Sec.6. These funds, however, furnish but a part, some of them but a small portion of the money necessary to complete the work; and some states undertaking public improvements may not have the lands or other property to constitute such a fund. The state therefore borrows the money for a long term of years, and depends upon the income of the canal fund and the tolls to be collected on the canals, for the repayment of the money borrowed. Should the revenues of the canal and of the canal fund be insufficient, the deficiency may be supplied by taxation.
Sec.7. The business of borrowing the money is done on the part of the state, by persons duly authorized, who give for the money borrowed the bonds of the state, which are written promises to pay the money at the times specified, with interest at the rate agreed on; the interest generally to be paid semi-annually. These bonds are usually given in sums of $1,000 each, or less. The debts of a state thus contracted by issuing bonds, are called state stocks, as the capital, or stock required to construct a state work is obtained by the sale of its bonds. These bonds, like the certificates of stock in a rail-road or other corporate business company, are transferable, and may be bought and sold as promissory notes, and constitute an important article of trade.
Sec.8. These stocks are taken by men who have large sums of money to lend, and who consider the state a responsible debtor; because, if it has no other sufficient means of paying its bonds, the legislature has power to raise the money by taxation. Most of the states have contracted debts in this manner for various purposes. State stocks are purchased and held not only by capitalists in this country, but by many in Europe.
Sec.9. Officers are appointed to manage the canal fund, and others to superintend the canals. There are also officers, called canal collectors, at suitable distances along the canals, to collect the tolls, which are charges paid by the masters or owners of boats for the use of the canal.
Sec.10. The states of New York, Pennsylvania, Ohio, and some other western states, have prosecuted the canal enterprise on a large scale. Although large debts have been contracted for the construction of canals in these states, the benefits derived from them more than compensate for the vast expense of their construction.
Sec.11. Rail-roads, although they are of public utility, are not properly public works, being constructed by companies incorporated for that purpose. The necessity for an act of incorporation is readily seen. Rail-roads pass through the lands of private individuals; and without the authority of law, the land of no person can be taken for such purpose; nor can a law authorize it to be taken, unless the work is one of general advantage; nor even in such case, without compensation to the owner for his land; for it is declared by the state constitutions, that “private property shall not be taken for public use without just compensation.”