The old canals of New Jersey are a perfect place to appreciate autumn leaves. There are many preserved sections between Bordentown and New Brunswick, between Phillipsburg and Jersey City and by the Delaware River near Lambertville. Many old towpaths are perfect hiking trails.
The first major canal in America was the Erie Canal built in upstate New York in 1825. It allowed boat traffic between the Hudson River and Lake Erie in the west. It brought such economic growth that New York became known as ?The Empire State?.? New York City quickly grew into the largest and richest city in America.
However, there was a dark side. The success of the Erie Canal convinced many Americans that the ?systematic corruption? of New York politics was also a success.
Professor Wallis, (like America?s Founding Fathers) understood that it is normal to find occasional ?venal? corruption in government. We humans are flawed creatures, and governments are organizations of humans.
However, Professor Wallis explained that ?systemic corruption? is something far worse?but ?something that can be corrected.??Systemic corruption? exists in failed states like Haiti today. It was common in the U.S. for roughly 50 years between 1805 and 1845.
?Systemic corruption? is where government officials control big chunks of the economy as well as the government. Politicians then use that control to promote their personal power and wealth. They reward? their bank and business ?friends? with permits, tax breaks, loans, gifts of public land, and other favors not available to anyone else. Politicians also selectively enforce laws to eliminate other banks or businesses that try to compete with their ?friends?.?? The ?inside? banks and business owners pay back their ?friends? in government with legal and/or illegal bribes, jobs, favors?and political support to keep them in office.
With ?systematic corruption?, honest politicians can?t get money to win elections.? Honest?bank and business owners can?t get government approvals to ?be in business. Corrupt officials are rarely punished or removed from office because they run the justice system.
?Systematic corruption? was a success in New York because the Erie Canal was a success.?? Tolls from boats using the canal paid back all construction loans within one year. The banks and business owners made huge profits. Business was so good all over the state, that few were bothered by high taxes or inefficient government.
In the 1820?s, America caught ?canal fever? ? and a love for New York?s ?systemic corruption?.?? A handful of bank and business owners in every state spent large sums of money to elect politicians who promised to support their projects. These politicians had government approve and finance expensive canals, roads, bridges, and lavish public buildings in every state. State and local government borrowed heavily to pay for them. Because politicians gave contracts and approvals based on politics and corruption, most projects were poorly planned and built, overpriced, and not needed.
The invention of steam railroads in the 1830?s made most canals, bridge, and wagon-road projects unprofitable before they were finished. Tolls were not collected. Loans were not paid back. Banks across the nation failed during the ?Panic of 1837?. The economy collapsed. Many Americans lost farms, homes, and businesses, and were financially ruined.
Many thought? American democracy had failed.?However, America did not fail. New Jersey was one of the first states to get out of this mess.?Professor Wallis said our solution ?was as simple as it was ingenious?.? In 1844, New Jersey adopted a new State Constitution with these three reforms:
First, all laws had to be ?uniform?. Politicians could no longer make ?special? laws that treated some businesses better than others.
Second, state and local governments could no longer support private businesses.
Third, state government could no longer borrow money unless voters approved?something New Jersey voters rarely did until recently.
These three reforms of 1844 quickly revived New Jersey?s economy.? Government was simple, less expensive, and less corrupt because New Jersey politicians had fewer favors to sell. These three reforms were included in our revised NJ Constitution of 1947.
New Jersey government was virtually debt free until the 1960?s. We had no state sales tax until the 3% sales tax designed to lower property taxes in 1963. We had no state income tax until our first 2% state income tax of 1976.
Today, New Jersey government is no longer like that.?For the past 50 years, governors, legislators, and judges of both parties created countless loopholes that completely ruined the reforms of 1844. Today?s empty shopping malls, baseball stadiums, and the Revel Casino are like the deserted canals of 1837.? All we are missing is the economic collapse.