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§ 1. (State credit limited.]—The credit of the state shall not in any manner be given or loaned to or in aid of any individual, association, or corporation.

[Const. 1846, art. 7, $ 9.)

The acts of 1866, chap. 576, 1867, chap. 708, and 1869, chap. 90, authorizing and regulating deposits with the superintendent of insurance by the North America Life Insurance Company for the benefit of certain policy-holders did not violate this section. The state simply became “the custodian of the securities deposited with it. It incurred or assumed no responsibility except as a depositary." Comparing these statutes with the safety fund acts, the banking law of 1838, and the general insurance law of 1853, which required deposits with the comptroller for certain purposes, the court say: “It was never before supposed that the constitutional provision cited was intended to prohibit the assumption by the state of the responsibility imposed by such acts.” Atty. Gen. v. North America L. Ins. Co. (1880) 82 N. Y. 172.

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

(Const. 1846, art. 7, § 10.]

A history of this section will be found in the chapter on the Convention of 1846.

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

(Const. 1846, art. 7, § 11.)

See the article on “Limiting State Debts,” in the chapter on the Convention of 1846, for a history of this provision. In 1898 the legislature provided for the expenses of the national guard and naval militia when called into service for the public defense by the President of the United States, and appropriated $1,000,000 for this purpose, to be expended on the governor's certificate and the warrant of the comptroller. This sum was used during the Spanish-American war of 1898.

§ 4. (How other debts authorized ]—Except the debts specified in sections two and three of this article, no debts shall be hereafter contracted by or on behalf of this state, unless such debt shall be authorized by a law, for some single work or object, to be distinctly specified therein; and such law shall impose and provide for the collection of a direct annual tax to pay, and sufficient to pay, the interest on such debt as it falls due, and also to pay and discharge the principal of such debt within eighteen years from the time of the contracting thereof. No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election. On the final passage of such bill in either house of the legislature, the question shall be taken by ayes and noes,

to be duly entered on the journals thereof, and shall be: "Shall this bill pass, and ought the same to receive the sanction of the people?"

The legislature may, at any time after the approval of such law by the people, if no debt shall have been contracted in pursuance thereof, repeal the same; and may at any time, by law, forbid the contracting of any further debt or liability under such law; but the tax imposed by such act, in proportion to the debt and liability which may have been contracted in pursuance of such law, shall remain in force and be irrepealable, and be annually collected, until the proceeds thereof shall have made the provision hereinbefore specified to pay and discharge the interest and principal of such debt and liability. The money arising from any loan or stock creating such debt or liability shall be applied to the work or object specified in the act authorizing such debt or liability, or for the repayment of such debt or liability, and for no other purpose whatever.

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

(Const. 1846, art. 7, $ 12.)

The legislature of 1905 adopted, for the second time, a concurrent resolution amending this section, and directed its submission to the people at the general election in that year. The amendment changes "eighteen" to "fifty,” thus extending the time limit on state debts from eighteen years to fifty years. The amendment also strikes from the last sentence the clause “or any amendment to the Constitution," thus permitting the submission of a debt law and a constitutional amendment at the same time.

The amendment also adds to the section the following:

The legislature may provide for the issue of bonds of the state to run for a period not exceeding fifty years in lieu of bonds heretofore authorized, but not issued, and shall impose and provide for the collection of a direct annual tax for the payment of the same, as hereinbefore required. When any sinking fund created under this section shall equal in amount the debt for which it was created, no further direct tax shall be levied on account of said sinking fund, and the legislature shall reduce the tax to an amount equal to the accruing interest on such debt.

See last paragraph of preface to this volume.

The origin and evolution of conditions which resulted in the policy expressed in this section have been sufficiently elucidated in the preliminary article on “Limiting State Debts" in the chapter on the Convention of 1846, and in the article under the same title in the history of that Convention. According to the comptroller's report, the total state debt September 30, 1845, was $27,288,570.10; much the larger part of this amount-nearly twenty millions—was for canal purposes, and the state was then engaged in the great work of enlarging the Erie canal. The average annual canal revenues during the ten years immediately following the Convention exceeded three millions; but the necessary expenditures for maintenance and improvements were very large. In 1859 canal revenues had fallen below two millions, but soon rapidly increased again, exceeding five millions in 1863; after that time there was a gradual decrease until tolls were finally abolished, in 1882.

The statesmen who framed the restrictive policy concerning state debts fixed the limit at one million dollars.

Possibly if they could have foreseen the accumulation of wealth and the extraordinary expansion of financial operations during the next sixty years, they would have established a much higher limit. Items of one million dollars in our present financial administration are too common to attract special notice, and several items in our annual state budget are larger than the sum expended for state purposes in 1845, which, according to the comptroller's report, was $3,151,928.61. This item seems small in comparison with the estimate of $26,735,457.70 for 1905. But the statesmen of sixty years ago were dealing with financial problems on the basis of an aggregate valuation of property in round numbers of six hundred millions, while the statesmen of 1905 may make computations for taxation and public expenditures on an aggregate valuation of property amounting to seventyfive hundred millions,-$7,500,000,000.

The one million dollar limitation on indebtedness has not prevented extensive public improvements, nor has it seriously embarrassed the administration of state affairs. The magnitude of our financial operations clearly appears when we remember that during the sixty years that have elapsed since it became manifest to the men in charge of public affairs that a more restrictive policy was necessary for the safety of the state, nearly eleven hundred millions of dollars have been raised and used for ordinary state expenses and for various public enterprises by the usual processes of administration, and without requesting popular approval; and the elasticity of our financial system finds a significant illustration in the fact that in this period, during which such large demands were made upon the treasury, the total effective indebtedness authorized by the people, prior to the barge canal law of 1903, was less than forty million dollars. Revenue not received from indirect sources has been raised by taxation, and

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