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The Government Class Book by Andrew W. Young

A >> Andrew W. Young >> The Government Class Book







Chapter XXIII.

Canals and Rail-Roads.



Sec.1. In carrying out the purposes of government, provision ought also to
be made to secure to the people the means of obtaining a suitable reward
for their industry, and to render the labor of all, as nearly as may be,
equally profitable.

Sec.2. The people of some states do not possess the same advantage as those
of others; nor do all the people of the same state enjoy equal
advantages. Those who reside at a great distance from market, or from
navigable waters and good roads, are not so well rewarded for their
labor as those who reside near them, because of the greater cost of the
transportation, both of what they have to sell, and of the goods they
buy. Hence the necessity of good roads, canals, or other means of
facilitating trade between the different parts of the state.

Sec.3. Among the works intended to effect this object, _canals_ are perhaps
the most useful, and are to be preferred wherever their construction is
practicable. Canals are sometimes constructed by incorporated companies;
but generally these works, especially those of great magnitude, are made
by the state, and are the property of the state. Although there are some
states in which are no canals of this kind, it may be interesting to
young persons generally to know how so important a state work is made.

Sec.4. To raise the money necessary to make a canal, the legislature might
levy a general tax upon the property of the citizens. But this would not
be expedient or just; because, first, the payment of so large a sum by
the people within the time in which it would be desirable to complete
the work, would be inconvenient and burdensome; and secondly, the
expense must fall alike upon the people of all parts of the state:
whereas, those residing most remotely from the line of the work, would
derive from it little or no benefit.

Sec.5. When, therefore, a great enterprise of this kind is undertaken by a
state, the law authorizing the work usually provides a _fund_, the
income of which is to be applied to this object. This fund consists of
such lands, property, and moneys as the legislature may grant for this
purpose. Funds were thus constituted in some of the western states, to
which funds congress made grants of the public lands of the United
States lying within those states.

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."

Sec.12. If, therefore, the legislature deem a proposed railroad to be of
public utility, they pass an act to incorporate a company with the
requisite powers to construct the road, on making compensation for the
land, the value of which is to be estimated in such manner as the law
prescribes. The law also prescribes the manner in which the affairs of
the road are to be conducted.

Sec.13. The amount of capital to be employed by the company, is mentioned
in the act of incorporation, or charter, and is raised in this way: The
amount of the capital, or stock, is divided into shares of $100, or
less. Persons wishing to invest money in the road, subscribe the number
of shares they will respectively take. When all the shares are thus sold
and the money is paid in, the company is ready to proceed to the
construction of the road. The owners of these shares are called
_stockholders_, who choose from among themselves such number of
_directors_ as the charter authorizes. The directors elect from their
number a _president_.

Sec.14. Persons buying shares receive certificates signed by the proper
officers, stating the number of shares for which each certificate is
given. The holders of these certificates, if they wish to make other use
of the money they have invested in the business, may sell their stock to
others, to whom they pass their certificates, which are evidence of the
amount of stock purchased. Thus these certificates are bought and sold
as promissory notes.

Sec.15. Stockholders depend, for the reimbursement of their capital, upon
the money to be received for the transportation of passengers and
freight. Such portion of the income of the road as remains after paying
all expenses of running and repairs, is divided semi-annually among the
stockholders. Hence the sums thus divided are called _dividends_. The
earnings of some roads are so large as to make the investment a
profitable one; so that the holder of shares is enabled to sell them at
an advance. When shares in the stock of any institution are sold at
their nominal value, the price named in the certificates, the stock is
said to be at _par_. When they are sold for more or less than their
nominal value, they are said to be above or below _par_. In large
commercial cities, as New York, Boston, Philadelphia, and others, the
purchase and sale of state stocks, and stocks in rail-roads, banks, &c.,
is a regular and extensive business of capitalists.




Chapter XXIV.

Banks and Insurance Companies.



Sec.1. Banks, we are told, were first instituted in Italy, where certain
Jews assembled, seated on benches, ready to lend money, and to exchange
money and bills; and _banco_ being the Italian name for bench, banks
took their title from this word. The first banks are said to have been
only places where money was laid up or deposited for safe-keeping. But
banks at the present day are not used for depositing alone.

Sec.2. Banks in this country can be established only by authority of law.
They are incorporated by an act of the legislature. The capital stock is
raised by the sale of shares, and issue of certificates, as in the case
of rail-roads. (Chap. XXIII., Sec.13.) The stockholders elect of their
number (usually) thirteen _directors_, who choose one of themselves as
_president_. The president and directors choose a cashier and clerks.

Sec.3. Merchants and others in commercial places, deposit in banks, for
safe-keeping, the money they receive in the course of business, and then
draw it out on their written orders as they have occasion to use it. An
order of this kind is called a _check_.

Sec.4. Persons depositing money only once, or very seldom, and intending to
draw for the same at once, usually receive from the cashier a
_certificate of deposit_, which states the name of the depositor, the
sum deposited, and to whose order it is to be paid. For the use of money
deposited for any considerable period, banks agree to pay interest,
usually less, however, than the rate established by law. Certificates of
deposit may, by indorsement, be made transferable as promissory notes
and other negotiable paper, (Chap. LX., Sec.2,) and are often remitted,
instead of money, to distant places, where, by presenting them at a
bank, they may, for a trifling compensation, be converted into money.

Sec.5. A material part of the business of banks is to assist merchants and
others in transmitting money to distant places. Thus: A, in New York,
wishing to send $1,000 to B, in Philadelphia, puts the money into a bank
in New York, takes for it an order, called _draft_, on a bank in
Philadelphia, for that amount, to be paid to B. The draft is sent by
mail to B, who presents his draft at the bank, and receives the money;
and the bank charges the amount to the New York bank.

Sec.6. But persons unacquainted with commercial business, especially young
persons, may not know how the bank in Philadelphia is to be repaid. In
the course of trade between the two cities, business men are constantly
remitting money both ways through the banks, which thus receive the
money and draw upon each other. Thus millions of dollars may be annually
transmitted between the two cities, without any expense except the small
charge of the banks for doing the business, and without the risk of loss
by accident or robbery which attends the conveyance of money in person.

Sec.7. Banks also lend money. The borrower gives a note for the sum
wanted, signed by himself, and indorsed by one or more others as
sureties. The cashier pays the money for the note, retaining out of it
the interest on the sum lent, instead of waiting for it until the note
becomes due. This is called _discounting_ a note.

Sec.8. The bills of banks pass as money. A bank bill or note is a promise
of the bank to pay the bearer a certain sum on demand, signed by the
president and cashier. It passes as money, because the bank is bound to
pay it in specie if it is demanded. Paying notes thus is _redeeming_
them. When a bank is unable to redeem all its bills, it is said to have
failed, or to be broken; and the bill holders suffer loss, unless some
security has been provided. This has been done in some states by making
the stockholders individually liable for the redemption of the bills;
that is, the property owned by them as individuals may be taken and sold
on execution for that purpose. Such security, however, has never been
generally provided.

Sec.9. But a system of banking, sometimes called _free banking_, has more
recently been adopted in some states. It is so called, because the
business of banking is thrown open to all by a _general law_. Any
person, or any number of persons, may, by complying with the provisions
of this general law, establish a bank without a special law for this
purpose. Hence it is also called the _general banking_ system.

Sec.10. Persons, before commencing business under this law, must put into
the hands of the proper state officers ample securities for the
redemption of their bills; and they may not issue bills to a greater
amount than the amount of their securities. These securities must
consist of approved state stocks, or United States stocks, or partly of
public stocks, and partly of real estate. When a bank fails, the lands
and stocks held in pledge by the state are sold, and the avails are
applied to the redemption of the bills. This system of banking seems to
be growing into public favor.

Sec.11. _Insurance companies_ also are authorized by law. Their business is
to insure persons against loss by fire. The corporators, on being paid a
small sum, consisting generally of a certain percentage on the amount
for which the property is insured, promise to pay such amount if the
property shall be destroyed by fire. There are companies also for
insuring vessels at sea; and _life_ insurance companies, that agree to
pay, in case of the death of the person insured, a certain sum for the
benefit of his family, or of some other person named in the policy. The
word _policy_ as here used, means the writing containing the terms or
conditions on which the company agrees to indemnify the person insured
in case of loss. The money paid to obtain insurance, is called
_premium_.

Sec.12. The profits of the stockholders consist of the excess of money
received for premiums over the amount paid out for losses. Thus, if a
company has issued 2,000 policies, each covering property of an average
amount of $1,000, the amount of risk is $2,000,000; and if the rate of
insurance is one per cent., the amount received in premiums is $20,000.
Hence, if none of the 2,000 buildings is burned within the time the
insurance is to run, the $20,000 are gained. If ten of them should be
burned, there would still be a gain of $10,000. If twenty should be
destroyed, there would be no gain, but an actual loss to the amount of
the expenses of the concern.

Sec.13. But from the average number and amount of losses annually for many
years, companies are enabled so to fix the rates of insurance as to give
the stockholders a fair profit on their capital. The rates are not the
same on all kinds of property; a higher per centage is charged on that
which is deemed hazardous, or more exposed to fire, than on that which
is less exposed. The profits on the business of the company, or the
_dividends_, as they are called, are annually or semi-annually divided
among the stockholders, in proportion to the amount of their respective
shares.

Sec.14. There is another kind of insurance companies, which differ
materially from the _stock_ companies described in the preceding
sections. They are _mutual_ insurance companies. They are so called
because the members unite in insuring each other. Every person having
his property insured by such a company is a member of it. He has his
buildings and the property in them valued; and pays a certain rate per
cent. on such valuation. A fund is thus raised out of which any member
suffering loss by fire is paid the amount for which the property was
insured. When the fund is exhausted, it is again supplied by a tax
assessed upon the members in proportion to the amounts for which they
are respectively insured.




Chapter XXV.

The Militia.



Sec.1. It is the practice of governments to keep their respective countries
prepared to defend themselves against foreign enemies. For this purpose
all men liable to do military duty are enrolled, and are required to
meet on certain days every year for instruction in the art of war, in
order to be ready for actual service whenever it shall be required. The
body of soldiers thus enrolled are called the _militia_. There are other
words which are sometimes applied to bodies of soldiers; as _infantry_,
which means the soldiers or troops who serve on foot; _cavalry_, the
troops on horses; _artillery_, those who manage the cannon and other
heavy weapons of war. But all troops are comprehended in the general
term, _militia_.

Sec.2. The militia of a state, or a portion of them, may also be needed to
aid in executing the laws of the state, and in suppressing insurrection
or rebellion. An _insurrection_ is a rising against the public
authority, or the attempt of persons to prevent the execution of a law.
_Rebellion_ generally means nearly the same as _insurrection_; but more
properly it signifies a revolt, or an attempt to overthrow the
government to establish a different one. As it is the duty of an
executive to see the laws executed, power is given by the constitution
to the governor to call out a sufficient military force for this
purpose.

Sec.3. All able-bodied white male citizens of the United States, between
the ages of eighteen and forty-five years, are liable to perform
military service in the states in which they reside, except such as are
exempt by the laws of the states and of the United States. Persons
exempt by the laws of the states are generally the following: Ministers
of the gospel; commissioned officers of the militia having served a
certain number of years; members of uniformed companies having served
for a specified time; members of fire companies; certain public officers
while in office; and in some states teachers and students of colleges,
academies, and common schools; and a few others.

Sec.4. Persons exempt by the laws of the United States are the
vice-president, the subordinate executive and all the judicial officers
of the government of the United States; members of congress and its
officers; custom-house officers and their clerks; post-officers and
drivers of mail stages; ferrymen employed at ferries on post-roads;
pilots and mariners.

Sec.5. By the constitutions of the several states, the governors are made
the commanders-in-chief of the militia of their respective states; and
by the constitution of the United States, the president is made
commander-in-chief of the army and navy of the United States, and also
of the militia of the states when called out into actual service. It has
already been remarked, (Sec.2,) that the military force of the state is at
the command of the executive to protect the government and its citizens.
So the president was thought the proper person to have command of the
public forces, to execute the laws of the United States, to repel
invasion, and to carry on war. Hence the governors and the president are
not among the public officers who are exempt from military duty.

Sec.6. Persons who, having been duly notified, refuse to appear at
military parades, or, appearing without being equipped as the law
directs, are tried by a military court, called _court martial_,
consisting usually of three military officers, or of such other persons
as may be appointed according to the law of the state. If the persons
tried do not show good cause for their delinquency, they are fined in
such sums as the law prescribes. In certain cases courts may consist of
more than three members.

Sec.7. The highest militia officer, except the governor, is the
_adjutant-general_ of the state; who keeps a list of all the higher
commissioned officers, containing the dates of their commissions, their
rank, the corps (pronounced _core_) they belong to, the division,
brigade, and regiment, and their places of residence. He distributes all
orders from the commander-in-chief (the governor,) to the several
divisions; attends public reviews where the commander-in-chief reviews
the militia; and obeys all orders from him relative to carrying into
execution the system of military discipline established by law.

Sec.8. There is also in some states a _commissary-general_, who has the
care of the arsenals and magazines, and the articles deposited in them.
An _arsenal_ is a building in which are kept cannon, muskets, powder,
balls, and other warlike stores; all of which are to be kept in repair
and ready for use.

Sec.9. There are persons who, believing all wars to be wrong, can not
conscientiously do military service. As it is the object of our
government to secure to every person the liberty of conscience as well
as other rights, the constitutions of many of the states provide, that
those who are averse to bearing arms, may be excused by paying annually
a sum of money instead of rendering the service. But it may well be
doubted whether compelling a man to pay the money is not itself a
violation of the right of conscience. Many persons conceive it to be no
less morally wrong to commute for the service than to perform it. In
some states, all persons belonging to the society of Friends, usually
called Quakers, are exempt without the payment of an equivalent in
money.

Sec.10. In the states of New York and Ohio, the rank and file of the
militia are not required to train in time of peace. Persons liable to
perform military service, except those connected with the uniformed
companies, are enrolled in the militia; but instead of doing duty, they
pay annually a small tax, which is in New York fifty cents, and in Ohio
fifty cents, or a day's highway labor.

Sec.11. Laws abolishing trainings and musters of the great body of the
militia, are, it is believed, growing into favor, and for these among
other reasons: First, the militia system produces no material
improvement in discipline; secondly, the expenditure of time and money
in these useless exercises, and for arms and equipments, are burdensome
to many citizens; and thirdly, there is no probability of an occasion
requiring a large portion of the militia to be so suddenly called into
service as to allow no time for preparation. Volunteer companies like
those kept up and disciplined in the states above named, and the
standing army of the nation, are deemed sufficient for any supposable
emergency.

Sec.12. Happily the practice of settling disputes between nations by war,
is becoming less popular in civilized and Christian communities. War is
a dreadful evil, and ought to be discouraged, and, if possible, avoided.
Were governments so disposed, they might in most cases settle their
differences as individuals do, by submitting them to the judgment of a
third party. If the love of military honor were less encouraged, and the
principles of peace duly inculcated, the time would be hastened when
"nations shall learn war no more."





Government of the United States.




Chapter XXVI.

Causes of the Revolution.



Sec.1. The plan of government in this country is peculiar. To a person
previously unacquainted with our political institutions, it might seem
strange, after having read the foregoing description of the state
governments, to be told that there is still another and a different
government to which the people are subject. How the people of more than
thirty states, all having complete and distinct governments, can at the
same time be subject to another government, also complete in all its
parts, he would not immediately understand. He would not know what is
meant by the government of the United States. How the states, all having
governments of their own, can be _united_ in one government, he would
not readily perceive.

Sec.2. We shall therefore proceed to a description of the government of the
United States, from which will appear the relation between that
government and the state governments. It will also appear that the state
governments, each of which has in itself a great deal of machinery, all
move in harmony with the great political machine--the government of the
United States. It is easy to see that a knowledge of these governments
is important to the people who live under them, as every freeman
exercises a part of the governing power, both in the government of his
own state, and in the general government.

Sec.3. To assist the reader in understanding the constitution and
government of the United States, we shall first give a sketch of the
governments which preceded, and of the principal causes which led to the
revolution in the government of this country. Most of the youth who are
of sufficient age to study this work, probably know that our present
forms of government were not established by the early settlers in this
country. The first inhabitants were _colonists_. A _colony_ is a
settlement of persons in a distant place or country, who remain subject
to the government of the state or country from which they removed. The
American colonies which have become the "United States," were chiefly
settled from Great Britain, and were under her jurisdiction.

Sec.4. The political rights and privileges enjoyed by the colonists as
British subjects, were very limited, and were conferred by the charters
of the king. The people had not then, as now, constitutions of their own
choice. There were colonial governments; but they were such as the king
was pleased to establish, and might be changed at his pleasure. These
governments were in _form_ somewhat similar to that of our state
governments. There was what might be called a legislature; also an
executive or governor; and there were judges.

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