The 1938 reports of the New York State Constitutional Convention Committee, commonly known as the Poletti Report, has divided pre-1846 gifts and loans to private enterprises into two periods: "moderate subsidizing" between 1790 and 1816 and "very extensive and highly speculative subsidizing" between 1816 and 1846.
The voters approved the constitution, (73) but the lack of a prohibition on gifts and loans of credit by local governments would prove to be a significant omission.
(145) Since 1846, the constitution had proscribed gifts or loans of credit to "corporations," and the Committee on State Finances and Revenues expressed the view that this change would clarify what was already believed: that the prohibition against gifts and loans of credit would include assistance to municipal as well as private corporations.
The voters approved two amendments in 1959, adding further exemptions to the general prohibition against gifts and loans of local money.
Beginning in the 1950s, there have been numerous suggestions for substantial revision of the state and municipal prohibitions against gifts and loans of money and credit.
When parents are asked to help their children financially, they frequently respond with gifts and loans
. Sometimes, the loans may be to businesses the children own.
In Flandreau, the court based its decision against the estate on the following factors: (1) the gifts and loans were contemporaneous transactions; (2) the gift and loan amounts were identical; (3) the promissory note terms were such that the decedent was practically relieved of repayment obligations during life; and (4) nothing existed to demonstrate full and adequate consideration for the loans.
The contemporaneous nature of the gifts and loans was clearly part of a single transaction.