Building the Empire State. Brian Phillips Murphy

Building the Empire State - Brian Phillips Murphy


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the canal Watson was proposing. Nevertheless, only “a scale of a truly enlarged [canal] policy” that involved the state funding the project “out of its own ample means” would “leave the passage free and open” for future generations. If the policy goals of canal building were settlement and economic development oriented toward the interest of the state, the state then bore responsibility for financing the project. This was the “enlarged American scale” Watson envisioned for the nation’s applied political economy, one that acknowledged and departed from European political economy to better suit domestic needs.19

      Recognizing that he was proposing something novel, Watson urged lawmakers to exercise their fiscal imaginations. “Are we advanced to a sufficient state of maturity to justify an undertaking of this magnitude?” he rhetorically asked. Moreover, he thought that if the state was focused on economic-development outcomes, it would want the canal to have as many users as possible, making hefty toll collections counterproductive. Because a New York canal would not link ready-made markets but would instead enable development along an arterial channel, Watson did not think it was viable to pay for the enterprise directly through either benefit taxation—a tax paid by the people who would benefit from living alongside the canal—or through tolls collected from the users of the canal. Because the state’s interest was in seeing as much development as possible, it would not have the same interest in turning a profit from toll collection as private or incorporated owners would. “Private individuals having a toll in view,” he wrote, would realize profits that “would probably be small for a few years, but the increasing benefit which will arise from this species of property, will keep equal pace with the augmenting settlement and cultivation of the country.” In time, “posterity will be burthened with a weighty tax (in the article of toll) to the emolument of the successors of the first adventurers, which ought not to exist in a land of liberty, where the intercourse should be as free as the air which we breathe.”

      In Watson’s mind, therefore, the canal was simply too important to be privately owned; its toll revenues would be far too large to be properly placed in the hands of private interests. What was needed, therefore, was for states to once again take on debt. Yet instead of paying for a war, these new obligations would fund internal-improvement investments that would pay for themselves over time. Watson thus anticipated the financial arrangements that would one day fund the canal’s construction, suggesting that the state go into debt and issue its own bonds rather than delegate canal construction to privately held corporations and their stockholders. “If executed gratuitously by the public,” Watson predicted that such a financing method would be low risk; “the State in effect will be retarded only a few years,” he explained, before “receiving a tenfold return for all its disbursements” in canal construction outlays.20

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