Income From Revenues And From Loans For Certain Years 1826 to 1842.

(in thousands of dollars)

1826 1830 1835 1842

I. All Taxes

163.6

203.5

417.6

730.2

1. Auction duties

108.8

132.2

57.2

57.4

2. Auction commissions

20.7

19.5

10.9

19.9

3. Tax on bank dividends

23.3

20.1

68.5

44.9

4. Tax on certain offices

10.8

10.0

13.8

6.3

5. Tax on writs, etc.

 

3.0

24.7

37.7

6. Collateral inheritance tax

 

18.7

32.2

38.7

7. Tax on real and personal property

   

209.0

486.6

8. Tax on corporation stocks

     

37.1

9. Tax on coal companies

 

.

1.3

 

10. Tax on salaries

     

1.6

II. Licenses and Permits

76.1

96.6

210.9

141.9

1. Tavern licenses

34.6

44.3

57.8

50.3

2. Dealers in foreign mdse.

41.5

51.6

   

3. Pedlars

 

.7

5.8

1.9

4. Retailers

   

80.7

84.2

5. Bonus on bank charters

   

66.6

 

6. Brokers

     

5.5

III. Commercial Receipts

176.4

272.1

205.9

57.9

1. Land sales

43.6

120.1

26.4

21.8

2. Dividends on stocks owned

132.2

151.4

179.2

35.8

3. Miscellaneous

.6

.6

.3

.3

IV. Canal Tolls, etc.

 

25.7

684.4

908.9

V. Miscellaneous Receipts

11.6

26.5

4.2

7.0

Total Revenues

427.8

624.4

1,523.0

1,845.9

Loans During Year

299.9

5,707.0

1,750.6

934.7

1 From Reports of Auditors General and State Treasurers.

   

11 $24,589,743, exactly.

       

Furthermore, the yield of other revenues devoted to the payment of the interest did not approach by many thousands of dollars the amount needed. If the interest charge of about $1,200,000 is added to the expense of operating the state government, we have a total of over $1,800,000, which was greater by $300,000 than the total income of the state from all sources except loans. The policy tentatively adopted in 1829 of borrowing money to pay interest had, by 1831, become the confirmed practice. This policy may be explained, if we remember that at that time scarcely anyone doubted the ultimate success of the public works; that it was a time of most reckless speculation in private business when principles of sound finance seem to have been completely ignored; *12 and that the belief was prevalent that the state should not levy direct taxes.

In 1836 the legislature chartered the Bank of the United States, receiving in return for the privileges granted a large bonus in cash and a loan for the internal improvement fund. *13 In the same year Congress authorized the deposit of the surplus revenue with the various states, and Pennsylvania received $2,867,000. *14 The act chartering the bank repealed the tax on real and personal property, but the state soon dissipated the funds that were so easily obtained, and the tax was renewed with slight alterations in 1840. *15 In the meantime borrowing to pay interest was again resorted to.

12 For a good contemporary explanation of the spirit of speculation that prevailed during the period, see No. Amer. Rev. for Jan. 1844, lviii, pp. 109-157.

13 Act 18 Feb., 1836, P.L. pp. 36 ff.

14 Tenth Census, VII, Valuation, Taxation and Public Indebtedness, p. 529.

15 Eastman, Taxation for Stale Purposes, p. xiii.

The table on page 39 shows that in 1842 the new tax yielded $486,600, and that the total revenue of the state—canal tolls, etc., excluded—was only $937,000. At this date the interest on the debt was approximately $1,666,000. Loans to pay the interest were necessary and the state was soon in serious financial difficulty. In the following year interest payments were suspended. The people were now told the truth about the financial prospects of the public works, and a heavy tax was levied to pay the current and over-due interest on the state debt.