^ Conn, Coiirani, Dec. 14, 1836, and N. H. Herald, March 20, 1837. 
 
 ^ " The public feeling is scarcely enlisted yet in support of our noble and just 
 measure of distributing the public revenue. People, seem so far as they fall 
 within my observation, to be unconcerned, as if entirely ignorant on the sub- 
 ject."— Letter from W. H. Seward, Sept. 8, 1836, from Westfield, N. Y., where 
 he was a land officer. Life of Seward, 307.
 
 24 SURPLUS REVENUE. 
 
 raised, let us look at the predicament. Private corporations were 
 using Government deposits as capital for their own profit ; this 
 great privilege was a reward for party services ; the wide and 
 powerful influence exerted in favor of the administration by this 
 system aroused the Whigs from mere party motives, if for no other 
 reason, to put a stop to such abuses. At the same time it was not 
 simply a case of unfair use of advantages seized in an unfair and 
 despotic way, but the policy was exceedingly disastrous com- 
 mercially and socially ; all monetary relations were disturbed by 
 arbitrary apportionments of the capital of the country and wild 
 speculation was undermining the solid basis of industry. Every 
 one felt that something must be done. Tariff revision was im- 
 practicable. Mr. Benton proposed, without success, to require all 
 payments for public lands to be made in specie ; this touched the 
 heart of the difficulty, it would check the growth of the surplus, 
 but it would not remove the money from the control of the 
 administration, a vital point with the opposition. All that this 
 could have done was done later by the " specie circular," ' an 
 heroic measure which struck at the root of the disease, but the 
 shock of whose execution hastened a crisis. Investment of the 
 money in the swollen issues of State stock would have been 
 to throw it away, and at the same time to tempt the States to 
 further issues. Webster regarded the deposit bill as a necessity to 
 prevent the accumulation of revenue ; building fortifications 
 would not do all ; he should vote, he said, for every part and 
 parcel of the fortification bill, yet he was sure it would not absorb 
 the revenue ; internal improvements could not absorb it, for these 
 useful channels were blockaded by vetoes. How then was it to be 
 disposed of P'^ 
 
 Calhoun maintained that it was highly dangerous to make way 
 with the surplus by increased expenditures, but more dangerous 
 still to leave it " in the custody of a few monopolizing corpora- 
 tions," selected by the Executive, which used the money as their 
 own while it was in their possession. This arrangement placed an 
 
 'See p. 27. 
 
 "Speech, March, 17, 1836; 4 Webster's works, 236.
 
 SURPLUS REVENUE. 25 
 
 overwhelming power in the hands of those who controlled the 
 Government, He could not favor buying State stocks. The 
 deposit probably would not be recalled except perhaps in time of 
 war. Tlie Electoral basis favored the smaller States, which he 
 wanted to do. Depositing, in short, would avoid national ex- 
 travagance ; would avoid diverting so much capital to unpro- 
 ductive enterprises ; and would enable the States to discharge 
 their debts and finish their internal improvements.' 
 
 It was under the pressure of such feelings that Congress passed 
 the bill The act was a makeshift. It was not wholly satisfactory 
 to the Whigs, who wanted distribution. Some of the States of the 
 free-trade South received their shares with protests, and received 
 them only because if they refused the North would get them ; 
 others regarded the money as a slight return for the iniquitous 
 exactions of the tariff, but not to be despised though slight. 
 Generally those States looked upon the deposit as a sop thrown 
 them by the protectionists, while a few of them proudly asserted 
 that they could support themselves and were not dependent upon 
 the General Government. Though their feelings were bitterly 
 expressed, they are an honorable contrast to the insatiable greed 
 manifested in some quarters. The administration disliked the act, 
 but felt constrained to sanction it. But in spite of its unsatisfac- 
 tory nature, and in spite of its unhappy effects in some cases, it is 
 difficult to suggest any thing better. The act was preferable to 
 pure distribution, though it degenerated to that in some instances. 
 The verdict must be that the country was in a sad plight : reckless 
 financial dissipation had had its effect ; disease had so fastened 
 upon the commercial body that there was no way to health or 
 improvement except by a surgical operation. The operation was 
 clumsy, because it was the first of its kind ever performed ; it was 
 painful, because the disease was strongly rooted ; it was injurious, 
 
 * Speech of May 28, 1S36 ; 2 Calhoun's works, 534-68. It will not be 
 anticipating too much to remark that "depositing" was no real safeguard 
 against the evils mentioned in the last sentence, for it encouraged State ex- 
 travagance, diverted the capital in many cases into unproductive State enter- 
 prises, and while enabling the States to reduce their debts etc., it frequently 
 tempted them to contract more debts and to begin more reckless improvements.
 
 26 SURPLUS REVENUE. 
 
 because the organism was so deeply affected that an attempt to 
 heal was only less dangerous than neglect. Our criticism and our 
 condemnation must be visited not upon the act so much as upon 
 the courses which made the act necessary.
 
 CHAPTER IV. 
 
 THE SPECIE CIRCULAR — THE GROWING SURPLUS — SUCCEEDING 
 SURPLUSES, AND THE ACTION TAKEN BY THE STATES UPON 
 
 THE DEPOSITS. 
 
 The deposit bill had passed, but though it was directed against 
 the mischievous effects of the surplus it was not all that was 
 needed ; it would not begin to act for six months, and then it only 
 turned the current of the flood instead of drying up its source. 
 To do this the Secretary of the Treasury, by order of the Presi- 
 dent, after Congress broke up, issued the " specie circular," ' 
 ordering that after the 15th of August nothing but gold and silver 
 and in special cases Virginia land scrip should be received in pay- 
 ment for public lands, " provided that till Dec. 15, 1836, the same 
 indulgences heretofore extended as to the kind of money received, 
 may be continued for any quantity of land not exceeding 320 
 acres to each purchaser, who is an actual settler or bona fide resi- 
 dent in the State where the sales are made." This measure was 
 only a return to a strict enforcement of existing laws ; but at a time 
 when credit was very general, so general as to be greatly abused, 
 to have the credit cease in just those transactions where it had 
 perhaps been most abused caused great annoyance and friction. 
 The opposition asserted that the measure failed to accomplish its 
 
 ' It was dated July nth, and addressed "To receivers of public money and 
 to the deposit banks." It began: " In consequence of complaints which have 
 been made of frauds, speculations and monopolies in the purchase of the public 
 lands, and the aid which is said to be given to effect these objects by excessive 
 bank credits, and dangerous, if not partial, facilities through bank drafts and 
 bank deposits, and the general evil influence likely to result to the public inter- 
 ests, and especially to the great amount of money in the Treasury, and the 
 sound condition of the currency of the country, from the further exchange of 
 the national domain in this manner, and chiefly for bank credits and paper 
 money, the president," etc. — 50 Niles, 337. 
 
 27
 
 28 SURPLUS REVENUE. 
 
 end, and that its effects were wholly evil ; Clay ' and Ewing 
 declared that it helped the speculators, for they could obtain 
 specie, and Ewing ' further objected that it would limit the sale 
 of land and raise the prices, an operation highly favorable to 
 speculators who had bought. But this could not be helped, and 
 it was absolutely necessary to diminish the land sales in some way. 
 The action of such measures is never pleasant, and the " specie 
 circular " was no exception. So great was the popular feeling, 
 however, that the Senate voted to annul the circular 41 to 5, and 
 the House 143 to 59, but the President did not sign the bill' 
 
 At the present time we must conclude that this popular objec- 
 tion was much of it unreasoning. The criticisms which economic 
 writers of to-day make are rather favorable than otherwise.* 
 
 During the latter part of the summer the people began to gird 
 up their loins for the Presidential campaign, and little interest was 
 shown about the surplus. 
 
 September ist, the money in the treasury amounted to $37,817,- 
 996.39 ; this added to the amount credited to public officers — 
 $4,847,926.55— made a total of $42,665,922.94 surplus revenue.' 
 Oct. ist this total was $46,610,131.77.' At this rate the sum to be 
 divided promised to be about $50,000,000, or about $3.75 for each 
 free inhabitant. This would be equivalent to-day to a distribu- 
 tion of $200,000,000. But these high expectations were not to 
 be realized. Nov. ist the two accounts stood at $42,600,000 and 
 $4,800,000, a gain in the total of only $700,000. By Dec, ist 
 
 ' 51 Niles, 15. 
 
 ''si Niles, 260. 
 
 ^ 52 Niles, 26. The bill was sent to the President March 2d. 
 
 *Wirth, in his histoiy of the crisis, says : " This measure [i. e., the circular] 
 for a time had salutary effects. It restrained the action of the Western banks, 
 and at the same time increased in advance their resources against the pressure 
 which soon appeared in the money market of the commercial cities of the East 
 and of Europe. By lessening the extent of the credit system, it did away with 
 the means of excessive speculation, and worked to prevent the tendency to mo- 
 nopolize the best public lands." Wirth, 147. Prof. Sumner : Jackson, 335-7. 
 gives a concise but thorough criticism of the measure. 
 
 * 51 Niles, 2. 
 
 "51 Niles, 180.
 
 SURPLUS REVENUE. 29 
 
 there had been a falling off of ^500,000, and by Jan. ist the 
 amount was still less, so that after deducting the $5, 000, 000 of 
 reserve there remained only $37,468,859 97 to be deposited with 
 the States. 
 
 Before considering the preliminary steps to the execution of the 
 deposit act which were taken by the treasury, it will be best to gather 
 up some threads of the narrative here, and so render our course 
 freer from digression hereafter. 
 
 Some Whig papers feared that the election of Van Buren would 
 put a stop to distribution, and they used his well-known opposition 
 to the scheme as a campaign argument. A specimen may be 
 quoted which will illustrate this feeling. In Connecticut Van 
 Buren had a majority of 620. The Connecticut Courant, in com- 
 menting upon this result foreboded that the longed-for distribution 
 would be prevented. "When that takes place," said the editor, 
 " it will be found that the people of the State have purchased the 
 privilege of being cheated and duped by selfish demagogues and 
 hungry horse-leeches dearly, by paying o?ie fnillion tivo hundred 
 t/wusajid dollars for being iniposed upon and degraded." ' 
 
 The act of June 23d provided only for the surplus in the 
 treasury Jan. i, 1837. What was to be done with later surpluses ? 
 This question arose before the one on hand was fairly disposed 
 of, and long before it was known whether there would be another 
 surplus. 
 
 A well-known writer for the press — " Pro Bono Publico," — 
 hailing from Pennsylvania, suggested that the surplus be used to 
 redeem the Continental money, and thus to wipe away the stain 
 still hanging over it.^ This proposition aroused no marked dis- 
 cussion, but the general question received attention on the 
 opening of Congress. On Dec. 12th, Mr. Mercer, of Virginia, 
 moved a resolution to instruct the Committee of Ways and Means 
 to report a bill releasing the States from any obligation to return 
 any part of the surplus that they might receive. This bold step 
 toward pure distribution found many supporters, but was laid 
 
 ' Conn. Cotirant, Nov. 12, 1836. 
 
 * National Intelligencer, Dec. I2, 1836.
 
 30 SURPLUS REVENUE. 
 
 upon the table, 123 to 73/ A few days later Calhoun introduced 
 a deposit bill providing for the surplus on hand Jan. i, 1838, 
 which would amount, he thought, to eight million dollars. If such 
 a revision of the tariff as would prevent a surplus were feasible, 
 it would be best by all means to get it ; but in case this should not 
 be possible, it was far preferable to deposit the money with the 
 States than with the banks.^ Clay, too, had introduced by this 
 time his favorite land bill,^ but neither of these bills passel. Cal- 
 houn's was finally tacked on to a bill appropriating money for 
 fortifications ; in this shape it passed the House, but the Senate 
 refused the amendment, 26 to 19.' The House disagreed, 
 and the Senate insisted on striking out the deposit clause, 28 
 to 22.' Friday, March 3d, the Senate voted, 27 to 23, to 
 adhere to its objections to the deposit clause, and the bill was 
 lost by the House voting to adhere to the disagreement, 106 to 
 87." 
 
 During the late fall and winter the State Legislatures were busy 
 in disposing of the prospective funds. Their measures will be de- 
 tailed later, but this is the best place to show how perplexing the 
 work was, and how carefully the law-makers were watched by 
 those whose hands itched for the Government money. In many 
 cases special sessions were summoned at considerable expense, as 
 there was no little controversy as to the use to be made of the 
 
 ^ 51 Niles, 255, and i Benton, 707. 
 
 "51 Niles, 309. 
 
 ' I Benton, 707. 
 
 * 52 Niles, 6. 
 
 " JbicL, 8. 
 
 ^ Ibid., 24. On this result the Washington correspondent of the Ne^o Haven 
 Palladium commented as follows : " The Senate has denied the request o£ the 
 Representatives that their own money be deposited with them, and has decreed 
 that it be left in the vaults of the deposit banks at two per cent, per annum 
 [the eleventh section of the act of June 23, 1836, provided that a deposit 
 bank should pay two per cent, interest a year on all the excess of its govern- 
 ment deposits over one-fourth its capital] when to the people it is worth two per 
 cent, a month." 
 
 It would be interesting to know how the correspondent, March 11, 1837, 
 knew that money would be worth two per cent, per month nearly a year later.
 
 SURPLUS REVENUE. 3 1 
 
 money. In New Hampshire the discussion took up far more time 
 than the whole session usually occupied.' 
 
 In Massachusetts the question was discussed two or three months 
 off and on, and when the lower house of the Legislature voted 421 
 to I to distribute the surplus among the cities and towns, high 
 hopes were awakened in all children who were out of pocket- 
 money.^ The country towns especially were in favor of this pro- 
 ceeding,' and we read in the Boston Courier that most newspapers 
 also " seemed to be in favor of distributing this God-send to the 
 towns in proportion to the number of inhabitants." The Courier 
 
 ' Gov. Hill, in approving the bill accepting and disposing of the deposit, 
 said : " With a Legislature composed of gentlemen scarcely less intelligent and 
 patriotic than any other public body that ever convened in the State, the people 
 will be surprised to learn that so great has been the agitation produced in antici- 
 pation of the surplus revenue for this State, that the important measures of the 
 session had not even been reported in that branch in which they are expected to 
 originate until long after the period when ordinary sessions have terminated." — 
 The Globe, Jan. 30, 1837. 
 
 In New Hampshire, a minority report was made against accepting the deposit. 
 See below " New Hampshire." 
 
 Mr Knox notes (p. 181) that the Legislature of N. H. by resolution declared 
 any distribution of surplus unconstitutional, and instructed their delegates to 
 vote against a relinquishment by the U. S. of the sums deposited, while the 
 legislators of Indiana pursued just the opposite course. 
 
 "^ This extract from the Boston Courier is interesting as showing the way in 
 which the topic was looked at by many. " The Western mail has just brought 
 us the following : ' To the Editor of the Courier : I have a little son, eight 
 years old, whom parental partiality might regard as a bright boy. He fre- 
 quently reads the newspapers, and is much interested in the disposition of the 
 surplus revenue in Massachusetts. He is decidedly in favor of its distribution 
 among the towns in proportion to their population, and is particularly anxious 
 about it now, as he is nearly out of pocket-money. Three dollars in his eyes are 
 a large sum for sugar plums, and he is sure if the towns get the money, he shall 
 have so much, whether father and mother are willing or not. Is he not a promis- 
 ing candidate for public favor ? Yours respectfully, WORCESTER.' " 
 
 Boston Courier, Jan. 19, 1837. 
 
 An acquaintance of the writer's was more fortunate in his childhood than this 
 little boy, for he lived in Maine, and still remembers getting between two and 
 three dollars from the town officers. 
 
 * 2 New Haven Register, Jan. 21, 1837.
 
 32 
 
 SURPLUS REVENUE. 
 
 had first favored an investment in internal improvements, but some 
 of its contemporaries had replied that this would aid corporations 
 and individuals, and that not a farthing of the money would then 
 benefit the great mass of the people. If lent to the towns, the 
 benefit would be unequal ; why not, then, said the Courier, dis- 
 tribute it among the people ? It was true democratic doctrine, and 
 would bring each individual about $2/ At another time, when the 
 division among the towns seemed likely to be carried through, the 
 Courier very much regretted that Congress had not provided for 
 the distribution of the money. " The popular doctrine of distribu- 
 tion to the various counties in some States and to towns in some 
 others, is a very excellent one to give opportunities to political 
 demagogues to show their love to the people and help themselves 
 to a little popularity ; but such a disposition can be of no possible 
 benefit to the towns." In five years, not an individual in New 
 England would be able to tell whether it had been of the slightest 
 benefit. As for itself it preferred a ''per capita distribution of the 
 money ; then, at least, every body would get something." ' The 
 matter was not settled till the 21st of March. 
 
 In Connecticut a special session was called which met at New 
 Haven, Dec. 21st. The day before the session opened the ISleiv 
 Haven Herald, a lively little Whig daily, to give the law-makers 
 something to think about, pronounced dividing the surplus up 
 among the towns, which might use the interest but must keep the 
 principal inviolate, "about equal to throwing it into the flames." 
 It would be divided into two hundred and thirty-four parts, there 
 would be the same number of responsibilities, ten times as many 
 subordinate responsibilities when it was loaned, and who could 
 expect ever to scrape it together again ? It did not approve of 
 applying the funds to schools or to improvements, as all would 
 
 ^ It continued : " If any one (like ourself, for instance) should have a number 
 of children— say a dozen, more or less— his share of the surplus would replenish 
 his pocket very comfortably — a consideration of no small weight in these days, 
 when breeches pockets are so degenerately empty. This case addresses itself so 
 vitally to every man's sensibilities that we look for a large majority on our 
 side." — Boston Courier ]a.n. 9, 1837. 
 
 * Boston Courier, Feb. 2, 1837.
 
 SURPLUS REVENUE. 33 
 
 not then enjoy the advantages of it ; it would be best to use it 
 to pay the State tax. It should be accounted as a liability of the 
 State, though every man of common-sense could see that it would 
 never be called for/ 
 
 After three days of discussion, the Herald declared it did not 
 know how the surplus business was coming out : " Both houses 
 seem to be acting 'upon their own hook,' It will probably result 
 something like the Seminole war, in which every general has 
 achieved a victory and retired, leaving his successors to fight the 
 battle over again, while each ' reposes on his laurels ' till a new 
 participant comes to share the glory and divide the spoils. 
 Uncle Sam pays." ^ The noise of the fray was not confined 
 to Connecticut, but on the 28th of Dec, Mr. Niles, from Con- 
 necticut, rose in the Senate in Washington and quoted from 
 a letter he had received from a friend on the spot : " For 
 God's sake send no more money among us." Mr. Niles 
 hoped the fund would prove beneficent to the State, al- 
 though for a time it might distract its councils. There were 
 those however who regarded the evil as greater than the 
 benefit.' 
 
 The bill proposed by the State Senate contained a provision 
 that the interest on this fund be applied to support the town 
 paupers or for education. Of this scheme the Herald sdJxd : " To 
 give the money to paupers would no doubt be a great relief to the 
 the New York almshouses, and set upon our State such a flood of 
 pauperism as would keep our inhabitant manufactories in con- 
 stant exercise of their benevolent designs." * Dec. 27th, in refer- 
 ence to the progress of the debate, it said : '* It will be seen by 
 the proceedings of the Legislature that the house, after being 
 in a state of betweenity — in which they have had to stop and 
 take an observation to determine their whereabouts, — have at last 
 got into a ' committee of the whole upon the state of the common- 
 
 ' N. H. Herald, Dec. 20, 1836. 
 * N. H. Herald, Dec. 24, 1836. 
 ' The Globe, Jan. 3, 1837. 
 ^N. H. Herald, Dec. 27, 1836.
 
 34 SURPLUS REVENUE. 
 
 wealth.' " ' The bill passed on the 29th with two dissenting 
 voices in the House and one in the Senate." 
 
 The Register, the administration paper, did not get so excited 
 about the surplus, and laughed at ihQ Herald ior its fretting. The 
 Herald, however, lost none of its interest in the matter, but still 
 had something to say from time to time. On Jan. 17th it 
 jubilantly exclaimed : " We presume the money will be in the 
 treasurer's hands in a few days, and those that want loans should 
 be on the qui vive with their securities when the managers will 
 ' down with the dust.' " ' 
 
 This account has been given at length to present an outline 
 picture of the discussions and feelings that prevailed in every 
 State. From what has been quoted it appears that some looked 
 upon the distribution as a kind of joke, while others considered it 
 as earnest a matter as the acquisition of two dollars is ordinarily 
 regarded. In general the tone of the discussion is undignified, 
 and the demoralizing effects of a distribution policy of this kind 
 are easily seen. 
 
 ' N. H. Herald, Dec. 29th. 
 
 "^ During the discussion Wesley [Wesleyan] University and Washington 
 [Trinity] College petitioned for an annual allowance from the fund. N. H. 
 Herald, Dec. 26th. At the same time the president and fellows of Yale sent in 
 a petition asking aid in assisting indigent students. This immediately follows 
 the notices of the other two petitions in the report, and one is led to suppose 
 that the surplus may have been the prospective source of this aid. The college 
 books, however, contain no reference to that petition, and the Secretary of the 
 corporation thinks the surplus was not the source from which the college hoped 
 to draw. 
 
 ^ A little later (Feb. 4th) the Register thought the distribution was working 
 favorably, and continued: "Now the people begin to see and own that our 
 national affairs must have been well managed, or such large sums of money 
 could not well have been saved for distribution." This comforting conclusion 
 was only partly true. Under good management the surplus would have been 
 far smaller, and under the best there would have been none.
 
 CHAPTER V. 
 
 THE STEPS TAKEN TO CARRY OUT THE ACT — THE PANIC AND 
 THE FOURTH INSTALMENT. 
 
 We have now to consider the steps taken to carry out the de- 
 posit act. The amount on deposit in the different States varied 
 widely from the shares that would fall to those States, for the 
 largest deposits were in commercial centres, or in the neighbor- 
 hood of the land speculations. Furthermore, very many deposit 
 banks had deposits far exceeding their capital. This was true of 
 fifteen of the nineteen banks which employed R. M. Whitney as 
 an agent between them and the treasury ; and these nineteen 
 deposit banks contained $24,200,000, while the sixty-six other 
 banks, which did not employ Whitney, contained only $16,- 
 900,000.' Michigan, which was increasing in population with great 
 rapidity, is the strongest case in point. During 1836 $5,053, 611.52 
 were received for lands sold there. ^ In October, 1836, the 
 Farmers' and Mechanics' Bank of Michigan, with a capital of 
 $150,000, had $1,029,200 on deposit, and the State Bank, with a 
 capital of $444,779, had $1,259,974 on deposit.' 
 
 Thus Michigan had $2,267,174 on deposit within her borders, 
 while her share from the instalment to be received in 1837 
 amounted to only $382,335.31. 
 
 This was one inequality to be adjusted. But besides this there 
 was another of no less difficulty, for the first section of the act of 
 June 23d ^ had ordained that no bank should have Government 
 deposits exceeding three quarters of its capital stock actually paid 
 in any longer time than was needed for the Secretary to remove the 
 
 ' 52 Niles, 91. For]the case of the Commercial Bank of Cincinnati see p. 13. 
 
 * 51 Niles, 353. 
 
 ' 50 Niles, 290, and 51 Niles, 249. 
 
 35
 
 36 SURPLUS REVENUE. 
 
 excess according to the provisions of section twelve. Conse- 
 quently the most arbitrary transfers of money had to be made 
 from place to place, and the money markets of business centres 
 were exposed alternately to hot and cold blasts, while constant 
 transportation of money hither and thither withdrew it from the 
 market to the great embarrassment of business men. 
 
 The Secretary of the Treasury had to keep these removals in 
 mind as well as the distribution to come in January. Further- 
 more, it was necessary to equalize as far as was feasible the 
 amounts on deposit in a given State with the amounts to be dis- 
 tributed to that State, so that when the act was carried out there 
 might be as little disturbance as possible. In accordance with 
 this intention, he notified each deposit bank on November i, 1836, 
 that a few days after January ist, or, if the deposit should not have 
 
 been accepted by the State of at that date, so soon as it should 
 
 be accepted, a transfer draft would be drawn upon it in favor of 
 
 said State for about the sum of % . Similar drafts would 
 
 come April, July, and October ist.' The money was to be paid 
 to the State in which the bank was situated or to some neighbor- 
 ing State. Now it is very clear that here were several delicate 
 and perplexing operations to be performed. The action, as has 
 been said, was wholly arbitrary ; no matter how the money market 
 stood, no matter how sharp the demand might be in one place, 
 the law said that the blind transfers of money must be made. 
 Consequently there was first a pressure and then a glut. But the 
 whole affair was vastly complicated by the fact that the deposits, 
 instead of being in the bank vaults, were loaned out in every direc- 
 tion, for the banks had expected to have the money until it was 
 needed for expenditures. These loans all had to be suddenly 
 called in,* an extremely embarrassing task. . 
 
 A writer of the time vividly described the period immediately 
 preceding the distribution : " The monetary affairs of the whole 
 country were convulsed — millions upon millions of coin were in 
 transitu in every direction, and consequently withdrawn from 
 
 ' 51 Niles, 167. 
 
 " See Van Buren's Message to Congress in September, 1837.
 
 SURPLUS REVENUE. 37 
 
 useful employment. Specie was going up and down the same 
 river, to and from the South and North and the East and West at 
 the same time ; millions were withdrawn from their usual and 
 natural channels and forced against the current of trade in literal 
 fulfilment of the distribution law, to points where public money 
 had previously never been either collected or expended except to 
 a very limited extent." ' 
 
 Another writer said : " The passage of the distribution law was 
 the signal for a general contraction of the loans of the deposit 
 banks, and everybody knows that no contraction of bank loans to 
 the extent of thirty-six viillions of dollars can take place in the 
 United States within fifteen months without creating a great and 
 general pressure for money." " 
 
 In fact, the newspapers of the time, both Whig and Democratic, 
 referred the pressure of the spring of 1837 to the influence of the 
 surplus and its management. There is no doubt that it was an 
 effective cause, a cause sufficient in itself to produce a severe 
 strain, but not adequate to produce the crash that finally came. 
 The measures taken to prepare for distribution intensified all the 
 difficulties of the time. So much is sure. But it might be a fair 
 question whether the reckless financiering would have gone to such 
 disastrous lengths without the constant and violent stimulus in the 
 West and South which came from the deposits. 
 
 The cotton failures in the South were the beginning of the storm, 
 but cotton speculation was a natural result and accompaniment of 
 the speculative spirit which derived its life from the easy loans of 
 Government money. 
 
 March 30th, the Neiv York American (Whig) attributed a por- 
 tion of the embarrassment to the curtailment which the deposit 
 banks were making to be prepared to pay over the second instal- 
 ment April I St. ^ 
 
 The Globe, a little later, said: "The proximate cause of the 
 
 ' I Hazard, 328, from an article by " A gentleman fully versed in the past 
 and present conditions of our monetary affairs." 
 
 "^ " Examiner," in Nat. Gazette, Mar. 22, 1S37, from i Financial Register, 67. 
 ' Quoted in the Globe, April 20, 1837. 
 
 ■386399
 
 38 SURPLUS REVENUE. 
 
 present disorders in the exchanges, and in some degree in the 
 money market is, as is known to every man of sense, the distribu- 
 tion act. This distribution act has rendered it necessary to transfer, 
 from point to point, an immense amount of funds, not according 
 to the wants of the Government, nor according to the demands of 
 commerce, but according to the provisions of an act of Congress 
 which completely binds the hands of the executive authorities.^ 
 
 On May 6th, four days before the general suspension in New 
 York, Horace Greeley enumerated twenty-one " causes of our 
 calamities." Among them were : 8th, " The removal of the deposits. 
 Sudden contraction of United States and other bank issues 
 followed by a corresponding expansion. 9th, The accumulation 
 of public money in the Western banks, whence it was loaned and 
 reloaned for speculations in public lands. 13th, The act of 
 Congress authorizing a distribution of the public money. 15th, 
 Injudicious steps taken by the Secretary of the Treasury to pre- 
 pare for an obedience to the Distribution Law (some say rather 
 with a view to render it odious') by a premature transfer to the 
 several States." ^ 
 
 Late in June the Charleston Courier in discussing the causes of 
 the crisis called attention to the great change in the distribution 
 of the national capital ; it declared that the clause removing the 
 deposits from banks when the deposits exceeded three fourths of 
 their capital, was worse in its effects than the first removal in 
 'ZZ-^ $6,168,854.66 had been withdrawn from the New York City 
 banks between Jan. ist and April ist,' $1,500,000 being in specie. 
 Much of this had been carried West and sunk in land speculations, 
 thus being taken out of the seats of commerce. "That the 
 deposit and distribution act has infinitely aggravated the evils of 
 
 ' The Globe, May 10, 1837. 
 
 ^ There appear to be no grounds whatever for this fling. 
 
 ' Neiv Yorker, May 6th. 
 
 * However this may have seemed at the time, it must be remembered that it 
 was the first removal that made this one possible and necessary. It certainly 
 was not expedient to allow a bank with a $150,000 capital to get gain on 
 $1,000,000 public money. See p. 35. 
 
 ^ See Appendix II., Table I.
 
 SURPLUS REVENUE. 39 
 
 speculation, and has almost indefinitely postponed the period of 
 return to a wholesome condition of things, is demonstrated. That 
 a vast amount of public funds has been lost to the country, we feel 
 convinced ; that it never will be recovered from the States, or 
 what remained in deposit, from that brood of deposit banks 
 which that act brought into existence we feel equally convinced." ' 
 
 The deposit banks had suspended with the rest, and, in fact, 
 the Dry Dock Bank, which yielded first in New York, was a " pet." 
 This was a source of keen chagrin to the administration. May 
 17th Secretary Woodbury sent a circular to the banks that had sus- 
 pended, beginning : "As the painful information has reached this 
 department through the public press,^ that your bank has sus- 
 pended specie payments, the object of this letter is to learn, 
 officially, if that fact has happened." The banks were therein 
 notified that no further deposits could be made with them, and 
 that what they had would be removed by warrants and transfers, 
 reasonable in amount and time of payment. They were asked 
 further when and how they expected to resume, and what meas- 
 ures they expected to take to secure the Government money.^ 
 
 On the 26th of May a Treasury order was issued requiring that 
 the public money should be deposited only in banks paying specie ; 
 if there were no such banks, the money was to be deposited in 
 those pledging themselves to return the deposit punctually when 
 wanted, in the same kind of money that was placed in them. The 
 deposits not in such banks were to be drawn and placed in the 
 same.' As the banks had suspended, paper currency more or less 
 depreciated was afloat everywhere. In view of this the Secretary, 
 in issuing his order for the transfers of the July instalment, dis- 
 tinctly informed the authorities who were to receive the money, 
 that no State was "desired to accept from any deposit bank any 
 
 * In the Globe, July 3, 1837. 
 
 "^ It is a sufficient commentary on the deposit system that the relationsbetween 
 the Treasury Department and the depositaries was so loose and careless that the 
 Secretary first learned of such a vital fact through the newspapers ! 
 
 ^ 52 Niles, 183 and 213, 
 
 * 52 Niles, 258. During the summer legal proceedings were commenced 
 against nine deposit banks, and additional security exacted from others.
 
 40 SURPLUS REVENUE. 
 
 currency which is not available, and at par, and which the State 
 would not hold itself in readiness to account for in the same man- 
 ner, when required under the provisions of the law. Should any 
 banks fail to deposit such currency, he requested that the orders 
 of transfer might be returned in order that the subject might be 
 submitted to Congress." ' 
 
 No instance has been found where a State did this. The States 
 preferred to take a depreciated currency rather than to wait, for 
 they wanted the money as soon as possible, and felt, most of them, 
 that it would probably never be recalled. 
 
 Soon after the outbreak of the crisis, May 15th, the President 
 called an extra session of Congress to consider " great and weighty 
 matters," or in other words, what was to be done about the de- 
 posit system and about the probability of an empty treasury. The 
 resources of the Treasury had been wellnigh exhausted by the 
 first three instalments, for the great deposits in the Southern and 
 Western banks that had failed were not available.^ In his mes- 
 sage Van Buren thoroughly discussed the situation. There had 
 been a prospect of a deficiency in the Treasury, he said, which 
 could not well be supplied by drawing on the sums already de- 
 posited with States, on account of the restricted conditions of 
 such a call, wherefore he had felt bound to summon an extra 
 session, that the problem might be dealt with as soon as possible. 
 He announced a probable deficiency of $6,000,000 and under a cer- 
 tain contingency, of $10,000,000,° ere the close of the year, 
 and recommended the withholding of the fourth instalment until 
 the money could be collected from the banks ; treasury notes 
 might also be issued for speedy redemption. The recommendation 
 about the fourth instalment was sound and commended itself to 
 the good financiers of the time. The Financial Register had 
 pronounced the repeal of the act, directing the fourth instalment 
 to be paid, indispensable.^ 
 
 ' The Globe, in 52 Niles, 241. 
 
 ^ See Appendix II., Table II. The first three instalments for the States came 
 mainly from the North and East. In the fall of 1837 there was still $9,000,- 
 000 on deposit in the West and Southwest. 
 
 ° 53 Niles, 15. '^A^ew Haven Register, Sept. 2, 1837.
 
 SURPLUS REVENUE. 4 1 
 
 Some of the Whig press, however, were disgusted and enraged 
 at the propositions.' 
 
 The whole discussion of the fourth instahnent is instructive and 
 rather amusing withal. Many members of the Senate and House 
 declared that the General Government had contracted to deliver 
 the money, and as the representatives of the States they claimed 
 the payment of the debt. True, the United States could not be 
 forced by a legal process, but their honor should be kept stainless. 
 It was only after prolonged and hot debating that on the 2d of 
 Oct. a bill was passed postponing the payment of the instalment 
 till Jan. I, 1839, when the duty of the Secretary was made i)er- 
 emptory to pay it, the nominal discretion of Congress over the 
 matter being denied. ° At the same time the power to recall the 
 amount already deposited was taken from the Secretary of the 
 Treasury and given to Congress, in other words to the States 
 themselves, an action equivalent to declaring the "deposit" a gift 
 to the States, for it was morally certain that the States would 
 never vote to give it back. Jan. i, 1839, there was no surplus and 
 the fourth instalment was not paid. To this day the three instal- 
 ments are carried on the treasurer's books as unavailable funds, 
 and are included in " the balance in the Treasury." ' Twice, at 
 least, since 1839 this surplus revenue has been mentioned as an 
 available resource. In his report of Dec. 9, 1S40, Secretary 
 Woodbury, in view of a deficiency of revenue in 1842 in conse- 
 quence of tariff reduction, advised that so much of the surplus as 
 was needful be recalled." 
 
 The second time was in 1861, when it was proposed to borrow 
 $25,000,000 to meet the demands upon the Treasury. As a 
 security for such a loan Secretary Dix, in a letter to the Ways and 
 Means Committee, Jan. 28th, recommended that " the several 
 States be requested to pledge the U. S. deposit funds in their 
 
 1 " Among the ' Grave and Weighty Matters' to consider which Van Buren 
 summoned the extra session, is placed first by the Ohio Register : ' To rob the 
 people of more than nine millions of dollars' " — A^. H. Herald, Oct. 6, 1837. 
 
 'See 2 Benton, 38. 
 
 ^ Treas. Report, 1883, 19. ' 3 Hazard, 404.
 
 42 SURPLUS REVENUE. 
 
 hands." ' As for the fourth instalment, again, those who hungered 
 for public money did not fail to look upon it with longing eyes. 
 Gov. Seward, in Jan. 1841, said : " It has been recommended 
 that the Legislature should insist upon the payment by the Federal 
 Government of the fourth instalment of the surplus revenue, and 
 require a relinquishment by Congress of all claims for a reim- 
 bursement of moneys constituting the United States Deposit 
 Fund."" 
 
 Though applications appear to have been made for the pay- 
 ment of the fourth instalment,^ it was not till lately that a State 
 
 ' I Blaine, 397, more fully stated in Knox, 189. 
 
 It may be worth remarking that Gen. Dix came from a State where the deposit 
 fund had been kept inviolable. It is not likely that he would have made this 
 proposition if he had come from a State where the fund had long been spent. 
 
 ^ 4 Hazard, 36 ; 2 Seward's works, 267. The writer cannot forbear quoting 
 the following curious specimens. Gov. Seward says that " if New York got her 
 share yearly of the public-land revenues, the internal-improvement enterprises 
 would no longer be rivals, for all would have all the money they wanted ; dif- 
 ferent educational institutions would no longer contend for shares, as there 
 would be ample for all. We are now obliged to practise a cold, calculating 
 charity. Our almshouses are perhaps sufiiciently convenient for those who are 
 brought into them by idleness and vice, but do they afford all the enjoyments 
 we would be happy to yield to the aged, the sick, the widow, and the orphan, 
 whose afflictions are the result of providential visitation unattended by vice or 
 error of their own ? . . . Let us bring annually into the treasury of the 
 State her proportion of these revenues (i. e. from land sales), and our fellow- 
 citizens can be relieved of the burthen of repairing common roads, and of pay- 
 ing tolls upon canals, railroads, and turnpikes, and from the heavy expenses of 
 the administration of justice, and the support of schools and charities. We are 
 sometimes called by the adversaries of internal improvement to contemplate a 
 condition of exhausting taxation. Who can object to a measure which would 
 almost secure a general exemption from the burthens of government." 4 
 Hazard, 54-55 ; 2 Seward's Works, 291. It would be hard to find a more 
 seductive picture of the benefits of a high tariff and of distribution of surpluses. 
 No taxes and every man's car fare paid whither he would go ! 
 
 ' This is stated upon the authority of Senator Garland, of Arkansas, who 
 asserted (April 16, 1884) that the Secretary of the Treasury had brought the 
 matter to the attention of Congress at nearly every session on account of the 
 applications made by the different States from time to time for the advance or 
 deposit of this fourth instalment. — 15 Cong. Record, 2996.
 
 SURPLUS REVENUE. 43 
 
 has tried to force the contract view by an appeal to the Supreme 
 Court. 
 
 In 1883 the Legislature of Virginia passed an act authorizing a 
 claim to be made upon the Secretary of the Treasury for the 
 deposit of the fourth instalment.' This claim was made through 
 the duly authorized agent, but the Secretary of the Treasury re- 
 fused to grant it. The State then applied to the Supreme Court 
 of the United States for a mandamus to compel the Secretary of 
 the Treasury to deposit with the State an amount equal with the 
 fourth instalment ($732,809.33). By this means we have a deci- 
 sion of the Supreme Court on the point whether a contract ex- 
 isted, as was so loudly and solemnly proclaimed by the Whigs. 
 
 The Court held that no case was made for a mandamus. The 
 "act of June 23, 1836, created no debt or legal obligation upon 
 the part of the Government, but only made the States the deposi- 
 taries, temporarily, of a portion of the public revenue not needed, 
 as was then supposed, for the purposes of the United States. 
 . . . We are of the opinion that the Secretary of the Treasury 
 has no authority under existing legislation, and without further 
 direction from Congress, to use the surplus revenue in the Treas- 
 ury, from whatever source derived, or whenever, since January i, 
 1839, it may have accrued, for the purpose of making the fourth 
 instalment of deposit required by the act of 1836." ^ 
 
 * Knox, 192. Arkansas, through the action of the State Treasurer and 
 Senator Garland, has made a similar claim. The Secretary of the Treasury re- 
 plied that the tradition of the department for over a dozen years had considered 
 the act of June 23, 1836, as obsolete, " or at least not imperatively effective 
 during a season of large public federal indebtedness," and that he should follow 
 his predecessors. — Knox, ibid. 
 
 " III U. S. Reports, 46-8. The decision vv^as rendered March 17, 1884. 
 April i6th Senator Garland, of Arkansas, remarked that this decision threw 
 the matter back upon the action of Congress, and he offered a resolution that 
 the Committee of Finance should investigate the matter and declare whether, in 
 their judgment, the Secretary of the Treasury should be authorized and directed 
 to make this payment ; and if not, what legislation, if any, was necessary to 
 adjust the matter. — 15 Cong. Record, 2996.
 
 CHAPTER VI. 
 the surplus in the states. 
 
 Alabama Received $669,088.95. 
 
 The surplus was accepted December 16, 1836, and the faith of 
 the State pledged " for the safe-keeping and repayment thereof," 
 according to the requirements of the national act.' 
 
 By the act of June 30, 1837, the money was to be deposited in 
 the State Bank and its branches, and all other laws were repealed, 
 provided the deposit was made before May i, 1838. The State 
 Bank at Tuscaloosa and the four branches, situated respectively 
 in Montgomery, Mobile, Decatur, and Huntsville, were each to 
 have a fifth. ^ The conditions were complied with, for we soon 
 find in the report of a commission to examine the State Bank that 
 $133,817.79 was credited to the United States surplus revenue.' 
 
 In February, 1840, the interest on the surplus was devoted to 
 form a part of an annual payment of $200,000 required of the 
 bank and its branches to aid in establishing a school system. 
 This law was repealed January 21, 1843.' The bank at this time 
 was greatly embarrassed by heavy fixed charges, and the repeal 
 was doubtless a measure of relief. In 1841 these fixed charges 
 exceeded its profits about $500,000 yearly, and were paid from 
 the capital." In fact, for a few years previous to 1843 all the 
 State expenses had been paid by the banks.® Among the items of 
 the bank capital that was disappearing we find " university and 
 
 ' Acts of 1836, 3 ; Clay's Digest, 552. 
 
 " Clay, ibid. 
 
 ° I Financial Reg., 203. 
 
 * Eaton, 12. 
 
 ' See note i on p. 45. 
 
 " 63 Niles, 279. 
 
 44
 
 SURPLUS REVENUE. 45 
 
 Other funds used as a part of the capital of the State Bank, 
 $1,058,195." ' The surplus is probably included here. 
 
 Besides heavy fixed charges constantly diminishing its capital, 
 bad management increased the difficulties which beset the bank. 
 As early as the close of the year 1839, the bank commissioners of 
 the State announced that the aggregate loss of the bank and its 
 branches reached the sum of $4,850,000, "squandered, according 
 to all accounts, in every direction, and never more to be returned 
 to the public coffers." ^ 
 
 Hardly a year later, early in 1841, the bad debts due the bank 
 of the State and its branches were officially announced as amount- 
 ing to $5,640,761.59,' while in 1844, or at the beginning of 1845, 
 a legislative committee classified the debts due from the counties 
 of the State to the bank and its branches as follows : 
 
 "Good" $6,755,103 27 
 
 "Doubtful" 1,019,395 18 
 
 "Bad" 6,179,680 27 
 
 Unknown 632,792 48 
 
 $14,586,781 20 
 
 The committee thought that by a more efficient mode of collec- 
 tion a considerable part of the " bad " and " doubtful " accounts 
 might be recovered.^ 
 
 We have assumed that the surplus was included in the capital 
 of the bank at this time because we found no mention of its pre- 
 vious withdrawal, but in 1846 we come across a note that implies 
 either a withdrawal at some earlier period, or that the State au- 
 thorities preferred to consider that the surplus had not suffered 
 by the above-mentioned losses, but was still available for any pur- 
 pose. In this meagre note the surplus revenue is mentioned 
 among the items of the State's indebtedness along with the " reve- 
 nue fund and the three-per-cent. fund." ' It seems more prob- 
 
 ' A Petition for Reform, 5 Hazard, 294. 
 
 * 57 Niles, 352. 
 ' 63 Niles, 71. 
 
 * 67 Niles, 368. 
 
 * Am. Aim., 1847, 268.
 
 46 ' SURPLUS REVENUE. 
 
 able that this means that the State had borrowed the fund, taking 
 it from the bank, than that it refers to the obligation of the State 
 to repay it to the General Government. A year later we read : "It 
 is considered doubtful whether the university and school funds, 
 and the surplus revenue, will ever be repaid from the treasury of 
 the State." ' 
 
 The fair conclusion seems to be, then, that the surplus was used 
 for State purposes, if not squandered in banking.'' 
 
 The authorities, however, still kept the deposit in view and, in 
 1854, set apart and appropriated, among the sums to be known as 
 the educational fund, " the annual interest at eight per cent, on 
 that portion of the surplus revenue of the United States deposited 
 with this State under the act of Congress of the 23d of June, 
 1836." The fund was available only for the payment of teachers 
 duly qualified.' 
 
 This stipulation was repeated in 1856,' and again in 1860.^ The 
 interest fell sadly in arrears during the distresses of the war and 
 of the reconstruction period, so that an act was passed October 
 10, 1868, appropriating $245,411.46 for the year beginning Octo- 
 ber I, 1868, " the same being the interest now due from the State 
 on the school fund." ° 
 
 In the Revised Code of 1867 the surplus revenue forms the first 
 item of the school fund, as in the law of 1854.' 
 
 But this yearly charge of $53,596.94 proved too heavy a burden 
 upon the treasury of the State, which was heavily in debt, and had 
 not recovered from the losses of the war. Consequently, in March, 
 1875, section 957 of the Code was repealed, the school fund re- 
 
 1 Am. Aim., 1848, 286. 
 
 ' Mr. Eaton says the surplus was used up in the war by the State. It may 
 be so accounted on the State books, but it seems very doubtful indeed whether 
 the old loan was ever repaid from the State treasury. It would be almost an 
 unique instance. 
 
 'Acts, 1853-4, 8. 
 
 " Acts, 1856, 34. 
 
 ' Eaton. 
 
 * Acts, 1868, 255. 
 
 ' Walker, R. C, 262, Sect. 957.
 
 SURPLUS REVENUE. 47 
 
 organized, and the first paragraph about the surplus stricken out, 
 no mention whatever being made of it.' At the same time, how- 
 ever, the Constitution of 1875 appropriated for education "the 
 income arising from the surpkis-revenue fund until it is called for 
 by the United States Government." ^ This shows that the intent 
 of the repealing act was not to abolish the fund, but to lessen the 
 burden which an interest charge of eight per cent, brought upon 
 the treasury. The discrepancy between these laws was removed 
 by the educational laws of February 18, 1876, and February 8, 
 1 87 7, which re-enacted the surplus revenue clause of the old law, 
 and changed the rate of interest from eight to four per cent.^ 
 Apparently the school income from this source ceased for only 
 one year. The annual appropriation is now $26,763.47. This 
 money is all raised by taxation, and is in no way the incovie of the 
 surplus revenue.^ The only relation which can fairly be said to 
 exist between this appropriation and the surplus is that of occasion 
 to event ; the surplus deposit was the occasion of part of the school 
 appropriation of 1854. Or, to state it a little differently, when 
 they made an annual appropriation for education, a portion thereof 
 was called " interest on the deposit fund." 
 
 Arkansas Received $286,751.49. 
 By the act of November 2, 1836, the surplus was deposited in 
 the principal bank, and was to be " considered as a part of the 
 capital thereof." ' 
 
 1 Laws, 1874-5, 170. 
 
 ^ Art. 13, sec. 5. See Code of 1876, 147. 
 
 'Acts of 1876-7, 199 ; Code of 1876, 384-5- 
 
 * " It is erroneously supposed by many that the interest annually accruing on 
 the i6th section, the vahieless i6th section, and the United States surplus- 
 revenue funds, was the result of a prudent investment of the capital of those 
 funds in solvent securities ; but in reality they have no existence except upon 
 the books of the State offices in which said accounts are kept. The State 
 became the trustee, and her debt long since absorbed them, and every dollar of 
 the education fund, except the annual receipts from the sale of school lands is 
 now directly derived from the revenues of the State." — Report of H. Clay Arm- 
 strong, State Supt. of Ed., 1882, p. 7. 
 
 free Library »""^^3,^>«*,i*.
 
 48 SURPLUS REVENUE. 
 
 June 12, 1837, the Bank of the State of Arkansas began business 
 with a capital of $413,105.29, of which $286,156.49 was derived 
 from the surplus.' The bank suspended specie payments imme- 
 diately, and consequently did a limited business for a while. The 
 next reference to the surplus appears in 1843. On February ist, 
 the Legislature passed a bill over the governor's veto, ordering 
 the State Bank " to reimburse the State " $15,000 in specie from 
 the surplus revenue to meet an appropriation.* 
 
 On the 3d of February this first step was followed by a general 
 act, the second section of which runs as follows : " Whenever the 
 ordinary revenue in the treasury shall not be sufficient to meet and 
 discharge warrants drawn under appropriations made, or which 
 shall be made by law, a sufficient sum of the surplus-revenue fund 
 shall be used for the payment of such warrants." ' 
 
 This act, we are told by Gov. Roane, in 1852, was the result of 
 general bad management. When the banks suspended, they were 
 allowed ten years, during which they were to liquidate their debts. 
 By this course their indebtedness became " confirmed as an ac- 
 count of the State." ' Such a condition of affairs discouraged 
 emigration, and " the legislators lost confidence in the State Gov- 
 ernment and began to try to secure their districts as much treasure 
 as possible." So, to save their constituents from taxation, they 
 used up the surplus for the State expenses, and, to be sure that 
 they and their friends got something before general dissolution 
 came, they divided the seminary fund and the proceeds of the 
 500,000 acres given for internal improvements among the coun- 
 
 ' Trotter, 337 and 450. 
 
 = Acts of Arkansas, 1842-3, 105. 'English, 962 ; Gould, 1047. 
 
 * " The State debt had its origin in the suspension of the business of the two 
 banks chartered by the Legislature shortly after the organization of the State 
 Government. In order to procure a capital fund upon which to base their op- 
 erations, bonds to the amount of $2,827,000 were sold, for the redemption of 
 which the faith of the State was pledged. After their suspension, these banks 
 were placed in liquidation by an act of the Legislature, which extended the time 
 of payment to those indebted for ten years ; by which injudicious policy the 
 amount of their indebtedness was confined as an account of the State."— Gov. 
 Roane's Mess., Nov., 1S52 ; Am. Statist. Ann., 185^, pp. 165-6.
 
 SURPLUS REVENUE. 49 
 
 ties. This bad policy dispirited the people and hindered the 
 growth of the State.' 
 
 But before the surplus was used up, attempts were made to save 
 some of it for educational purposes. On the same day that it was 
 made subject to appropriation, an act, establishing a system of 
 common schools, was passed, in which it was provided (Sec. 41) : 
 " that so much of the surplus revenue of the United States, dis- 
 tributed to the State of Arkansas, as shall remain unappropriated 
 after the final adjournment of the present General Assembly, shall 
 form a capital for the use, benefit, and support of common schools 
 in this State." The interest was made payable to the counties in 
 the ratio of white population.^ 
 
 If the friends of education hoped for much help from the sur- 
 plus, their hopes were in vain, for the fund was almost entirely 
 used up at or near the end of the session.' 
 
 If they hoped much from the law, their hopes were equally vain, 
 for it was a dead letter. It did not even protect the little rem- 
 nant of the surplus. In October, 1846, there was $13,830.95 of 
 this money to the credit of the State in the bank, and very soon 
 after $4,667.19 was drawn." The $9,163.76, left to the credit of 
 the State, and nominally an educational fund, appears on the books 
 as late as October, 1850,^ It is altogether probable, however, 
 that this small remnant soon followed the rest of the surplus." The 
 law, in fact, was too complicated. As late as 1848, the system 
 had not been organized, and nobody believed that it would be." 
 
 The people were perfectly indifferent on the subject ; ' and, how- 
 ever bountiful their resources might have been, or how liberal 
 
 ' Gov. Roane: Am. Statist. Ann., 1854, 162. 
 
 ^ Acts of 1842-3, 138. Am. Aim., 1845, 266. 
 
 ' Gov. Drew : i Bankers' Mag., p. 429. 
 
 ^ Auditor's Report, Table B ; Acts, 1848-9, 2l6. 
 
 ^ Report, Table D ; Acts, 1850-1, 320. 
 
 ■^ It will surprise no student of banking in this period to learn that, though the 
 surplus was almost entirely drawn from the bank, it was still represented as a 
 basis for a corresponding amount of notes of the State Bank in circulation. — 
 I Bankers' Mag., 432. 
 
 ' Am. Aim., 1856, 309.
 
 50 SURPLUS REVENUE. 
 
 soever their laws, their own indifference would have rendered their 
 resources useless and their laws without effect. 
 
 We could have no better example of the truth, that it is public 
 sentiment which gives life to laws, or no better justification of 
 that only sound principle which makes local taxation the proper 
 source from which to draw the supplies for local wants. 
 
 If Arkansas had had a school fund of a million dollars, it would 
 
 soon have gone the way of the surplus fund, taking the place of 
 
 taxation for governmental wants ; or the way of the seminary fund, 
 
 to satisfy the greed of local politicians. The surplus revenue did 
 
 Arkansas no good, but rather much harm, for its presence led to 
 
 corruption, and, finally, relieved the people of taxation at a time 
 
 when they most needed it, and when relief therefrom only sowed 
 
 the seeds of future backwardness in meeting their obligations. 
 
 Arkansas failed to pay the interest on that bank debt for thirty 
 
 years, and, consequently, was numbered among the repudiating 
 
 States.' 
 
 Connecticut Received $764,670.60. 
 
 An extra session of the Legislature was called to meet Dec. 21, 
 1836, mainly to consider the question of the deposit money.'* 
 The governor recommended that the school-fund commissioners 
 loan it on mortgage and add the interest to the school fund.' 
 There was a stormy and confused discussion for nine days, and 
 many propositions were advanced. A bill was finally passed Dec. 
 29, 1836, with two dissenting voices in the House and one in the 
 Senate.* The act provided that the money be deposited with the 
 towns which might receive it on condition that they should keep 
 and preserve the money as a deposit. The principal was to be 
 loaned on good security at the legal rate of interest, and the entire 
 income appropiated annually ; " at least one half thereof for the 
 promotion of education in common schools in such manner and 
 proportions as the towns may direct ; and the remainder for the 
 
 ' Hunt's Merchants' Mag. Year-Book, 203. 
 " For further particulars see page 32. 
 ^ New Haven Herald, Dec. 21, 1836. 
 ^Nexo Haven Herald, Dec, 27, 1836.
 
 SURPLUS REVENUE. 5 I 
 
 ordinary expenses of such town and for no other purpose." 
 "The principal of this fund shall remain permanent, and no part 
 of it shall ever be used for any purposes other than those desig- 
 nated in the act." ' 
 
 If the towns failed to make good the losses to the principal 
 within one year after the same should occur, such towns should 
 forfeit a sum*equal to the whole amount received from the treasury. 
 When towns refused their shares the treasury should loan them at 
 the expense of the said towns ; ° and when the towns were divided 
 the surplus also should be divided proportionately.^ For nearly 
 twenty years, about three quarters of the income from the fund, or 
 about $33,000, was devoted to schools.'' Then came the act of 
 June 30, 1855, by which the whole income was applied to schools ; 
 one half to be divided pro rata among the districts, and one half 
 distributed under the direction of the selectmen and town 
 treasurer.^ 
 
 Of late years the income has been diminishing very rapidly either 
 from losses, lower interest, or from unproductiveness of the funds." 
 
 ' This and the following provisions are dead letters now. 
 
 " The towns of Berlin, Grandby, Wethersfield, Brandford, North Brandford, 
 Southbury, and Bolton did not draw their shares, but invested them in State 
 bonds and still draw their interest. 
 
 'Laws, 1837, 61 ff. Gen'l St., 593-8. Eaton, 14. 
 
 *"A second and considerable source to meet the school expense is half the 
 income of the ' Town Deposit Fund,' amounting to $764,670.61 and such por- 
 tion of the remainder as the towns may appropriate to education in common 
 schools. As far as heard from, about one half of the remainder is devoted to 
 this object — making an aggregate income of over $33,000. This amount is, in 
 most of the towns, distributed to the school societies, and through them to the 
 districts, on the same principle as the avails of the School Fund. In quite a 
 large number it is divided equally to the districts without reference to the enum- 
 eration. This is done to give additional aid to weak districts. The annual 
 appropriation of this fund is one of the ' vexed questions ' of town meetings." 
 
 First Annual Report of the Secretary of the School Board, Henry Barnard. 
 Connecticut Common School Journal (1838), 161. 
 
 ' Laws of 1855, 105. 
 
 ° The income was $48,078.92 in 1866, wavered between that and $43>985-75 
 in 1869, averaging about $45,000. Since 1877 when the income was $47,665 
 it has steadily sunk to $42,156.28 in 1884.— Report of Sec'y of Ed., 1884, 21.
 
 52 SURPLUS REVENUE. 
 
 The following is from the last school report : " The fund origi- 
 nally amounted to ^763,661.83 and has somewhat diminished. 
 The principal has in many cases been borrowed and used by the 
 towns, and exists only in the form of town orders, upon which the 
 towns pay interest. The result is that it does not in fact add to 
 the school resources. The town must raise this interest, which is 
 accounted a town charge, and instead of actually increasing school 
 resources there is simply a transfer of charges on the books. It 
 cannot be said that this is within the intent of the law, which re- 
 quires the interest to be actually devoted to the maintenance of 
 schools." ' Some towns have lost more or less of the money and 
 not refunded it. 
 
 Delaware Received $286,751.49. 
 
 The share of the surplus that fell to Delaware was exactly one 
 tenth of the share of Pennsylvania, and about one hundredth of 
 the whole sum deposited. As Delaware invested the surplus, we 
 will first see what the investments were, and then what was done 
 with the income therefrom. The money was accepted January 
 16, 1837, to be deposited in the Farmers' Bank, of the State of 
 Delaware, at Dover. At the same place the subsequently accru- 
 ing dividends^ were to be deposited. By an act to authorize the 
 building of a court-house, etc., at Georgetown, Sussex County, 
 " the State Treasurer was to pay the building commissioners 
 $5,000 from the surplus fund of this State, to be used in the 
 erection of this building." Sussex County was to pay six per cent, 
 interest on this loan, which was to be deducted from her share of 
 the annual interest from the surplus revenue.' 
 
 Four days later a general act was passed, providing for the in- 
 
 ' Ibid. 
 
 A table of the towns and their shares as they existed in 1847 is in the Report 
 of 1876, pp. 254-5. Statistics of the state of the fund in 1881 in MS. are in 
 the Yale College library, and the office of the State Secretary of Education at 
 Hartford. A thorough investigation of the matter at an early day is promised 
 by the Secretary of Education. 
 
 =■ Acts, 1837, 64-7. 
 
 ' Act of February 17th. Acts of 1837, 140.
 
 SURPLUS REVENUE. 53 
 
 vestment of the rest. $250,000 was to be expended in baying 5,000 
 shares of the increased stock of the Farmers' Bank of the State of 
 Delaware, at par, — to wit, at $50 per share. If the whole amount 
 expected ($382,335.31) should not be received, a sum bearing the 
 same ratio to what was finally received, " after deducting the sums 
 already paid thereout," that !|25o,ooo bore to the amount ex- 
 pected, was to be in Farmers' Bank stock. Further, $110,000, or 
 a sum proportionate to the remainder of the surplus was to be 
 lent for a period not longer than two years to the Wilmington and 
 Susquehanna Railroad Company, on approved security, provided 
 the company accepted their new charter. Any remaining portion 
 of the surplus was to be loaned under the approval of the Com- 
 mittee of Three, who had charge of the railroad investment.* 
 
 The amount invested under this law, as will appear, was 
 $180,000 for Farmers' Bank stock, and $80,793.83 loaned to the 
 railroad. Nominally, however, $1 10,000 was loaned to the Wil- 
 mington and Susquehanna Railroad Company, and their penal 
 bond for $220,000 was recorded January 28, 1839.^ Soon after- 
 wards this loan was extended to the Philadelphia, Wilmington, and 
 Baltimore Railroad for a period of not more ^than four years, at 
 the same rate of interest. This was a consolidated road, which 
 had absorbed the Wilmington and Susquehanna.' The mortgage 
 for this loan of $80,793.83 was accepted February 22, 1843.' 
 This loan was to be extended under certain conditions till 1860." 
 
 The remainder of the surplus, $20,958.49, was probably loaned 
 under the act, or invested in some way. It is now invested in 
 Smyrna Bank stock and National Bank of Delaware stock.' 
 
 To return now to the disposition of the income, February 22, 
 1837, " An act to provide for the distribution of the interest of 
 the surplus revenue" was passed. The interest was to be equally 
 divided into three parts, one part to be for " the use and benefit" 
 
 ' Act of February 21st. Acts, 1837, 175-6. 
 
 "^ Acts of 1S39, 205. 
 
 ^ Acts, 1839, 242. 
 
 * Acts, 1S43, 521 ; see also Revised Statutes, 1852, 205. 
 
 ' Acts of 1847, 139-40, and Revised Statutes (1874), 201. 
 
 ' Statement of Supt. of Schools.
 
 54 SURPLUS REVENUE. 
 
 of each of the three counties, New Castle, Kent, and Sussex. 
 The shares falling to Kent and New Castle counties were to be 
 used for schools, but the share of Sussex County was to be re- 
 divided, one third being set apart for schools, and two thirds to 
 pay the poor tax of the county ; and the treasurer was to see that 
 each county received as nearly equal benefit as possible, keeping 
 in mind the loan to Sussex County/ By an amendment, Febru- 
 ary 12, 1845, the whole of the share of Sussex was to be appro- 
 priated to schools.* 
 
 The certificates of the Phil, Wilmington, and Baltimore Railroad, 
 which were bought with the surplus and which the school fund 
 owned, amounted at their par value to $85, 000. The fund paid 
 $80,793.83 for them, and finally sold them in 1881 for $131,750. 
 Thereupon a single bond of $156,750 was issued for this sum and 
 for $25,000 proceeds of some stock in the New Castle and Wil- 
 mington Railroad, previously extinguished and paid in, but be- 
 longing to the school fund.^ 
 
 The income from the investments made of the surplus revenue 
 is apportioned among the school districts, and comprises the divi- 
 dends on 5,000 shares of Farmers' Bank stock, for which $36 per 
 share was paid ; the dividends on the $20,958.49 invested in stock 
 of the Smyrna Bank and of the National Bank of Delaware ; 
 " the interest on $131,750 of the above-mentioned bond for $156, 
 750 of the State of Delaware to the school funds of said State, at six 
 per cent, interest, issued under chap. 324, v. 16, and the interest 
 on the sum of $5,000 advanced to the county of Sussex."* 
 
 To summarize now. Of the surplus, 
 $180,000 00 was invested in Farmers' Bank stock, 
 
 80,793 °° was loaned to the Phil., Wil., and Bait. R. R., 
 5,000 00 " " " Sussex County, 
 20,958 49 was invested or loaned. 
 
 $286,751 49 
 
 ' Acts, 1837, 187-8, Eaton, 16. 
 
 * Acts, 1845, 41, Eaton, 16. 
 
 'Act of March 29th ; Laws, iSSi, 318-9. 
 
 * Digest of School Laws, 1881, Art. 13, p. 30.
 
 SURPLUS REVENUE. 55 
 
 Now, supposing the bank stock to be worth only $180,000, 
 though it is really worth more than %T,(i per share,' and assuming 
 that the Smyrna Bank stock and National Bank of Delaware stock 
 to be at par, we find that the Delaware school fund owns securi- 
 ties worth $337,708.49, or more, obtained by an investment 
 of $286,751.49 surplus revenue. Thus Delaware stands far 
 ahead of all the States that received the surplus, for she has 
 now far more to show for it than she received, besides a yearly in- 
 come of $15,000^ for the support of schools. At present the 
 income of the permanent school fund, including the $286,751.49 
 surplus revenue, with the revenue from licenses, amounts to over 
 $25,000 a year, and obviates the necessity of a State tax for 
 schools. ° 
 
 ' The Supt. of Schools is the authority for this. 
 
 'Eaton, 17. 
 
 ' 5th Ann. Report of Schools, 18S0, 53.
 
 CHAPTER VII. 
 
 the surplus in the states. 
 Georgia Received $1,051,422.09. 
 
 When the Legislature met in Nov., 1836, Gov. Schley said in 
 his message : " Declarations at the time of its enactment (/. e., the 
 Deposit Act), and since by some of its ablest advocates, that these 
 deposits were intended as donations never to be reclaimed ; and the 
 simultaneous avowal by the great beneficiaries of the tariff, that 
 this policy was to become a system to conciliate the complaining 
 States, are calculated to excite a jealous watchfulness of the innova- 
 tion. . . . The framers of the Constitution never could have con- 
 templated the accumulation of redundant revenues to foster par- 
 ticular interests in its collection, and to subsidize others in its 
 distribution." Further, Georgia had ample resources of her own, 
 and her people were too proud to be the beneficiaries of the 
 National Government. Georgia should solemnly protest and call 
 for a reduction of the tariff. It was best to loan the deposit on 
 good security, that it might easily be returned, and to apply the 
 interest to the State expenses.' 
 
 The Legislature followed this advice, and in their acceptance, 
 Dec. 26th, uttered a vehement protest against distribution, affirm- 
 ing that they would have refused the deposit had it not been for 
 the provision that the share of any refusing State should be divided 
 among the other States. 
 
 Two days later an act was passed directing that the money be 
 deposited in the Central Bank of Ga., and loaned to the public 
 like other funds, under the regulation for discounting notes ; it 
 was also to be loaned to sound banks in which the State was a 
 stockholder, to be repaid at sixty days' notice, under a penalty of 
 
 ' 51 Niles, 207. 
 
 56
 
 SURPLUS REVENUE. 57 
 
 twenty-five per cent, damages, besides interest. The interest on 
 the loans was to be disposed of according to subsequent acts.' 
 
 Dec. 26, 1837, " An act to establish a system of education by 
 common schools " was passed, by which the academic and poor 
 school funds were consolidated, and together with the interest on 
 one third part of the surplus revenue were formed into a common 
 school fund.^ This act was repealed two years later, and the 
 funds were constituted into a poor school fund/ The appropria- 
 tion of the common school fund for 1840, under the laws of 1837 
 and 1838, amounted to $100,646.89.* 
 
 But these school laws were not supported by public sentiment, 
 and so easily became dead-letters. In 1870 it was stated on the 
 best authority that the school fund ^ was being paid into the treasury, 
 and as it was not kept separate from other funds, it was used to 
 pay members of the General Assembly, or other expenses. The 
 same writer continues : " And indeed all the school fund had been 
 paid out in this way before the date to establish [sic) a common 
 school system. ... It has been paid out as fast as received 
 into the treasury ever since. It is now being paid to the members 
 of the General Assembly, and to meet other expenses of the State."" 
 
 ' Prince, 837 ; Hotchkiss, 140-2 ; see also 51 Niles, 305, and Eaton, 17. 
 
 ='Acts, 1837, 94. 
 
 ^ Acts, 1840, 61. Mr. Eaton traces at some length the changes which this 
 fund underwent. As his address is in every considerable library, or can be got 
 by writing for it, it is unnecessary to reprint the matter, especially as educa- 
 tional interests got little benefit from the fund. 
 
 * Acts, 1840, 53 ; Appendix. "Fund" here doubtless means "income" of 
 the fund. 
 
 ' I suppose this means the income from school funds. 
 
 ^ Supt. Lewis, p. 3 of an open letter to the teachers of the State, appended to 
 the Report of 1871. I am not certain what he means by " the date to establish 
 a common school system," but I suppose the reference is to the law of 1837. 
 (See above.) 
 
 There must have been exceptions to the general practice here described, if I 
 have rightly understood Mr. Lewis' meaning, for in 1839 it was stated that the 
 annual appropriations from various funds for purposes of general education 
 amounted to about $60,000 — a sum which was deemed wholly inadequate to the 
 wants of the State. The governor was of the opinion that the present system of 
 education should be thoroughly amended or abandoned altogether, — 57 Niles, 202.
 
 58 SURPLUS REVENUE. 
 
 This abuse was corrected in 1870/ 
 
 The other two thirds of the surplus remained in the Central Bank, 
 and no special appropriation of the interest has been met with.'^ 
 In the general statement of the condition of the Central Bank 
 of Ga., Nov. 7, 1842, among the liabilities appears this item : 
 "United States Surplus Revenue, $1,051,422.09."^ The act 
 of Dec. 23, 1840, contained the following provision : The directors 
 of the Central Bank " are hereby authorized and required to apply, 
 from time to time as need may be, so much of the money of {sic) 
 the said bank, not otherwise appropriated, as may be sufficient to 
 pay the interest on the public debt." Furthermore, an additional 
 sum was annually to be applied to the payment of the principal of 
 said debt.* This provision afforded ample means to consume the 
 interest on the surplus without other legislation. In 1841 the Cen- 
 tral Bank was in great straits on account of the severe encroach- 
 
 ' Laws of 1870, 61 ; Act of July 28th. 
 
 "^ It is stated in a letter to Blair's Globe, Jan. 14, 1837, that these two thirds 
 were appropriated to building a railroad in opposition to the Louisville, Cincin- 
 nati, and Charleston R. R. The road meant is doubtless the Western and At- 
 lantic, which was built by the State, and from the income of which the State 
 afterward appropriated large sums for education. But this assertion appears 
 untrustworthy compared with the bank report. The State records in the treas- 
 urer's ofifice at Atlanta throw no light upon the subject. In regard to the 
 Western and Atlantic R. R. it may not be going too far from my subject 
 to state a few facts, for this road is, I think, almost the only prominent instance 
 of State ownership of railroads in this country. The road was built by the State. 
 Up to Oct. I, 1839, it had cost $1,320,144, all of which save $250,000 had been 
 raised by the sale of State stocks (57 Niles, 202). By 1849 the debt incurred to 
 build the road amounted to $1,395,250, and the total cost of 116 miles was 
 estimated to be $2,300,000. It was hoped that the revenue derived from the 
 road would be a great help in paying the State debt (4 Bankers' Mag., 231-2). 
 In 1858 the State appropriated $100,000 a year from the income of the property 
 for the benefit of schools (Eaton, 18). The road suffered during the war, but was 
 refitted, and by the act of Oct. 24, 187, was leased with its rolling stock 
 for twenty years " to a corporation mainly composed of the officials of connec- 
 ting roads." The lessees are under bonds of $8,000,000 to operate and maintain 
 the road and pay " monthly " a rental of $25,000 (Pool's Manual, 1884, 460). 
 The estimated value of the road is $8,000,000. 
 
 ^Bank Reports of Ga., 1842, 94. ^ Acts of 1840, 150.
 
 SURPLUS REVENUE. 59 
 
 ments upon its capital from the acts of the Legislature/ but it 
 continued to exist a dozen years more, and then went into liqui- 
 dation. Gov. Howell Cobb said in 1853 : " On careful examina- 
 tion of the affairs of the Central Bank, it appears that after 
 exhausting its resources, there will be left the amount of $369,500, 
 which must be paid from the treasury."^ 
 
 It seems, then, that the surplus in Georgia was used up in one 
 way and another, some of it doubtless having been lost on bad 
 loans. Not nearly so much help was derived from it for educa- 
 tion as would appear from a superficial examination. It went as 
 the other State funds went, economically or extravagantly accord- 
 ing to the quality of the prevailing administration. 
 
 Illinois Received $477,919.14. 
 
 The deposit was accepted December 17, 1836, and the most of 
 it was deposited in the bank of the State.' On February 27, 
 1837, was passed an act which involved Illinois in disaster and 
 debt. It was entitled " An act to establish and maintain a gen- 
 eral system of internal improvements." Among the resources from 
 which the fund for this purpose was to be drawn are enumerated : 
 " Moneys to be received from the treasury of the United States," 
 by the act providing for a distribution of surplus revenue. When 
 the United States should demand it, payment was to be made out 
 of the fund for internal improvements.* 
 
 ' Gov. MacDonald, 5 Hazard, 307. 
 
 ^ Message, Amer. Statist. Ann., 1854, 202. 
 
 * Acts 1836-7, 193. Some additional act is referred to here : " The Legis- 
 lature of Illinois has instructed the agent of that State to demand and receive 
 the surphis in specie, from the institution on which the treasury draft may be 
 given." — Boston Recorder, February 3, 1837. I have read somewhere that the 
 specie was transported in ox-carts under great difficulties. The cost of collect- 
 ing first instalment was $807. (Treas. Report, Laws of Special Sess., 125.) In 
 consequence of this law Gov. Duncan called a special session of the Legislature 
 June 5, 1837, to consider among other things what to do about the later instal- 
 ments of the surplus, as the deposit banks had suspended specie payments. (52 
 Niles, 291 and 359.) 
 
 ^ Acts, 1837, 137.
 
 6o SURPLUS REVENUE. 
 
 March 4th, " An act amending several acts" in relation to com- 
 mon schools, was passed to be put in force immediately. It con- 
 tained the provision : " All monies which may be received into 
 the State under the provisions of any act of Congress directing or 
 authorizing any part of the revenue of the United States to be de- 
 posited in the State treasury, except that which has been appro- 
 priated to purposes of internal improvement, shall be added to 
 and form a part of the common school fund of the State, 
 and shall be loaned to the State on the same terms upon 
 which the seminary and school funds have heretofore been 
 loaned." ' 
 
 Fortunately an interpretation for this rather ambiguous law was 
 found, and a very arbitrary interpretation it was ; perhaps, how- 
 ever, no other could have been given. Auditor Davis in his next 
 report said : " In conformity with what I conceive to be the 
 proper construction of the acts entitled [then follow the above 
 titles], I have added to the school fund $33^.592-32 of the 
 surplus revenue, being the amount which the State owed to the 
 school, college, and seminary funds at the time when the said laws 
 were passed." ^ 
 
 Practically the school fund got the second and third instalments 
 and a few thousand dollars from the first. In view of the dis- 
 crepancy between the internal improvement and common school 
 laws and their uncertain wording it is probably due to Mr. Davis 
 that the school fund got any thing. From his remarks, however, 
 we are not to understand that the money settled the debt of the 
 State to the school fund and restored that to its integrity, for such 
 was not the case, for the State immediately borrowed the surplus 
 
 ' Acts, 1837, 315. 
 
 "" Auditor's Report. Laws at the Special Session, 1837, 120. " This amount 
 was added and bears interest from the following dates : 
 
 Amount loaned 25th March, 1837 . . . $239,306.38 
 
 2d May, " ... 79,306.38 
 
 29th Jan., " ... 16,979.56 
 
 $335,592.32"
 
 SURPLUS REVENUE. 6 1 
 
 and used it up.' It paid six per cent, interest on it,^ to be sure, but 
 that interest for a time apparently followed the principal, to be 
 absorbed in the vast debt of the State, from the contraction of 
 which no advantage was derived. In this particular respect the 
 surplus was a great injury to the State, for it relieved the people 
 of taxation when they were involving themselves deeply in debt, 
 just the time when the weight of the coming burden should have 
 acted as a brake.' In Illinois the surplus was expended in ex- 
 travagant and unsuccessful improvements — undertakings which 
 in reckless management perhaps surpass those of any other State, 
 while they gave rise to unparalleled log-rolling.'' 
 
 The fortunate interpretation of an ambiguous law secured an 
 interest charge for the State school fund. It is with doubtful 
 propriety, however, that the surplus can be said to have helped 
 education in Illinois, though it gave rise to this interest charge on 
 the State treasury. 
 
 Indiana Received $860,254.44. 
 
 The deposit was accepted Dec. 21, 1836.' On Feb. 6, 1837, 
 
 1 In estimating-lhe State debt, the $807,585.39 due to the school fund, and 
 $477,919.44 " surphis revenue which has been remitted by, the General Govern- 
 ment," were subtracted. — Illinois Paper, in 61 Niles, 242. This is the only in- 
 stance I remember where it is stated as z. fact that the U. S. had remitted the 
 surplus, supposing " remitted" to mean " renounced their claims to." 
 
 " Seventh Report on Ed,, 132. The loan in this book is dated wrongly 
 1835 ; it should be 1837, of course. — See, also. Am. Aim., 1854, 306. 
 
 Mn Feb., 1841, the chairman of a Committee on Finance reported that 
 previous legislation on taxation had been_ conducted on deceptive principles, 
 and that, consequently, alarm in reference to taxation was prevailing. " The 
 people are led to believe that they need not now be taxed more than they have 
 heretofore been ; while in truth a large portion of the State expenses have been 
 defrayed by applying the school fund to this purpose — a system which cannot 
 any longer be pursued." — 4 Hazard, 162. 
 
 " In the foregoing estimates I have not put down any thing to be received 
 from the school fund. There will, of course, be several thousand dollars 
 received from this source within the next two years, to be used as revenue, un- 
 less the laws are changed." — Report of Aud. Davis, ibid. 
 
 * The fuller consideration of internal improvements in Illinois is reserved to 
 another place.— See chap. xii. ^ Laws of 1836-7, 97.
 
 62 SURPLUS REVENUE. 
 
 was passed an act providing for the distribution of the surplus 
 revenue. It directed that one half should be loaned among the 
 counties in proportion to the number of taxable polls, to be reap- 
 portioned every five years, and to be loaned only to citizens 
 residing in the several counties in sums not exceeding $400 ' to 
 one man at eight * per cent, annual interest. The interest was to 
 be paid over to the school commissioner. Of the other half, 
 $280,000, or such sum as should remain after the appropriation to 
 the State capitol, was to be invested in bank stock. ^ 
 
 As the payment of the fourth instalment was postponed till 
 1839, the State issued bonds to the amount of $294,000, and ad- 
 vanced them to the bank in anticipation of the fourth instalment.* 
 About $577,000 appears to have been distributed to the counties, 
 which was a little more than half ; consequently enough more was 
 given to the bank to make the division even." 
 
 Jan. 27, 1836, an internal improvement law had been passed, 
 authorizing a loan of $10,000,000 to construct improvements at 
 the expense of the State, which should belong wholly to the 
 
 ' $300 is the limit in tlie Revised Statutes of 1843, p. 252. 
 
 * Mr. Eaton (p. ig) says the interest was 7 per cent., but the law of 1S37 
 reads 8 per cent. The interest is stated as at 7 per cent, in Am. Aim., 1854, 
 304, where it is also said that 2^ per cent, went to pay county auditors and 
 treasurers. 
 
 ^ Acts 1836-7, 3. This act was somewhat revised Feb. 17, 1838, and Feb. 
 18, 1839 (Acts 1838-9, 30). 
 
 I have been unable to find out about the appropriation to the State capitol, 
 if there was any. From the following it would be inferred that there was 
 none : " The surplus has been divided, one half placed in the bank, the interest 
 to be applied to internal improvements ; the other half to be loaned out by 
 county commissioners, and the interest applied to support common schools." — 
 51 Niles, 416. The Legislature adjourned the day the act was passed. 
 
 * Dillon 573 ; 3 Hazard, 145. These bonds were redeemed by 1847. (Am. 
 Statist. Ann., 1854, 222.) 
 
 ' The sum distributed to the counties is stated differently in different years, 
 e.g., in Nov., 1847, $580,433.89 (Am. Aim., 1849, 301) ; Jan., 1849, $694,216 
 (Am. Aim., 1852, 307). This is called simply " S. R. Fund," and may include 
 some of the bank stock ; but in 1852, under the same title, the amount is only 
 $552,529.92 (Am. St. Ann., 1854, 226). Eaton, however, p. 19, states that ex- 
 actly half was distributed, viz. : $573,502.96.
 
 SURPLUS REVENUE. 63 
 
 State. Of the interest charges accruing on so much of this debt 
 as was contracted, $40,000 a year was paid by the bank from the 
 surplus in its hands.' More of the surplus was said to be available 
 for that purpose in 1839.' 
 
 In Feb., 1841, a law was passed providing for calling in the sur- 
 plus loaned among the counties, and investing it in bank stock. 
 If anybody who had borrowed of the surplus desired longer time, 
 it could be granted him at six per cent, interest, "upon delivering 
 his note to the proper branch, with sufficient endorsers for the 
 
 sum he might owe." The bank could then " grant its usual indul- 
 
 >» 3 
 gences. 
 
 Henceforward the data about Indiana are uncertain and unsat- 
 isfactory, and no help could be obtained from the State au- 
 thorities. 
 
 In 1852, in the Auditor's Report, under the head of " Surplus 
 Revenue Fund," we find : 
 
 On account of loans refunded . . . Sq^o-SS 
 
 " " interest on loans . , . 429.36 
 
 " " cost of advertising refunded . 13-00" 
 
 Now these figures admit of no certain interpretation from the 
 facts at hand. They may be said to mean that nearly all the 
 money had been refunded before 1852, which accounts for the 
 small payment and interest charge. On the other hand, these fig- 
 ures are equally well accounted for if Mr. McCulloch's statement 
 (quoted below), that nearly all was lost, is accepted. Finally, Mr. 
 Eaton says the money is now nearly all in the counties. This ex- 
 plains the small payment, but not the small interest charge. 
 The reconciliation or rejection of these statements must be left to 
 those who have more information than is at my command. 
 
 * Acts, 1835-6, 6 ; Trotter, 304. 
 
 "57 Niles, 37. 
 
 ^ Acts, 1841, 192. The same use was made of the sinking fund, the saline 
 fund, the college fund, and the school fund. 60 Niles, 40. Yet, so far as the 
 law referred to the surplus, it was apparently contradicted in the Revised Stat- 
 utes of 1843, 251, where it is provided that all money received by the counties 
 from that fund should be loaned. 
 
 *Acts, 1853, 155.
 
 64 SURPLUS REVENUE. 
 
 By the Constitution of 1851/ the school laws of 1855 ' and 1865, 
 the surplus was made a part of the school fund.' 
 
 So far as the interest of Indiana's share went for internal im- 
 provements, it was probably wasted.' In 1844 the debt of the State 
 was $12,218,000. The bank paid interest on $1,390,000, and on 
 the rest no interest was paid, nor was there any provision there- 
 for.' In 1846 the State compromised with her creditors. For the 
 old securities she would substitute new bonds to the amount of 
 fifty per cent., and give to the holders, in lieu of the other half, 
 a lien upon the canal, canal lands, revenues, and lots. " In- 
 diana has thus," says a writer of the time, " assumed the payment 
 of three millions of dollars, for which nothing was ever realized by 
 the State. Not only were the avails of the bonds to a large 
 amount grossly squandered by the agents of the State in the con- 
 struction of its public works, but bonds to the amount of three 
 millions thrown away by mismanagement." '^ 
 
 The notice of the surplus in Indiana can best be closed by 
 quoting the testimony of Hon. Hugh McCulloch, at a recent meet- 
 ing of the Washington Philosophical Society : 
 
 " Being invited by the Chair to participate in the discussion, he 
 said that in Indiana the application of the money deposited by the 
 United States had occasioned a long debate, which had resulted 
 in its division. One half, by means of a system of commissioners, 
 was loaned to individuals on land and mortgage ; the other half 
 was put into stock of the State Bank, with which the speaker was 
 at that time connected. In a financial crisis the first half was 
 practically lost, probably less than one twentieth part being recov- 
 ered ; but the loss was fortunately made good by the bank stock, 
 upon which dividends were regularly paid, and by which the in- 
 
 ' Art. 8, § 2 ; i Revised St., 1852, 62. 
 
 ''Acts, 1855, 161. 
 
 'Statutes, Davis Rev., 1876, 779. " The words lieretofore known and desig- 
 nated as the surplus revenue funds," are the words of the last. The plural 
 probably means to include the bank's share. 
 
 * See chap. xii. 
 
 ^ Am. Aim., 1846, 2S7. 
 
 * I Bankers' Mag., 262.
 
 SURPLUS REVENUE. 65 
 
 vestment was eventually doubled. Since the closing of the bank, 
 this money has constituted the school fund of Indiana." ' 
 
 Kentucky Received $i,433,754-39- 
 
 Before the question of the deposit came up in the Legislature, 
 one member declared his intention of presenting a resolution to 
 appropriate part of the surplus revenue to African colonization.^ 
 It is needless to say that this resolution was not adopted, if ever 
 proposed. 
 
 The deposit was accepted Dec. 16, 1836,' and disposed of by 
 the act of Feb. 23, 1837, which ordered that the surplus "be 
 properly invested." The profits arising from $1,000,000 were to 
 be " set apart and forever dedicated to founding and sustaining 
 a general system of public instruction," while the profits from the 
 remainder were to form a sinking fund to pay the interest on the 
 internal improvement loan and to redeem the principal thereof.* 
 
 The investment of the surplus under this act was to be as fol- 
 lows : First, in the purchase of 5,000 shares of stock in the Bank 
 of Louisville ; then f of the residue were to be paid on a pur- 
 chase of 5,000 shares in the Northern Bank of Kentucky as the 
 later instalments come in ; while the remaining f were to be paid 
 on the 10,000 shares subscribed by the State in the Bank of 
 Kentucky not paid for with State bonds. Among the conditions, 
 it was laid down that the banks must comply with the act within 
 three months, otherwise the surplus falling to them was to be 
 handed over to the Commissioners of the Sinking Fund. The 
 10,000 shares of stock in the Bank of Kentucky were set apart 
 and pledged as a fund for the repayment of the surplus when it 
 should be demanded by the United States.^ 
 
 ' Ne7v York Times, Dec. 31, 1883. The last clause is hardly accurate, as the 
 school fund of the State is about $8,000,000. "A part of" should follow 
 " constituted." 
 
 ''New York Joitrnal of Commerce, Nov. 2g. 1836. 
 
 'Acts, 1836-7, 4. 
 
 * Acts, 1836-7, 319 ; Trotter, 236 ; Pickett, 220. 
 
 'Acts, 1S36-7, 319.
 
 ^6 SURPLUS REVENUE. 
 
 As Kentucky received only three fourths of what was expected, 
 the million dollar appropriation to education was reduced to 
 $850,000, with the provision that if the fourth instalment should 
 be paid, $150,000 should be added to this sum. This fund was 
 placed under the management of the Commissioners of the Sink- 
 ing Fund till the school board should be organized.' 
 
 By the act of Feb. 23, 1839, it was provided that the interest 
 which had accrued or should accrue beyond the present expenses, 
 should be invested in State internal improvement bonds or in 
 State Bank stock, as the commissioners chose.* 
 
 The conditions above referred to in reference to a purchase of 
 bank stock were not fulfilled apparently, for the investments were 
 not made as provided. In June, 1841, James Harlan, Secretary 
 of State, made a special report on the State Bank, and gave therein 
 the following particulars about the surplus : " The whole amount 
 of the Surplus Revenue of the United States received by the State 
 of Kentucky was $1,433,757.58. Of this $850,000 was set apart 
 as a permanent school fund and invested in internal improvement 
 bonds.' A portion of the dividends have been reinvested in the 
 same manner, and the accumulated amount now is $937,500. The 
 residue of the surplus was subscribed and paid into the Bank of 
 Kentucky, as a part of the fifth million in the capital stock of that 
 bank." ' 
 
 The Commissioners of the Sinking Fund who had charge of the 
 part of the surplus devoted to education were frequently involved 
 in conflicts with the Superintendent of Public Instruction, and 
 the strife ended in an issue with the governor in 1850-1. " The 
 differences arose as early as 1840 on the refusal [of the Commis- 
 sioners] to pay the interest on the school fund consequent on the 
 result of the system of internal improvements upon which the 
 State had embarked, leaving a depleted treasury and an im- 
 paired State credit," An additional bond for accumulated 
 
 ' Acts, 1837-8, 274 ; Pickett, ibid. 
 
 "Acts 1838-9, 355. 
 
 ' These were State bonds with interest at five per cent. Eaton, 19. 
 
 * 5 Hazard, 64 ; also 60 Niles, 120.
 
 SURPLUS REVENUE. 6/ 
 
 arrearages was executed in 1848, representing the sum of S308,- 
 268.42.' 
 
 The income of the school fund was about $50,000 in 1839.' 
 But the organization of the system went on slowly, or rather there 
 was no system for several years. In 1840 the governor said : 
 " No school has yet gone into operation, as no law for enumerating 
 the children was passed till the last session of the Legislature. 
 Several schools will be organized the present year," ' 
 
 There was urgent need of a good organization and efficient 
 schools," but the work was slowly done or not done at all. In 
 1847 Gov. Owsley said : " As yet for this great cause Kentucky 
 has done but little more than place a law in her statute book which 
 
 * See Pickett, 220. He gives here full particulars about the history and con- 
 dition of the State school fund. The executive referred to was Gov. Helm, 
 who affirmed that by the new Constitution the sinking fund was not chargeable 
 with this interest. 5 Bankers' Mag., 626. The act of Feb. 10, 1845, gave 
 some color to the refusal of the commissioners, for it reappropriated the $850,- 
 000 for schools and left out the clause referring to the sinking fund (see Acts, 
 1844-5, 45)- Ii^ addition to the failure of the internal improvements the Bank 
 of Kentucky declared no dividend in 1840 on account of a great fraud upon it, 
 perpetrated by the Schuylkill Bank of Philadelphia (see 4 Hazard, 167-72). 
 Usually the income of the sinking fund met all demands for interest and had 
 a large surplus left over for investment, but in 1840 there was a deficit of 
 $10,802, because there were no dividends from its bank stock. Harlan's Re- 
 port, 5 Hazard, 64 ; 60 Niles, 120. In 1841 there was a deficit in the State 
 treasury. 4 Hazard, 167-72. 
 
 ^ 2 Hazard, 277. 
 
 'Gov, Wickliff's Message, June, 1840. 3 Hazard, 59 ; 58 Niles, 146. 
 
 * Bishop Smith, Supt. of Public Schools, stated in an address that of 140,000 
 children of school age, only 32,000 were receiving education ; also that under 
 the then existing system it cost about as much to educate the 32,000 as it would 
 to educate the whole 140,000 under the common school system. " In one of 
 the circuit courts the judge ascertained that not one of the fifteen persons sum- 
 moned as grand jurors could read or write his own name ! In another county, 
 in a public assembly of about fifty persons, not one could be found capable of 
 reading and attesting an instrument of writing." — 3 Hazard, 379. 
 
 It is fair to add that this report was pronounced most egregiously inaccurate 
 by the Frankfort Commomvealth, which asserted that there were vastly more 
 schools and scholars than there were said to be. — 59 Niles, 375. Of the value 
 of this statement I know nothing.
 
 68 SURPLUS REVENUE. 
 
 has never been carried into effect, and almost justified the re- 
 proach that a system of education cannot flourish in a slave 
 State." ' 
 
 In 1849 the school fund was stated to be $1,299,268.42 and the 
 interest $66,733.99, three fourths of which were "retained in the 
 treasury and appropriated by the State to its ordinary expendi- 
 tures." ^ It was, however, considered as borrrowed from the 
 school fund which thus rapidly increased in size, for these loans 
 were added to the principal which the State had borrowed on its 
 bonds. 
 
 In 1851 the State owed the Board of Education $1,326,770.40,^ 
 which included the $850,000 of surplus, or most of it, and the ac- 
 cumulating interest thereon. 
 
 At first sight one might name Kentucky among those States 
 which have preserved a portion of the surplus to the present day, 
 and, technically, this would be correct, but the deposit was in- 
 vested in bonds issued to obtain money for improvements, and, 
 since the improvements did not pay, the interest on the bonds had 
 to be met by taxation ; consequently the people pay annually by 
 their taxes what is nominally the income of the surplus. This is 
 true of course only of so much of the surplus as was invested in 
 improvement bonds. 
 
 Louisiana Received $447,919.14. 
 
 The deposit was accepted March 13, 1837.^ By the act of Feb- 
 ruary 26, 1838, the treasurer of the State was authorized to apply 
 $355,000 to the full payment and extinguishment of the floating 
 debt of the State, due the different banks of this State, and of the 
 balance due by the State for its subscription of five hundred 
 shares of stock of the Barataria and La Fourche Canal Company. 
 From the residue of the surplus the treasurer was to pay the bal- 
 ance of the appropriations made by law and due to the College 
 of Louisiana, to Jefferson College, to Franklin College, to the 
 Covington Female Academy, and to the Penitentiary at Baton 
 
 ' 73 Niles, 334. ^ Am. Aim., 1853, 294. 
 
 Am. Ahn., 1851, 273. " Acts, 1837, 74. 
 
 3
 
 SURPLUS REVENUE. 69 
 
 Rouge. Whatever might be left was to be put to the credit of 
 the sinking fund and applied to the payment of State bonds due 
 July, 1839/ 
 
 The next provision in regard to the surplus is in the 137th Ar- 
 ticle of the Constitution of 1852, which appropriated the interest 
 of the trust funds deposited by the United States under the act of 
 June 23, 1836, to schools. In consequence of this, we find among 
 the items of the State debt due the free school fund up. to 
 December 31, 1852: "Interest accrued during 1852 on the 
 United States deposit fund, $28,795.14.' This constitutional 
 enactment was repeated in the Constitution of 1864, Art. 144, and 
 in the Constitution of 1S68, Art. 139. The same provision was 
 made in the school law of 1853 ' and again in 1855.^ It is also 
 contained in the Revised Statutes of 1876.' The liability of the 
 State to repay the deposit is noticed by the State Com- 
 mittee of Finance, in 1844, with the remark that it will " never in 
 all human probability be repaid or demanded." " As the fund was 
 appropriated in 1839, these later enactments in favor of education 
 can hardly be said to be in reality appropriations of the surplus. 
 The money is all raised by taxation, and is called interest on the 
 surplus merely as a formality. 
 
 ' Acts, 1837-8, 26. •* Acts of 1855, 429. 
 
 ^ Am. Statist. Ann., 1854, 249. ' P- 342. 
 
 ' Eaton, 20. ^ 66 Niks, 44-
 
 CHAPTER VIII. 
 
 THE SURPLUS IN THE STATES. 
 
 Maine Received $955,838.25. 
 
 The Legislature accepted the surplus and pledged the faith of 
 the State for its repayment January 26, 1837.' 
 
 On the 8th of March following, an " Act providing for the dis- 
 tribution and repayment of the public money deposited by the 
 United States " was passed. It directed that the money be de- 
 posited with the cities, towns, and plantations, to be refunded in 
 sixty days after notice, the shares to be apportioned according to 
 a new census. If the towns did not wish to draw the principal 
 they might draw the interest instead. If any towns refused their 
 shares, the interest thereof was to be subject to legislation. The 
 treasurer could loan the shares of such towns as did not give 
 notice of their acceptance by May ist. The first instalment was 
 to be distributed on the basis of the distribution of the school 
 fund, and the second so that the aggregate of both should be 
 proportional to the population by the new census. It was further 
 enacted : " Any city, town, or organized plantation is hereby 
 authorized to appropriate its portion of the surplus revenue or 
 any part thereof for the same purposes that [for which] they have 
 a right to [appropriate] any money in the treasury from taxation ; 
 also to loan the same in such manner as they deem expedient on 
 receiving safe and ample security therefor." ^ 
 
 Doubtless most of the money was distributed according to this 
 provision, but at this time the boundary between Maine and New 
 Brunswick was doubtful, and when an agent was sent into the 
 northeastern extremity of the State to take the census, he was 
 
 ' Acts, 1837, 389. ^ Laws of 1837, 403-7. 
 
 70
 
 SURPLUS HE VENUE. 7 1 
 
 arrested by the New Brunswick authorities. On this account the 
 estimated share of this district, $6,000, was kept back by the State 
 Treasurer. " It remained in the State treasury until 1S61, when 
 $5,000 of it were set apart as a separate school fund, the yearly 
 interest of which, at six per cent., is allotted to those towns for the 
 support of schools." ' Under the act of March 8, 1837, the town 
 of Biddeford at a legal town meeting voted to receive the money, 
 and that it should " be divided among the inhabitants of the town 
 according to families." The officials, however, who received the 
 money refused to apportion it among the citizens ; whereupon 
 one W, R. Hooper brought suit against them for his share. The 
 Supreme Court of Maine pronounced such distribution illegal, on 
 the ground that by the statute, the money was subject to such 
 appropriations only as were legally met by taxation, and that it 
 was illegal to raise money by taxation for distribution.^ 
 
 March 29th, An amendment to the general act was passed to 
 the effect that the second instalment should be distributed on the 
 school fund ratio, and also the third if the census were not 
 finished in time, and that the remaining instalment should be so 
 apportioned as to bring the whole down to the basis of population.' 
 
 Not quite a year later, February 28, 1838, the towns were re- 
 leased from all obligation to return the money, and were em- 
 powered to distribute ii per capita according to the census of 1837, 
 or to use it like money accruing from taxation.^ 
 
 Mr. Eaton says that partial returns for the years 1837 to 
 1839 show that $659,598 were expended for public schools.^ 
 This seems too big an estimate, though no contemporary evidence 
 has been found that can be arrayed against it. Mr. Blaine has 
 said that : " In Maine they made an absolute per capita distribu- 
 tion of it among the entire population — a trifling sum to each." * 
 The present State Treasurer writes : " As a rule the surplus reve- 
 
 ' Eaton, 21. 
 
 ^ 2 Shepley in 14 Maine, 375-S2. ' 
 
 ' Laws 1837, 441. 
 
 ^ Laws, 1838, 460. 
 
 ° Eaton, 20. 
 
 "Letter to the Philadelphia Press, Nov. 29, 1883.
 
 72 SURPLUS REVENUE. 
 
 nue was distributed per capita. There may have been some ex- 
 ceptions, but we have no information on that point in this office." 
 It would seem unlikely that, if so large an amount as Mr. Eaton 
 mentions had been devoted to education, the fact would have 
 escaped the notice of both Mr. Blaine and the Treasury Depart- 
 ment. 
 
 Maryland Received $955,838.25. 
 
 In his message, Dec. 28, 1836, Gov. Veazy advised the Legis- 
 lature to invest the money in some permanent and profitable stock, 
 and to apply the interest to the general purposes of the State till 
 the treasury was relieved, and afterwards to education. Though 
 it was not likely to be recalled, yet the State should be in readi- 
 ness to return it, and so had better appropriate the interest 
 only.' 
 
 The fund, after the acceptance and before the final disposal, 
 was " applied to discounting real paper at short dates." ^ On the 
 i8th of March, 1837, $274,451 was appropriated to pay the interest 
 on the public debt already created. The rest (1681,387.25) was 
 to be deposited in some incorporated bank or banks in Baltimore, 
 which should pay at least 5 per cent, thereon ; the interest was 
 then to be devoted to the support of common-school education, 
 being divided between the counties and Baltimore like the existing 
 
 fund.' 
 
 The Union and Franklin banks * were chosen, and the fund re- 
 ferred to the next Assembly for further disposition.^ 
 
 By the act of March 17, 1838, $1,000 of the income, which was 
 $34,069.36, was to be appropriated annually for the education of 
 the indigent blind of the State. "^ 
 
 A few days later an act was passed providing that the residue 
 of the income should be distributed yearly, " one half equally 
 
 ' 51 Niles, 292. 
 
 "^ 51 Niles, 273. 
 
 "" Acts, 1836-7, ch. 220. 
 
 * Later the Bank of Baltimore was added to the list.— 57 Niles, 291. 
 
 ^ 52 Niles, 82. 
 
 ^ Acts, 1837-8, ch. 173.
 
 SURPLUS REVENUE. 73 
 
 among the several (21) counties and the city of Baltimore, and the 
 other half among the same, according to population." ' 
 
 The State, since this time has annually appropriated $34,069.36, 
 nominally interest on the surplus, but really raised by taxation, 
 for the support of schools. In 1852 it was stated : " There is no 
 common-school system in this State. In the city of Baltimore 
 there is a regular, organized scheme of public instruction ; but the 
 country districts have merely local primary schools, under the 
 direction of the several county commissioners, supported by a 
 county levy in addition to an amount afforded by a proportion of 
 the [school] fund." ^ 
 
 It was a case where outside aid was not sufficiently supplemented 
 by local taxation. The principal of the surplus was wasted in ex- 
 travagant internal improvements.^ 
 
 Gov. Grason said in 1840 that "the remainder of the surplus 
 might be considered as so much added to this State's means of 
 complying with its other engagements." The whole expenditure, 
 including the interest on the public debt, greatly exceeded the 
 annual receipts ; and the deficiency in the revenue was supplied 
 from the special deposits, which, if applied to that purpose alone, 
 would be exhausted in two or three years.* 
 
 One year later he announced that only $149,000 of the surplus 
 remained on deposit, while there was a deficiency of more than 
 $620,000 in the treasury. After using the rest of the surplus, a de- 
 ficiency would remain of about $470,000 to be provided for. After 
 that year they must face an annual deficiency of upwards of 
 
 ' Acts, 1S37-8, ch. 285 ; Al. Aim., 1840, 237. 
 
 "^ Am. Statist. Ann., 1854, 267. 
 
 ' " Unfortunately for this ill-fated State every department (from 1832 on) was 
 under the control of those who held opinions which had been condemned by the 
 judgment of the whole country. They refused to abandon altogether an ex- 
 travagant system of roads and canals that cannot be consummated in a country 
 like the United States where the population is scattered and sparse. We be- 
 hold [then] the little State of Maryland having 10,000 square miles of territory 
 and 318,194 white inhabitants staggering along with undertakings that would 
 task the financial resources of the whole kingdom of Great Britain." — Gov. 
 Thomas, Mess., Dec, 1842 ; 63 Niles, 314. 
 
 * Message, Jan., 1840 ; 57 Niles, 291 ; 2 Hazard, 177.
 
 /4 SURPLUS REVENUE:. 
 
 $600,000.' As might be expected Maryland suspended payment 
 of the interest on her public debt January i, 1842. 
 
 Four years later, December i, 1845, the arrearages of interest 
 had amounted to $1,376,871.24.^ 
 
 The surplus in Maryland was a temporary benefit to the State's 
 creditors but a permanent injury to the State. It stimulated ex- 
 travagance, increased the State debt,^ and had a demoralizing effect 
 upon the people generally.'' It was several years before the State 
 got out of the straits in which bad financial management had 
 
 placed her. 
 
 Massachusetts Received $1,338,173.58. 
 
 The Whig papers of Boston recommended the Legislature to 
 loan the deposits to the banks. ^ 
 
 The deposit was accepted the 19th of January,' and disposed 
 of the 21st of March, 1837, as follows : The first two instalments 
 were to be deposited with the towns in proportion to their popula- 
 tion by the last census, the last two according to the population by 
 a new census to be taken in May, 1837. 
 
 The towns were bound to refund the deposit when the United 
 States Treasury called it in, but, meanwhile, they were to apply the 
 money or the interest on the same to those public objects for 
 which it is lawful to raise money, and for no other purpose. If 
 any town did not pay back the money within thirty days after a 
 call, an execution could be served against the goods of the in- 
 habitants therefor. $2,500 was to be reserved and loaned by the 
 treasurer of the commonwealth, the income of which was to be 
 
 ^ 59 Niles, 291. 
 
 ^ I Bankers' Mag., 747. 
 
 ^ The debt in 1842 was at least $10,000,000 and by some estimated at $15,- 
 000,000. — 63 Niles, 313 
 
 * " Nothing has influenced more fatally the evil councils by which so many of 
 the States have become involved, than the delusive expectations, rekindled con- 
 stantly as fast as they are quenched, of pecuniary largesses from the National 
 Treasury for State purposes." — Gov. Thomas "hi Md., Dec, 1842; 63 Niles, 
 313. See also near the end of chap. xii. for a more extended extract, 
 
 ^ Boston Advocate in Blair's Globe, Dec. 3, 1836. 
 
 " I Supplements to the Rev, Statutes, 15.
 
 SUHPLl^S REVENUE, 75 
 
 and is paid as follows : March ist, to the treasurer of Marshpee 
 the income of ^i,ooo ; to the guardian of the Chappequiddick 
 and Christian Town Indians the income of $1,200, one half for 
 the benefit of the said Chappequiddick and Christian Town In- 
 dians, the other half for the benefit of the Indians of Gay Head ; 
 and to the treasurer of the Herring Pond Indians the income of 
 $300, all the said income to be for the purposes of common-school 
 education in these places, and these Indians to have no other ap- 
 propriation from this money.' 
 
 An amendment was soon passed providing that if any town re- 
 fused or neglected for six months to accept the money, it was to 
 stay in the treasury for future disposition by the Legislature." 
 This bill was pronounced by some a compromise and a bid for 
 favor.' 
 
 The towns made use of the money in various ways, the ma- 
 jority applying it for town expenses, ordinary and extraordinary, 
 In 1841, 36 towns devoted $6,625.95 to education, and in 1846. 
 44 towns applied $8,392.99 to that purpose.'' The appropriation 
 in 1840 — was $9,529.48.^ From these fluctuating figures it will be 
 seen that sometimes a town devoted the money to education and 
 sometimes did not. 
 
 Michigan Received $286,751.49, 
 
 Secretary Woodbury, in a communication to the House of Rep- 
 resentatives, Jan. 3, 1837, stated that " the payment of the share 
 assigned to Michigan would be postponed till some expression of 
 opinion should be given by Congress." ° Michigan was admitted 
 
 ' I Suppl. Revised Stat., 20. 
 
 ' Act of April I, 1S37, ibid., 23. 
 
 ' The House did not agree on the bill they sent to the Senate because it was 
 the best, but because it was the only one they could agree on. It seemed to have 
 filled the minds of the members that the only way they could gain popular favor 
 was by voting to distribute it. The act exposed the towns to endless strife and 
 contentions. — Boston Courier (the exact date was lost). 
 
 * See Table in Appendix III. 
 
 ' Report of Supt. Mann. 5 Hazard, 320. Also in Am. Aim., 1843, 208. 
 
 " 51 Niles, 297.
 
 ']6 SURPLUS REVENUE. 
 
 into the Union Jan. 26, 1837. The people, however, did not wait 
 for that formality, but straightway, after the passing of the deposit 
 bill, they accepted their share by the act of July 22, 1836.* The 
 share of the surplus falling to Michigan, having been duly paid 
 with the approval of Congress, was placed by the act of March 
 22, 1837, to the credit of the internal improvement fund as a loan, 
 to be returned to the treasurer of the State whenever the loan for 
 internal improvements should be obtained, or whenever required 
 by the Legislature. 
 
 Further, the board for internal improvements might loan any 
 money not immediately needed to any specie-paying bank for not 
 less than five per cent, interest payable semi-annually." 
 
 In a little over a year $80,000 of the surplus was passed to the 
 credit of the State, " to be drawn out according to law to defray 
 the current expenses of the State." ' A year later a second 
 $80,000 was drawn for the same purpose.'' In nine months 
 $100,000 more was credited to the general fund.^ The remaining 
 $26,751.49 "continued to form a part of the internal improve- 
 ment fund, and contributed to the works for which that fund was 
 provided." ' 
 
 It is hard to see how the surplus was of any real benefit to 
 Michigan. It only relieved the inhabitants momentarily from the 
 burden of their own extravagance. Swept along in the tide of 
 reckless speculation which then carried every thing before it, the 
 people of Michigan had contracted a debt of $5,340,000 before 
 1838, when the population was less than 200,000. There seems 
 to be good reason to believe that the presence of the surplus 
 stimulated rather than checked their prodigality, for it was affirmed 
 early in 1839 that their appropriations, though reduced, far exceeded 
 the means of the State.' 
 
 1 Acts, 1835-6, 61. ''Acts, 1837, 269 ; Trotter, 342. 
 
 'Act, April 6, 183S ; Acts of 1837-8, 244 ; entered in Treasurer's Report, 
 Acts, 1839, 295. "Acts, 1839, 179. 
 
 ^ Act, Jan. 30, 1840 ; Acts, 1840, 46 ; entered in Auditor's Report, Acts, 1841^ 
 250. ° Deputy State Treasurer, 1884. 
 
 ^ 56 Niles, 160. The Detroit Advertiser sz\A. : " The only practicable remedy 
 which we can perceive for the pecuniary embarrassments under which the State
 
 SURPLUS REVENUE. J J 
 
 That Michigan's share of the surplus was largely wasted, to say 
 nothing of its effects in creating extravagance, appears altogether 
 probable from the words of contemporary writers." Like all the 
 Western States, they planned a great many works at such immense 
 expense that all their resources were used up before any thing was 
 finished, and so very much was lost. When it is remembered 
 that with a population of only 175,169 in 1837, mostly farmers 
 with little capital, in a new country, improvements were designed 
 whose probable cost would equal |i5, 000,000,^ some idea of the 
 wildness of these undertakings may be obtained. 
 
 When such methods of financiering prevailed, it would have 
 been a wonder if the surplus fund had not been wasted like the 
 most of the five-million loan. 
 
 Michigan failed to pay the interest due on her debt for some 
 years after the first instalment became due July i, 1843. In 
 Feb., 1843, ^^^^ Legislature "covenanted with the bondholders to 
 fund the interest till July, 1845, pledged the revenue from the 
 
 and the people thereof are laboring is time and retrenchment. It will go hard with 
 our spoil-loving rulers, but they must come to it. Necessity is a stern master. 
 They have exhausted the treasury — exhausted tlieir credit, now they have be- 
 come economists from mere necessity. It is time they should." — Niles, ibid. 
 
 * " This State has a debt of about five million and a half of dollars, and what 
 is peculiarly unfortunate the State has lost more than one third of the proceeds 
 of the stock which has been issued, by the infidelity and insolvency of those 
 with whom the' loans were negotiated [see 2 Curtis, 122] ; and even the amount 
 received has not been expended in such a manner as to yield revenue to any 
 considerable amount. The board of internal improvement in a recent report 
 say : ' We have expended or wasted three fourths of our five-million loan, and 
 what have we to show for it ? ' We have finished about forty, say fifty miles of 
 the Central, and about thirty-four of the Southern railroads, and there will soon 
 be completed the portion of the Clinton and Kalamazoo Canal between Roches- 
 ter and Frederick, and where are the profits to remunerate the State for this 
 heavy outlay?" — A. C. Flagg, Comptroller of New York : a report on State 
 debts. Am. Aim., 1842, 106. 
 
 ■■'Early in 1842 Gov. Barry writes : " The system of internal improvements 
 projected in Michigan some years ago, when speculation was the mania of the 
 day, embraced about 596 miles of railroad, 233 miles of canal, and the im- 
 provement of five rivers. The probable cost would not have fallen short of 
 $15,000,000." — 63 Niles, 336.
 
 78 SURPLUS REVENUE. 
 
 public works to the payment of the interest which should accrue 
 after that time," and voted a direct tax to supply deficiencies of 
 interest.* 
 
 In 1846 the Central R. R. was sold for $2,000,000, and the 
 Southern for $500,000.' The two cost $3,343,284.92.' The cir- 
 cumstances of Michigan's partial repudiation are detailed by 
 Curtis. 
 
 Mississippi Received $332,355.30. 
 
 The deposit was accepted May 2, 1837.' In 1839 the Legisla- 
 ture passed an act loaning $30,000 from the surplus revenue to 
 the Railroad and Turnpike Co. in the counties of Newton and 
 Lauderdale. . Three bonds of $10,000 each were executed there- 
 for, payable to the governor, after ten, fifteen, and twenty years 
 respectively. The money was to be spent in improving naviga- 
 tion in the Chickasawy River ; if all was not used the residue was 
 to be returned, and in case the United States called in the surplus 
 the bonds became immediately payable.' In reference to an act 
 supplemental to this, three Senators put forth a protest, saying : 
 *' By this vote of the Senate, they have in our judgment squan- 
 dered the public money upon a company of individuals engaged 
 chiefly in speculation, whose personal interest will be promoted by 
 the law in question ; while, on the other hand, the State will not be 
 benefited by the appropriation." ° 
 
 Such are the meagre notices about the surplus in Mississippi 
 that the writer has been able to collect ; letters to the State of- 
 ficers brought no reply, and therefore he is thrown back upon 
 conjecture, which in this case is not difficult. To judge from the 
 single instance quoted it would seem probable that the money was 
 loaned. Notwithstanding this probability, a consideration of the 
 state of the finances in Mississippi leads to the belief that it was 
 
 1 2 Curtis, 123. 
 
 ' Am. Aim., 1848, 310. 
 
 ' Am. Aim., 1847, 294. 
 
 * Laws, 1824-3S, 590. 
 
 "Act, Feb. 15, 1839 ; Acts, 1839, 365 ; Democratic Rule, 112. 
 
 '■■ Democratic Rule, 122 ; quoted from Senate Journal of that Session, 350.
 
 SURPLUS REVENUE. 79 
 
 used for the State expenses, or was squandered during those times 
 of reckless financiering. We find it once mentioned among the 
 items of the State debt, "$382,335.30 deposited by the General 
 Government, and which is liable at any time to be recalled.' 
 
 Now Jan. i, 1838, there was a surplus or balance of cash in the 
 treasury amounting to $279,6 13.3 ij-, not including the sinking 
 fund, the seminary land fund, or the Jackson City lot notes. Be- 
 sides these items and the above-mentioned cash balance, the 
 State held stock in the Planters' Bank for at least $2,000,000, 
 which before that time yielded ten per cent, per annum. ^ Though 
 nothing is said in the connection to lead us to suppose that this 
 cash balance was part or contained part of the surplus, yet it is 
 not at all unlikely. 
 
 In 1840, however, the treasury was empty — so empty that there 
 was nothing to pay the Legislature with, whereupon that body dis- 
 banded. ' 
 
 In Jan., 1842, the treasury had receipts of the Attorney-General 
 for claims on the Brandon and other broken banks for the 
 
 sum of $233,102 
 
 Also notes of the insolvent Miss. R. R. Co. , . 63,030 
 
 $296,132 
 There were some other notes to raise the total to about $298,000, 
 but these securities were not worth five per cent, on their face 
 value. In addition the treasury had thirty-four cents in specie, 
 while the " real and pretended claims against the State exceeded 
 the sum of $8,000,000." * 
 
 Under such circumstances and in the absence of adverse testi- 
 mony it seems safe to say that the surplus was applied to State ex- 
 penses, and at a time, too, when the State finances were too reck- 
 lessly managed to permit of economy. It does not appear unjust, 
 then, when we look at the only notice we have of any part of the 
 surplus and the disposal thereof, and at the way the State finances 
 
 ' Democratic Rule, 106. 
 
 "^ Democratic Rule, 218-220 ; from Senate Journal, 1843, 25. 
 
 ' Democratic Rule, 166. 
 
 * Democratic Rule, 218-220.
 
 80 SURPLUS REVENUE. 
 
 were carried on at that time, to say baldly that in Mississippi the 
 surplus revenue was utterly wasted. 
 
 Missouri Received $382,335.30. 
 
 By the act of Feb. 6, 1837, the Legislature set apart all 
 money which might be received under the act of June 23, 1836, 
 for investment by the governor in the stock of any bank which 
 the State might incorporate ; and all the interests and profits that 
 should accrue thereon were to be applied to the use and support of 
 common schools. The fund was to be styled the common-school 
 fund. The interest was to be added to the principal till the fund 
 amounted to $500,000 or more, after which time the income was to 
 be used for the payment of " teachers in common schools," as the 
 General Assembly might direct by a system of common schools. 
 If the surplus should ever be recalled after it was invested in any 
 bank stock the State should issue bonds to such a bank. These 
 bonds were not to pay over five per cent., and in other respects 
 were to be like previous bonds.' The bank chosen was the Bank 
 of St. Louis, chartered Feb. 2d, with a capital of $5,000,000.* 
 This system of common schools was established by the act of Feb. 
 9, 1839." 
 
 Among the funds we find enumerated : "All moneys heretofore 
 deposited or which shall hereafter be deposited with this State ac- 
 cording to the act of June 23, 1836." ' As in the first act the fund 
 must accumulate till it reaches $500,000. There were many other 
 regulations, as can be seen -from the length of the act. Among 
 them may be mentioned the restriction limiting the yearly ex- 
 penditure to the income of the previous year, and further, forbid- 
 ding it to exceed sixty cents for each white child between six and 
 eighteen years old residing where there was a school organization 
 entitled to a share in the distribution.^ 
 
 ' Acts of 1836-7, 137. 
 
 "^ Acts of 1836-7, 13. 
 
 ^ Acts, 1838-9, 112-149. 
 
 " Repeated in Acts, 1853, 147 ; also in 2 Rev. Stat., 1855, 1414. 
 
 * Acts, 1838-9, 115.
 
 SURPLUS REVENUE. 8 1 
 
 The portion left over in 1843 was borrowed for a year by the 
 State to be repaid, apparently with interest at six per cent., Feb. i, 
 
 1844.' 
 
 In the Constitution of 1865, Art. ix.. Sect. v. : "All moneys, 
 stocks, bonds, lands, and other property now belonging to any 
 fund for purposes of education " were constitutionally confirmed 
 as parts of the school fund. Section vi. says : " No part of the 
 school fund shall ever be invested in the stock, or bonds, or other 
 obligations of any State, or of any county, city, town, or corpora- 
 tion." All such stocks then held were to be sold and the proceeds 
 invested in United States bonds.^ 
 
 The bank which we have mentioned was under the patronage 
 of the State, which subscribed to three tenths of its stock of 
 $5,000,000. If we are not mistaken, it was later styled the Bank 
 of the State of Missouri. While the surplus was invested in this 
 stock, the income was variable, but averaged about 5-^ per cent. 
 annually for the first eleven years. The fund is now invested in 
 six per cent. State bonds." 
 
 Missouri, then, is one of the half dozen states which have saved 
 the deposit to the present day. 
 
 ' Acts, 1842-3, 12. 
 
 "General Statutes, 1865, 40-1 ; also in 2 Rev. Stat., 1879, 1397. 
 N. B. — In Myers' Supp. to Wagner, p. 424, the bonds of the State of Missouri 
 are made exceptions to this rule. 
 ' Eaton, 22.
 
 CHAPTER IX. 
 
 THE SURPLUS IN THE STATES. 
 
 New Hampshire Received $669,086.79. 
 
 Governor Isaac Hill, in his message, December, 1836, recom- 
 mended that " the money he loaned on undoubted security," and 
 that the interest, which he contended was all that fairly belonged 
 to the State, be exclusively applied towards the discharge of the 
 ordinary expenses of government.' In another place the long 
 legislative struggle over the deposit has been noticed. In gen- 
 eral, the distribution bill seems to have been unpopular.' The 
 surplus was accepted, however, January 11, 1837, and on the 
 13th a bill was passed which provided that it should be deposited 
 with the towns on this compound ratio : one half according to the 
 new proportion for the assessment of public taxes to be made at 
 that session, and one half according to the number of ratable 
 polls for the year 1836. The faith of the towns was to be 
 pledged for the return of the money, which they might loan but 
 not spend or appropriate.^ 
 
 1 Blair's Globe, December 3, 1836, from the Albany Argtis. The passage is 
 introduced thus: "Governor Hill, with an eye to the true interest of the 
 distribution bill, and with a view to retain the share of the State within the 
 reach of the authorities responsible for its repayment, recommends," etc. 
 
 '^ " A minority report was made [in the Legislature] in which reasons were 
 urged against the acceptance of the money, and recommending the adoption of 
 a resolution, declaring that the distribution of the surplus is not only unconsti- 
 tutional, but highly dangerous to the liberties of the people." — Mercantile 
 Journal, in the Boston Courier, December 15, 1836. 
 
 The distribution bill, according to some, would seem to have opened the way 
 for the political promotion of Franklin Pierce. He was elected Senator by 108 
 votes out of 160, and the following comment shows the connection of this event 
 with the " Distribution" : " Mr. Page, the present incumbent, seems to have 
 given offence by voting for the distribution bill." — The New Yorker, December 
 24, 1836. ' Laws, Nov. Sess., 1836, 231. 
 
 82
 
 SURPLUS REVENUE. 83 
 
 It is noted in Niles that the towns of Haverhill and Newport 
 voted to receive their portions in specie.' A year and a half later 
 the act was amended to the effect that the moneys could be loaned 
 or appropriated for any purpose for which the towns could lawfully 
 raise money. '^ 
 
 July 4, 1S39, an act was passed authorizing any town to trans- 
 fer or convey to the New Hampshire Asylum for the Insane its 
 share of the surplus revenue, on condition that the institution 
 should be located in such town. The towns were not released 
 from their liability.' In two years it was made " lawful for any 
 town in this State, at a legal town meeting, to make any disposition 
 of the public money as, by a major vote, said town should deter- 
 mine." * According to the Revised Statutes adopted December 
 18, 1842, the towns might, at a legal meeting, make such disposi- 
 tion of the money " as should be deemed equitable and ex- 
 pedient." They were still accountable if the United States should 
 demand the money. " In case of such a requisition the treasurer, 
 on a warrant from the governor and his council, shall pay it from 
 any money in the treasury ; and if that is not sufficient, he shall 
 raise a loan, at not more than six per cent, interest, for that pur- 
 pose." ^ It seems probable that a considerable, if not a large, 
 part of the surplus was distributed. ° 
 
 > 52 Niles, 48. " Act, July 4, 183S ; Acts, 1838, June Sess., 355. 
 
 'Acts, June Sess., 1839, 38. The Asylum was located at Concord. — Rev. 
 Stat., 1842, 55. " Act. July 2d ; Acts, 1841, 538. 
 
 ' Rev. Statutes, 1842, 55 ; Gen'l Statutes, 1867, 52. 
 
 ^ Prof. R. E. Thompson says : " New Hampshire illustrated extreme demo- 
 cratic principles by distributing the money among her citizens," but this state- 
 ment is rather too broad, as is shown in the text. 
 
 The following are of interest : " Dividing the Stirpbis in New Hampshire. 
 " In Portsmouth, N. H., the inhabitants voted to divide that portion of the sur- 
 plus revenue which fell to that town, per capita — the sum due to every man, 
 woman, and child in the place being between two and three dollars. That vote 
 is now in course of execution. An agent has been appointed and has received 
 the money for distribution ; but about two hundred suits have been commenced 
 against him as the trustee of individuals owing small sums, and he is placed in 
 rather an embarrassing situation. 
 
 " In Gilford (the Exeter iV^wj-Zd'/^^r states) the surplus or a part of it hav-
 
 84 SURPLUS REVENUE, 
 
 About fifty towns seem to have kept the money invested, if we 
 may judge from the appropriations for schools fifteen or more 
 years ago.' 
 
 Mr. Eaton estimates that about $i,8oo a year has been derived 
 from the surplus for school funds, or about five and a half per 
 cent, of the annual interest at six per cent." 
 
 "There still remains in the State treasury the sum of $1,009.44 
 with the accumulated interest of $1,723.82, which was assigned to 
 sundry unincorporated places and where there was no one to re- 
 ceipt for it." The treasurer's books "do not even show the 
 amounts paid to the several towns." ' 
 
 New Jersey Received $764,670.60. 
 
 New Jersey accepted the deposit November 4, 1836," and Gov- 
 ernor Dickerson recommended that it be added to the school 
 fund.^ By the act of March 10, 1837, the money was appropriated 
 among the several counties according to the ratio of the State tax 
 paid by them ; chosen freeholders were to pledge the faith of the 
 county on receipt of the trust, and were empowered to loan and 
 reloan the money upon bond and mortgage or other good and 
 sufficient security, as should seem to them safe and proper. Men 
 of their own county were to receive the preference among the 
 applicants for loans. The freeholders, further, must sue for 
 and recover the same with interest in their corporate capacity, 
 
 ing been expended, the selectmen decline to borrow, as instructed to do by the 
 vote of the town, so much money as will make good the deficiency — having 
 some not very unreasonable doubts of their legal right to borrow money for the 
 purposes of distribution." — 5 Hazard, 186. 
 
 These little men copied well the example of the great men at Washington, 
 who wanted to borrow money to distribute as the fourth instalment. 
 
 ' See Table in Appendix IV. 
 
 ^ In the year 1848-9 the income from the surplus among the school funds 
 was $2,500 (Am. Aim., 1850, 231) ; in 1860-1, $1,512.06 ; 1861-2, $2,460.51 
 (Nat. Aim. and Ann. Record, 1864, 279). 
 
 ^ Letter from the treasurer. 
 
 * Acts of 1836-7, 10. 
 
 * Boston Courier, January 19, 1837, and Revision of New Jersey, 1131-4.
 
 SURPLUS REVENUE. 85 
 
 and apportion and pay the interest to the several townships 
 in the above ratio of the State tax, for the benefit of said 
 township or the inhabitants thereof. The freeholders were to be 
 paid by the day in no higher proportion than for other services. 
 The penalty for embezzling was to be a fine not exceeding $1,000, 
 or imprisonment not exceeding five years, or both. If the board 
 of chosen freeholders should neglect or refuse to pledge the faith 
 of the counties, the money should be loaned for the benefit of 
 the counties, at their own risk ; the freeholders also were to 
 publish an annual report in the chief county paper of all their 
 transactions.' 
 
 Two years later Mercer County was formed, and received its 
 share of the surplus from the counties out of which it came. The 
 interest of its share was to be paid to the townships in proportion 
 to the county taxes they paid.° 
 
 This fund was henceforth spoken of as " State property not 
 now productive, consisting of the surplus revenue lent to the 
 counties without interest." ^ 
 
 It is probable that more or less of the income was devoted 
 to the support of schools from the first. In the year 1861 $30,- 
 505.76 of the school money was obtained from interest on the 
 surplus.* 
 
 Mr. Eaton estimates that $15,000 a year was added to the 
 school income up to 1852 from this source, and from 1852 to 1867 
 about $30,000 a year.^ In 1867 the whole income of the fund was 
 appropriated to schools in " an act to establish a system of public 
 instruction." Art. ix. Sect. 77, reads: "Be it enacted — That 
 the several townships of the State are authorized and required to 
 appropriate the interest of the surplus revenue received by them, 
 and from other funds not raised by tax, such sums for the support 
 of public schools as they shall order and direct at their annual 
 town meetings." ' 
 
 The income for education from the surplus was $349,313.18 in 
 
 1 Acts of 1836-7, 432. ^ Acts, 1839, 158 ; Revis. of N. J., 1131-4- 
 
 ' Am. hXm., passim, 1852-61. * Nat. Aim. and Ann. Record, 1863, 422. 
 
 ^ Eaton, 23. ' Laws, 1867, 378 ; Revision of N. J., 1086.
 
 86 SURPLUS REVENUE. 
 
 the eleven years 1866-77, or an average of $31,755.74 a year,' In 
 1876 it was $30,523.54.'' The smallness of this sum is explained 
 and the condition of the fund stated in the following extract from 
 a letter from the State Superintendent of Schools, Mr. E. A. 
 Apgar : " I think there is not a county in the State where the 
 fund remains intact. It has been used for various purposes, prin- 
 cipally for the erection of county buildings and in the payment of 
 war bounties. Sixteen of our twenty-one counties continue to set 
 apart every year out of the county funds amounts equal to the 
 interest that would be derived if the fund continued to draw 
 interest. That which is appropriated, therefore, as interest of the 
 surplus revenue fund, is really raised by taxation, and schools, 
 therefore, cannot be said to receive any benefit from the fund." 
 
 New York Received $4,014,520.71. 
 
 The deposit was accepted Jan. 10, 1837, and was ordered to be 
 deposited in the banks paying the highest interest.^ By the act 
 of April 4, 1837, the money was apportioned among the counties 
 according to population, to be loaned out on real estate ; loan 
 commissioners to manage the fund were to be appointed by the 
 governor and confirmed by the Senate ; the lands on which 
 mortgages were taken must be worth double the amount of the 
 sum loaned, exclusive of buildings, and of the value of the rent in 
 perpetuity, if any were charged thereon ; the borrower must have 
 a title in fee, and the land must have been improved. The com- 
 missioners must give a full report the first Tuesday in each Decem- 
 ber. The interest was to be at seven per cent. Outside of New 
 York City the sums loaned were not to exceed $2,000, or to be less 
 than $200 ; within the city the limits were respectively $5,000 and 
 $500. The commissioners were paid as follows : for loaning 
 $25,000 or less, f of i percent.; on further sum of $25,000 or 
 less, \ of I per cent.; for loans amounting to more than $50,000, 
 \ oi \ per cent, on the whole, except in New York City, where 
 upon sums exceeding $50,000 the fees were to be ^ of i per cent. 
 
 ' Eaton, 23. 2 Raum, Hist, of N. J., 294. 
 
 ' 3 Edmonds, 75 ; 3 Fay, 349.
 
 SURPLUS REVENUE. 87 
 
 When the repayment should be called for the comptroller was to 
 issue State stock on the most favorable terms to raise the money.' 
 Under this law the State, like Indiana, loaned the fourth instal- 
 ment in anticipation of its early appearance.' 
 
 By an act supplementary to this general act, the comptroller was 
 authorized to invest any money of the " United States Deposit 
 Fund," as it was called, that might be in the Treasury, in State 
 stocks, loans, or bonds of the United States.^ The losses of the 
 principal were to be charged on the income. The power thus 
 given to the comptroller has been a very salutary one in the history 
 of the fund, as will appear later, and this direction about charging 
 losses to interest has been the only way by which the fund has 
 preserved its original size. In 1873 $100,000 of the income was 
 transferred for this purpose." 
 
 By the act of May 2, 1864, the commissioners were authorized 
 to invest any moneys on hand in county bonds issued to pay 
 bounties to volunteer soldiers.^ 
 
 The Legislature in disposing of the interest on the fund followed 
 closely the general recommendations of Gov. Marcy." 
 
 By the act of April 17, 1837, $110,000 was appropriated to 
 
 ' 3 Edmonds, 78 ff. ; 3 Fay, 350 ff. The act takes up twenty pages in Edmonds. 
 
 ' " The fourth instalment of the United States surplus revenue is still with- 
 held. The portion of that instalment due this State is $1,338,178.57. Relying 
 upon prompt payment of that instalment, the State has loaned an equivalent 
 sum to her citizens. I cannot doubt that you will insist upon the fulfilment of 
 the pledge of the Federal Government, and will at the same time protest against 
 the withdrawal of the instalments already received." — From the Message of 
 Gov. Seward, Jan., 1840. 2 Hazard, 49 ; 57 Niles, 323. There was nothing 
 half-way about Seward's plans of distribution (see page 42, note 2). On the 
 pledge or contract theory of the deposit see page 43. So far from having 
 $10,000,000 surplus to give away, the Government was $5,000,000 in debt, but 
 that made no difference with the distributionists. 
 
 ' 3 Edmonds, 117. ■• 3 Fay, 367. " 6 Edmonds, 303. 
 
 ^ Gov. Marcy recommended that while the deposit remained, $110,000 an- 
 nually be devoted to common-school education, that a liberal amount be given 
 to academies in a way to increase both the literature fund and their annual share 
 of money, and that the remainder of the income of the deposits be added to the 
 capital of the common-school fund. — Blair's Globe, Jan. 10, 1837.
 
 88 SURPLUS REVENUE. 
 
 common schools, to be distributed like the existing school moneys ; 
 and school districts, to receive their shares, must maintain a school 
 for four months in the year instead of three, to be kept by a duly 
 qualified teacher. The first distribution was to take place in 
 1839. $55,000 was to be distributed in the same way ; for three 
 years it was to be used in providing libraries for districts, but after 
 that time it might be used for libraries or teachers' pay at the will 
 of the district. $28,000 a year was to be added to the literature 
 fund for academies under certain conditions. The residue of the 
 income was to be added to the capital of the common-school 
 fund.' Later a constitutional provision was made for adding 
 $25,000 annually to the common-school fund. 
 
 The income of the fund varied quite widely from $237,304 in 
 1844 to $286,950 in 1854.^ The reports of each year were given 
 in the old American Almanac of the second year following as 
 long as that annual was published. 
 
 The appropriations have been changed from time to time, and 
 were last year as follows : 
 To academies, for instruction of common-school 
 
 teachers $i7)585-99 
 
 Academic examinations ...... 7)985.17 
 
 Transferred to capital of common-school fund . 25,000.00 
 Transferred to the revenue of the same for divi- 
 dends to common schools .... 75,000.00 
 
 Transferred to the literature fund revenue for divi- 
 dends to academies ...... 28,000.00 
 
 Transferred to the capital of the fund for diminu- 
 tion of loans under foreclosure of mortgages . 3,288.79 
 Premiums, interest, and commissions on securities 
 
 purchased 134,634.77 
 
 Transferred to the revenue of the school fund, for 
 
 deficiency 57,581.88 ' 
 
 The reduction of the amount appropriated for common schools 
 
 * 3 Edmunds, 96 ; 3 Fay, 351 ff. 
 
 '■' In 1883 the income properly so-called was about $200,000. 
 
 ^ Comptroller's Report of January, 1884.
 
 SUIfPLUS REVENUE. 89 
 
 to ^75,000 was in accordance, it appears from the Comptroller's 
 Report, with chap. 179, JLaws of 1856.' The provision of $55,000 
 annually for district libraries was in force in 1874, but seems to 
 have been discontinued.^ 
 
 Though the state of the deposit fund is annually reported in 
 New York, the reports appear rather too favorable. In some 
 ways the fund has been an embarrassment.' Again the fund looks 
 safe when it is really in danger of suffering great losses. Mr. F. 
 P. Olcott, of New York, Comptroller of the State in 1877, has 
 kindly communicated the following : " On assuming the 
 duties of Comptroller in 1877, I determined to look into 
 the condition of the fund, and to that end I sent ex- 
 aminers to ten or fifteen counties selected miscellaneously. 
 The details of these examinations were never published in 
 report form, but were referred to in my report to the Legisla- 
 ture, transmitted January 2, 1878, in the words following : ' As 
 far as the investigation instituted has gone, it demonstrates the 
 utter insecurity of the fund. In almost every particular the law is 
 violated — money is loaned upon property not worth double the 
 amount of the mortgage, aside from improvements.* Second and 
 
 ^Comptroller's Report of January, 1883, 67. If the treatment given New 
 York seems meagre in comparison with that given some smaller States, it is to 
 be remembered that each comptroller's report presents statements of the surplus 
 and its use, so that it is an easy matter for anybody to inform himself on the 
 subject. "3 Fay, 117. 
 
 ' " It is loaned out by the State in small sums on real-estate security, and is 
 cared for by no less than fifty officers in the various counties, who are appointed 
 by the Governor on confirmation of the Senate, each of whom bears the high- 
 sounding title ' Commissioner for Loaning Certain Moneys of the United States 
 Deposited with New York.' The most frequent duty of these officers is the 
 collection of a dollar fee on each real-estate search, as no title is perfect without 
 a U. S. Loan Commissioner's search certificate that the property has not been 
 in debt to this fund, whose records are not with the usual records of titles and 
 encumbrances. In New York the U. S. Fund has become an annoyance and 
 embarrassment." — An anonymous writer in the American Protectionist for 
 June 9, 1883. He says he was once a commissioner. 
 
 * Cases have been known where the loans were made on timber lands whose 
 value was in timber. This was then cut off and the mortgage suffered to fore- 
 close to the loss of the State,
 
 90 
 
 SURPLUS REVENUE. 
 
 third mortgages are taken. Searches are not made. Minutes are 
 not kept. The supervisors whose duty it is to examine the fund 
 annually in the different counties and report to this department its 
 condition, in the majority of cases fail to report. Forged and 
 fictitious mortgages have been taken, and during the past year two 
 of the commissioners — one in Jefferson Co. and the other in 
 Chemung Co. — have absconded, and have been found to be de- 
 faulters to the fund in considerable sums. In one county alone 
 property upon which the commissioners had loaned ^49,000 has 
 been advertised for sale the past year on account of non-payment 
 of interest, of which amount the State bid in $33,500. It is clear 
 to my mind that the control of this department over the fund is 
 too remote to be of use in its management, or to be of satisfaction 
 to the Comptroller. Considerably more than $3,000,000 ' of the 
 principal of the fund is invested in mortgages, and the control of 
 this large sum is in the hands of men more frequently chosen for 
 political considerations than from any peculiar fitness for the 
 duties imposed on them. In view of the facts recited I recom- 
 mend that legislation be had abolishing the office of loan com- 
 missioner, and providing that the mortgages in their possession, 
 with the records, be transmitted to this department, and the fund 
 with its responsibilities be placed in the hands of the Comp- 
 troller.' " 
 
 This recommendation was repeated in 1879 and 1880. The 
 Comptroller of the State in the Report of January, 1884, urges very 
 strongly that as fast as loans become due, the commissioners 
 should be compelled to forward both principal and interest to his 
 department. " For the safety of the fund this is now absolutely 
 essential." " The law requires loans to be made on the best of 
 security, at six per cent, interest. This cannot now be done." 
 
 Therefore much money lies idle in the hands of such commis- 
 sioners as refuse to return it. The losses and expenses, he says, 
 have, for the past thirty years, been over $29,000 a year. 
 
 " The State has to-day," he goes on, " thousands of dollars in- 
 
 * The amount invested in mortgages and county bonds Sept. 30, 1883, was 
 $2,352,832.26 which is $220,000 less than it was the year before.
 
 SURPLUS REVENUE. 9 1 
 
 vested in farms, the result of foreclosed loans, that will not sell for 
 a third the principal and interest due." * 
 
 These testimonies cast a shadow over the figures that look so 
 well. In New York we may say that the income of the surplus 
 has been well used, but the principal badly managed. 
 
 North Carolina Received $1,433,727.39. 
 
 The deposit was accepted Jan. 11, 1837, and was deposited in 
 the banks of the State for safe-keeping, not being subject to draft 
 save by the special order of the General Assembly, or unless the 
 safety of the same should require it.* 
 
 Gov. Dudley recommended that the principal be employed for in- 
 ternal improvements, and that the income be devoted to the estab- 
 lishment of common schools, or some other object; he also declared 
 that the tariff ought to be modified so as to lessen the revenue.' 
 
 In "An Act to Aid Internal Improvements," which was passed 
 that year, are found enumerated among the resources for that pur- 
 pose : " Besides the funds heretofore set apart for internal im- 
 provements, all the surplus revenue, after deducting : the sum of 
 $300,000, which is to be devoted to the redemption of the public 
 debt of this State ; the sum of $300,000, which is to be paid for 
 stock subscribed in the Bank of Cape Fear ; * and that portion of 
 the said surplus which is to be added to the literary fund, and to 
 be applied to draining the swamp lands." ^ 
 
 All that we need to clear up this is the amount appropriated for 
 draining the swamp lands, which was $200,000.® 
 
 In accordance with this law we find : " Among the receipts of 
 the literary fund — cash : That part of the surplus revenue ap- 
 propriated to this fund by the last Legislature for the subscription 
 
 ' Comptroller's Report, 28. 
 ' Laws, 1836-7, 305. 
 
 * 51 Niles, 209. 
 
 * This appropriation was by the act of Jan. 23, 1837. Acts, 1836-7, 6. 
 ° I Revised Statutes, 1837, 349. 
 
 * Fayetteville Observer vc\. Am. Aim., 1838, 231. I mention this authority to 
 call attention to the fact that the other statements there made do pot accord 
 with the notices in the original authorities.
 
 92 SURPLUS REVENUE. 
 
 for stock in the Bank of Cape Fear, and for draining the Swamp 
 Lands of this State, $500,000." ' Among the receipts of the in- 
 ternal improvement fund we find — " Cash : Being part of the 
 surplus revenue S533'757-39-"^ Of the $400,000 remaining, $300,- 
 000 was applied to the debt as explained below, and $100,000 was 
 used to pay the civil and contingent expenses of the State by the 
 act of Jan. 27, 1837.^ The $300,000 applied to the debt was 
 made use of as follows : $300,000 worth of land scrip had been 
 sold to the Secretary of the Treasury of the United States for the 
 use of the Cherokee Indians. The governor was now authorized 
 to appoint a commissioner to buy this back, and to do this the 
 governor was authorized to draw on the banks for a part of the 
 surplus, not exceeding $300,000. The scrip was to be re-issued 
 in case the United States called for the surplus.* 
 
 We can now make a tabulated statement of the items : 
 ist. To defray civil and contingent expenses . . $100,000,00 
 2d. " For the payment of stock in the Bank of 
 Cape Fear, subscribed for by the president 
 and directors of the literary fund " ^ . . 300,000.00 
 3d. " For draining the swamp lands of the State 
 under the directions of the Board of Litera- 
 ture " . . . . . . . . 200,000.00 
 
 4th. To redeem the Cherokee land scrip . . 300,000.00 
 5th. Added to the internal improvement fund . 533)757-39 
 
 S^433,757-39 
 During 1837 the Board of Internal Improvements invested 
 
 ^ Treasurer's Report for 1830-9, in Acts of 1838-9, 203. ^ Ibid., 205. 
 
 ^ Acts, 1836-7, 167 ; Treasurer's Report, 200. 
 
 * Act, Jan. 21, 1837 ; Acts, 1836-7, 307; Treasurer's Report, 200. In the 
 Treasury Report of Dec, 1840, a full quotation from which was kindly sent me 
 by the State Treasurer, this transaction is referred to in other words which may 
 throw light upon it. The item reads : " For the redemption of the public debt 
 due the United States, in trust for the Cherokee Indians, created for the purpose of 
 paying the State's subscription for the stock in the Bank of the State of N. C, 
 which stock constitutes a part of the fund belonging to the Board of Literature, 
 $300,000." 
 
 ^ These two items are worded as in the Treasurer's Report of 1840.
 
 SURPLUS REVENUE. 93 
 
 $300,000 of their part in stock of the Wilmington and Raleigh 
 Railroad, and apparently loaned the residue.' Before 1841, how- 
 ever, the whole of their share had been put into the railroad.' 
 All of the surplus, except the $100,000 devoted to State expenses, 
 was a part of the educational fund.' 
 
 In 1840 Governor Dudley recommended a change of manage- 
 ment in the literary and improvement funds, by which their 
 resources should be handed over to the banks of the State, and of 
 Cape Fear, for which the banks would make a large loan to the 
 Wilmington and Raleigh, and Raleigh and Gaston Railroad Com- 
 panies. He said that the most of the counties had adopted the 
 common-school system, and that a few had received the State's 
 quota of money. The want of schoolmasters was the only com- 
 plaint that had reached him. This was the universal complaint 
 at that time in States beginning to form school systems. Further, 
 he pronounced the acts of 1836-7, creating the Boards of Internal 
 Improvement and of Literature of North Carolina, very defective, 
 and in great need of revision. Large sums of money were at their 
 disposal, which they were required to invest in bank stock, and to 
 lend to individuals and corporations. These funds were daily 
 increasing by appropriations, interest from loans, and bank divi- 
 dends. If it were intended to establish a loan office, necessary 
 provisions should be made. " It certainly never could have been 
 intended," he adds, " to convert the executive into a loan office, 
 occupying more of the attention and responsibility of the gov- 
 ernor than all his other duties combined, and diverting him from 
 the higher and more enlarged trusts committed to his care." 
 These funds ought not to be loaned, but invested.* 
 
 The Cape Fear Bank investments were good, for the bank paid 
 semi-annual dividends of 3, and later of 3^^ per cent, on the 
 
 1 The item among the disbursements of 1837 of the Board reads: "Cash 
 paid W. and R. R. R., being a subscription of stock under an act of the last 
 Legislature, $300,000 ; loaned by the managers, $549,450. — Treas. Rep. Laws., 
 1836-7, 206. 
 
 " Treas. Report of December, 1840. 
 
 ' Letter from the treasurer. 
 
 " 4 Hazard, 7 ff.
 
 ^4 SURPLUS REVENUE. 
 
 stock owned by the literature fund.' The progress of the school 
 system was slow at first, but by 1855 it was growing rapidly 
 into efficiency.^ The experiments of North Carolina in internal 
 improvements in general were not a success financially.^ 
 
 The treasurer of the State writes : " The investments for the 
 benefit of the educational interests of the State were considered 
 wise and judicious, and yielded before the war handsome divi- 
 dends. The results of the war rendered all of them unavailable,* 
 except the stock in the Wilmington and Raleigh (afterwards 
 known as the Wilmington and Weldon) Railroad Company. The 
 stock in this company was sold in 1869 by the State Board of 
 Education, composed of State officers elected under the recon- 
 struction acts, [at what was] supposed by them to be a fair value 
 [valuation], viz., $148,000, and invested in worthless special tax 
 bonds, now not considered as legal obligation of the State. In 
 fact, the people have repudiated them, in view of the questionable 
 authority under which they were issued. ... It appears 
 that the original investments were made solely to advance the 
 educational enterprises and interests of the State, the loss of 
 which, for the most part, is attributable to the results of the war," 
 
 1 Treas. Report, 1848 ; Acts of 1848-9, 11-13. Treas. Report, 1850 ; Acts 
 of 1850-1, 13-15- 
 
 ^ Am. Aim., 1858, 258. 
 
 ^ " Nearly all the State debt was contracted in aid of internal improve- 
 ments, directly or indirectly. Some of the efforts to give such aid have resulted 
 disastrously, and in others the agents of the State wasted the funds." — Hunt's 
 Year-Book, 1871, 161. 
 
 * In 1869 it was stated that about one half of the literary fund had been 
 swept away by the war. — American Year-Book, 424.
 
 CHAPTER X. 
 
 THE SURPLUS IN THE STATES. 
 
 Ohio Received $2,007,260.36. 
 
 The deposit was accepted December 19, 1836.' By the act of 
 March 28, 1837, it was directed that the surplus be divided among 
 the counties in proportion to the male population above twenty- 
 one years of age. It was to be loaned to internal improvement 
 companies on good security, or the commissioners might buy bank 
 stock, or loan to the county a sum not exceeding $10,000 for 
 public buildings. These loans were to be at six per cent., pay- 
 able semi-annually in advance. Loans might also be extended to 
 the State at six per cent, per annum. If the counties failed to 
 take all the money, the auditor might loan the rest to the canal 
 fund at six per cent, interest, and in that case he must pay over 
 to the school authorities five per cent, yearly. Further, all interest 
 accruing on these county loans up to five per cent, was to be paid 
 for schools in the counties according to the proportion of children 
 of school age therein. Every January the commissioners must 
 publish full particulars of their acts in some county newspaper of 
 general circulation. No loans were to fall due later than January, 
 1850, at which time the principal should be subject to the order of 
 the State Treasurer to pay the canal debt, unless some other dis- 
 position were made of it by the Legislature. If the State should 
 make this use of the money, there must be a provision that five 
 per cent, interest on the sum be distributed yearly among the 
 counties for the support of common schools. The fund must be 
 reapportioned in 1839, ^^^ ^^ every subsequent enumeration. 
 
 Any amount of income exceeding the five per cent, to be paid 
 
 ' 35 Statutes, 4. 
 
 95
 
 96 SURPLUS REVEATUE. 
 
 to schools was to belong to the county.' This provision was 
 altered March 19, 1838, so that this excess should be invested 
 profitably for a school fund, internal improvements, or for build- 
 ing academies.'' 
 
 There was a further provision in the first act that the counties 
 should be held liable for the five per cent, for schools, any defi- 
 ciency to be made up by taxation. This was repealed March 27, 
 1841,^ and immediately re-enacted, making the deficiency charge- 
 able on the grand levy.'' 
 
 March 13, 1843, an act to pay domestic creditors of the State 
 was passed. It empowered the commissioners of the canal fund 
 to borrow on the credit of the State a sum not exceeding $1,500,- 
 000, to pay the amounts due the contractors of public works ; 
 bonds were to be issued for this purpose, and to redeem these 
 bonds the surplus revenue was appropriated with some other 
 resources. 
 
 The commissioners were to pay five per cent, to the school 
 fund, and one per cent, to the counties on the amount paid in by 
 the counties.^ 
 
 These bonds were known as the seven-per-cent. loan, payable 
 January i, 1852. Besides being pledged to redeem this debt, the 
 surplus was also pledged for the redemption of the turnpike 
 bonds, payable in 1846." It is also mentioned somewhat later as 
 applicable to the payment of the debt in general.'' Under this act 
 the counties began to pay in the surplus, but quite slowly at first. 
 
 1 35 Statutes, 97. Statutes of Ohio, 1841, 881-9. Here are quoted various 
 amendments. This volume contains every thing to date. 
 ' 36 Statutes, 7g. 
 ^ 39 Statutes, 41 ; St. of O., 1841, ibid. 
 
 * St. of O., 1841, 891. 
 
 * 41 Statutes, 80. A full list of the laws about the surplus is given in the 
 Appendix to Swan's Rev. Stat., Derby's Ed., 1854, p. 1043. The last clause 
 mentioned above doubtless means that the counties were to receive one per cent* 
 on the sums paid in before they were due {i. e., before January, 1850), the inter- 
 est to stop at that date. The text of the law is inaccessible at the present, or I 
 should have verified the reference. 
 
 " Aud. Report, i Bankers' Mag., 438 (1846). 
 ^ 5 Bankers' Mag., 203.
 
 SURPLUS REVENUE. gj 
 
 After tlie money became due, which was on January i, 1850, 
 "except with certain balances not due to the State till 1852," the 
 counties must pay 6 per cent, on what remained in their hands.' 
 $839,012.68 had been paid in up to November 15, 1849. In the 
 year ending November 15, 1852, $279,274.96 was paid in.^ By 
 comparing the reports of different years it seems probable that a 
 little more than $1,900,000 had been paid by November 15, 1S55, 
 or, according to other estimates, about $1,700,000." 
 
 During 1856, the amount paid in was about equal to the amount 
 of the previous year, but immediately afterwards the stream dries 
 up very fast, not merely from the fact that most had been paid in, 
 but because the counties did not pay. Twenty-five counties were 
 delinquent as late as 1862, when a tax was authorized to be 
 levied to pay these dues. They could be discharged in certificates 
 of the State funded debt, and the payment credited to the sink- 
 ing fund.* 
 
 The money still failed to come in, and by the act of April, 
 7, 1869, the deficiency, when collected, was to be applied to any 
 fund in the counties that the people thought best.^ 
 
 Now that the history of the surplus as a loan to the counties 
 has been detailed, it only remains to pick up the thread of its 
 relation to the school fund, and then briefly to see what was 
 done with the money. Besides the provisions of the acts pre- 
 viously quoted the school law of 1838 appropriated the interest of 
 the surplus to schools," and the act of March 24, 185 1, repeated 
 
 ^Am. Aim., 1S51, 277. Under this arrangement it happened in cases of 
 delay that the State paid 7 per cent, on her bonds, while the counties only paid 
 6 for keeping the money which would pay the bonds. — Auditor's Rep., Acts 
 1849-50, 16. 
 
 * Am. Aim., 1854, 296-7. The almanac during these years gives the annual 
 returns. 
 
 " Perhaps the latter is the safer figure, for in that year the interest on the sur- 
 plus amounted to $17,280.01, whence it would appear that about $300,000 had 
 not been paid in. The first figure was calculated from not over-clear returns in 
 the American Almanac. 
 
 * Act of April 23d, 59 Stat., 59 ; 2 Rev. Stat., 18S0, 2103. 
 * 66 Statutes, 45. 2 Rev. Stat., 1880, 2105. 
 
 'Am. Aim., 1S39, 191.
 
 98 SURPLUS REVENUE. 
 
 the clause and added to the common-school fund " the balance of 
 the Surplus Revenue Fund.' This last phrase it has been impos- 
 sible to interpret exactly, for in the school reports the surplus is 
 not mentioned, as the common school fund, of which it is a part, 
 is reported as a unit. It may mean the surplus left after paying 
 the turnpike bonds and 7 per cent, stock of 1851. 
 
 The State borrowed some of the money from the counties ; e.g., 
 in 1840, there was such a loan of $63,332.68 from three counties, 
 while the auditor managed the funds of four more counties." 
 
 The use made of the principal is well illustrated by the follow- 
 ing extract from an auditor's report: 
 
 APPROPRIATION OF THE SURPLUS REVENUE. 
 
 Appropriated for the redemption of the turn- 
 pike bonds, S337»369-85 
 
 Appropriated for the purchase of State bonds, 
 
 7 per cent, stock, ...... 208,312.08 
 
 Appropriated for the payment of the faith and 
 credit bonds, to be refunded from the 
 sinking fund, . . ... . • 92,742.90 
 
 Total repaid by the counties, .... $839,012.68 
 Amount loaned to the State, .... 16,806.43 
 
 Balance due by the counties Nov. 15, 1849, . 1,151,441.23 
 
 $2,007,260.34' 
 
 The internal improvements of Ohio were far more successful 
 than those of other States, because her undertakings were more 
 within her power. In December, 1846, Governor Barry said the 
 internal improvements were fully completed. They were monu- 
 ments of early wisdom and public spirit, and had contributed to 
 the development of the country.* So the application of the sur- 
 plus to paying part of the improvement debt was a payment for 
 value received, and not as with so many States merely sinking the 
 
 ' Am. Aim., 1853, 297. Repeated in succeeding issues. 
 
 " 2 Hazard, 102. ^ Laws, 1849-50, 16. "' i Bankers' Mag., 433.
 
 SURPLUS REVENUE. 99 
 
 money in redeeming a vast debt with nothing to show for it. Yet, 
 notwithstanding the favorable words of Governor Barry, the con- 
 stitution of 1 85 1 prohibited the State from ever contracting debt 
 for internal improvements and from lending its credit/ 
 
 Pennsylvania Received $2,867,514.78. 
 
 In Pennsylvania, in 1836 as in 1883," there was a party in favor 
 of distribution. On June 16, 1836, a resolution was passed by the 
 Assembly deprecating the investment of the surplus in State 
 stocks, and declaring that the most safe and Federal disposition 
 which could be made of the surplus revenue would be its appor- 
 tionment among the several States.' 
 
 The deposit was accepted Dec. 22, 1836. So much of the 
 money as should be paid in draft or drafts on any bank or banks 
 in Pennsylvania was to remain where it was then, or where it 
 might be deposited Jan. i, 1837, until further disposition of it by 
 law."* A temporary measure in reference to the deposit was passed 
 Feb. 27, 1837.' 
 
 The parts in the Girard Bank, the Moyamensing Bank, and the 
 Merchants' and Manufacturers' Bank of Pittsburg were to stay 
 there, paying five per cent, interest ; the rest was to go into the 
 Bank of Pennsylvania and the Bank of Philadelphia, and to pay 
 six per cent., provided the banks accepted the charge. The 
 
 ' Am. Aim., 1852, 295. 
 
 *One of the resolutions adopted by the Republican State Convention of Penn- 
 sylvania, July II, 1883, reads as follows : " Any surplus in the public treasury 
 arising from a redundant revenue should, after paying the national debt as fast 
 as its conditions permit, be distributed from time to time to the several States 
 upon the basis of population, to relieve them from the burdens of local taxation 
 and provide means for the education of their children." — See " The ' Surplus ' 
 Question," a little pamphlet which may be obtained of The American, Phila- 
 delphia. 
 
 ' Acts of 1835-6, 853. * Acts of 1836-7 (the third act of the session). 
 
 'Gov. Ritner, in his message, recommended that the surplus falling to Penn- 
 sylvania should be forthwith and immediately applied to the payment of so 
 much of the State's debt as it would cover. — Boston Traveller in Boston 
 Recorder, Dec. 23, 1836. By this means a non-interest-bearing debt would in 
 so far have been substituted for the interest-bearing debt.
 
 lOO SURPLUS REVEMUE. 
 
 interest of these moneys as paid by the banks was to be applied to 
 the fund for common schools.^ 
 
 A month before the general act, however, the treasurer was 
 authorized by a resolution to take a sum not exceeding ^150,000 
 from the surplus revenue to make up the deficiency in the semi- 
 annual payment of interest on the State debt, due Feb. i, 1837.* 
 
 By a special resolution, passed April 7, 1837, $500,000 of the 
 surplus was appropriated as an increase on the annual grant of 
 $200,000 " to be applied by the several districts either for buildings, 
 repairing or purchasing school-houses, or for education, as they may 
 deem best." This additional appropriation increased the average 
 school season, which was three months and twelve days in 1836, 
 to five months and eight days.^ 
 
 Besides the act and two resolutions that have been described, 
 Pennsylvania passed no general law^ touching the surplus rev- 
 enue, but considered the money outwardly in the light of a non- 
 interest-bearing loan to the State immediately available for any 
 wants. It is generally said that Pennsylvania used the money for 
 schools and internal improvements.^ This is true enough, but it 
 is more accurate to say that most of the surplus, especially that 
 part not used for education, was just put into the State treasury 
 and drawn upon for all kinds of uses. This view is derived from 
 
 1 Acts, 1836-7, 24. * Acts, 1836-7, 395. 
 
 ^ School Report, March, 1840 ; 2 Hazard, 226. 
 
 * This becomes apparent in the course of the narrative, but the following may 
 be quoted. " Pennsylvania, by a prudent foresight of her executive, has 
 escaped from the disappointment, which must be severally felt by her sister 
 States, having made no disposition of her share." — Quoted with date, May 10, 
 1837, in I Financial Register, 151. 
 
 * " The appropriations for education are very liberal — $500,000 from the 
 State's share of the surplus revenue, and $200,000 from the bonus given for the 
 charter of the U. S. Bank. The residue of the surplus revenue is applied to 
 the continuance of internal improvement, and the payment of the State debt." 
 — Nezv Yorker, April 15, 1837. The American, of Philadelphia, Dec. 22, 
 1883, contained a short notice of the surplus in Pennsylvania, and the Fhila- 
 delphia Press of Dec. 20, or 21, 1883, contains a more extended account taken 
 from sources independent of those used in the text. The conclusions are that 
 " it was used for two great objects — public improvements and public schools."
 
 SURFLUS REVENUE. lOI 
 
 the treasurer's report for 1837. In it (p. 7) the surplus revenue, 
 ^2,867,514.78, is included among the receipts for 1837, as well as 
 in the statement of debt (p. 5). Then it is said that " after 
 deducting several drafts for the use of the State treasury, drawn 
 during the fiscal year," the balance on deposit in these three banks 
 was 12,220,135.74 (p. 9); this now is exactly the treasury balance, 
 for the amount paid in for the year ending Oct. 31, 1837, including 
 balance on hand the 31st Oct., 1836, was . $6,394,076,00 
 The payments for the same period were . 4,173,940.26 
 
 Leaving a balance of $2,22o,i35.74(p.8). 
 
 For some years previous to this time the revenue had not met 
 the ordinary and extraordinary expenditures ; from 1 830-1 835 
 large sums were received from premiums on loans for internal im- 
 provements and bonuses on bank charters, and by these the in- 
 terest on the public debt and the large local appropriations were 
 met annually. " From 1835 till the present time (says the report, 
 p. 12) the deficiency has been met by premiums on bank charters, 
 and the surplus revenue received from the United States." 
 These extracts show clearly how the surplus was regarded and 
 used. 
 
 In reference to the use of the interest of the surplus while on 
 deposit, F. H. Burrowes, Superintendent of Schools reported as 
 follows : " By the fourth section of the act of the 27th of Febru- 
 ary, 1857, the interest of the surplus revenue received by this 
 State, is ' ordered to be applied to the fund for the support of 
 common schools within this commonwealth.' The sum already 
 received into the treasury amounts to ^100,000 and will be con- 
 siderably increased before the principal is expended for internal 
 improvements or other purposes. This money has not been em- 
 braced in the estimates of the State Treasurer, Governor, or any 
 other officer, and has not, therefore, been calculated on for any 
 other public use." Doubts had been entertained by the treasurer, 
 and auditor-general whether the Legislature did not mean to have 
 the interest added to the annual State appropriation ; but the 
 superintendent thought that the use of the word fimd determined
 
 I02 SURPLUS REVENUE. 
 
 that the interest was to be added to the principal of the school 
 fund.' 
 
 The interest on the deposits for the year ending October 31, 
 1838, was $137,668.86.' 
 
 The school system of Pennsylvania was helped by the surplus 
 revenue to the extent probably of about $800,000. It could not 
 have drawn the interest more than two or three years, for in 1840 
 the treasurer of the State called attention to an annual deficit of 
 $1,000,000 and upwards, in the ordinary receipts and expenditures 
 of the State.' 
 
 The surplus could not stand such a drain long and it had disap- 
 peared before 1840, as these deficits were made up by new loans. 
 
 The aid that the cause of education received from the surplus 
 was timely and very helpful. A school system had been organized 
 in 1834, and what was needed most were accommodations and 
 means to set it in operation. The surplus supplied this need at a 
 time when it would have been met but slowly by the people. For 
 at that time they were reluctant to endure taxation, much pre- 
 ferring running into debt, and a little later they were heavily 
 weighted with taxes imposed on account of the extravagant im- 
 provement system. Not many years after this their appropriations 
 fell too low to make what was given of much service.^ 
 
 Pennsylvania's experience with internal improvements was a 
 hard one, and brought the credit of the State under a cloud for 
 some years. The State was not only deeply involved in debt but 
 a great deal of money was wasted and thrown away. This is 
 practically acknowledged by Gov. Porter, who favored the system 
 in general.^ 
 
 ' 4th Ann. Report, 1837, 21-2. ' 55 Niles, 200. ' 2 Hazard, 91. 
 
 *Townsend Haines, Supt. of Pub. Instruction 1848-49, said: "The appro- 
 priation now made by the State is literally squandered." He mentions several 
 reasons, among them that the amount was too small to be effectual, and that 
 the people were dispirited by grievous taxation for the State debt. — l6th Ann. 
 Report, 1849, 16. 
 
 ' " On the whole, though some works have been undertaken of doubtful 
 policy at the time, though large sums of money have been expended on some 
 which ought never to have been commenced, and though the cost of those of
 
 SURPLUS REVENUE. 103 
 
 " The total cost to the State of the Pennsylvania Canal and 
 branches" between 1826 to 1843 was $28,616,375.01. In 1843 
 the State owed a net amount of $41,581,281.99. By 1844 the 
 people had become alarmed at the prospect and declared them- 
 selves in favor of stopping short and selling the public works. In 
 1845 the main line of the public works was offered for sale 
 for $20,000,000, but there was nobody to buy. In 1858 the same 
 property was sold to the Pennsylvania Railroad Company for 
 $7,500,000.' These figures show the losses on invested capital. 
 The introduction of railroads lessened the value of the greatest 
 undertakings in the State, and this unavoidable circumstance 
 must be borne in mind in passing judgment on the internal im- 
 provement experience. 
 
 Rhode Island Received $382,335.30. 
 
 The Legislature of Rhode Island accepted the surplus, Nov. 4, 
 1836, and the next day passed a law providing for its deposit 
 in banks that had complied with the bank laws. These banks 
 must pay five per cent, interest thereon. The interest was 
 to be apportioned according to the act of 1828, and devoted to the 
 support of public schools.^ 
 
 This appropriation of the interest was repeated in the school law 
 of 1839, while the State was to add thereto enough to make 
 $25,000, which should be the annual appropriation to schools.' 
 
 The same year the act regulating the investment of the principal 
 was so amended that whatever deposits were voluntarily given up 
 by the banks might be loaned to the towns at five per cent, annual 
 interest. The sum loaned was not to exceed the share that each 
 town would receive on the ratio of population, and the loan " must 
 be used for the purposes of education simply." ^ By this the 
 schools received a double benefit. 
 
 unquestioned utility has been far greater than it would be, if the same work 
 was to be done under all the advantages of our present experience, we have yet 
 perhaps as much cause to be surprised at our good as at our ill fortune." — Mes- 
 sage, Jan., 1840 ; 2 Hazard, 42. 
 
 ' Penn. Finances, 25-7. 'Stockvvell, 51. 
 
 'Acts since 1835, 913-4. * Acts since 1837, 1054.
 
 I04 SURPLUS REVENUE. 
 
 This act was still further amended by authorizing the com- 
 missioners to invest such money as was given back by banks in 
 town and city bonds having not more than five years to run 
 and paying at least five per cent, annually. The bonds were 
 to contain a condition that the city must pay them within thirty 
 days, if the United States should call for the money.' 
 
 Jan. 7, 1840, the State borrowed $29,526.49 of the fund to pay 
 the remainder of the State prison debt.'' In June, 1842, an act 
 was passed to draw out $50,000 to pay for the insurrection, to be 
 refunded as soon as may be, with interest at five per cent.' In 
 Oct. $32,000 more was voted. ^ 
 
 The cost of the " Dorr war was met by the use of a portion of 
 the deposit fund." The expense is variously stated.^ 
 
 The following is from a report of May, 1846 : 
 Invested in bank and other security . . . $229,567.84 
 In the hands of the commissioners . . . 48.18 
 
 Borrowed by the State, Jan. 7, 1840, to pay 
 
 the balance of the State prison debt . . 29,526.49 
 Borrowed by State, June, 1842, for State purposes 50,000.00 
 
 28,192.72 
 " " . 25,000.00 
 
 " " . 10,000.00 
 
 " " . 10,000.00 
 
 << 
 
 n 
 
 u 
 
 Oct., 1842, 
 
 « 
 
 (( 
 
 li 
 
 Jan., 1843, 
 
 (( 
 
 (( 
 
 ii 
 
 June, 1843, 
 
 « 
 
 (( 
 
 ii 
 
 May, 1845, 
 
 Total borrowed by the State, $152,719.21.'' 
 
 $382,335-23 
 
 ^ Act, June 26, 1841 ; Acts since Sess., Jan., 1840, 2055. 
 
 2 $35,000 was voted (letter from Supt. of Ed., T. B. Stockwell). 
 
 = Actsofjune, 1842,8. " Actsof Oct., 1842,85; only $28,192.72 were taken. 
 
 ° In Mr. E. R. Potter's Report to the General Assembly, June 23, 1843, this 
 sum is stated at $102,949.63 (Am. Aim., 1844, 219), but in 64 Niles, 296, is the 
 statement : " By a report of the Finance Committee in the middle of 1843, it ap- 
 pears that the expense to the State Government of suppressing Dorr's insurrec- 
 tion was $114,949. This was met by the use of a portion of the ' deposit fund.' " 
 Full reports of the Loan Commissioners up to date may be found in the Acts of 
 June, 1841, 46, and again in the May Acts of 1843, p. 8. 
 
 ° Am. Aim., 1847, 228. 
 
 7 " This is sometimes spoken of asadebt " of theState.— Am. Aim., 1849, 236.
 
 SURPLUS REVENUE. I05 
 
 In June, 1848, the treasurer was authorized by a resolution to 
 borrow $16,000 of the Bank of North America, "to prevent using 
 up any more of the surplus revenue, which by former laws had 
 been specially devoted to schools." ' 
 
 This policy was not kept up, however, for in Jan., 1849, 
 $41,526.67 was drawn " to pay a note at bank." ^ 
 
 Accordingly, in 1852, the account of the surplus stood as 
 follows : 
 
 Loaned to cities and towns on bond . . , $70,402.60 
 
 Invested in bank stock ...... 117,638.67 
 
 Used by the State for prison and Dorr war . . 194,245.88 
 
 Not funded 48.08 
 
 $382,335.23 
 The State owed no debt save what had been borrowed from 
 the " deposit fund." ' 
 
 " In 1857, $32,500 of the fund which had been loaned to some 
 of the towns was paid to the treasurer and put by him into the 
 general fund, thus making a grand total of $226,793.96, which 
 was taken out of the deposit fund proper. 
 
 "In 1858 Rhode Island received from the U. S. Government 
 $4,276.03 on account of sales of the public lands. This amount 
 was added by vote of the General Assembly to the deposit fund 
 account,* which made the grand amount due from the State 
 $231,069.99, leaving a balance still invested in loans and stocks 
 as a fund. In Jan., 1859, the General Assembly voted to trans- 
 fer this balance of $155,541.27 to the permament school fund. 
 In i860 the sum of $11,191.80 surplus revenue of the State was 
 directed to be added to the permanent school fund on account of 
 
 ' Am. Aim., 1849, 240. The State already owed $25,000 on note to the 
 bank. 
 
 ^ $45,000 was voted — (Mr. Stockwell). This money was withdrawn doubt- 
 less to pay the very note which was given for a loan to save drawing from the 
 surplus. — Cf. note i. 
 
 ' Am. Aim., 1853, 244-5. 
 
 ■* Accordingly the deposit fund is stated as amounting to $386,611.33 in Am. 
 Aim,, 1859, 247, and in all later reports.
 
 I06 SURPLUS REVENUE. 
 
 the amount of the deposit fund due that fund. No transfer of 
 funds has since been made, so that the State stands ostensibly 
 as a debtor to the school fund to the amount of $219,878.19." ' 
 
 The State has not formally paid interest on this loan but as the 
 State appropriation to schools is far greater than this interest, it is 
 fair to say that the interest is included in the appropriation. If 
 the State transferred the interest formally, the appropriation 
 would doubtless be just so much less. At the same time the in- 
 lent of the original laws was that the money should constitute a 
 fund, and if borrowed should be repaid. The State appropriation 
 was $25,000 in 1839 ; it was raised to $35,000 in 1851, to $50,000 
 in 1854, to $70,000 in 1868, to $90,000 in 1869, and has just been 
 raised to $120,000. 
 
 The regulation about loaning the surplus to towns has been so 
 far changed as to direct that the shares of the towns should be 
 proportioned to the number of children in them under fifteen 
 years of age. The commissioners of the fund who managed it 
 are the Governor, the Secretary of State, and the General 
 Treasurer.'' 
 
 1 For these particulars I am indebted to the kindness of Mr. Thos. B. Stock- 
 well, the State Supt. of Public Instruction ; other facts that he sent me 
 threw light on some obscure points in the account of R. I. 
 
 " Revised Statutes, title 3, ch. 14. School Laws, v. As will be seen in the 
 report above, dated 1852, acts later than that of 1837, allowed the commis- 
 sioners to invest the money " in good bank stock."
 
 CHAPTER XI. 
 
 the surplus in the states. 
 South Carolina Received $1,051,422. 
 
 The Legislature accepted the share of the surplus that fell to 
 the State, December 21, 1836, and ordained that it be deposited in 
 the Bank of South Carolina, to the credit of the State, not as a 
 part of the capital, but " to be banked upon and employed accord- 
 ing to the usages of said bank." * 
 
 The day before, by a resolution, the comptroller-general had 
 been authorized to subscribe ten thousand shares, or $1,000,000, 
 to the Louisville, Cincinnati, and Charleston Railroad,'' to be paid 
 out of the surplus revenue in instalments, as the other stock- 
 holders paid. By the charter, the $1,000,000 could be called for 
 by the company in instalments of $5 per share, or $50,000, every 
 sixty days.^ 
 
 By the act of December 20, 1837, the fourth instalment was to be 
 paid to the L., C, and C. Railroad Company to the credit of instal- 
 ments to become due from the State.* 
 
 The ten thousand shares were subscribed for in 1837, and one 
 
 ' Acts of 1836, 45. Governor Pierce M. Butler, in his message, after this 
 suggested that a portion of the surplus be used in erecting monuments on the 
 Revolutionary battle grounds (Acts and Resolutions, 1837, p. 5 of Message). 
 Another proposal : a South Carolinian, premising that the surplus revenue was 
 the planters' money refunded by the Government, proposed that the State lend it 
 on negro security, to save the planters from having to sell their negroes ; to make 
 the security valid let the banks make the same fund into an insurance fund to 
 insure negroes (51 Niles, 257). 
 
 ' On this great railroad bank see the Globe, September 7, 1836 ; January 2d ; 
 and January 14, 1837; 2 Financial Register, 96, 318, 351. The notices in 
 Niles are indexed and are therefore omitted here. 
 
 ' Resolutions, 1836, 129 ; Report of Pres. of Bank, 1843, 33 
 
 * Acts, 1837, 1836. 
 
 107
 
 I08 SURPLUS REVENUE, 
 
 instalment of $50,000 was paid that year. In 1838 another in- 
 stahnent was paid, which left then 1951,422.09 "on deposit in the 
 Bank of South Carolina subject to the payment of the remaining 
 instalments on said shares when called for, and in the meantime 
 to be used as other deposits." ' By October i, 1839, $50,000 
 more had been paid.^ The rest may best be told in the words of 
 " The Report of the Special Joint Committee Appointed to Examine 
 the Bank of South Carolina " on the sinking fund. " In 1840 the 
 six-per-cent. stock, issued under the act of 1820, became redeem- 
 able and, before the ist of October of that year, the sum of $798,- 
 795.96 was redeemed and debited to this fund [/. e., the sinking 
 fund], which was thereby reduced to $57,806. It was then, by 
 the direction of the comptroller-general, credited with the sum of 
 $651,422.09, part of the surplus revenue received from the Federal 
 Government, and deposited in the bank. 
 
 "By an act passed in 1836, before this money was received, it 
 was directed that^the instalments, as they should become due on 
 shares to be subscribed for by the State to the L., C, and C. Rail- 
 road Company, should be paid out of it, and accordingly the first 
 four instalments were so paid ; but in 1839 when it was deemed 
 expedient for the State to make an immediate advance of twelve 
 instalments, amounting to $600,000, the comptroller-general was 
 directed to issue and deliver to the railroad company $600,000 of 
 six-per-cent. stock, instead of requiring that sum to be paid by 
 the bank, and by the same act the interest on the said stock was 
 made payable out of the sinking fund ; and the capital and profits 
 of the bank and the balance of the surplus revenue beyond the 
 amount required to pay the four instalments of the subscription 
 to the railroad not advanced, were pledged for the payment of the 
 interest and principal of said stock. The amount of surplus 
 revenue then on deposit was $85 1,422.09, of which $200,000 would 
 be required to pay the four instalments not yet advanced, leaving 
 the sum of $651,422.09, which was carried to the credit of the 
 
 ' Report of Comptroller Hayne ; Acts and Res., 1838, 70; and Table G, 
 Bank Report, ibid. 
 
 ^ Table F, Bank Report, 20, in Comptroller's Report, 1839.
 
 SURPLUS REVENUE. ^ IO9 
 
 sinking fund as above mentioned." ' . . . The fund later " was 
 credited in 1844 with a balance of $200,000 surplus revenue, 
 which was, by an act passed in 1843,'^ directed to be transferred 
 to this fund."' Besides the six-per-cent. stock of 1839, the five- 
 per-cent. stock of 1826 was to be extinguished by the sinking 
 fund. The last payment on the five-per-cent. stock was made in 
 April, 1847, and the last on the six-per-cent. stock in March, 
 1856.' 
 
 While the surplus was deposited in the State bank the profits of 
 the bank, arising from the interest on the same, amounted by Octo- 
 ber I, 1843, to $356,221.10.' 
 
 In the statements of the public debt of South Carolina the 
 comptroller mentioned the $1,051,422.09 surplus revenue annually 
 down to 1859.* 
 
 Though the great Louisville, Cincinnati, and Charlestown Rail- 
 road was never built, the investment of the State seems to have 
 been a good one. The new company bought the South Carolina 
 Railroad from Charleston to Hamburg, 135!- miles long, which cost 
 $1,750,000, for $2,400,000 of L., C, and C. stock.* Besides its 
 subscription the State guaranteed for the railroad a loan of two 
 million dollars.' After buying the South Carolina road the L., C, 
 and C. Co. almost reconstructed it, and laid out the branch road to 
 Columbia, 128 miles in length, which was opened in November, 
 1840. The railroad bank had a capital of $1,500,000, on which in 
 
 * Reports and Resolutions of 1849, p. 100. In Rep'ts and Res., 1847, p. 36, 
 is a report of the president and directors of the Bank of South Carolina, and 
 another is to be found in Rep'ts and Res., 1840, 32. These reports agree 
 thoroughly with the above, and illustrate the methods of accounting. The sur- 
 plus was made a special account. 
 
 " Dec, 1843. 
 
 ° Letter from the State Treasurer. 
 
 ^ Report of Pres. of the Bank, 1843, p. 43. 
 
 * Reports /«JJZOT / also Am. Aim., 1853-61, Art., South Carolina. In 1843 
 Governor Hammond said : " It is highly probable the State will never be called 
 on to refund the surplus revenue, though her liability for it should never be 
 forgotten in an estimate of her debt." — Am. Aim., 1845, 252, 
 
 ° 2 McCulloch, Geo., Diet., 831. 
 ' 55 Niles, 40.
 
 no SURPLUS REVENUE^ 
 
 * 
 
 ihe first part of 1839 the profits were at the rate of eight per cent, 
 per annum.' Then, after the big scheme fell through, the different 
 branches in the State were consolidated in 1844 and called the 
 South Carolina Railroad Company. This road did a profitable 
 business up to the time of the war, but has since been unfortunate.' 
 
 In November, 1846, Governor Aiken said: "The State has 
 hitherto exhibited a wise policy in investing the greater part of the 
 surplus revenue in the South Carolina Railroad." He pronounced 
 it a valuable enterprise which had thus been encouraged, was then 
 in successful operation, and which promised to be a source of 
 wealth.^ 
 
 The State owned $641,000 of stock in this company as late as 
 October 1853.' 
 
 From the facts at hand it seems on the whole that South Caro- 
 lina stands very well among those States that invested the 
 
 surplus. 
 
 Tennessee Received $1,433,757. 58.* 
 
 The surplus was accepted October 24, 1836, and directed to be 
 deposited in the Union and Planters' banks of Tennessee under a 
 special contract by which they were to pay the State five per cent. 
 
 ' Hayne's Report, 56 Niles, 325. 
 
 " The annual dividends between 1844-58 were 5, 5|, 5^, 5.83, 2\, 4, 6, 7, 7, 
 8, 8|, 8|, 10, 8, 8^ (Poor's Manual, 1869-70, 262). The expense of rebuilding 
 and equipping the road after the war loaded it with a large floating debt. It 
 became embarrassed, failed to pay the interest on its bonds, and was put into 
 the hands of a receiver, September, 1878. It was sold under foreclosure, July 
 28, 1881, and reorganized as the "South Carolina R. R. Co.," November i, 
 1881 (Poor's Manual, 1883, 453). 
 
 ' I Bankers' Mag., 428. 
 
 * 8 Bankers' Mag., 625. 
 
 " This was the share that fell to Tennessee, but whenever the amount is men- 
 tioned it is stated as $1,353,209. The cause of this discrepancy, I have not 
 been able to find out. In the report of the Secretary of the Treasury presented 
 at the meeting of the extra session of Congress in 1837, it was stated that about 
 §1,165,575 of the transfers of the July instalment had not been receipted for or 
 received by the States. It is barely possible that the missing eighty thousand 
 dollars falling to Tennessee is to be included in this sum, and that it was not 
 recovered.
 
 SURPLUS REVENUE. Ill 
 
 interest, payable semi-annually. All the interest that accrued was 
 to be received by the treasurer and charged to him by the comp- 
 troller as part of the State revenue, subject to the comptroller's 
 warrants to meet all appropriations chargeable on said fund bylaw. 
 The residue left was to be loaned to the Union Bank.' The 
 Farmers' and Merchants' Bank of Memphis would be allowed part 
 of the surplus revenue if it agreed to the contract, which it did. 
 
 $707,353 of the surplus was deposited with the Union Bank, 
 and " was considered available for capital, as it was not likely to be 
 suddenly recalled. " "^ The rest was deposited in the Planters' and 
 Memphis banks under the same condition. 
 
 January 19, 1838, was passed "an act to establish a State bank, 
 to raise a fund for internal improvements, and to aid in the estab- 
 lishment of a system of education." The main provisions were 
 that a State bank should be set up with a capital of five million 
 dollars, made up of the surplus revenue and the unexpended 
 interest thereon, the school fund, the proceeds of the sales of the 
 Ocoa (or Ocoee) lands, and of such additional sums to be borrowed 
 as would be required to complete the five million dollars. The 
 fourth instalment, if it was received, was to be paid on the stock 
 in addition to the five million dollars. 
 
 The surplus was to be paid over from the deposit banks in two 
 yearly instalments, beginning Jan. i, 1839, in specie or in funds 
 immediately convertible into specie, Of the dividends of this 
 bank $100,000 was annually to be set apart for common schools, 
 to be applied as the General Assembly might direct. Further, 
 $18,000 more was annually to be appropriated for county acade- 
 mies. The bank also was to pay the interest on the internal im- 
 provement bonds. Under this head $650,000 each was appropri- 
 ated to the construction of the Hiwassee and the Charleston and 
 Cincinnati Railroads, to be paid by instalments.^ 
 
 * Laws of Called Session, 1839, 9. ' See Trotter, 258 and 412. 
 
 ' Laws, 1837-8, 153-66 ; i Financial Reg., 222 ; Trotter, 261. The Am. Aim., 
 1845, 270, gives a history of school legislation up to this law. 
 
 The instalments to the L., C, and C. Railroad were to be five per cent., 
 fifteen per cent., fifteen per cent., five per cent., and so on of the total sub- 
 scription. The instalments were to fall due as soon as the stockholders had
 
 112 SURPLUS REVENUE, 
 
 Next in the comptroller's report of Oct., 1839, the following 
 statement is found : " The first instalment of one half the U. S. 
 revenue deposits in the Union, Planters', and Memphis banks has 
 been promptly paid by the banks respectively, amounting in all to 
 ^674, 837. 33/ The whole amount of the school fund in the treas- 
 ury, and liable to distribution on the first Monday of Jan. last, 
 was only 1115,551.46, and this sum has been disbursed. At the 
 close of the first bank year the annual dividend required to be 
 made by the Bank of Tennessee, of $100,000 for the use of com- 
 mon schools, and of $18,000 for the use of county academies, was 
 duly set apart by the directors and placed in the treasury. The 
 common-school portion has been distributed generally to the 
 counties in their due proportions." ^ This appropriation of $roo,- 
 000 annually of the profits of the bank might with no great stretch 
 of the fancy be considered as the appropriation of the interest of 
 the surplus for education, for $100,000 less the interest on the 
 school fund, which was invested in the bank,' is about seven per 
 cent, on the surplus.* 
 
 paid in equal amounts. To the Hiwassee road the State was to subscribe as 
 much as the stockholders paid in, provided it was not more than $650,000. 
 The Hiwassee road was to go from Calhoun on the Hiwassee to Knoxville. 
 
 ' In the cashier's report (i Hazard, 361) the sum is stated at $678,373.12, and 
 put to the credit of the bank as capital stock. This discrepancy is probably ac- 
 counted for by the method of payment. $150,000 was paid in silver, and the 
 balance in post notes of the banks payable in Philadelphia at 60, go, and 120 
 days, adding interest. — Report of Pres. of Bank, Oct., 1839 ; i Hazard, 292. 
 ^ I Hazard, 306. 
 ' July I, 1840, the capital of the bank was made up of : 
 
 State bonds $1,000,000.00 
 
 School fund 115,528.46 
 
 School fund (Ocoee) 587,051.90 
 
 Surplus revenue 1,353.209.55 
 
 $3. 055-789. 91 
 Cashier's statement ; 3 Hazard, 121. 
 
 * The revenue of the school fund expended from March i, 1836, till Oct. i, 
 1837, was $17,705.26, which is about $ii,ooo a year. $100,000 less this income 
 equals $89,000, or nearly seven per cent, on the surplus ; or to present the same 
 in a different way, Oct. i, 1841, the capital of the bank was made up of the
 
 SURPLUS REVENUE. II3 
 
 But whatever views may be accepted on this, point it must be 
 said that the law, though well intended, was a failure in nearly 
 every direction.' It is true that education received some help but 
 
 Proceeds of the sales of six-pei-cent. State bonds . . . $1,000,000.00 
 School fund collected, and proceeds of the sale of the Ocoee 
 
 lands 769.537.31 
 
 U. S. surplus revenue 1,353.209.55 
 
 $3,122,746.86 
 (5 Hazard, 267.) Now the $118,000 appropriated from the net profits on this 
 capital is almost exactly six per cent, on the whole school fund and surplus 
 revenue. 
 
 ' " The benefits expected to be derived from the act of Jan. 19, 1838, have 
 not been realized. The bank has failed to effect the amelioration in our 
 pecuniary affairs that its authors anticipated, and the expectations of the public 
 have been sadly disappointed ; nor has the operation of the act been more salu- 
 tary and successful in relation to other interests it was intended to foster. 
 There is, probably, not another law to be found among our statutes that more 
 signally failed to fulfil the wishes of the Legislature, or one that requires more 
 thorough reversion and amendment in order that it may effectuate the purposes 
 for which it was designed." The State by the provisions of the act of Jan. 19, 
 1838, was to issue bonds in subscription of stock in improvement companies, so 
 soon as individuals subscribed for the other half and deposited 15 per cent. 
 of the subscription (Trotter, 262). These State bonds had ruinously depreciated 
 and great losses threatened those contractors who engaged to receive the bonds 
 of the State in payment of stock or for labor, unless the Legislature provided 
 for the emergency. The action of the school system had not been attended 
 with very satisfactory results. — Gov. Cannon's message, Oct., 1S39 ; l Hazard, 
 296 ; partly in 57 Niles, 137. Two years later Gov. Jones in his inaugural 
 message, Oct., 1841, pronounced the improvement laws of 1837 " impolitic, 
 unsafe, and wholly inadequate to accomplish the objects contemplated." They 
 were "loose and unguarded, opening the door by which fraud and injustice 
 might be perpetrated on the State with the greatest facility." Some improve- 
 ments had been made' in the law, but there was room for more. The State 
 Constitution provided that the common school moneys belonging to the State, 
 should be a perpetual fund, the principal never to be diminished by appropria- 
 tion, the interest to go to education. The present system was very imperfect, 
 but its influence had been salutary. The law was " vague, indefinite, and com- 
 plicated," and its revision was demanded by the best interests of the State. — 5 
 Hazard, 296-7. 
 
 To cite a specific case of unsuccessful improvements. The Hiwasse Railroad, 
 designed to extend from Knoxville to the Western Atlantic R.R., at a point
 
 114 SURPLUS REVENUE. 
 
 not so much as ought to have been received, and the provisions of 
 the law, as a whole, ended in consuming a good deal of the princi- 
 pal of the school fund, as we shall see. Nor must it be understood 
 that the surplus was considered as a part of the principal of the 
 school fund ; on the other hand, it is mentioned during these years 
 as a resource of the State for paying its debt, in case the United 
 States did not recall it.' 
 
 All of this generous appropriation, however, though regularly 
 paid by the bank, apparently was not expended for schools. The 
 following items are found in the financial report of the State for 
 the year ending in Oct., 1846. 
 
 RECEIPTS OF THE STATE. 
 
 Bank of Tennessee, for schools . . $100,000 
 " " " academies . 18,000 
 
 )i 18,000.00 
 
 EXPENDITURES OF THE STATE. 
 
 For common schools .... $65,083.78 
 " academies 11,931.36 
 
 $77,015.14 
 
 Leaving a remainder of . . . . . $40,984.86 
 
 near the Tennessee line, about 100 miles, was begun in 1826 ; about 70 miles 
 were graded at a cost of $1,000,000, when the company had to stop on account 
 of financial difficulties. Strong efforts were made to resume it, but without 
 success. — Am. Aim., 1849, 290. 
 
 The Louisville, Cincinnati, and Charleston Co. had abandoned work as far 
 as Tenn. was concerned before Oct., 1841 (5 Hazard, 347). And in 1844 the 
 company surrendered $32,000 of 5 per-cent. -improvement bonds to the State 
 which were cancelled (67 Niles, 340). The total amount issued for this road 
 was $560,000. 
 
 These bonds could be withdrawn under certain conditions (63 Niles, 119), 
 and the above is doubtless a case of withdrawal. 
 
 Considerably later than this, in 1849, Gov. N. S. Brown called the improve- 
 ment act of 1837-8 " an indiscriminate policy, that if persevered in would bank- 
 rupt any state in the world." " The tendency was to construct any and every 
 sort of road without reference to its importance or value." — 4 Bankers' Mag., 
 484-6. 
 
 ' 1841, 5 Hazard, 274 ; 1843, 64 Niles, 245 ; 1853, Am. Statist. Ann., 1854,289.
 
 SURPLUS REVENUE. II5 
 
 of the disposal of which nothing is said.' Judging from the prac- 
 tice of the neighboring States it probably went into the general 
 fund. 
 
 We now come to the time when the effects of the law of Jan. 
 19, 1838, had begun to bear down on the bank which it had 
 created. In T849 Gov. Neil S. Brown ^ called attention to the fact 
 that the fixed charges on the bank threatened to bankrupt it, 
 though it had been profitably managed, and to consume the school 
 fund as well as the surplus revenue. This finally came to pass. 
 In 1865 Gov. Brownlow declared the bank hopelessly insolvent. 
 
 Feb. 16, 1866, an act was passed to wind up and settle the busi- 
 ness of the bank. After the assignment of the assets the first fund 
 to be secured was the ^1,500,000 of school fund.* 
 
 The conclusion in regard to the surplus is that it was used up 
 either in providing for the general expenses of the State or in 
 
 ^ I Bankers' Mag., 365. 
 
 ' In general he said : The bank was suffering a constant loss of capital. It 
 had made seven per cent, since its organization, but by State regulation it had 
 to meet imposed liabilities that would require a profit of ten or eleven per cent.: 
 e. g., the real capital of the bank did not exceed 2^ million ; seven per cent, of 
 that was $175,000 per year ; but in 1847 the stated liabilities amounted to 
 $271,712.87. Here then was a deficit of $96,712.87 to be taken from the capital. 
 Further, no account was taken of the increased liabilities and current drain of 
 capital. The bank began July i, 1838, with $3,226,976.82 capital, and by July 
 I, 1849, $800,000 had been lost, it was believed. At that rate the whole capital 
 would be gone in sixteen years. [This prophecy was almost exactly fulfilled as 
 to time. Note the date given in the text.] The bank ought to be either discon- 
 tinued or disencumbered. Under the existing policy the dissipation of the 
 capital must result before long. " That capital, as is well known, embraces the 
 common-school fund and the surplus revenue — if the latter should ever be called 
 for, it would present us a melancholy alternative, — while there is little probability 
 that the former would ever be supplied, however solemnly it has been pledged 
 by the Constitution, and however ardently it has been cherished by the friends of 
 education." — 4 Bankers' Mag., 4S4-6. 
 
 'Acts, 1865, g. He says also that the school fund had " been squandered by 
 bad men and dishonest functionaries, who fled at the approach of the old flag." 
 It seems more probable that the fund had suffered with the rest of the bank's 
 capital, than that this accounts wholly for its loss. 
 
 ^ Acts, 1865-6, 38. The fund was reorganized in the Constitution of 1870. 
 Art. xi., § 12.
 
 Il6 SURPLUS REVENUE. 
 
 paying interest on bonds issued for internal improvement? which 
 failed, and that the interest was used in part for the same purpose, 
 and in part to promote education." 
 
 Vermont Received $669,086.79. 
 Gov. Jennison recommended that the income of the surplus be 
 applied to the support of normal and primary schools.^ Partially 
 following the governor's advice, the money was accepted and dis- 
 posed of in Nov., 1836, as follows: It was divided among the 
 
 ' There is one reference to the surpkis and the school fund which has been 
 omitted in the text and reserved for notice here on account of the hitherto in- 
 explicable confusion of the statements. 
 
 Jan. I, 1859, the capital stoclc of the Bank of Tennessee Avas readjusted, " and 
 the school fund constituting a portion of the capital stock was as follows : 
 School fund $215,648.35 
 
 " " Ocoee 
 
 " U. S. public lands 
 Surplus revenue (one half) 
 Ledger balance 
 
 576,536.81 
 11,189.80 
 
 466,439.59 
 44,621.18 
 
 $1,414,434.73. 
 
 Report of John Eaton, Superintendent of Public Instruction, 1869, p. of 
 Appendix 103. 
 
 If we are to understand by this that of the whole surplus only twice $466,- 
 439.59 was left, and that that sum had been credited to the school fund, the only 
 difficulty then is to account for the missing part of the surplus ; but if we look 
 into the Index to the scliool laws which were compiled and published with the 
 acts of 1853-4 (page 61 of the Index), we find among the sources of the school 
 funds "one half of surplus revenue from U. S.," and reference is made to the 
 3d Sect, of the act of Feb. 3, 1842 (Acts, 1841-2, 209) ; but by this act one 
 half of what Tennessee received from the distribution of the proceeds of public 
 land sales was deposited in the Bank of Tennessee as a part of the common 
 school fund. Acts, 1S42-3, 210. This however creates the difficulty, for Ten- 
 nessee received no such sum as $932,879.18 from the land sales. Her share in 
 the $562,144.18 to be distributed from the proceeds of land sales from Jan. 1st 
 to June 30, 1842, was $26,446.68. Up to December 10, 1842, the news had come 
 that one or two States had received their shares, while others had resolved 
 not to receive theirs. Among the refusing States were South Carolina and Vir- 
 ginia. The land receipts from July ist to the passage of the tariff bill, when 
 the distribution ceased, had not been published then, but probably would not 
 exceed $184,000. — 63 Niles, 226. Some one of the above authorities has 
 evidently made a mistake. It is possible that the phrase "one half" ought to 
 go with " U. S. public lands," and then every thing would be clear, except the 
 fate of the missing part of the surplus of 1837. '51 Niles,i6o.
 
 SUJiPLUS REVENUE. II7 
 
 towns on the basis of population, and was to be loaned on sufficient 
 security at six per cent, interest. For this purpose three trustees 
 were to be elected in each town. After every census the money 
 must be newly apportioned. The interest the towns were to apply 
 to the support of schools, or if they had other funds sufficient 
 to support schools in their several school districts for six months in 
 each year they could apply the interest to any object they might 
 choose. Among the districts the " income was to be divided 
 in the same manner as that raised by the three-per-cent assessment 
 on the grand list." If the towns did not draw the principal they 
 might draw the interest from the treasurer of the State who was 
 to put their shares to use. The towns were accountable to the 
 State when the State Treasurer should require, on requisition from 
 the United States, or for the purposes of new division. 
 
 In cases of breaches of this act the Grand Jurors were to present 
 indictments against each town so charged, and if the town should 
 be convicted it must pay a fine not exceeding double the annual in- 
 terest of its deposit and costs, which fine and costs were to be for 
 the use of the county.' 
 
 The general tenor of this law has never been changed. An in- 
 vestigation instituted this year shows " that most of the towns 
 apply the income of the surplus revenue fund of 1837 to the sup- 
 port of schools. The several towns have invested and keep 
 the income separate for school purposes, or have conveyed it into 
 the treasury, and annually raise a sum by tax equal to the interest 
 of the same, for the support of common schools. A few towns may 
 fail to do this, but most do it."^ 
 
 Vermont once had another school fund of about ^200,000 
 but the State borrowed it and then abolished it instead of paying 
 the debt.^ The deposit is now called a " school fund." The State 
 
 >Z. Thompson, " Hist, of Vermont," part 2, 142 ; Acts of 1836, 11 ; Rev. 
 Statutes of 1839, 119 ; Compiled Statutes, 1850, 155 ; General Statutes, 1862, 
 163 ; Revised Laws, 1880, 184. 
 
 ^ Letter from the State Supt. of Ed. In 1843 about half the interest was so 
 applied. — Am. Al., 1S45, 208. 
 
 ' Am. Aim., 1846, 208, and 1847, 221. In 1851 the office of State Superin- 
 tendent was abolished and no school returns made for some time. — Am. Aim., 
 1S55, 22S.
 
 Il8 SURPLUS REVENUE. 
 
 has borrowed the shares of some towns, and such loans of from 
 one to fifteen thousand or more dollars have existed from the begin- 
 ning. Probably in most cases these loa'ns were merely instances 
 where the towns did not draw the money which was invested 
 by the State. ' 
 
 It will be noticed that Vermont and Connecticut made almost 
 the same use of the surplus revenue; the similarity is closer than 
 exists between any two States that have kept part of the money to 
 the present day. 
 
 Virginia Received $2,198,427.99. 
 
 The surplus was accepted as a deposit by the act of December 
 20, 1836, in which pains was taken to declare that it was unjust 
 to raise revenue for distribution.'^ 
 
 On the 20th of March, 1837, an act was passed increasing the 
 banking capital of the State ; by this act the State was to subscribe 
 for half the increased stock from the surplus revenue. According 
 to this provision, the State was to subscribe for 
 
 $325,000 worth of stock in the Bank of Virginia, and for 
 505,000 " " in the Farmers' Bank of Virginia. 
 
 $830,000 
 This sum was to be paid from the instalments already received. 
 Further, from the instalments of July and October (any deficiency 
 was to be supplied from the first two deposits) the following 
 amounts of stock were to be bought : 
 
 $370,000 in the Bank of the Valley of Virginia. 
 250,000 in the Northwestern Bank of Virginia, at Wheeling, 
 150,000 in the Merchants' and Mechanics' Bank, at Wheeling. 
 900,000 in the Exchange Bank of Virginia. 
 
 $1,670,000 
 The residue was to be loaned as the executive of the Bank of 
 
 1 Am. hXxa.., passim. " The State owes several towns, for the U. S. surplus 
 fund deposited and left on interest, $14,528.94, which is all loaned out agree- 
 ably to law on good securities." — i Bankers' Mag., 372 (1846). 
 
 "Acts, 1836-7, 7 ; 51 Niles, 274.
 
 S URPL US RE VENUE. 1 1 9 
 
 Virginia saw fit,' or it was to be loaned to the Bank of Virginia 
 and to the Farmers' Bank of Virginia at five per cent, yearly, with 
 the right reserved to convert this loan into stock." With the 
 fourth instalment this residue would be about $300,000. 
 
 Four days later, it was enacted that "so much of the profits or 
 principal of the surplus fund on deposit in the treasury of this 
 commonwealth, as shall be requisite to supply any deficiency in 
 the receipts of the present fiscal year, shall be subject to the war- 
 rants of the auditor of public accounts to defray the legal and 
 necessary expenses of the commonwealth." " 
 
 June 24th an act for the temporary relief of the banks sus- 
 pended so much of the act of March 25th as touched the Bank of 
 Virginia, the Farmers' Bank of Virginia, and the Bank of the Val- 
 ley of Virginia till March i, 1838. This act relieved them from 
 increasing their capital, allowed them to suspend specie payments, 
 and empowered the treasurer to loan out, at good security, at 
 not less than five per cent, per annum, the surplus revenue that 
 was to be subscribed to these banks. Further, these banks could 
 borrow without security as much as was to be subscribed to the 
 stock.* 
 
 At the same time the treasurer was authorized to detain out of 
 the surplus revenue enough to discharge all claims on the treasury, 
 which should be duly audited, whether government expenses or 
 interest on improvement loans. So much as should be paid 
 upon loans was to be put to the credit of the board of public 
 works.' 
 
 The relief to the banks was extended on Feb., 20, 1838, till 
 March, 20th, twenty days, and the time to increase the capital 
 was extended till April first. As the 20th of March approached 
 the limit of the relief was placed at the end of the session.^ 
 
 ' P. 72, of Acts, 1836-7. General ref., ibid., 68-74. These two statements 
 are not alternatives in the text, but such seems to be the sense of the law. 
 ' P, 73, of Acts, 1836-7. 
 
 * Acts, 1836-7, 6 ; 52 Niles, 273. 
 
 * Acts of Extra Sess., June, 1837, 4. 
 
 * Acts of Extra Session, June 1837, 7, ^d 5,2 jfcifiks, 273. 
 
 » Acts of 1838, 77. Wcstrr.imter Oda reilows 
 
 Free Librai^ and Reading R0dm,.7
 
 I20 , SURPLUS REVENUE. 
 
 One case of a loan of the surplus can be mentioned. In 1837 
 the executive loaned $98,065.83 to the Richmond and Petersburg 
 Railroad Co. The company failing to pay the interest repaid the 
 loan in part by returning a draft for $100,000 gn the Board of 
 Public Works which had been granted to the railroad. There was 
 left then a deficit of $11,993.^ 
 
 Either at this time or later $225,792.93 " surplus revenue " ap- 
 pears to have been added to the literary fund." During the war 
 the income of this fund was ordered to be applied to the military 
 defence of the State. $216,000 was actually paid to the State 
 under this ordinance, and the rest was realized by the State by 
 not paying interest on its own obligations in the hands of the 
 fund. No aid for schools to speak of has since been derived from 
 the fund.' 
 
 With this meagre statement the account of the surplus in Vir- 
 ginia, so far based upon direct statements must end,^ but there 
 are grounds for probable conjecture. It seems likely that some 
 of the bank stock was turned over to the internal improvement 
 fund later, for among the chief sources of State income in 1855 
 we find the "surplus revenue internal improvement fund" 
 $162,591,' and in 1857 the same item was $130,000." No further 
 explanation was found, and this may not refer to the U. S. surplus 
 of 1837. 
 
 > 59 Niles, 232. 
 
 ^ School Report, 1871, 198. It is not stated whether this surplus was the 
 U. S. surplus, and it may have been rash to make that assumption in the text. 
 
 ' In 1871 it was stated : " No payments or receipts of any description have 
 been made since the war on account of the literary fund, nor has any interest 
 accrued to the State been funded." — Ibid., 200. An inspection of later reports 
 shows that very little is now received from the fund, which nominally amounts 
 to $1,877,364.68. 
 
 ^ The treasurer of the State writes that the House Documents of the present 
 Congress (1S83-4) are to contain full information on the use of the surplus. 
 Unfortunately this document is inaccessible at the present writing. The state- 
 ment was probably made in connection with Virginia's application for the 
 fourth instalment.— See page 43. 
 
 ' Am. Aim., 1857, 283. 
 
 ° Am. Aim., 1859, 280.
 
 SURPLUS REVENUE. 121 
 
 About this time the State owned stock in improvement com- 
 panies to the amount of $18,359,226, and held bonds and certifi- 
 cates of loans besides, which raised the amount to about 
 $24,000,000 par value. The real value was unknown and the 
 property was much depreciated.' The following testimony is of 
 considerable value : " The portion [of the State debts for capital 
 borrowed] put to banking was totally lost, and what was expended 
 in roads and canals nearly so, for most of them lie unfinished, or 
 lead to points where such works are not wanted, or would not pay 
 the interest on their construction."^ These are the words of a 
 man who represented Virginia in Congress from 1816 to 1840, and 
 who favored distribution in 1836.^ If the surplus had been used 
 differently than the borrowed capital in Virginia, or if Virginia 
 was a marked exception among the States in this regard, it seems 
 altogether probable that Mr. Mercer would have qualified this 
 statement. As it stands it leads one to suspect that his views 
 were formed to a certain extent on what he saw in Virginia. 
 
 Before leaving the special subject of the surplus in the States, 
 it is best to say a word in reference to the character of the forego- 
 ing pages. The facts were gathered from very many sources and, 
 in general, were unattended by any critical remarks. Oftentimes 
 the only available source of information has been the statute- 
 book, which tells what it was proposed to do rather than what was 
 done, for many fine-sounding laws were inactive. On account of 
 this peculiarity in respect to the sources of knowledge, it is very 
 highly probable that a much more favorable light has been cast 
 upon the whole operation than would be shed were critical in- 
 formation attainable. 
 
 Contemporary references, though few, generally present a 
 blacker picture than is drawn in the investigation. Horace 
 Greeley, as early as October 7, 1837, wrote : '' Two thirds of the 
 
 •Am. Aim., 1858, 286. 
 
 " Exposition, etc., by Charles Fenton Mercer, p. 157. See also other ex- 
 tracts, pp. 132 and 222, quoted on pp. 124 of this work. 
 
 ^ I Benton, 707. Mr. Mercer tried to have the States released from their 
 obligations to return the money.
 
 122 
 
 SURPLUS REVENUE. 
 
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 124 StjRPLUS REVENVE. 
 
 States have mismanaged and misapplied this great fund in such a 
 miserable, time-serving, popularity-hunting fashion, that," etc/ 
 
 Charles Fenton Mercer, an advocate of distribution, said, 
 later, that the surplus deposited " was used up, generally speaking, 
 in some visionary project, or it was distributed in some way to 
 the emolument of party and wasted by demagogues." ^ And 
 again : the States wasted it as they had done millions before 
 — or what was infinitely worse, the dominant politicians got hold 
 of it and under pretence of supporting schools or doing some work 
 for the State, they and their abettors used it up." ' Benton's 
 severe comments are well known and need not be quoted in detail.'' 
 In brief, he finds no good effects of the bill and various hurtful 
 consequences, such as corruption, extravagance, and useless waste 
 of money. But these general effects will be considered more par- 
 ticularly in the following chapter. 
 
 ' The New Yorker, March 24, 1837. The N. Y. yoiirnal of Commerce pro- 
 nounced " the surplus a curse and distribution a greater curse." 
 
 ^ Exposition, etc., 132. It is only fair to say that Mercer appears as an ex- 
 treme pessimist in this book. 
 
 ' Ibid., 121. 
 
 * 2 Benton, 39.
 
 CHAPTER XII. 
 
 SOME GENERAL EFFECTS OF THE ACCUMULATION AND DISTRIBU- 
 TION OF THE SURPLUS, ESPECIALLY UPON THE INTERNAL 
 IMPROVEMENT SYSTEM. 
 
 CONCLUDING REMARKS. 
 
 The origin and growth of the surplus, the legislation and feel- 
 ing concerning it, and the various uses to which it was applied by 
 the States, have all been described, and now it only remains to 
 call attention to the relations between the surplus and the internal 
 improvement craze, and to note some of the effects of the distribu- 
 tion. In general, the growth of the surplus was followed by a 
 considerable increase in Government expenses,' legitimate and 
 
 ^ " One, and not the least, of the evils resulting from a surphis revenue is an 
 extraordinary increase of our Federal expenses." A part of the general increase 
 was attributed to the Indian wars, and then the report continues : " Unless 
 prompt measures are taken to reduce our revenue, we may anticipate a rapid 
 increase of our expenses, and the recurrence of another surplus for deposit or 
 distribution." — Report of the Com. of Ways and Means. 51 Niles, 326 (Jan. 
 21, 1837). 
 
 The average annual expenditure, exclusive of the public debt, for the twelve 
 years preceding 1836 was $15,063,000. The expenditure for 1836 was $30,- 
 868,164, and for 1837 $39,164,745. 
 
 " The above sums include payments for trust funds and indemnities, which 
 in 1837 were $5,610,404.36." — 54 Niles, 320. 
 
 Mr. Duncan, of Ohio (July 7, 1838), a Jackson man, in reply to Mr. Bond, 
 who had upbraided the Jackson men for extravagance, mentions three instances 
 of inexcusable extravagance that were supported by the opposition : ist. $1,500,- 
 000 for a canal through the suburbs of Washington. He had looked out on 
 that canal seven months and had not seen a boat on it. " Unpardonable 
 folly." 2d. An appropriation for a turnpike road, made at great expense on 
 the bank of the Ohio and Chesapeake Canal. 3d. A turnpike parallel with this : 
 the existence of the one superseded the necessity of the other. He had ridden 
 six or seven times on these roads for exercise, and had seen only one shackly 
 
 135
 
 126 SURPLUS REVENUE. 
 
 illegitimate, and an astonishing prevalence of official recklessness 
 and dishonesty in the Government finances, not to say of gigantic 
 frauds and barefaced plundering of the Treasury,' 
 
 Such results, however, are to be expected when a surplus exists, 
 and in some respects are so well illustrated at the present day, as 
 not to need any extended discussion. 
 
 But when the effect of the surplus in the States is to be esti- 
 mated, another feature of the times, the widespread enthusiasm 
 for internal improvements, demands attention, and, indeed, the 
 two subjects are wellnigh inseparable. 
 
 The desire for internal improvements was early manifested 
 in this country. The lack of convenient means of communication 
 was a great hindrance to the development of the newly settled re- 
 gions, and in a general system of improvements all classes saw 
 great advantages : the land-owner saw his land rapidly rising in 
 value, the farmer saw new and valuable markets opened to him, 
 and the laborer saw brisk work and high wages. 
 
 Though in Congress the system met with continued opposition 
 from the strict constructionists on constitutional grounds, the 
 spirit of improvement grew steadily among the people, until by 
 the invention of the railroad, it received a great impulse which 
 fairly turned people's heads. The contagion spread and attacked 
 the old and new communities alike. It will not lead me too far a 
 field to present, in the text and notes, some materials which are 
 not only interesting at the present day, but indispensable in 
 forming an idea of the system. For this purpose a glance at the 
 movement in Illinois will be perhaps sufficient. One who lived 
 through the period writes: "In 1836 the fever of internal im- 
 provements raged throughout most of the States of the Union. 
 
 team on one, and never a living animal except his own horse on the other. 
 " Extravagant," worthless," "wicked." But the most profligate and extravagant 
 appropriation was for the Georgetown and Alexandria Canal and Aqueduct. The 
 canal was underway, was right " on the bank of the Potomac — a canal, deep, 
 still, and wide, being tide water." — 54 Niles, 375. See Bolles, " Financial 
 History of the U. S." (17S9-1860), pp. 554-566, for other notable instances of 
 extravagance, and also 3 Calhoun, 498-499. 
 ' See Bolles, ibid.
 
 SURPLUS REVENUE. 1 27 
 
 Pennsylvania, my native State, was crazy to improve the whole 
 country, whether the wants of the people required it or not. In- 
 diana was almost as wild ; and Illinois, also, was ^ras^^ considera- 
 bly with the mania." The movement had begun in Illinois in 
 1832, and had rolled on with increasing momentum till 1836, when 
 the law (/. e.^ the improvement bill) was passed. It was not the 
 fault of the politicians but of the people who clamored for it ; ^ the 
 people would not trust their representatives, but sent on delegates 
 to lobby. The bill of 1836-7 authorized a loan of ^8,000,000 for 
 building 1,300 miles of railroad, and improving five rivers. 
 $200,000 was to be distributed throughout the counties which 
 received no improvements.^ 
 
 The fever raged at the next Legislature, and $800,000 more was 
 borrowed. " The people were perfectly insane on the subject," 
 and beyond the reach of argument ; the banks then failed, money 
 could not be obtained, and a called session of 1838-9 had to re- 
 peal the acts, and provide for winding up the business.' The law 
 had provided that the work should begin on all improvements at 
 the same time, and so nothing had been completed except the rail- 
 
 ' Another writer, William S. Wait, in a letter to BickneWs i?^'/or/^r disagrees -^of <^ 
 with the above statement. " Our population is thinly scattered over a large " ^' ' 
 
 territor}' ; strangers, not only to the country, but to each other, and but little 
 acquainted with the men who compose the legislative body, and with the motives, 
 other than those which should promote the general welfare {sic) that actuate 
 them." — 61 Niles, 244 (Dec, 1841). 
 
 ^ " The manner in which th-is young State has thus involved itself is made 
 evident by this single paragraph from the governor's message : ' I am aware 
 that the system is the result of mutual concession and compromise, and that its 
 advantages were to be dispensed as equally as possible throughout the State, 
 by the construction of improvements in almost every county, and appropriating 
 to those in which no improvements were to be made $200,000 in lieu thereof.' 
 This is the most comprehensive system of log-rolling, softly referred to by the 
 governor as 'mutual concession and compromise,' that we have any record of," 
 —57 Niles, 356 (Jan., 1840). 
 
 * " The Illinois improvement system still continues to create a great excite- 
 ment in Illinois. At a meeting lately held in Peoria, strong resolutions were 
 adopted recommending its ' total abandonment,' notwithstanding the admission 
 that such a step would involve a sacrifice of $4,000,000." — 56 Niles, 36S (Aug., 
 1839).
 
 128 SURPLUS REVENUE. 
 
 road from Springfield to the Illinois River.' This road was of no 
 advantage to the State, and was ordered to be sold for what it 
 would bring. Though it cost the State over ^1,000,000, it sold 
 for only $100,000 in State indebtedness. The population, though 
 poor and embarrassed with private debts, was left with a State 
 debt of $14,237,348.^ The following extract describes the con- 
 dition of affairs in five of the improvement States : " There are 
 constructing in the five Western States of Ohio, Kentucky, In- 
 diana, Illinois, and Michigan : 
 
 " Of canals, about .... 1,250 miles 
 
 " Of slackwater navigation . . . 750 '' 
 
 ' " A correspondent of the St. Louis Argus gives the following brief account 
 of the condition in which things will be left by the Legislature : Out of 
 300 miles of railroad some 20 are completed, the rest in every stage between 
 completion and commencement — embankments half formed, bridges half built, 
 an immense amount of timber lying on the ground ; the first is left to wash 
 away, the second to tumble down and decay, the last to rot in utter uselessness. 
 unless some kind persons will take it for firewood or fences. A large amount 
 of contracts are now abandoned by the State." — 57 Niles, 402. 
 
 " The condition of Illinois is truly deplorable. We first see her immense in- 
 ternal improvement fund squandered by profligate Legislatures as commissioners, 
 so that after an investment of over $10,000,000 for public works, scarcely a mile 
 of her canals and railroads has yet been completed so as to afford an income to 
 the State." (The second disaster was trouble with the State bonds.) — 61 Niles, 
 247. 
 
 "Abridged from Reynolds' "My Own Times," 324-5. In 1841 the debt 
 was estimated at $17,500,000 to $19,125,000. In 1840 the population of the 
 State was 476,183, and of Chicago, 4,470 (in 1880, 503,185). — Am. Aim., 1842, 
 252. In Gov. Carlin's Message of Dec, 1842, the proposed methods of paying 
 for the improvements are explained. In brief : Six-per-cent. State bonds were 
 issued to be reimbursable after a long term of years ; the interest on these was 
 to be paid by negotiating them in foreign markets and realizing the difference 
 of exchange, by depositing the money thus raised with banks until it should be 
 disbursed, and by receiving premiums upon it. Further, bank stock was to be 
 subscribed for, " the dividends upon which, it was expected, would greatly ex- 
 ceed the interest upon tbe bonds with which the stock was purchased." " Thus 
 it was contemplated by the advocates of this policy to complete those extensive 
 improvements without any expense to the State during the process." When 
 finished the tolls would pay the interest and principal of the cost. — 63 Niles, 
 297.
 
 SURPLUS REVENUE. 
 
 129 
 
 " Of railroads 
 
 " Of McAdam roads 
 
 " Total . 
 
 1,540 miles 
 1,400 " 
 
 4,940 miles, 
 
 making, in the general aggregate of work to which the States are 
 parties, about 5,000 miles of artificial communications. Of labor- 
 ers directly employed on the works there are supposed to be at the 
 lowest estimate not less than 20,000 during the greatest portion of 
 the year. If to these we add the numerous body of public officers, 
 engineers, contractors, agents, store-keepers, and the ordinary pro- 
 portion of families, we shall find a population of not less than one 
 hundred and fifty thousand who are dependent upon the public 
 works of the Western States. The expenditures now annually 
 amount to between four and five million of dollars, and the sum 
 total of money solemnly pledged by legislative enactments to the 
 completion of these works, with what has already been expended 
 on them, is at least the enormous sum of forty-eight millions of 
 dollars. To this sum we may add at least $5,000,000 pledged on 
 the part of individuals, and large sums for the completion of the 
 national road. Of this aggregate about $10,000,000 have already 
 been expended, and it is within bounds to say that an amount 
 fully equal to the sum total will be expended on these and similar 
 undertakings within the next eight years." ' 
 
 How far short this was to come of the real facts appears from 
 the following list of the debts of the " Delinquent States," or States 
 that failed to pay the interest on their loans. The list is dated less 
 than six years after the above was written. 
 
 Pennsylvania 
 Maryland 
 
 Mississippi 
 Louisiana 
 Arkansas 
 Illinois . 
 
 DEBT. 
 
 $40,835,013 
 11,387,285 
 
 7,000,000 
 20,558,000 
 
 3,000,000 
 11,454,170 
 
 ' 56 Niles, 262 (June, 1839).
 
 130 SURPLUS REVENUE. 
 
 DEBT. 
 
 Indiana '...... $13,349,500 
 
 Michigan 4,077,178" 
 
 Of course it would not be safe to assume that the whole amount 
 of these several debts had been expended in internal improve- 
 ments, but certainly by far the greater part of them had. As has 
 been seen this great burden of debt brought on the whole no 
 adequate recompense for the trouble and the disgrace of bank- 
 ruptcy. Had the money been well spent and carefully husbanded ' 
 the result would have been different in degree but probably not 
 in character. The work was undertaken in a heedless, imprudent 
 way, and the conditions were unfavorable to a successful issue. 
 When all the circumstances are considered — the log-rolling, the 
 
 ^ The case of Indiana deserves a special note. "In the fall of 1839, the 
 purchasers of the State bonds having failed to pay, and the credit of the State 
 being no longer available, the whole system of operations was paralyzed. On 
 the 1st of November the total expenditures amounted to about seven millions, 
 and it was then estimated that the total cost of the works, if completed, would 
 be about twenty-three millions. Such was the undertaking of a State whose 
 whole taxable property, at the time the system bill passed, did not exceed, 
 according to the actual returns, more than forty-seven millions, and such was 
 the result. The policy of constructing the works and parts of works simul- 
 taneously was so well pursued, that no considerable portion of any work was 
 completed or fit for use. Twenty miles of the Madison Railroad, thirty miles 
 of the White Water Canal, were the principal routes of travel that had been 
 made ready ; the system lay in fragments throughout a State whose vast territory 
 of woodland, was, as yet, but slightly interspersed with patches of cultivation. 
 There lies the system still — its unfinished excavations and embankments, locks, 
 culverts, aqueducts, and bridges hastening to ruin ; the income insufficient to 
 pay the expenses of superintendence and repair. The Wabash and Erie Canal 
 may be ready for navigation next fall, but conceding as much revenue to the 
 work as was derived from similar portions of the Ohio Canal, it will not yield 
 in five years more than expenses and repairs," — The Louisville yournal, 61 
 Niles, 229 (Dec, 1841). 
 
 '67 Niles, 371 (Feb., 1845). Florida had to be added to this list two or 
 three years later. — 73 Niles, 218. 
 
 ^ " As an actual fact it will be seen that in two thirds of the cases the State 
 funds have not been judiciously or carefully used, and that the consequence has 
 been a loss of the money furnished and no corresponding benefit, by reason of 
 the development of material resources," — Hunt, 134.
 
 SURPLUS REVENUE. I3I 
 
 requirement that all works should begin simultaneously, the fatuous 
 hopes that in some way or other the improvements would cost the 
 State nothing and would pay for themselves, and the reckless 
 action of all parties concerned, — it seems right to say that the spirit 
 was a spirit of gambling. 
 
 There was the same kind of excitement, and, with a few ex- 
 ceptions, equally disastrous consequences followed. 
 
 Apart from these considerations there is another reason for the 
 misfortunes of the AVestern States. The chief lack of new communi- 
 ties is always capital, but the chief requisite for the prosecution 
 of internal improvements, is abundant and cheap capital. This 
 fact at once accounts for the enviable success of Holland in mak- 
 ing internal improvements, and for the pitiable failure of the 
 frontier States fifty years ago. Holland is old, well-peopled, and 
 rich, while the Western States were barely out of their primitive 
 condition ; in Holland surplus capital and surplus labor are em- 
 ployed, in the West recourse was had to borrowed capital and 
 laborers taken from the needful cultivation of the soil. Illinois 
 in 1837, with about three fifths the present population of the single 
 province of North Holland, possessed a territory over fifty times 
 as great. In other words, the ratio of the density of population 
 was as eighty to one, in favor of North Holland. It is remarked 
 that of the less than half a million inhabitants of Illinois in 1840, 
 probably less than 70,000 were taxpayers. 
 
 " The mass of the people," said an observer at the time, " live 
 in the first rude log-house which was thrown up to protect them 
 from the weather." ' All their capital had been laid out in land,' 
 and the population was sparse. With a trading capital estimated 
 at $2,500,000 ' (that of New York was about |roo,ooo,ooo), the 
 people of Illinois expended on internal improvements between 
 $10,000,000 and $15,000,000 in a few years. Under these circum- 
 stances it is easy to see that the results which followed the transfer 
 of laborers from productive to unproductive employment, and of 
 borrowing capital to do so, were inevitable ; the candle was burn- 
 ing at both ends, and each moment the flame burned more fiercely. 
 
 ' W. S, Wait in BickneWs Reporter, Oct 30, 1841 ; 61 Niles, 243.
 
 132 SURPLUS REVENUE. 
 
 The rapid growth of the surplus gave foreign investors great con- 
 fidence ; the States wanted to borrow for internal improvements ; 
 to carry on these works men were drawn from the life-support- 
 ing industries ; this led to an increase in the imports and there- 
 fore of the surplus, this to greater confidence and easier 
 loans, this to more undertakings and more subtractions of labor 
 from the productive employment, and so it went on till the crash 
 came. 
 
 The key to the situation is easy to seize. 
 
 There was a large fixation of capital, when the country needed 
 a large production of capital and that it was borrowed capital, 
 which was transformed into fixed capital, or more truly, sunk, just 
 hastened the ruin so much more. 
 
 Simultaneously with the sudden expansion of the internal im- 
 provement movement came the distribution of the surplus to 
 aggravate the evil. Despite the facility with which the States 
 could borrow money in the earlier part of the excitement, the re- 
 ceipt of a large amount of capital, which they believed would not 
 be recalled, undoubtedly impelled them to greater undertakings, 
 and added fuel to a flame already burning too fiercely. 
 
 That this influence of the distribution was in most cases ex- 
 tremely hurtful can hardly be questioned. The States were at- 
 tempting, or in the mood to attempt, far too much, and the distribu- 
 tion, by enticing them on with aid for the present, and with hopes of 
 more in the future,' not merely increased the scale of the works 
 but also, by so doing, greatly enhanced their cost. Since every 
 additional laborer taken from agriculture raised the price of pro- 
 visions, and every additional demand for labor raised wages, it 
 was inevitable that every new undertaking was more expensive 
 than the last, and, furthermore, increased the cost of all other un- 
 
 ' Sec. Woodbury, in his Treasury Report in 1839, notes the greatly increased 
 foreign liabilities of the States, and the large excess of exports over imports 
 needed to settle these liabilities, and says that the rapid development of this 
 state of affairs was " accelerated by the distribution of the surplus in deposit 
 among the States, tempting them in several instances to new and unprofitable 
 enterprises, and stimulating delusive hopes of still further distributions." — 57 
 Niles, 294.
 
 SURPLUS REVENUE. I 33 
 
 finished improvements/ In Pennsylvania the receipt of the sur- 
 plus was followed by the passing of a bill appropriating $3,000,000 
 to internal improvements. Gov. Ritner, in vetoing this bill, asserted 
 that "the bare probability of the passage of the bill had already 
 unsettled the condition of whole sections of the State, and had 
 given a new stimulus to the over-excited spirit of speculation."" 
 This bill was regarded by some as a distribution of the surplus,' 
 for no special disposition had been made of the money. 
 
 As most of the capital for improvements was borrowed, the in- 
 creasing cost of the work failed to make itself felt as a brake. 
 When the surplus came, practically a gift, the case was aggravated 
 in its worst features, and prudence and economy forgotten.* 
 
 Five years after the distribution, Governor Thomas reviewed 
 the effects of that measure in the following language : " Nothing 
 has influenced more fatally the evil councils, by which so many of 
 the States have become involved, than the delusive expectations, 
 rekindled constantly as fast as they are quenched, of pecuniary 
 largesses from the national treasury for State purposes. The dis- 
 tribution law (miscalled the deposit act), which beggared the Gen- 
 eral Government, whilst but few of the recipients of its bounties 
 have been enriched, caused a most unfortunate revolution in pub- 
 lic feeling, if not in public opinion. The possession of that fund, 
 stimulating as it did the wildest speculations, destroyed at once all 
 those salutary restraints found in the habits of the people and the 
 conditions and powers of their local governments. An inexhausti- 
 ble fountain of wealth, it was believed, had been opened, which 
 was to flow in perennial streams into the State treasuries. State 
 
 ' " In consequence of the rise in the price of labor and provisions within the 
 last two years, and of the amount of work commenced in the other States, the 
 expense of constructing public improvements has increased fully 50 per cent." 
 — Gov. Ritner in his veto of the above-mentioned bill (April 3, 1837) ; 52 Niles, 
 105. ^ Ibid. ^ Ibid., lot. 
 
 ^ " The moment the States yield to this tempting influence, their indepen- 
 dence and sovereignty will be at an end. The privilege of expending the reve- 
 nue, without any of the responsibilities which its collection imposes, will destroy 
 every principle of moderation and economy." — Governor Carlin, of Illinois, in 
 discussing the distribution of 1842 ; 63 Niles, 300.
 
 134 SURPLUS REVENUE. 
 
 legislators, it was thought, were no longer to be limited in their 
 operations, or abridged in their expenditures, by the amount of 
 revenue they might be emboldened to take directly by taxes from 
 the pockets of the people. A new source of supply was to 
 was to come through the breach made in the Federal Constitution. 
 Private property was to be obtained for public purposes, by a less 
 perceptible, because more circuitous, route. High tariffs were to 
 be levied to supply not only the demands of the national treasury 
 but, in conjunction with the land sales, to furnish a surplus for 
 distribution after that deposited was exhausted. Under the in- 
 fluence of these and similar delusions, the large and oppressive 
 debt of Maryland has been contracted." * 
 
 With these words of Governor Thomas may be left the brief 
 consideration of the effects of the distribution. As a discussion 
 of the economic arguments for and against distributing the surplus 
 revenue falls outside the range of this work, which is intended 
 merely as an historical investigation, I have only to present a word 
 or two in reference to the proper relation of the law of June 23, 
 1836, to the present schemes of distribution, and my work will be 
 done. 
 
 The act of 1836 was designed to relieve the overburdened Treas- 
 ury when the public money, as it was then deposited, was doing a 
 vast deal of mischief ; an immediate remedy was sought for a finan- 
 cial plethora ; at the present day, however, there is no such press- 
 ing necessity, and the sole aim of the distributionists is to per- 
 petuate a high protective tariff. Whether the design be laudable 
 or not, that is unquestionably the fact. 
 
 There is, then, difference enough in the underlying causes to 
 decrease the value of the precedent which, it is claimed, the act 
 of 1836 offers to the later projects, but when the legal character of 
 that act is compared with the propositions that have been lately 
 advanced, the assumption that the former is a precedent for the 
 latter is wholly unwarranted. In its legal character the law of 
 June 23, 1836, was simply a bill regulating the Government de- 
 
 ^ Message of Governor Thomas, of Maryland, December 27, 1842. — 63 Niles, 
 315-
 
 SURPLUS REVENUE. I 35 
 
 posits. The wideness of the gulf between the modern plans and 
 their supposed precedent appears in a striking light when we see 
 the two strongest supporters of the deposit bill emphatically de- 
 nouncing the collection of taxes for distribution. 
 
 Daniel Webster in his speech of May 31, 1836, " On the distri- 
 bution of the surplus revenue," while favoring a distribution in 
 that crisis, said : " There would be insuperable objections, in 
 my opinion, to a settled practice of distributing revenue among 
 the States. It would be a strange operation of things, and its 
 effects on our system of government might well be feared. I can- 
 not reconcile myself to the spectacle of the States receiving their 
 revenues, their means even of supporting their own government, 
 from the Treasury of the United States." Further on, Mr. Web- 
 ster approved of the continued distribution of the proceeds of the 
 public-land sales, if a separate account were kept of them ; " but," 
 he continues, " if we cannot separate the proceeds of the lands from 
 other revenue, if all must go into the treasury together, and there 
 remain together, then I have no hesitation in declaring now that the 
 income from customs must be reduced. It must be reduced even at 
 the hazard of injury to some branches of manufacturing industry ; 
 because this, in my opinion, would be a less evil than that 
 extraordinary and dangerous state of things in which the United 
 States should be found laying and collecting taxes for the purpose 
 of distributing them." * 
 
 A few years later Henry Clay, when discussing the constitutional 
 power of the Government to tax, declared : " There is, then, I re- 
 peat, no power or authority in the General Government to lay 
 and collect taxes in order to distribute the proceeds among the 
 States. Such a financial project, if any administration were 
 mad enough to adopt it, would be a flagrant usurpation."" 
 
 With these two opinions, coming from the highest sources, 
 "sharply implying the wide and essential difference between the 
 " distribution in 1837 " and the late propositions, the history 
 of that incident may fitly close. 
 
 ' 7 Webster, 257. 
 
 ' 6 Clay's Works, 233.
 
 APPENDICES. 
 
 APPENDIX I. 
 
 A supplement to " Examiner's" views, mentioned on page i6. The attempt 
 is simply to calculate what would have been the excess of receipts over ex- 
 penditures of the Government if there had been no fever of speculation. 
 
 ANNUAL RECEIPTS FROM LAND SALES. 
 
 Average for ten years before 1835 ..... $2,363,004 
 
 after 1S36 3,171,167 
 
 2)5.534.171 
 Average for twenty years excluding the speculative period . $2,767,085 
 
 The sales of 1835 amounted to $14,757,600.75 
 
 2,767,085.00 
 
 By subtracting the average yearly receipts we find the specu- 
 lative excess for 1835 $11,990,515.75 
 
 The sales of 1836 amounted to . . . . . . $24,877,179.86 
 
 2,767,085.00 
 
 Going over the same process, we find the speculative excess 
 
 to be $22,110,094.86 
 
 11,990,515.75 
 
 We now find that the receipts of 1835 and 1836 exceed the 
 
 annual average for twenty years by ... . $34,100,610.61 
 
 This excess of $34.1 million, though calculated from the average of twenty 
 years, is probably a little too large. The time during which the average is 
 calculated included, before 1835, several years when credit was not given on the 
 sales, and after 1836 several years of depression. 
 
 Now as the receipts of 1834 were $4.9 million, and of 1837 $6.8 million, ap- 
 proximately, it will be fair enough to assume that the normal receipts of 1835 
 would have been about ........ $5.5 million 
 
 And for 1836 .......... 6. million. 
 
 Then we have the estimated normal receipts for 1835 and 1836, $11.5 million. 
 
 137
 
 138 SURPLUS REVENUE. 
 
 Actual receipts for 1835 and 1836 $39,634,780.55 
 
 "•5 
 
 Estimated speculative increase for those years, consisting 
 
 largely of bank credits ....... $28.1 
 
 In the general account of the Government we have : 
 
 RECEIPTS, EXCLUDING LOANS. EXPENDITURES, EXCLUDING INTEREST. 
 
 1834, $21.8 million. 1834, $18.4 million. 
 
 1835, 35.4 " 1835, 17.5 " 
 
 1836, 50.8 " 1836, 30.9 " 
 
 $108.0 " $66.8 
 
 66.8 
 
 $41.2 " = the excess of receipts over expenditures in 
 those three years. 
 
 $41.2 million, excess of general receipts. 
 28.1 '" Speculative excess of land receipts. 
 
 513. 1 " = Approximately the surplus, excluding abnormal land receipts. 
 3, " But the speculative spirit caused unusually large importations to 
 be made, and thereby increased the customs. Three million dol- 
 
 $10.1 " lars may be assumed as the amount of this abnormal excess 
 though it was probably near five millions. Our result is that under ordinary 
 circumstances there would have been a surplus Jan. i, 1837, of about $10,000,- 
 000 instead of $41,000,000. There is only one further modification to be 
 made. The presence of the surplus notably increased Congressional expendi- 
 tures during 1836, so that about the excess of receipts was somewhat too small. 
 But making all the necessary allowances, the figures show that if the deposits 
 had not been removed to excite the speculation, and if the speculation had not 
 been excited in some other way, there never would have been anywhere near as 
 large a surplus.
 
 APPENDIX II. 
 
 TABLES. 
 
 TABLE I. See p. 38. 
 
 Statement of amount on deposit in the N. Y. banks to the credit of the 
 Government, Jan. i, 1837, also the same April 26th, and the amounts credited 
 to the State April 26th. By subtracting the sum of the last two columns from 
 the first, we eet as a remainder the amount of Government funds withdrawn 
 from New York in less than four months. 
 
 Manhattan Company 
 National Bank 
 Phenix Bank .... 
 Mechanics' Bank . . 
 Merchants' Bank 
 Leather Manuf. Bank . 
 Bank State of New York 
 Lafayette Bank . . . 
 Dry Dock Bank . . . 
 Tradesman's Bank . 
 Merchants' Ex. Bank . 
 Seventh Ward Bank 
 Union Bank .... 
 Bank of America 
 
 Jan. 1st, 
 Government. 
 
 $2,143,325.78 
 
 320,000.00 
 
 1,089,160.00 
 
 3-739.050.00 
 
 728,880.00 
 
 450.00 
 
 345,000.00 
 150,000.00 
 201,000.00 
 380,000.00 
 375,000.00 
 709,634.29 
 2,664,017.73 
 
 $12,294,067.80 
 
 April 26th, 
 Governinent. 
 
 $770,577-76 
 170,000.00 
 170,795.00 
 
 1,000,000.00 
 346,100.02 
 200,089.27 
 
 134,000.00 
 
 80,000.00 
 
 94,676.92 
 
 50,498,21 
 
 149,813.57 
 
 248,634.20 
 
 1,267,624.00 
 
 $4,066,210.74 
 1,358,003.10 
 
 $6,125,213.14 
 
 April 26th, 
 
 State. 
 $206,005.96 
 
 180,000.00 
 
 205,000.00 
 
 65,000.00 
 
 325,000.00 
 
 50,900.00 
 
 106,347.14 
 210,000.00 
 
 &i, 358, 003. 10' 
 
 Amount withdrawn from 6,125,213.14 
 
 New York in less than 
 
 four months . . . .$6,168,854.66 
 
 This item to the credit of the State is only a trifle larger than one instalment. 
 
 TABLE IL See p. 40. 
 
 The table (taken from Mr. John Quincy Adams' speech " upon nouns, pro- 
 nouns, and adjectives," 53 Niles, 167) shows the amount due each State on Oct. 
 
 ' 52 Niles, 227. 
 
 139
 
 140 
 
 SURPLUS REVENUE. 
 
 r, 1837, the actual deposits in the deposit banks of each State in July and 
 August, 1837, to meet the general call for the payment of this fourth instalment, 
 the number of deposit banks in July and on Oct. 4, 1837, and the balances still 
 due Oct. 4, 1837. From this table it may be seen how great the deposits were 
 in the States where the land sales occurred, and how almost completely unavail- 
 able that part of the surplus was. 
 
 
 
 1 
 
 No. of 
 
 
 Deposits due to the several States on tlie 
 
 No. of dap. banks and 
 actual denosits lulv 
 
 deposit 
 banks 
 
 Balances still 
 
 first of Oct., 1837. 
 
 and . 
 
 A.ugust, 1837. 
 
 Oct. 4, 
 
 i8?7. 
 
 due Oct. 4, 1837 
 
 Maine $318,612 
 
 5 
 
 $117,042 
 
 3 
 
 $41,708 
 
 New Hampshire 
 
 
 
 223,028 
 
 6 
 
 114,026 
 
 5 
 
 63,635 
 
 Massachusetts 
 
 
 
 446,057 
 
 4 
 
 81,278 
 
 4 
 
 42,891 
 
 Rhode Island 
 
 
 
 127,445 
 
 2 
 
 5,433 
 
 2 
 
 l,X33 
 
 Vermont 
 
 
 
 223,028 
 
 2 
 
 588 
 
 2 
 
 466 
 
 Connecticut 
 
 
 
 
 254,890 
 
 2 
 
 31,629 
 
 3 
 
 7,409 
 
 New York 
 
 
 
 
 1,338.173 
 
 15 
 
 1,386,919 
 
 14 
 
 803,570 
 
 New Jersey 
 
 
 
 
 254,890 
 
 3 
 
 95.506 
 
 3 
 
 37,292 
 
 Pennsylvania 
 
 
 
 
 955. S38 
 
 2 
 
 255.445 
 
 3 
 
 131,857 
 
 Delaware . 
 
 
 
 
 95.583 
 
 I 
 
 2,906 
 
 I 
 
 2,906 
 
 Maryland . 
 
 
 
 
 318,612 
 
 2 
 
 280,198 
 
 2 
 
 212,102 
 
 Virginia 
 
 
 
 
 732,809 
 
 4 
 
 403,136 
 
 3 
 
 739,302 
 
 North Carolina 
 
 
 
 477,919 
 
 I 
 
 146,030 
 
 I 
 
 64,638 
 
 South Carolina 
 
 
 
 350,474 
 
 2 
 
 111,590 
 
 2 
 
 125,433 
 
 Georgia 
 
 
 
 350,474 
 
 3 
 
 172,269 
 1,020,856 
 
 3 
 
 119,706 
 
 Alabama 
 
 
 
 
 223,028 
 
 I 
 
 I 
 
 906,379 
 
 Mississippi 
 
 
 
 
 127,445 
 
 2 
 
 1,744,373 
 
 2 
 
 1,656,367 
 
 Louisiana . 
 
 
 
 
 159.306 
 
 2 
 
 1,450,023 
 
 2 
 
 918,749 
 
 Missouri 
 
 
 
 
 127,445 
 
 I 
 
 589.327 
 
 2 
 
 355,280 
 
 Kentucky . 
 
 
 
 
 477,919 
 
 4 
 
 843,246 
 
 4 
 
 845,053 
 
 Tennessee . 
 
 
 
 
 477.919 
 
 2 
 
 514.516 
 
 2 
 
 182,932 
 
 Ohio , . 
 
 
 
 
 669,086 
 
 8 
 
 1,127,979 
 
 8 
 
 960,061 
 
 Indiana 
 
 
 
 
 286,751 
 
 5 
 
 743,129 
 
 5 
 
 660,723 
 
 Illinois . 
 
 
 
 
 159,306 
 
 I 
 
 39,795 
 
 I 
 
 39.323 
 
 Arkansas 
 
 
 
 
 95.583 
 
 
 
 
 
 Michigan . 
 
 
 
 
 95,583 
 
 2 
 
 998,050 
 
 2 
 
 882,994 
 
 
 $9,367,214 
 
 $12,275,302 
 
 $9,801,921 
 
 These very suggestive figures Adams analyzed and commented upon at con- 
 siderable length with great vigor. There is room to quote only one or two para- 
 graphs. 
 
 " The balances due, therefore, from the deposit banks, in the single State of 
 Mississippi, a State with four electoral votes, are nearly one hundred thousand 
 dollars more than adequate to pay the whole fourth instalment receivable by her- 
 self, and by the six New England States." 
 
 " But observe that, through the whole of September, although the deposit act 
 of 23d June, 1836, was in full force, the Secretary of the Treasury continued to
 
 SURPLUS REVENUE. I4I 
 
 draw from the banks of the North to the amount of more than eight hundred 
 thousand dollars of those balances, which ought to have been applied toward the 
 payment of the fourth instalment to the States of the North ; while, at the same 
 time, he left in the Southwest and Western States nearly seven millions and a 
 half, nearly five millions more than the fourth instalment, which they were en- 
 tilled to receive." 
 
 A considerable portion of these unavailable deposits remained unpaid for a 
 long time. 
 
 The Treasury Report, Dec, 1838, mentioned the following " funds, not im- 
 mediately available, in the Treasury " : 
 
 ($28,101,644.97 deposited with the States.) 
 
 $1,100,000 " due chiefly from various insolvent banks, on account of money 
 that before 1837 had been placed in their custody to the credit of the Treasurer, 
 and still remains unpaid." 
 
 $2,400,000 "due from banks that suspended specie payments in 1837, and 
 will probably not be paid during the present year." — 55 Niles, 242. 
 
 TABLE III. 
 
 Illustrating tJie Great Arbitrary Movements of Money In the 
 
 Months Before the Crisis. 
 
 This table shows the amounts that each State received (ist col.), the amounts 
 on deposit, June 20, 1836 (2d col.), and Dec, 19, 1836 (3d col.), and the pos- 
 sible or the necessary transfers of money to or from each State between Dec. 
 19, 1836, and July, 1 837, in order that the first three instalments might be paid 
 (4th col.), (transfers to or necessary transfers are marked plus, and transfers 
 from or possible transfers, i. e., the excess over the requirements of the first 
 three instalments in the given State, mi7tus). A comparison of cols. 2 and 3 
 shows, of course, the transfers that took place between June 20th and Dec. 
 19th. Col. 5 shows the transfers that took place before July or Aug., 1837. 
 The arrangement of the States is by their position, so far as possible, so as to 
 show the magnitude of the transfer in general. 
 
 ' These figures are found by adding to or substracting from the figures in 
 col. 4 the sums on deposit in the respective States in July, 1837, e. g., $448,- 
 234.25 had to be transferred to Maine to distribute the first three instalments ; 
 but in July there is still $117,042 on deposit in Maine. These sums added 
 together give approximately the actual transfers to Maine. In States possess- 
 ing ports of entry and land offices, the account would be modified somewhat, 
 but this influence would generally balance itself. I say " at least" because if 
 the banks of Maine did not pay up promptly, their deficiency would have to be 
 supplied from other States. This was probably the case in Tennessee, for in-
 
 142 
 
 SURPLUS REVENUE. 
 
 States. 
 
 Am't de- 
 posited with 
 the States. — 
 Col. 1. 
 
 Am't. on 
 
 deposit in 
 
 the banlcs 
 
 of the 
 
 States, 
 
 June 20, 
 
 1836.— 
 
 Col. 2. 
 
 Amt. on 
 
 deposit in 
 
 the banlcs 
 
 of the 
 
 States, 
 
 Dec. 19, 
 
 1836.— 
 
 C6l. 3- 
 
 The necessary 
 transfer to, or pos- 
 sible transfer 
 from, before July, 
 i837.-Col. 4 
 
 The actual trans- 
 fer between Dec. 
 19, 1836, and July, 
 1837, was at 
 least.^— Col. s. 
 
 Maine . 
 New Hampshire 
 Vermont . 
 Massachusetts 
 Rhode Island . 
 Connecticut . 
 New York . 
 New Jersey . 
 Pennsylvania . 
 Delaware . 
 Maryland . 
 Virginia 
 North Carolina 
 South Carolina 
 Georgia 
 Alabama . 
 Mississippi 
 Louisiana . 
 Tennessee . 
 Kentucky . 
 Ohio . . . 
 Indiana 
 Illinois . 
 Missouri . . 
 Arkansas . 
 Michigan . 
 
 $955,838. 
 
 66g,oS6. 
 
 66g,oS6. 
 1,338,173- 
 
 382,335. 
 
 764,670. 
 4,014,520. 
 
 764,679. 
 2,867,514. 
 
 286,751. 
 
 955,838. 
 2,198,427. 
 
 1,433,757. 
 1,051,422. 
 1,051,422. 
 
 669,086. 
 
 382,335. 
 
 477,919. 
 1, 433, 757. 
 1,433,757. 
 2,077,260. 
 
 860,254. 
 
 477,919. 
 
 382,335. 
 
 286,751. 
 
 286,751. 
 
 25 
 79 
 79 
 57 
 30 
 60 
 
 71 
 60 
 
 78 
 49 
 25 
 94 
 
 39 
 09 
 09 
 
 79 
 30 
 14 
 39 
 39 
 ■34; 
 
 44' 
 
 ^4| 
 30 
 
 49 
 49 
 
 % 231,829 
 180,200 
 
 52,975 
 
 2,077,164 
 
 112,084 
 
 103,839 
 
 12,108,322 
 
 None. 
 2,643,179 
 None. 
 1,447,663 
 
 489,951 
 
 129,625 
 
 484,680 
 
 637,011 
 
 1,057,740 
 
 1,619,564 
 
 2,568,355 
 
 631,289 
 
 400,037 
 
 1,520,979 
 
 1,021,195 
 
 None. 
 1,890,304 
 
 None. 
 1,895,175 
 
 $ 507,604 
 
 632,285 
 
 162,315 
 
 2,386,476 
 
 349,758 
 
 741,063 
 
 11,536,271 
 
 534,004 
 
 2,684,880 
 
 170,000 
 
 1,225,210 
 
 1,238,660 
 
 660,697 
 
 936,576 
 
 558,904 
 
 1,407,505 
 
 1,791,558 
 
 4,382,308 
 
 492,433 
 1,802,846 
 3,130,881 
 2,136,419 
 45,616 
 1,880,628 
 
 None. 
 1,462,222 
 
 + $448,234.25 
 + 36,801.79 
 
 + 506,771.79 
 
 — 1,048,302.42 
 
 + 32,577-30 
 
 + 23,670.60 
 -7,521,750.29 
 
 4- 230,675.60 
 
 + 282,634.78 
 
 + 116,751.49 
 
 — 269,371.75 
 
 + 959,767.94 
 
 + 773,060.39 
 
 + 114,846.09 
 
 + 492,518.09 
 
 — 738,418.21^ 
 
 — 1,409,222.70 
 -3,904,388.86 
 
 + 941,324.39 
 
 — 369,088.61 
 
 — 1,053,620.66 
 
 — 1,276,164.54 
 -I- 432,303.14 
 
 — 1,498,292.70 
 + 286,751.49 
 -1,175,470.51 
 
 + $565,276.25 
 + 150,827.79 
 
 + 507,359-79 
 
 — 962,024.42 
 4- 38,010.30 
 + 55,299.60 
 -6,134,831.29 
 + 267,967.60 
 + 538,079.78 
 4- 119,657.49 
 + 10,822.25* 
 + 1,362,903.94 
 + 929,090.39 
 + 225,436.09 
 4- 664,787.09 
 + 167,960.79'' 
 -h 247,144.30 
 -2,454,365.86 
 
 4-1,455,840.39 
 
 4- 474,157-39 
 
 + 76,358.34 
 
 - 533,045.54 
 + 472,098.14 
 
 — 908,965.70 
 4- 286,751.49 
 
 - 187,420.51 
 
 ' (The note begins on the previous page.) 
 stance, for only $941,324.39 was required from abroad to complete the three in- 
 stalments, while $1,455,840.39 was sent in, more than enough to pay all four 
 instalments, whence it would appear that none of the $492,433 (in col. 3) had 
 been available. The excess of the figure in col. 5 over the three instalments, 
 if added to the $492,433, makes a sum nearly equal to the deposits in the 
 Tennessee banks, July, 1837. See Table II. above. 
 
 "Where a plus figure in col. 5 follows a minus in col. 4, it shows that the 
 given State, though containing deposits in its banks in excess of its share of 
 the surplus, found it impossible to collect these deposits. Miss, and Ohio are 
 good instances of this state of affairs. It is to be noted that New York fur- 
 nished about three fifths of the amount transferred to other States. (This table 
 was constructed from the data of the one in Niles 51, 306, and the one quoted 
 from Niles 53, 169.)
 
 SURPLUS REVENUE. 
 
 143 
 
 TABLE IV. 
 
 The surplus was divided among the States according to their electoral vote, 
 
 or on the basis of direct taxation. But since the electoral vote of each State 
 
 in 1837 was based upon the census of 1830, -i. per capita division of each State's 
 
 share according to the census of 1830 will very strikingly show the great gain of 
 
 
 d 
 
 
 
 Am't. to 
 
 
 
 
 
 Atn't to 
 
 each free 
 
 States. 
 
 "3 
 
 
 The share received 
 by each State. 
 
 each free 
 person 
 (census 
 
 person 
 
 (estimated 
 
 popula- 
 
 , 
 
 
 
 5 
 
 
 of 1830). 
 
 tion, 
 1837).' 
 
 Alabama 
 
 7 
 
 $669,086.79 
 
 $3.48 
 
 $2.28 
 
 Arkansas 
 
 
 
 
 
 3 
 
 286,751.49^ 
 
 II. II 
 
 4-57 
 
 Connecticut 
 
 
 
 
 
 8 
 
 764,670.60 
 
 2-57 
 
 2.50 
 
 Delaware 
 
 
 
 
 
 3 
 
 286,751.49- 
 
 3-90 
 
 3.82 
 
 Georgia 
 
 
 
 
 
 II 
 
 1,051,422.09 
 
 3-50 
 
 2.55 
 
 Illinois 
 
 
 
 
 
 5 
 
 477,919.14 
 
 3-04 
 
 1.49 
 
 Indiana 
 
 
 
 
 
 9 
 
 860,254.44 
 
 2.51 
 
 1.48 
 
 Kentucky . 
 
 
 
 
 
 15 
 
 1,433,757-39 
 
 2.74 
 
 2.22 
 
 Louisiana . 
 
 
 
 
 
 5 
 
 477,919.14 
 
 4.50 
 
 2.98 
 
 Maine 
 
 
 
 
 
 10 
 
 955.83S.25 
 
 2-39 
 
 2.02 
 
 Maryland . 
 
 
 
 
 
 10 
 
 955,838.25 
 
 2.77 
 
 2.54 
 
 Massachusetts 
 
 
 
 
 
 14 
 
 1,338,173.5s 
 
 2.19 
 
 1.91 
 
 Michigan 
 
 
 
 
 
 3 
 
 286,751.49-. 
 
 9.07 
 
 1.63' 
 
 Mississippi . 
 
 
 
 
 
 4 
 
 382,335.30 
 
 5.39 
 
 2.59 
 
 Missouri 
 
 
 
 
 
 4 
 
 382,335-30 
 
 3.31 
 
 1.99 
 
 New Hampshire 
 
 
 
 
 
 7 
 
 669,086.79 
 
 2.49 
 
 2.39 
 
 New Jersey 
 
 
 
 
 
 8 
 
 764,679.60 
 
 2.40 
 
 2.15 
 
 New York . 
 
 
 
 
 
 42 
 
 4,014,520.71 
 
 2.09 
 
 1.76 
 
 North Carolina 
 
 
 
 
 
 15 
 
 1,433,757-39 
 
 2.91 
 
 2.85 
 
 Ohio . 
 
 
 
 
 
 21 
 
 2,077,260.34 
 
 2.21 
 
 1-54 
 
 Pennsylvania 
 
 
 
 
 
 30 
 
 2,867,514.78 
 
 2.13 
 
 1-77 
 
 Rhode Island 
 
 
 
 
 
 4 
 
 382,335.30 
 
 3-93 
 
 3-73 
 
 South Carolina 
 
 
 
 
 
 II 
 
 1,051,422.09 
 
 3-96 
 
 3-94 
 
 Tennessee . 
 
 
 
 
 
 15 
 
 1,433.757.39 
 
 2.65 
 
 2.32 
 
 Vermont 
 
 
 
 
 
 7 
 
 669,086.79 
 
 2.38 
 
 2.33 
 
 Virginia 
 
 
 
 
 
 23 
 
 2,198,427.94 
 
 2.96 
 
 2.81 
 
 ' The estimated population of 1837 has been obtained by adding seven tenths 
 {-^ of the increase of free persons in the years 1830-40 to the number of free 
 persons in 1830. I have used in the calculation the free population, at con- 
 siderable trouble, to show the gain of the slave-holding States from their slave 
 representation, a gain not offset at that time by any direct taxation worth men- 
 tioning. At this time, by act of Congress, 1832, one representative was returned 
 for every 47,700 of representative population. 
 
 ''Calculated on the Michigan census of 1837.
 
 144 SURPLUS REVENUE. 
 
 the sparsely populated States by such a ratio of division. This division is 
 found in the first of the subjoined columns, while the second shovk^s the changes 
 in the per capita shares wrought by the increase of population. 
 
 It may be noted that Michigan's share per capita decreased the most with the 
 increase of population, and that South Carolina's decreased the least. These 
 tables are also highly interesting as showing the inequality of the burdens that 
 would have fallen upon the States in case an expensive foreign war had neces- 
 sitated at that time heavy direct taxation. In 1837, if $28,101,644.91 had been 
 raised by direct taxation rich New York, would have contributed $1.76 per free 
 person, and poor wild Arkansas $4.57 per free person. Under the same circum- 
 stances Massachusetts would have contributed $1.91, and Rhode Island $3.73. 
 Of course the offset to this inequality was the proportionately larger voice that 
 the small States had in public affairs.
 
 APPENDIX III. 
 
 A list of the towns in Massachusetts that appropriated more or less to educa- 
 tion from the surplus revenue during the years 1841 and 1846. 
 
 Barnstable Co 
 Barnstable 
 Eastham 
 Falmouth 
 Harwich 
 Sandwich 
 Wellfleet 
 
 Berkshire Co. 
 Becket 
 New Ashford 
 New Marlborough 
 Sheffield 
 Tyringham 
 
 Bristol Co. 
 Dighton 
 Rehoboth 
 Seekonk 
 
 Dukes Co. 
 Tisbury 
 
 Essex Co. 
 Dan vers 
 Georgetown 
 Haverhill 
 Newbury 
 
 Franklin Co. 
 Montague 
 Whately 
 
 Hampden Co. 
 Palmer . 
 Springfield 
 Tolland 
 Wilbraham 
 
 I84I 
 
 1846 
 
 $450.00 
 
 $331.00 
 
 
 75.00 
 
 
 299.31 
 
 100.00 
 
 
 
 372.01 
 
 112.50 
 
 87.00 
 
 129.52 
 
 
 34-58 
 
 
 
 204.78 
 
 180.00 
 
 180.00 
 
 177.25 
 
 167.25 
 
 171.00 
 
 171.00 
 
 
 139.20 
 
 
 242.00 
 
 140.00 
 
 
 276.60 
 
 
 
 90.00 
 
 299.00 
 
 53T.I8 
 
 
 3S2.50 
 
 183.61 
 
 168.06 
 
 • 
 
 150.00 
 
 174.00 
 
 
 936.51 
 
 I06T.84 
 
 84.60 
 
 84.00 
 
 235.59 
 
 246.70 
 
 145
 
 146 
 
 SURPLUS REVENUE. 
 
 Hampshire Co 
 Cunnington 
 Granby 
 Hatfield 
 Middlefield 
 riainfield 
 Southampton 
 Worthington 
 
 Middlesex Co 
 Ashby 
 Bedford 
 Billerica 
 Brighton 
 Dracut 
 Holliston 
 Lexington 
 Lincoln 
 
 Norfolk Co. 
 Bellingham 
 Dover . 
 Needham 
 Sharon 
 Stoughton 
 Wrentham 
 
 Plymouth Co. 
 Duxbury 
 Marshfield 
 North Bridgewater 
 Plympton 
 
 Worcester Co. 
 Douglas 
 Mendon 
 Uxbridge 
 
 Total 
 
 I84I 
 
 1846 
 
 $156.00 
 
 $150.00 
 
 100.00 
 
 
 
 113.74 
 
 90.00 
 
 90.08 
 
 II9.I3 
 
 
 
 150.00 
 
 146.98 
 
 146.98 
 
 
 40.00 
 
 90.00 
 
 90.00 
 
 75.20 
 
 
 58.93 
 
 
 
 23.71 
 
 180.00 
 
 180.00 
 
 60.00 
 
 
 
 88.50 
 
 140.62 
 
 140.63 
 
 52.50 
 
 52.50 
 
 60.00 
 
 
 131.20 
 
 131.20 
 
 180.06 
 
 180.00 
 
 336.46 
 
 341.84 
 
 220.00 
 
 228.00 
 
 99.71 
 
 91.71 
 
 276.20 
 
 
 42.80 
 
 
 142.05 
 
 
 415-29 
 
 131.75 
 
 247.00 
 
 247.00 
 
 $6,625.95 $8,392.99 
 
 Examples of the use of the Surplus in other towns. — During my in- 
 vestigations of this subject I sent out about forty circulars to the town clerks of 
 the chief cities and towns in Massachusetts, to learn how much was received by 
 those towns, the use made of the money, whether any was lost, whether it had 
 been a benefit, whether it had led to extravagance, etc, etc. The following in- 
 formation was gained ;
 
 SURPLUS REVENUE. 1 4/ 
 
 Amherst received $5,491.01. — The money was loaned at first and then later 
 $4,433.17 was paid for a farm, and $1,219.12 for a new barn thereon. The 
 farm has served as a poor-farm since. In 18S2 the buildings were burned, but 
 were well insured. $408.37, made up of the interest and the residue of the 
 principal, was used for town expenses in 1839 or 1S40. The surplus has been 
 regarded as " a great benefit." None of it has been lost. 
 
 Andover received $9,707.40, which was "aliased in paying town debts." 
 It was a benefit. 
 
 Boston received $140,599.83. — The money was used for city expenses in 
 1838, and some loans authorized by the city council were not negotiated, as the 
 surplus in the bank drew less interest for the city than would have been paid 
 for a loan. (See Auditor's Rep., Dec, 1838.) 
 
 Cambridge. — No records in the clerk's office state the amount of the surplus 
 falling to the town. The money was put in the town treasury, 
 
 Danvers. — Upon the division of the town in 1855 Danvers received about 
 $4,500. At first it was considered a liability of the town, and the income was 
 appropriated to schools. In 1S59 the " liability" theory was discarded and the 
 money considered town funds. " It did not lead to any unusual or extravagant 
 expenditure." 
 
 FiTCHBURG received $4,856.04, and the money was used to pay the debt of 
 the town. The city treasurer cannot learn that the money led to any 
 extravagance, and believes it was a great benefit, as it "lightened the public 
 burdens for the next few years," a period of general distress in business. 
 
 Groton received $4,115. — " Just about the time this money was received a 
 heavily loaded, seven-horse team, driver and all, fell through a bridge over the 
 Nashua River, causing a loss or damage of about $3,000, and this $4,115 was 
 regarded by many as a real Godsend to meet that occasion, though the money 
 was actually used by the town to pay its "interest-bearing indebtedness." 
 Certainly a benefit. 
 
 Lee. — Amount unknown ; used partly to pay off the town debt and partly for 
 the benefit of schools. 
 
 Lynn received $14,897.00, and the money was used to pay the town debt. 
 
 Nantucket received $16,255.45, and it was used to pay the debt in part. 
 " A very great benefit." 
 
 New Bedford received $18,258.95. — The money was " expended in the 
 erection of a town hall." The work was economically done, and the surplus 
 was a benefit. 
 
 Newburyport received $14,843. — The money was loaned to the State till 
 June I, 1843, when $15,776.26, credited to the " surplus revenue," was appro- 
 priated for public improvements. This sum probably includes the original
 
 148 
 
 SURPLUS REVENUE. 
 
 principal and the accrued interest. $5,000 was appropriated to the school 
 department, and was used mainly for repairs and new buildings. $348.75 was 
 spent for globes and maps, and $500 for philosophical apparatus. 
 
 $5,000 was appropriated for the fire department, and the residue for town re- 
 pairs. The accounts of the town show a little change from this program, as 
 follows : 
 
 New Brick Barn for Poor Dep't . . . $3,253.79 
 
 Expended on Aims-House . 
 School Dep't and Buildings 
 Highways .... 
 Fire Dep't .... 
 
 " " for Reservoirs 
 Public Park or Mall and Pond 
 Incidental Expenses 
 
 274-09 $3,527-88 
 5.400.75 
 1,565-37 
 
 $1,870.03 
 1.879-39 
 
 3.749-42 
 
 1,403-30 
 
 129.54 
 
 $15,776.26 
 " It appears from the above statement that the money was very judiciously 
 expended, that the inhabitants of this city are at the present time receiving 
 benefits from the surplus revenue — having in possession and constant use the 
 public buildings and other improvements paid for by said revenue." 
 
 Salem received $29,790.23, which was " appropriated as follows : 
 " Payment of part of city debt .... $8,000.00 
 " Repairs on building occupied by insane poor . 600.00 
 
 " Erection and furnishing of City Hall . . 21,190.13 
 
 "$29,790.13" 
 
 The work was economically done and was a benefit to tlae town. 
 
 Sandwich received " about $3,500. — It was loaned to individuals ; none of it 
 was lost. In the year 1856 the roads of the town were, on account of the very 
 unusual fall of snow, rendered impassable, again and again, so that the expenses 
 of clearing amounted to that sum ; — the town in consequence voted to use said 
 revenue to pay the expense, which was done. I presume the work was as 
 economically done as in any other service performed." 
 
 Sheffield received $4,940,96. — It was loaned on the security of " individual 
 names, residents of the town." $700 is now " missing." 
 
 The interest was appropriated for schools. Later the principal was for town 
 purposes, like building bridges. The work is thought to have been economically 
 done, and was " without question " a benefit. 
 
 Springfield received $15,764.00. — It was at first loaned on real-estate mort- 
 gages, and the interest "applied to the support of schools." Later the principal 
 was applied " to the payment of the town debt." " Certainly " a benefit. 
 
 These instances are good examples of what was done through the State and 
 in New Hampshire as well.
 
 APPENDIX IV. 
 
 The appropriations for schools made from the ' ' Surplus Revenue " by the 
 towns in New Hampshire during four years. 
 
 
 1865-6. 
 
 1868-9. 
 
 1869-70. 
 
 1870-1. 
 
 Rockingham Co. 
 
 Brentwood .... 
 East Kingston . . . 
 
 Epping 
 
 Londonderry .... 
 
 Rye 
 
 Salem 
 
 Strafford Co. 
 
 Dover 
 
 Farmington .... 
 Madbury 
 
 Belknap Co. 
 Centre Harbor . . . 
 
 Milton 
 
 New Durham .... 
 New Hampton . 
 
 Carroll Co. 
 
 Brookfield 
 
 Hart's Location . . 
 Moultonborough . 
 
 Sandwich 
 
 Tamworth 
 
 Tuftonborough . 
 Wakefield 
 
 Merrimack Co. 
 
 Dunbarton 
 
 Henniker 
 
 Hopkinton .... 
 New London .... 
 
 Hillsborough Co. 
 
 Amherst 
 
 Bennington .... 
 Francestown .... 
 
 Hudson 
 
 Litchfield 
 
 36.09 
 
 100.00 
 
 50.00 
 
 12.12 
 60.00 
 
 1-44 
 14-30 
 
 12.00 
 
 ■ 13.98 
 48.00 
 
 • • • 
 
 1 00. 00 
 
 180.00 
 25-83 
 
 8.00 
 
 7.00 
 2.00 
 
 '28.74 
 42.00 
 24.00 
 
 $268.63 
 
 36.09 
 
 240.00 
 
 100.00 
 
 500.00 
 120.00 
 
 18.03 
 * \' 
 
 9.00 
 
 72.00 
 14.30 
 
 153-54 
 
 12.00 
 17.00 
 
 lOO.CO 
 
 220.00 
 
 180.00 
 12.42 
 
 30.00 
 67.20 
 
 124.00 
 
 72.00 
 108.00 
 
 14.37 
 54-14 
 
 101.79 
 265.64 
 
 149
 
 150 
 
 SURPLUS REVENUE. 
 
 
 1865-6. 
 
 1868-9. 
 
 1869-70. 
 
 1870-1. 
 
 Cheshire Co. 
 Chesterfield 
 Marlow . . 
 Richmond . 
 Ringe . . 
 Troy . . 
 Westmoreland 
 Winchester 
 
 Sullivan Co. 
 Acvvorth 
 Cornish . 
 Goshen . 
 Langdon 
 Newport 
 
 Grafton Co. 
 Bethlehem . 
 Bridgewater 
 Canaan . 
 Enfield . . 
 Hanover 
 Haverhill . 
 Landaff 
 Lebanon 
 Lyman . 
 Orford . . . 
 Plymouth . 
 Waterville . 
 
 Coos Co. 
 
 Clarksville . . 
 Dalton . . . 
 Dummer 
 Milan . . . 
 Whitefield . . 
 
 
 
 
 
 
 141 
 
 19 
 
 350 
 
 52 
 240 
 
 70 
 
 9 
 19 
 
 27 
 
 .00 
 
 .00 
 
 .00 
 
 -98 
 -50 
 
 .00 
 
 -32 
 .40 
 
 .00 
 
 
 60.30 
 
 75-25 
 
 • • • 
 
 • • • 
 
 • • • 
 
 23-24 
 119.00 
 
 55.98 
 90.00 
 
 162.04 
 42.95 
 45.18 
 
 100.00 
 
 • • • 
 
 • • • 
 
 27.00 
 
 57.20 
 60.30 
 
 56.00 
 117.20 
 
 90.00 
 
 162.00 
 87-44 
 
 2.25 
 
 42.98 
 352.07 
 
 2.00 
 
 26.00 
 27.00 
 
 60.30 
 
 78.00 
 
 88.14 
 
 202.00 
 
 100.00 
 
 93.60 
 
 70.00 
 160.50 
 160.1S 
 
 85-35 
 
 3-17 
 232.00 
 
 100.00 
 
 25-87 
 
 932 
 21.00 
 27.00 
 
 
 
 
 
 
 $1,277-13 
 
 $1,278.51 
 
 $2,663.03 
 
 $2,765.99 
 
 Total for 1864-5, $1,203.64 ; for 1871-2, $2,508.52. 
 (The School Reports for those years.)
 
 BIBLIOGRAPHICAL INDEX. 
 
 INTRODUCTORY NOTE. 
 
 When I began to search for materials for the foregoing account of the various 
 uses to which the States put the surplus revenue, I was much embarrassed by 
 not knowing where to turn for information. Very little help could be got from 
 any one else, as the ground was almost untrodden. 
 
 Under these circumstances it seemed best to give an exact reference for every 
 important statement, so that the work could easily be verified, and to furnish a 
 bibliographical index to present as a whole all the sources from which I had 
 drawn, for the double purpose of showing succeeding students where to look for 
 original matter, and of enabling them instantly to tell whether they have dis- 
 covered any facts to which I failed to gain access. 
 
 My chief source, it will be seen, has naturally been the acts of the Legisla- 
 tures of the various States. I cannot hope, however, that I have exhausted this 
 mine, for every one who has had experience with these documents knows how 
 imperfectly they are indexed ; yet as some five hundred volumes were to be con- 
 sulted, it goes without saying that the indexes had to be relied upon. The 
 difficulty was increased by the varying titles under which the matter appeared. 
 In dealing with this subject one cannot feel at all sure that he has done his best 
 with an index till he has looked for the titles : " Appropriations," " Deposits," 
 "Education," "Money," "Public Deposits or Money," "Revenue," "Sur- 
 plus," and " United States," unless he has previously learned the names used in 
 the State. 
 
 In the case of the " American Almanac," " Niles' Register," and " Hazard's 
 Register," no reliance was placed upon the indexes, but more than twenty vols, 
 each of the Almanac and Niles were examined page by page. 
 
 A word about the arrangement of this index. The general arrangement is 
 alphabetical. All general authorities, then, are in alphabetical order ; all 
 authorities, on the other hand, that have been used for one State only, are to be 
 found in their alphabetical order under the name of that State, following the 
 State documents, which have been arranged chronologically, except that, in gen- 
 eral, Acts precede Reports. Finally, the general authorities used for any one 
 State are summarized in italics at the end of the list under that State. 
 
 Adams' Gallatin : The Life of Albert Gallatin. By Henry Adams. J. B. 
 Lippincott & Co., Philadelphia, 1879. ^ vol. 8vo. 
 
 151
 
 152 SUJiFLUS REVENUE. 
 
 ALABAMA. 
 
 Acts : Acts of the General Assembly of Alabama, for 1836, Ferguson, Tusca- 
 loosa, 1836 ; for 1853-4, Brittan & Blue, Montgomery, 1854 ; for 1855-6, 
 Bates & Lucas, Montgomery, 1856 ; for 1868, J. Stokes & Co., Mont- 
 gomery, 1868 ; for 1874-5, W. W. Screws, Montgomery, 1875 ; for 1876-7, 
 Barrett & Brown, Montgomery, 1877. 
 
 Clay : A Digest of the Laws of the State of Alabama, containing all the statutes 
 of a general nature in force in Feb., 1843. Compiled by C. C. Clay. 
 M. J. Slade, Tuscaloosa, 1843. 
 
 Code of 1876 : The Code of Alabama, 1876. Prepared by "Wade Keyes, Fern. 
 M. Wood, and John D. Roquemore, successor to Fern. M. Wood. Bar- 
 rett & Brown, Montgomery, 1877. 
 
 Walker : The Revised Code of Alabama. Prepared by A. J. Walker. Reid 
 and Screws, Montgomery, 1867. 
 
 Armstrong : Report of H. Clay, Superintendent of Education of Alabama, for 
 the year ending Sept. 30, 1S82. W. D. Brown, Montgomery, 1883. 
 {General Authorities : Am. Aim., 1847 ; Eaton; I Financ. Reg.; 5 Hazard ; 
 and Niles, vols. 57, 63, andb"].) 
 
 Am. Alm. : The American Almanac, vols. 8-32. Boston, 1837-61 (various 
 publishers). 
 
 Am. St. Ann. : American Statistical Annual for the year 1854. Compiled by 
 Richard Swainson Fisher, M.D., and Charles Colby, A.M. J. H. Colton 
 & Co., New York, 1854. 
 
 American Year-book : The American Year-book and National Register for 
 1869, etc., etc. Vol. ist. edited by David N. Camp. O. D. Case & Co., 
 Hartford, 1869. 
 
 ARKANSAS. 
 
 Acts : The Acts passed at the fourth session of the General Assembly of 
 Arkansas, 1842-3 ; E. Colby, Little Rock, 1843. The Acts of the seventh 
 session, etc., 1848-9 ; Little Rock, 1849. The Acts of the eighth session, 
 etc., 1850-1 ; Little Rock, 1851. 
 
 English : Digest of Laws in force in 1846 ; with notes of Superior-Court de- 
 cisions. By E. H. English. 8vo. Pub. by the State, Little Rock, 1848. 
 
 Gould : Digest of Statutes in force in 1856 : with notes of Superior-Court 
 decisions. By J. Gould. 8vo. Pub. by the State, Little Rock, 1858. 
 {General Atithorities : Am. Aim., 1845, 1856 ; Ain. Statis. Annual, 1854 ; 
 1 Bankers' Mag.; Hunt; and Trotter^ 
 
 Bankers' Mag.: The Bankers' Magazine and State Financial Register, etc. 
 J. Smith Homans, Baltimore, 1847. Vols, i, 5, and 8. 
 
 Benton's Abridgt. : Abridgment of the Debates of Congress from 1789-1856. 
 By the author of Thirty Years' View. D. Appleton & Co., New York, 
 1857. Vols. 9 and 11.
 
 SURPLUS REVENUE. 1 53 
 
 Benton : Thirty Years' View ; or, A History of the Working of the American 
 
 Government for Thirty Years, from 1820 to 1850. By a Senator of thirty 
 
 years. D. Appleton & Co., New York, 1854. 2 vols., 8vo. 
 Blaine : Twenty Years of Congress : From Lincoln to Garfield. By James 
 
 G. Blaine. Henry Bill Pub. Co.. Norwich, Ct., 1884. 
 Boston Courier : The Boston Semi-Weekly Courier. Buckingham & Foote, 
 
 Boston, 1836-7. 
 Boston Recorder : The Boston Recorder (religious weekly). Boston, 1836. 
 Calhoun's Works : The works of John C. Calhoun. Edited by Richard K. 
 
 Cralle. D. Appleton & Co., New York, 1854-7. 6 vols., 8vo. 
 Clay's Works : The Life, Correspondence, and Speeches of Henry Clay. By 
 
 Calvin Colton, LL.D. A. S. Barnes & Co., New York, 1857. 6 vol., 8vo. 
 Cong. Record : Congressional Record. Containing the Proceedings and 
 
 Debates of the 48th Congress, ist session. Washington, Government 
 
 Printing-office, 1884. 
 
 CONNECTICUT. 
 
 Acts : The Public Statute Laws of the State of Connecticut, passed at the 
 May and December sessions of 1836, and the May session of 1837. John 
 R. Boswell, Hartford, 1837. 
 Public Acts passed by the General Assembly of the State of Connecticut, 
 
 May session, 1855. Thomas H. Day, Hartford, 1855. 
 The General Statutes of the State of Connecticut. John H. Burnham, New 
 Haven, 1866. 
 Report : First Annual, of the Secretary of the School Board, 183S. (Pub. in 
 the Connecticut Common-School Journal. Ed. by Henry Barnard, 2d. 
 Case, Tiffany, & Burnham, Hartford, 1842.) 
 Annual Report of the Board of Education of the State of Connecticut, 1884. 
 
 Tuttle, Morehouse, & Taylor, New Haven, 1884. 
 {General AtUhorities: The New Haven Herald and Eaton.) 
 Conn. Courant : The Connecticut Courant, Hartford, 1836-7. 
 
 DELAWARE. 
 
 Acts : Laws of the State of Delaware passed in 1837, S. Kinney, Dover, 1837 ; 
 in 1839, etc., 1839 ; in 1843, etc., 1843 ; in 1845, etc., 1845 ; in 1847, etc., 
 1847 ; in 1881, etc., 1881. 
 
 Revised Statutes of the State of Delaware (to 1852 inclusively). Samuel Kin- 
 ney, Dover, 1852. Revised Statutes of the State of Delaware of 1852 
 (brought down to 1874, with additions and amendments). James & 
 Webb, Wilmington, 1874. 
 Digest of Laws Relating to Free Schools in the State of Delaware. J. Kirke 
 & Sons, Dover, 18S1.
 
 154 SURPLUS REVENUE. 
 
 Report, Fifth Annual, of the Superintendent of Free Schools, for the year 
 ending Dec. i, 1880. Delawarean Office, Dover, 1881. 
 {^General author.: Eaton.') 
 
 Eaton : An Address on National Aid to Education. By Hon. John Eaton, 
 U. S. Commissioner of Ed. Government Printing-Office, Washington, 
 1879. (This address is also to be found in Circulars of Information of the 
 Bureau of Education, No. 2, pp. 123-134. Page 12 of the address, as 
 quoted in the work, corresponds to p. 123 of the Circular.) 
 
 Financial Register : The Financial Register of the United States. [Edited 
 by Condy Raguet.] 2 vols., 8vo. Philadelphia, 1837-38. 
 
 FOLGER : Annual Report of the Secretary of the Treasury on the State of the 
 Finances, for the year 1883. Charles J. Folger, Secretary. Washington, 
 1883. 
 
 Gales and Seaton : Register of Debates in Congress. Vol. III. Gales & 
 Seaton, Washington, 1S29. 
 
 GEORGIA. 
 
 Acts, The, of- the General Assembly of the State of Georgia for 1837, P. L. 
 
 Robinson, Milledgeville, 1838 ; for 1840, W. S. Rogers, Milledgeville, 
 
 1841 ; for 1S70, Atlanta, 1870. 
 Hotchkiss : A Codification of the Statute Law of Georgia. By William A. 
 
 Hotchkiss. J. M. Cooper, Savannah, and John F. Trow & Co., New 
 
 York, 1S45. 
 Lewis : A Letter to County School-Commissioners, etc., dated Dec. 19, 1871. 
 
 By J. R. Lewis, State Commissioner. Appended to the First Annual 
 
 Report of the State School-Commissioner. Atlanta, 1871. 
 Prince : A Digest of the Laws of the State of Georgia. By Oliver H. Prince. 
 
 Published by the author. Athens, 1837. 
 Reports: Bank Reports, 1841 and 1842; and a Report of the Central Bank 
 
 on Nov. I, 1841, in the Chronicle and Sentinel oi Augusta, Ga. (Novem- 
 ber ; date not known.) 
 (General Authorities : Am. Statist. Ann., Eaton, 5 Hazard, 51 and ^1 Niles.) 
 Globe : The Globe. Blair & Rives, Washington, 1836-7. 
 Hazard : Hazard's United States Commercial and Statistical Register, etc., 
 
 etc. Edited by Samuel Hazard. W. F. Geddes, Philadelphia, 1839-41. 
 
 5 vols., 8vo. 
 Von Hock : Die Finanzen und Finanzgeschichte der Vereinigten Staaten von 
 
 America, Von Dr. Carl Freiherrn von Hock. J. G. Cotta, Stuttgart, 
 
 1867. 
 Hunt's Yr.-Bk. : Hunt's Merchants' Magazine Year-Book. W. B. Dana & 
 
 Co., New York, 18 71.
 
 SURPLUS REVENUE. 155 
 
 ILLINOIS. 
 
 Acts: Laws of the State of Illinois, 1S36-7, W. Walters, Vandalia, 1837; 
 
 Laws of the State of Illinois, passed at the special session, July 10-22, 1837, 
 
 William Walters, Vandalia, 1837. 
 Report, Seventh Biennial, of the Superintendent of Public Instruction of the 
 
 State of Illinois. 
 {General Authorities : 4 Hazard, 52 and tl Niles.) 
 
 INDIANA. 
 
 Acts : Laws of a General Nature of the State of Indiana, passed 1836-7, Doug- 
 las & Noel, Indianapolis, 1837 ; in 183S-9, do., 1839 ; in 1840-1, do., 1841. 
 In 1S53, J. P. Chapman, Indianapolis, 1853 ; in 1855, A. H. Brown, In- 
 dianapolis, 1S55. 
 
 The Revised Statutes of Indiana, passed at the 27th session of the General 
 Assembly. Dowling & Cole, Indianapolis, 1843. 
 
 The Revised Statutes of the State of Indiana, 1852. J. P. Chapman, In- 
 dianapolis, 1852. 
 
 The Statutes of the State of Indiana, revision of 1876. By Edwin A. Davis. 
 Second edition, 2 vols., 8vo. Bingham & Co., Indianapolis, 1878. 
 Dillon : History of Indiana, from its earliest exploration by Europeans to 1816, 
 and thence to 1S56. J. B. Dillon. Bingham & Doughty, Indianapolis. 
 
 {General Authorities : Am. Aim., 1846, 1849, a«rt' 1852 ; Am. Siatis. Attn., 
 1S54 ; I Bankers' Mag. ; Eaton ; 3 Hazard ; 51 atid 57 Niles ; The New 
 York Times, Dec, 1883 ; Trotter.) 
 Jefferson's Works : The Writings of Thomas Jefferson, etc. Edited by H. 
 A. Washington. Taylor & Maury, Washington, D. C, 1853. 9 vols., 8vo. 
 
 KENTUCKY. 
 
 Acts : Acts of the General Assembly of Kentucky in 1836-7, A. G. Hodges, 
 
 Frankfort, 1837 ; in 1837-8, do., 1838 ; in 1838-9, do., 1839 ; in 1844-5, 
 
 do., 1845. 
 Pickett : Report of the Superintendent of Public Instruction for the years 
 
 ending June 30, 1880, and June 30, 1884. S. I. M. Major, Frankfort, 
 
 1882. 
 {General Authorities : Am. Aim., 1851, 1853; '■j Bankers' Mag.; 3,4, and 
 
 5 Hazard ; New York Journal of Coinvierce , 1836 ; 58, 59, and to Niles ; 
 
 Trotter.) 
 Knox : United States Notes ; A History of the Various Issues of Paper Money 
 
 by the Government of the United States. By John Jay Knox. Charles 
 
 Scribner's Sons, New York, 1884.
 
 156 SURPLUS REVENUE. 
 
 LOUISIANA. 
 
 Acts : Acts of the first session of the 13th Legislature of Louisiana, 1837. 
 Jerome Bayon, New Orleans, 1837. Acts of the second session of the 
 same, 1837-8 ; Jerome Bayon, New Orleans, 1838. 
 Acts of the General Assembly of Louisiana, 1855. Emile La Sere, New Or- 
 leans, 1855. 
 
 VoORHiES : The Revised Statute Laws of the State of Louisiana up to iS6g. 
 Compiled and Edited by Albert Voorhies. B. Bloomfield & Co., New 
 Orleans, 1876. 
 {General Authorities : Am. Statis. Ami., Eaton, 66 Niles.) 
 
 Mackenzie : The Life and Times of Martin Van Buren, etc. By William L. 
 Mackenzie. Cooke & Co., Boston, 1846. 
 
 MAINE. 
 
 Acts : Public Acts of the State of Maine, Jan. Session, 1837 ; Smith and Rob- 
 inson, Augusta, 1837. The Same for the Jan. Session of 1838 ; L. Sev- 
 erance, Augusta, 1838. 
 
 Shepley : Reports of Cases Argued and Determined in the Supreme Judicial 
 Court of the State of Maine. By John Shepley, Counsellor-at-Law. 
 Glazier, Masters, and Smith, Hallowell, Me., 1839, (Vol. XIV., Maine 
 Reports.) 
 {General Authorities : Eaton; The Philadelphia Press, Nov., 1883.) 
 
 MARYLAND. 
 Acts : Laws Made and Passed by the General Assembly of the State of Mary- 
 land, in 1836-7, Jeremiah Hughes, Annapolis, 1837 ; in 1837-38, do., 1838. 
 {General Authorities : Am. Aim., 1840 ; Atii. Statis. Ann., 1854 ; i Bankers' 
 Mag. ; 2 Hazard; 51, 52, 57, 59, and t'}, Niles.) 
 
 MASSACHUSETTS. 
 
 Acts : Supplements to the Revised Statutes : General Laws of Massachusetts 
 
 passed subsequently to the Revised Statutes. Vol. I. (1836-53). Dutton & 
 
 Wentworth, Boston, 1854. 
 Reports : The 5th and loth Annual Reports of the Board of Ed. of Mass. 
 
 Dutton & Wentworth, Boston, 1842, 1847. 
 {General Authorities : Blair's Globe, Dec, 1836 ; The Boston Courier, 1837.) 
 Mercer (Charles Fenton) : An Exposition of the Weakness and Inefficiency of 
 
 the Government of the U. S. (Printed anonymously, 1845.) 
 
 MICHIGAN. 
 
 Acts : Acts of the Legislature of the State of Michigan, passed in 1835-6, J. 
 S. Bagg, Detroit, 1836; in 1837, do., 1837; in 1837-8, do., 1838; in 
 1839, do., 1839 ; in 1840, G. Dawson, 1840 ; in 1841, do., 1841.
 
 SURPLUS REVENUE. 157 
 
 Curtis : A Memoir of Benjamin Robbins Curtis, LL.D. ; with some of his 
 Professional and Miscellaneous Writings. 2 vols., 8vo. Edited by his 
 son, Benjamin R. Curtis. Little, Brown, «& Co., Boston, 1879. 
 
 N. B.— The article quoted, " Debts of the States," was first published 
 in the Noi-th American Review, Jan., 1844. 
 {General Authorities: Am. Aim., 1842, 1847, 1848; 51, 56, b'i Miles; Trotter.) 
 
 MISSISSIPPI. 
 
 Acts : Laws of the State of Mississippi, from the Jan. Session, 1824, to the 
 Jan. Session, 1838 ; Jackson, 1838. Laws Passed at an Adjourned Session, 
 1839 ; B. D. Howard, Jackson, 1839. 
 
 Democratic Rule : Nine Years of Democratic Rule in Mississippi. Jackson, 
 1847. (Published anonymously, but written by G. L. Potter.) 
 
 MISSOURI. 
 
 Acts : Laws of the State of Missouri, passed 1836-7, C. Grum, Jefferson, 
 1837 ; in 1S38-9, do., 1839 ; in 1842-3, A. Hammond, 1843 ; in 1852-3, 
 James Lusk, 1853. 
 The Revised Statutes of the State of Missouri, 1855. By Charles H. Har- 
 din. 2 vols., 8vo. James Lusk, Jefferson, 1856. 
 The General Statutes of the State of Missouri, passed 1866. E. S. Foster, 
 Jefferson, 1866. 
 Myers' Supp.: Myers' Supplement to Wagner's Missouri Statutes, by William 
 G. Myers, Esq. W. J. Gilbert, St Louis, 1877. 
 The Revised Statutes of the State of Missouri, 1879 ; 2 vols. 8vo. Carter & 
 
 Regan, City of Jefferson. 
 (General Author.: Eaton.) 
 Nat. Al. and A. R.: The National Almanac and Annual Record (for 1863 and 
 
 1864). Geo. Childs, Philadelphia, 1863, 1864. 
 Nat. Intell.: The National Intelligencer. Gales & Seaton, Washington, 
 1836-7. 
 
 NEW HAMPSHIRE. 
 
 Acts : Laws of New Hampshire, passed at the Nov. Session, 1836, Cyrus Bar- 
 ton, Concord, 1837; the same, passed June, 1838, do., 1838 ; the same, 
 passed June, 1839, do., 1839 ; the same, passed June, 1841, Barton & Car- 
 roll, Concord, 1841. 
 The Revised Statutes of the State of New Hampshire, passed Dec. 23, 1842. 
 
 Carroll & Baker, Concord, 1843. 
 The General Statutes of the State of New Hampshire, 1867. J. B. Clarke, 
 Manchester, 1S67. 
 
 Reports : Annual Report of the Board of Education of New Hampshire, for 
 1865-6, G. B. Jenks, Concord, 1866 ; for 1868-9, J- B. Clarke, Manches-
 
 158 SURPLUS REVENUE. 
 
 ter, 1869; for 1869-70, do., 1870 ; for 1870-71, O. C. Moore, Nashua, 1871. 
 {General Authorities : Am. Aim., 1850; Blair's Globe. Dec, 1836; Boston 
 Courier, Dec, 1836 ; 5 Hazard ; Nat. Aim. and Ann. Rec, 1864 ; A^ew 
 Yorker, Dec, 1836 ; 52 Niles.) 
 New Haven Herald : New Haven, 1836-7. 
 New Haven Palladium : New Haven, 1836-7. 
 New Haven Register : The Columbian Register, New Haven, 1836-7. 
 
 NEW JERSEY. 
 
 Acts : Acts of the General Assembly of New Jersey for 1836-7, Trenton, 1837 ; 
 
 for 1838-g, P. J. Gray, Camden, 1839 ; for 1867, Chiswell and Wurts, 
 
 Paterson, 1867. 
 Revision OF N. J.: Revision of the Statutes of New Jersey. J. L. Murphy, 
 
 Trenton, 1877. 
 Raum : History of New Jersey, etc., etc. By J. O. Raum. J. E. Potter & Co., 
 
 Philadelphia, 1877. 
 {General Authorities : Atn. Aim., 1852-61 ; Boston Courier, Jan. 1837 ; 
 
 Eaton; Nat. Aim-, and Ann. Rec, 1863.) 
 
 NEW YORK. 
 
 Edmunds : Satutes at Large of the State of New York ; Edited by John W. 
 Edmunds. Weed. Parsons, & Co., Albany, 1869. 6 vols. 8vo. 
 
 Fay : Digest of the Laws of New York ; Comprising the Revised Statutes and 
 Statutes of General Interest, in force Jan. i, 1874. By Joseph D. Fay. 
 James Cockroft & Co., New York, 1876. 
 
 The American Protectionist : Marcus Hanlon, New York (June 9, 1853). 
 
 Reports : Annual Reports of the Comptroller of the State of New York, for 
 the years ending Sept. 30, 1882 and 1883. Weed, Parsons, & Co., Albany, 
 1883 and 1884. 
 {General Authorities : Am. Aim. passim ; Blair's Globe, Jatt. 1837 ; 5 Haz- 
 ard j 57 Niles ; and Seward's Works.) 
 
 New Yorker (The) : Pub. by H. Greeley & Co., New York, 1836-7. (Third 
 volume.) 
 
 New York Journal of Commerce : Edited by David Hale and Gerard Hal- 
 lock, New York, 1836-7. 
 
 New York Spectator : Francis Hall & Co., New York, 1837. 
 
 Niles : Niles' Weekly Register (Edited by PI. Niles, later by W. Ogden Niles, 
 and later by Jeremiah Hughes). Baltimore. Vols. 12, 31, and 50 to 73. 
 
 NORTH CAROLINA. 
 
 Acts : Laws of North Carolina, passed 1836-7, T. J. Lemay, Raleigh, 1837 ; 
 in 1838-9, J. Gales & Son, do., 1839 ; in 1848-9, T. J. Lemay, do., 1849 \ 
 in 1850-1, do., 1851.
 
 SURPLUS REVENUE. 159 
 
 The Revised Statutes of North Carolina, passed 1836-7 ; Turner & Hughes, 
 Raleigh, 1837. 
 The Treasurer's Report : Dec, 1840. (Communicated to the writer.) 
 {General Authorities : Am. Aim., 1858; American Year-Book ; \ Hazard; 
 Hunt ; 51 Niles.) 
 
 OHIO. 
 
 Acts: Acts of a General Nature, passed 1836-7, vol. 35, S. R. Dolbee, Co- 
 lumbus, 1837 ; in 1837-3, vol. 36, S. Medary, do., 1838 ; in 1840-1, vol. 
 39, do., 1841 ; in 1842-3, vol. 41, do., 1843 ; in 1849-50, vol. 48, Scott 
 & Bascom, do., 1850 ; in 1862, vol. 59, R. Nevins, do., 1862 ; in 1868-9, 
 vol. 66, Myers & Bro., do., 1869. 
 
 Statutes of the Slate of Ohio of a General Nature, in force 1840-1. S. 
 Medary, Columbus, 1841. 
 
 Statutes of Ohio of a General Nature, in force 1854 ; collated and compiled 
 by Joseph R. Swan. H. W. Derby & Co., Cincinnati, 1854. 
 
 The Revised Statutes of the State of Ohio, in force Jan. i, 1880. H. W. 
 Derby & Co., Columbus, 1879. 
 
 {General Authorities : Am. Aim., 1839, 185 1, and ff ; i and 5 Bankers' 
 Mag. ; 2 Hazard.) 
 
 PENNSYLVANIA. 
 
 Acts : Laws of the General Assembly of Pennsylvania, passed in 1835-6. Theo. 
 Fenn, Harrisburg, 1836 ; in 1836-7, do., 1837. 
 
 Reports : Report of the State Treasurer on the Finances of the Common- 
 wealth. Packer, Barrett, & Parke, Harrisburg, 1837. 
 Fourth Annual Report of the Common Schools, Academies, and Colleges of 
 the Commonwealth of Penn. Thomas H. Burrowes, Supt. Pecker, Bar- 
 rett, and Parker, Harrisburg, 1838. 
 Sixteenth Annual Report of the Superintendent of the Common Schools of 
 Penn., for the year ending June, 1849. Townsend Haines, Supt. 
 
 Penn. Finances : A Brief Review of the Financial History of Pennsylvania, 
 etc., etc. By Benjamin M. Mead. Lane S. Hart, Harrisburg, 1881, 
 {General Authorities: The American, Dec, 1883; Boston Recorder, Dec., 
 1836; I Financial Register ; 2 Hazard; 55 Niles; The New Yorker, 
 Apiil, 1836 ; Philadelphia Press, Dec. 2Qth, 1S83.) 
 
 Reynolds : My Own Times ; embracing also the History of my Life. By John 
 Reynolds [Gov. of III., 1830-4]. Chicago Historical Society, Chicago, 1879. 
 
 RHODE ISLAND. 
 
 Acts : Public Laws of Rhode Island, passed since Jan., 1835 (publishers not 
 mentioned) ; since Jan., 1837 ; since Jan., 1840 ; in June, 1841 ; in June, 
 1842 ; in Oct., 1842 ; in May, 1843.
 
 l6o SURPLUS REVENUE. 
 
 School Laws : Acts Relating to the Public Schools of Rhode Island. Provi- 
 dence, 1867. 
 
 Revised Statutes : The Revised Statutes of the State of Rhode Island and 
 Providence Plantations. Sayles, Miller, & Simons, Providence, 1857. 
 
 Stockwell : A History of Public Education in Rhode Island from 1836 to 
 1876. Edited by Thomas B. Stockwell. Providence, 1876. 
 
 Seward : Autobiography of W. H. Seward. Edited by F. W. Seward. D. 
 Appleton & Co., New York, 1877. 
 
 Seward's Works : The Works of William H. Seward. Edited by George E. 
 Baker. Redfield, New York, 1853. 3 vols. 8vo. 
 
 SOUTH CAROLINA. 
 
 Acts : Acts and Resolutions of the General Assembly in 1836, S. Weir, Colum- 
 bia, 1837 ; in 1837, do., 1838 ; in 1838, Pembertons, do., 1839 ; in 1839, 
 A. H. Pemberton, do., 1839. 
 Reports and Resolutions of the General Assembly of South Carolina, in 1840, 
 A. H, Pemberton, Columbia, 1841 ; in 1843, do., 1844 ; in 1847, A. G. 
 Sumner, do., 1847 ; in 1849, J- C. Morgan, do.", 1849. (These Reports in 
 the edition I used were found with the acts of the same year.) 
 
 McCuLLOCH ; Dictionary, Geographical, Statistical, and Historical. ByJ. R. 
 McCuUoch. Harper & Brothers, New York. 2 vols. 8vo. 
 
 Poor's Manual : Manual of the Railroads of the United States for 1869-70, 
 etc. ; and the same for 1883. By Henry V. Poor. H. V. & H. W. Poor, 
 New York, 1869. 
 {General Authorities : Am. Aim., 1845, 1853-61 ; i and 8 Bankers' Mag. ; 
 
 2 Financial Reg. ; The Globe, Sept., 1836, yan. 1837 ; 51, 55, 56 Niles.) 
 Statesman's Man. : The Statesman's Manual. By Edwin Williams. Ed- 
 ward VN^-ilker, New York, 1846. (2 vols. 8vo., paged consecutively.) 
 
 Sumner : Andrew Jackson as a Public Man, etc. By William Graham 
 Sumner. Houghton, Mifflin, & Co., Boston, 1882. (American Statesmen 
 Series.) 
 
 " Surplus" Question (The) : A Plain Statement of Facts Concerning the Na- 
 tional Revenue and General Taxation of the PeojDle. (No publisher. A 
 
 campaign document of the Penn. Republicans in favor of wholesale dis- 
 tribution.) 
 
 TENNESSEE. 
 
 Acts : Public Acts of Tennessee, passed at the called session of 1836, S. 
 
 Nye & Co., Nashville, 1836; passsed 1837-8, do., 1838 ; passed 1841-2 ; 
 
 D. Cameron, Murfreesborough, 1842 ; passed 1865-6, S. C. Mercer, Mur- 
 
 freesborough, 1866. 
 School Laws : Compilation of the School Laws of Tennessee. Published 
 
 with the Acts of 1853-4. McKennie & Brown, Nashville, 1854.
 
 SURPLUS REVENUE. l6l 
 
 Report: First Report of the Superintendent of Public Instruction for the 
 
 State of Tennessee (John Eaton, Jr.). Geo. Edgar Gresham, Nashville, 
 
 1869. 
 {General Authorities : Am. Aim., 1849; Am. Statist. Aim., 1853; i, 4 
 
 Bankers Mag.; i Financial Reg.; i, 3. 5 Hazard ; 57, 63, 64, 67 Niles ; 
 
 Trotter. ) 
 Thompson : Relief of Local and State Taxation through the Distribution of 
 
 the National Surplus. By Robert Ellis Thompson. E. Stern & Co., 
 
 Philadelphia, 1883. (A series of articles reprinted from The American, 
 
 newspaper.) 
 Trotter : Observations on the Financial Situation and Credit of Such of the 
 
 States of the North American Union as Have Contracte<l Public Debts, 
 
 etc., etc. By Alexander Trotter, Esq. Longman, Orme, Brown, Green, 
 
 and Longmans, London, Dec, 1839. 
 United States Reports : Vol. CXL Banks & Brothers, New York and 
 
 Albany. 
 
 VERMONT. 
 
 Acts: Acts Passed by the Legislature of Vermont in October, 1836. E. P. 
 Walton, Montpelier, 1836. 
 
 The Revised Statutes of Vermont, passed Nov. 19, 1839. C. Goodrich, Bur- 
 lington, 1840. 
 
 The General Statutes of the State of Vermont, passed in 1862. Published 
 by the State, 1863. 
 
 The Revised Laws of Vermont, 1880. Tuttle &Co., Rutland, 1881. 
 Thompson : History of Vermont, Natural, Civil, and Statistical, etc. By 
 Zallock Thompson. Chauncey Goodrich, ^Burlington, 1842. 
 
 (Genl. Authorities : Am. Aim., passim.; i Bankers' Mag.) 
 
 VIRGINIA. 
 
 Acts : Acts of the General Assembly of Virginia, passed in 1836-7, T. 
 
 Richie, Richmond, 1837 ; the same, passed in the extra session of June 
 
 1837, do., 1837 ; the same, passed in 1838, do., 1838. 
 Report : First Annual Report of the Superintendent of Public Instruction. 
 Richmond, 1871. 
 
 {General Authorities : Am. Aim., 1857-8-9; Mercer; 51, 52, ^c) Niles.) 
 Webster's Corrsp. : The Private Correspondence of Daniel Webster. Edited 
 
 by Fletcher Webster. 2 vols. 8vo. Little, Brown, & Co., Boston, 1857. 
 Webster's Works : The Works of Daniel Webster. 6 vols. 8vo. Little, 
 
 Brown, & Co., Boston, 1851. 
 WiRTH : Geschichte der Handelskrisen, von Max Wirth. J. D. Sauerlander, 
 
 Frankfort-a-M., 1874. i vol. 8vo. 2te ; Aufl.
 
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