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4 Board of Public Works
of state capital in corporate stock and the exaction of revenue or services from its
somewhat captive corporate creations—the state was able, for a while, to meet two-
thirds of its ordinary, and rather modest, expenses.14
The reliance of the legislature on corporations as a source of revenue, either
through special taxes or borrowing, continued with the progression of the War of 1812.
In fact the state's cost of that war was financed primarily through loans from the
state-chartered banks rather than through general taxation. By Acts of 1813, chapter
22, the legislature authorized state-chartered banks to lend the state up to one-third
of their paid-in capital.
Unlike tax revenue, however, these war loans had to be repaid, and that required
the state to liquidate some of its capital investments. Unfortunately the postwar
depression had already lowered the value of those investments, thereby worsening the
state's plight. The resulting deficit required the General Assembly to reimpose tax-
ation, which it did with great reluctance. As Hanna explains:
The ideal of a non-taxing state government still held sway. The new taxes imposed were
for long regarded as temporary, a necessary evil to be borne until some streak of fortune
should restore the treasury to its former condition of surplus. The heavy investment made
by the state in internal improvement companies was, in one view, but an expression of
this desire—a means by which the fallen fortunes of the state might be restored.15
What ultimately led to the creation of a board of public works was the state's
growing interest in and involvement with various "works of internal improvements."
As will shortly become evident, this was an interest that was, from its inception, closely
associated with the desired interdependent relationship described above between the
state and its corporations. Those corporations, chartered by the legislature and viewed
as the potential source of investment income, undertook the actual construction of the
improvements. Unlike some of her sister states, the Maryland state government was
not to become directly involved in the undertakings but was, instead, to play the role
of capitalist.
Even during the colonial period internal improvements had been contemplated
as the means by which to stimulate and expand Maryland's economy. Settlement of
the territories in the West and development of a mining industry there offered sub-
stantial trade benefits if those areas could be linked by transportation systems to the
coast. To that end serious efforts to improve the navigability of the Potomac River
had begun as early as 1749 with the establishment of the Ohio Company.
Maryland was, however, not the only state that offered trade routes to the West.
As Walter S. Sanderlin has stated:
For routes of trade, communications, and migration the early pioneers depended for the
most part on the rivers and trails which penetrated the first range of mountains. In New
York, the Hudson and Mohawk valleys were the main route to the new West. In Penn-
sylvania, the Juaniata River and Forces Road provided the easiest access to the Western
territories. To the south the Potomac, the James, and the South Carolina trails served
settlers and trappers alike. Each one had its advantages and disadvantages. The central
routes, in Pennsylvania and the Chesapeake Bay colonies, were shorter and served a
greater number of settlers. On the other hand, the extreme northern and southern paths,
in New York and South Carolina, had topographical advantages arising from their location
at either end of the Appalachian Mountains.
14. Acts of 1813, ch. 122; Randall, Farmers National Bank, p. 20.
15. Hanna, Financial History of Maryland, p. 45.
16. Walter S. Sanderlin, The Great National Project: A History of the Chesapeake and Ohio Canal, JHU
Studies, ser. 64, no. 1 (Baltimore: Johns Hopkins University Press, 1946), pp. 16-17.
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