HISTORY OF STATE DEBTS.

521

STATE DEBTS .

.ASSUMPTION OF ST.ATE DEBTS BY THE FEDER.AL GOVERNMENT.

One of the first questions agitatecl in OongTess was that of the assumption of the state debts. As early as 1790 a Senate committee reported that it would be greatly conducive "to an orderly, economical, and effectual arrangement of the public finance" should an equal distribution be made of the burdens of the se\-~eral states among the citizens of the United States. Such a course, it was said, would not only promote more general justice to the .. different classes of public creditors, but would also serve to give 1:>tability to public credit. The justice of this assumption was also strongly urged on the ground that the debts were essentially contracted in the prosecution of the Revolutionary war. .An act providing for the assumption of state debts by the general government passed · Congress and was approved .August 4, 1790.

' , The following statement, showing the amount auth0rized t~ be assumed in the redemption of the debt of each state and the amount assumed, is taken from the "History of the National Loans", prepared by R . .A. Bayley, esq., which is published as a part of this report: ·

States.

NewHampshire .............................. . Massnclmsptts ..•......•..•.•.....•......•..... Rhode Islnnd .....••.....................•.•••. Conncctlont .................................. . New York .... ~ ............................... . Now Jersey: .................................. . Penasylyania: ................................ . Delnwnre ................. : ................... .

.Amount authorizod.

$300, 000 00 4, 000, 000 00

200, 000 00 1, 6-00, 000 00 1, 200, ·ooo oo

800, 000 00 2, 200, oeo oo

200, 000 00

.A'.mount nssumo<l.

$282, 59;; 51

3, 081, 733 05 200, 000 00

l, 000, 000 00 1, 183, 716 69

695, 202 70 777, 983 48 50, 161 65

Stntes. "'I Mnryfand .•...........•...•........•......•••.. Virginin nnd Kentucky ....................... . North Cnrolinn .....•.........•........•...•••.. South Cnrolinn ............................... ..

I Georgln ....................................... .

Total. ................................... .

I

Amount o.nthorizeu,

$800, 000 00 ti', 500, OOQ 00 2, 400, 000 00 4, 000, 000 00

300, 000 00

21, 500, 000 00

Amount nssuru~d.

$517,401 08 2, 934, 416 00 1, 793, 803 85 3, 999, 651 73

246, o~o n 18, 271, 786 47

From this time to 1820 but a small amount of state debt was' contracted. Some of the states incurred a small war debt to aid in the war of 1812, but public improvements were not fairly pushed until after 1820.

mtE:ATION OF Sl'ATE DEBTS BETWEEN 1820 A.ND 1838.

The earliest exhibit showing the amount of stocks issued and antho~izecl by law to be issued by the several states, after this assumption by the federal government, is contained in the following table: ·

A nwimt of stooks issued by the several states named below i1i each period of five years from 1820 to 1835, and from 1835 to 1838.

_____________ st_11_tes. 1820 to 1825. 11825 to 1830. 1830 to 1835. 1835 to 1838. \ __ ·.r_o_tn_1. __

.Alabam11 ...................................................................... ~...... $1001 000 • • • .. • • • .. • • • • • • $2, 200, 000 $8, 500. ooo I Arkansas .................................... , ............................ .'.......... . • . . . • .. . . . . . . . . . . . . .. . . . . . . . • .. .• • • . . . .. . . • . . .. 3, 000, 000 Illinois............................................................................... . •. .. . . .. . .. . . . . .. . . .. . .. . .. . ••. 600, 000 11, 000, 000 Imlinn11 .................................. '........... ....................... ••. • •• .. . . . ••• . • . . . . . . .. . . . . . . .. ••..... ... 1, 890, ooo 10, 000, 000 Kentucky............................................................................ .... . . .. . .. • . . .. . .. . •. . ... . . . • . . .. . . .. .. .• • • • .. . 7, 390, ooo Loutslan11 .......... l! ..... . •....... . . . . . . . .... . . .. . . . . . . . .. . . . . . .. . . . . . . . . . . .... .. . . . . . . 1, 800, 000 • • • • • .. .. .. • • • .. 7, 335, 000 14, 000, 000 •

1

Maine... . . • . • • • . • .. . • • • .. • • . . • • • . • • .. • • • • • • • • • • . • . •• . .. .. • • . .. • .. .. .. .. • • • • • . . . . . . • . . .. .. .. . • • . . . . . . . . .• . . . . • . • • . . • •• 554, 076 ............... .

Maryland .•• , ............... ......... .... . .. ••. •• .•• .. • . . .. .............. .• • .. . .. . • . 57, 947 $576, 689 4, 210, 311 6, 648, 033 Mnssnohusat.ts ................................................................................... , . • . .. • • . .. . . .. . . . .. . • • . . . . . . . . . . .. . 4, 290, 000

Michigan ....... : ............. -········· .... •• .... ·· .......... ·• ... •••• .. ••···· ................................... ' .................. . 5, 340, 000

Mississippi ....................................... ~.. .... . •• • . .• •• . . • •• . ••• .. • • .. . . .. .... •• ... •• • .. .. ... . .. . ... . . .. .. 2, 000, ooo *5, 000, 000

Missouri: ........................................................................................................................... . 2, 500, 000

NewYork ........... ." ............................................................... t0,872,781 1,624,000 2,204,979 12,229,288 Ohio . . • . • . . . . .. • • • . . . • • • • • • . .. • • • .. • . . • .. . • .. . • . . . . • . . .. . . • • .. • • . • . . • .. . . • • . . • .. • • • . . . . .. . .. . . . . . • .. .. 4, 400, ooo 1, 701, ooo ••• -·• -- · · • • · · .. Pennsylvania ......................... ~ .......... : . .......... ,.. •• .. .. . • • • .. •••• •• . . . . 1, 680, 000 6, 300, 000 16, 1301 003 3, 166, 787 South Carolina........................................................................ .p, 250, 000 310, 000 ................ 4, 000, 000

$10, 80-0, 000 3, 000, 000

11, 600, 000 11, 890, 000 7, 36§, 000

23, 135, 000

55~ 970 11, 492, 980

4, 290, 000 5, 340, 009 7, 000, 000 2, 500, 000

22, 931, 0<18 6, 101, 000

27, 276,700 5, 560, 000

Tennessee •.••.• , .............. ,...................................................... . . . • . . .. . . . . .. .. . .. .. . •• .. .. ... . 500, 000 6, 648, 000 7, 148, 000

Virginia .............................................................................. 1 _ _:_§ 1...:., _oa_o,_o_oo_

1 ___ 4_69_, o_o_o _

1 ___ es_o,_5_oo+--4_, 1_a_2,_10_0_

1 ___ o_, _a1_8,_2_00

Total. ......................................................................... . 12, 700, 728 13, (179, 689 40, 012, 769 107, 823, 808 174, 306, 994

*It is claimed by the people of Mississippi that tho debt of $5,000,000 was contracted in violation of the constitution, nll(l that the state was not liable therefor. j $4,500,000 redeemed. t South Carolina had a 1·<wolutionary clebt of $193,770. §Virginia had a war deb~ contractc1l before 182g2J $343,139.

524 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

CRISIS IN STATE FINANCE, 1836-'42.

Between the years 1836 and 1842 the states 6f Pennsylvania, Maryland, Mississippi, Michigan, Lonisin JH'l'

Indiana, ancl llinois had contracted public debts or become obligated for the debts of private corporations, w11iell1 in one form or another, through various pretexts, they refused, or threatened to refuse, to pa.y. .At this ti 111 ("'

Benjamin R. Curtis, esq., afterward a justice of the Supreme Court of the United States, prepared himself '\ritlt great care and research to sum up the whole case of the repudiating states, and to examine in detail the sow>11·nl arguments, excuses, or subterfuges that had been relied upon, in or out of e.ach particular state, to justify i ~~ delinquency. He chose the form of an·.article in the North .American Review, because be could there best dcp<lHl t the facts, principles, and reasoning to which others might resort as to an arsenal, and which would furnish wht\ t he deemed the sound and just conclusions to which public opinion should be led. His paper, entitled "Debts of the States", was first published in the North .American Review for January, 1844, a;ncl was immediately republishO:<l and wiQ.ely circulated in pamphlet form. The article is not only valuable now on accotl.nt of the principles or republican constitutional .law to which Judge Curtis has there given the sanction of his authority, but becauso he

·presented at length, and ~ith great clearness, many of the causes which had led the states into the fiuanoinl . embarrassments of 1840. .Tudge Curtis differed from most of the popular writers of the time, holcling tha.t a groot; injustice had been done to the American people in the comments made on the financial policy of the indebt<\<l states through leaving out of view the general state of financial affairs at the time when their debts were contraotetl.

THE CA.USES TH.A.T LED TO IT~

The peace of 1815 [said Judge Curtis] found Europe, and to some ext.ent this country also, e:x.hai;isted by the wars which wore tlHH.'l terminated. Great pnblic cle~ts had been createcl, population had been kept down by the drain upon it for the armies, production ,,·na diminished, nnd co=erce had but a feeble life. The habits and pursuits of the people had so long been formed to a state of Wltl' t:}U\.f. time was requisite to allow the general pen.ce of the world to produce its effects. This change, however, soon began to be accomplialtod, and the world was ·not slow in obtaining the benefit of the new condition of things. Reverses more or less severe occasionally cn.tuo, especially that most serious one in England. in 1825 and 1826, which was felt in this country a,lso; but, ou the whole, the affairs, of' u.11 commercial aml manufa~turing countries were in a hopeful state. Wen.1th was increashig, population was greatly multiplied, produotinu was enlarged still faster than population, and the gene1·al condition of man in most civilized countries was constantly improving. ''""o felt some checks during the period between 1815 and 1829; but they were beneficial rather than injurious, for they tencled•to kMll f.ltu country in a sober ancl calm state, and to make men industrious and economical '1,ithout seriously impairing their resources. 'VluH.l General Jackson became President, in 18'.W, there was a. general and well-grounded belief that the financial affairs of the counti•y \Yt'l"O

prosperous, and that we were in a condition to go forward with accelerated speed.

In 1834 the last installment of the national debt was paid. This fact had a natural tendency to raise the spiri ta of the people at home and increase the confidence of foreigners in American securities. At that time the mon~y­lenders of Europe were not so familiar with the difference in value exjsting between the securities of difforc~nt states, and the promptitude with which the national obligations had been paid made it thereafter less diffieult to negotiate state leans.

PURPOSES FOR WHICH THE DEBT W.A.S CONTR.A.CTED.

Most of the state debts of thit period were contracted for the purpose of covering the expense of importnn t works of public improvement. "New communications," said one writer, when commenting on the financin .. 1 embarrassments of 1840, "have been opened by railroads and canals between different parts of the com1 t.ry, generally at points where they were really wanted, and will be of important service. In' some few cases the rt\.gQ

for speculation and the facility for obtaining loans, which characterized the period when the debts were contracted, may have given rise to projects not precisely of this character; but the worst that can be said of them is tha.t the.y are premature." But at that time the population and the business of the country were rapidly growing up to thoao improvements, and, as subsequent events have shown, many of the enterprises 'Yhich at that period of our histoi.•y seemed to bid fair to bankrupt the states that had prometed them are now profitable investments.

With an improved credit abroad; with an ardent desire at home to push improvements even' bey~nd the WQ.nta of population; with manufacturing and commercial industries rapidly increasing, and apparent prosperity on. n.U hands; it is not surprising that, as .Tudge Curtis said, credit to an immense amount was thus created, and that tll a entire country felt the stimulating effects of these expenditures. Added to this, it must be borne ill mind tbnt during this period occurred the controversy between the government of the United States anq. the Bank,.whiol'l finaUy terminated ·in the removal of the ·public deposits from the United States Ba,nk to state banks;· and t~h()

· popular anticipation of the time when the charter of the United States Bank should expire caused local banks to be chartered in many of the states. According to Jndge Curtis, in seven years, from.1830 to 1837, the nomin nJ capital of these banks was increasecl from $110,000,000 to $225,ooo,ooo; and paper money, he says, multiplied auu faster.

This increase had a necessary effect on prices. The ease with which money was obtained, and the applll'GJl.t profit from its use, led to the multiplication of engagements of all kinds and to every form of speculation to n.11 amount which, if it could be correctly ascertained, would fill us with astonishment. The :following i,s Judge Ouru a'

HisrroRY. OF ~TA'rE DEBTS-INTRODUC'DORY. 525

description of the :financial condition of affairs in the United States prior to the wiclespread bankruptcy and distress of 1837 to 1840: ·

CONDITION OF .AFFAIRS BEFORE THE CRISIS;

If we add that, while these causes were in full operation ancl were 'graclually working toget'her to produce their natural effects some of ~ho

1 states. ~eg~ t.o reoeive and expend the great sums of money they had obtained upon loan, and that our own country, \n its

?gnet'. t~e an ot er u~1portant resources, hacl been making a real and great progress, while other eountries, and especially England, were m n s1m1lar state of excitement, ancl we1·e constantly reacting on us-if we aclil. all these circumstances together' we shall have little cause to wonder that the .A.merican people were brought into that most exkaordinal:y conilition in which their public debts were contracteil.. Former times may have exhibited as great madness, but it reachecl fewer persons. At no other perioil. did the wild spirit of adventure ~ecome epiclemio over so many countries till it seemed ~o affect the whole world. At this time commerce and manufactures had largely mcreused. Wealth had been both accumulated and diffused to an extent before unknown.. ·wonderful improvements in the means of comniunication across wide seas and through great continents had brought all civilized, and especially all commercial men, within one common atmos1ihere of sentiment and opinion. A long aud unbroken peace, in whose sunshine population had increased, and proil.uction been stimulated, and private enterprise suffered to act freely, incited men to large undertakings. Some, who in former times would have found occupation suited to their daring tem11ers in the field, embarked theirreeklessness in commerce; others, whose rnshness u!ider ordinary circumstances would have been soon checketl by disaster or preventecl from showing itself by want of means, found that their energy and love of adventure had made them loaders; ancl others still, whose fears would have been roused by danger, lost all hesitation in the general confideuee. Men aeted as if a short ancl secure roacl to wealth had been discovered, on which all might travel, and he who went the fastest w~uld be the first to·reaoh the desired end. The result was such a morbid tendency to excess in all financial affairs as had never before been witnessed. In those countries where the curmucy was bank paper the quantity of money in circulation was e-normously increased. Partly in consequence of this increase, and partly on account of the sanguine hopes of men, prices continuecl to rise. All nses of capi'tal seemed t0 be followed by certain and large returns, and men were therefore eager to borrow. All pursuits appeared to be safe and prosperous, and therefore those who had mimey were desirous to lend it. So much security was folt that little security was asked ; and to obtain money nothing more was necessary than to show the lender that it was to be employed in some magnificent schenie, which stood well with the large expectations of the tiff.le, antl was in B?ason with the glorious summer of men's hopes.~

So much for the extraordinary combination of circumstances which led to the creation of these debts. In speaking of the mania for the. construction of great public works, for which the money was actually borrowed, the same authority says: ·

At this same periocl, au cl partly in consequence of this extraordinary state of things, there arose in thi~ country a vehement desire to construct great publio works, chiefly such as facilitate and promot6 internal communication. We do not mean to say that the desire was then new. '!'lie people of this country are far too sagacious not to have discovered before that time the great value of ench works arnl the extraordinary natural opportunities for them presented by this continent. They have not much taste for cathedrals and palaces, but "the nsefnl magnificence of roads ancl bridges" excit.es their admiration. They knew well enough that a canal or a railroad., piercing a great tract of country, was of imrfiense importance to them. They quite comprehended its objects, and did not underestimate its effects; nml when their hopes had been raised and. their jtulgment somewhat disordered by the fever in their veins, and they saw the m~ans of accomplishing these great objects not only within reach, but almost thrust into their hands, it is not strange that they seized upon them with incautious eagerness and expended them with a prndigality somewhat in proportion to the ease with which they were ohtained.

PUBLIO IMPROVEl'llEN'.L'S IN ADVANCE OF POPULA.TION.

In view of these facts, it is .hardly surprising that so eminent a jurist as Judge Curtis should consider that a great injustice had been done the people of this country by many of the writers and public men of the perio<l, in not carefnll~· weighing· the general state of men's minds and the financial condition of affairs as they existed at that time, when considering the subject of their indebtellness. Iu the following paragraph he admits the great mistakes whicll were macle during· that period, but shows at the same time the palliating causes which led to them:

They have been rash, but it was at a time when rashness was epide~ic. They have been improvident, but it was when pr11.deuCJe was generally considered little better than narrow-minded timidity. Their fault may have been very great, but it was very general, and it WltS

a fault of which the creditor largely 1iartookwith the debtor. If it was rash and improviUent in them to borrow, it was rash and improvident in others to lend; for in these eases the lenders had almost as good means of knowing the grounds of credit as the borrowers had. The borrowers were states, whose resources and means of payment are necessarily made public, so that all may know them, The works on which the money was to be expended 'were public works; their character and purposes were known; and when the loan was obtained for a specific aw:1: declared objeot, which it often was, the reasonableness and the probable results of the undertaking were open to the judgment of all intelligent men. In our opinion, it was the duty of the lender to exercise his judgment on these points. It is reasonable to expec.t that creditors will not"onlybe vigilant, but suspicious; for those qualities naturally grow out of the relation of clebtor and creditor wh?n it is formed, and they spring up whenever an attempt is made to form it. The fears o±' creditors and of those who are asked to become creditors not selclom lead to untrue judrrments and harsh constructions, which are not to be blamed, because they contribute to the general safety. But when we find rashness where we hacl a right to expect caution, and a blind confidence in place of a careful examination into means and plans, we cannot doubt that the general infatuation must thereby be increased, and that they who have departecl so widely from the qualities which usually belong to their position have done much to produce the mischief.

• TUE REAL PROSPERITY .A.N EXCUSE FOR PREMA.TURE INVESTMENTS.

Another fact which it is important to bear in mind was the real prosperity of the states at the time when these debts were contracted, especially when seen under the bright sunshine which rested at.that time np'on all things. Truly may it be said that this w~s a cause, and, to a great extent, a just cause of confidence. Our progress in everytlliug·which inakes a people powerful and rich had been unexampled. In thirty years the population .h~d increased from 7 ,000,000 to 17 ,000,000, and this increase was in a country wide enough to afford ample room for tt still

*The life aucl writingH of B. R. Curtis, vol. II, :ii. 97.

526 VALUATION, TAXA'rION, AND PUBLI9 INDEBTEDNESS.

greater population; fertile to produce the means filf subsistence; full of all natural resources to invite and reward enterprise, and governed by laws that left the freest scope for the energies of the people. The export of the domestic products of the country had been rapidly increasing. .A. large amount of capital had been invested in manufactures, until an agricultural community, "hich had been almost wholly dependent upon foreign nations for manufactured articles, was able to supply many of its home wants, and even to send some of its commodities to other countries. To sum up, in the forcible language of Mr. Oharles Francis .A.dams:

In the lifetime of one generation we have seen an extent of wilderness that seemecl illimitalile divided into cultivated farms; solita.ry inland seas made glacl with the presence of an active and prosperous commerce; great rivers, whose waters formerly reflected only the shadows of the forest, running by the luxurious abodes of civilized men and bearing the varied products of lalior; cities, which are already wcrthy of the name, iilled with an. industrious and intelligent population, springing up in the solitary places; nay, great states, whose people are reckoned by millions, brought into existence and esta,blished during this short period.

THE ASSUMPTION OF ST.A.TE DEBTS .AGITATED IN CONGRESS.

This table gives in detail the amount of each state clebt in 1838, and the purposes for which it was contracted:

States. For banking. I For canuls. i For wllrouds. Fer tumpikes. I Miscellaneous. I Total .

.A.labnma ............................................... ;............. $7,800,000 l ................ i $3,000,000 ................ 1

................ $10,800,000

Arkansas .. .. . . .. .. . .. .. . .. . .. . .. .. .. .. .. .. .. . • . .. . . .. . .. .. .. . . . . .. . . 3, 000, 000 I' .............................. T ...............

1

.... . .. .. .. . .. .. 3, 000, 000 Illinois............................................................... 3, 000, 000

1

$900, 000 I 7, 400, ooo .. .. . .. . . .. .. . .. $300, 000 11, 000, 000

Indiana.............................................................. 1, 390, 000 O, 750, 000 I 2, 600, 000

1

1 $1, 150, 000 .. .. .. .. • •. .. .. .. 11, 890, 000 Kentucky ............................................................

1

2, 000, 000

1

2, 619, 000 I i 350, 000 2, 400, 000 .. .. .. . . • • .. . . .. 7, 360, 000

Louisinnl\ ................................ ·............................ 22, 050, 000 50, 000 , 500, 000 .. .. .. . .. .. . .. .. 235, 000 23, 735, 000

Maine ............................................................................................... 'l' ............... I................ 554, 976 654, 970

Mnr;ylnncl. ........................................................................... 1 5,700,000 1

5,500,0001................ 202,080 11,-102,080

Massachusetts ....................................................................... :······ .......... I 4, 200, ooo 1.......... ...... ... .. .. .. .. .. ... 4,290, 000

Michigan ............................ , .................................. ; ............ ·I !l, 500, 000 i 2, 620, 000 ................ , 220, 000 5, 340, 000

~!::~~:r~_i:::::::::::::::::::::::: :::::::::::::::: ::::::::::::: :::: :: ~: ~~~: ~~~ c: :: : ::::::: ::i:::::: :::: ~::::: i::: ::: : :: : :::: :: 1::::::: :: : :: : : : : ~: ~~~: ~~~ NewYork ............ : .... , ......................................................... / 13,310,6741 3,787,700 ................ 1 1,158,032 18,202,400 Ohio.................................................................................. 6,101,000

1

1 ................................

1

................ 0,101,000

Pennsyl>"nnia ........................................................................ / 16,570,527 4,964,484 2,595,902 3,100,787 27,306,700

SouthCn:rolina. ...................................................................... ,. 1,550,.000 I 2,000,000 .... : ......... l!.I 2,203,770 5,753,770 Tennessee............................................................ 3,000,000 .

1

300,000 3,730,000 118,106 ................ 7,1'18,166

Virginin .............................................................................. , 3,Sa;;,350 2,128,llOO 354,800 343,130 O,G02,180

Total .. . .. . . .. . . . .. .. . . . .. . .. . .. . .. .. .. . • .. .. .. . . . .. . . . . . .. •. .. 52, 640, 000 j----;;o:-m,5511-42,SD,Q84-0,0IB,8681-8,i74,684 -i70,iioo;IB7

Early in 1840 the question of the United States assuming the states' debts, contracted during the period described, was agitated in Oongress. ·The :first figures that bear evidence of authenticity, as showing the amount and the purposes for which the state debts had been contracted, appear in the speech of Senator Benton, made before the · Senate iu January, 1840, the figures being supplied by Mr. Flagg, the comptroller of.the state of New York. I!;rom tliese tables it seems that $170,000,0QO of debt bad actually been coatracted or authorized by the eighteen states previous to 1840, without counting the $28,101,644 91 received from the surplus revenue funds of the federal government. Taking into the calculation the amount probabl.r incurred in the period between tlle report of Mr. Ji'lagg and the speech of Senator Benton~ together with the Florida debt of $5,000,000, and making allowance for possible omissions from Mr. Flagg's tables, the whole debt might then have been estimated at more than $200,0001000. The aggregate, as ascertained by Mr. Flagg ($170,806,187), was distributed among the states of Maine, l\fassachusetts,• New York, Pennsylvania, Maryland, Virginia, South Carolina, Alabama, Louisiana, Tennessee, Kentucky, Ohio, Indiana, Illinois, Missouri, Mississippi, Arkansas, and· Michigan. Eight of the states of the Union at that time, viz., New Hampshire, Vermont, Rhode Island, Uonnecticut, New Jersey,

. t

Delaware, North Oarolina, and Georgia, enjoyetl the distinction of not finding their names on the lii:;t. Maine ancl Missouri were only nominally ill debt, the former having created but half a million of debt. Of this $170,806,187, $52,640,000, or about 31 per cent., had been incurred in aiding state banks; $60,201,551, or al.lout 35 per cent., in building canals; $42,871,084, or about 25 per cent., for railroad aicl; $6,618,868, or about -~ per cent., for turnpikes and macadamized roads; arnl for miscellaneous objects $8,474,684. Thus it will be seen that nearly $103,000,000, or a.bout 60 per cent. of this entire amount, was expended for the improvement of our system of int'ernal transportation.

DOWNF.ALL OF ST.ATE SEOURI'.l.'IES.

It was in the course of the year 1839 that the European ·nutrket for United States stocks may be sa.id to have been destroyed, and very little, if any, addition was thereafter made to the volume of state indebtedness. .A.n article on state credit in the Democratic Revieio for ,Jannar;y, 1842, makes the a.ssertion that no.considerable amount of state securities was sold abroad after the surumer of 11'39, imtting ont of view, of course, the mere h;rpothecations

HISTORY OF STATE DEBTS-INTRODUCTORY. 527

which may have been made of· some amounts in the possession of the Bank of the United States and other· institutions. The heavy issues of state stocks may be saicl to have commenced about 1830.' The amounts created prior to that elate had been comparatively small. The amount of stock authorizecl to be created by eighteen states in each period of five years, from 1820 to 1838, as already shown, was as follows:*

From 18-20 to 1825 .......... , .•.••...•••••••••••.•.••..•••••.•••••••.•••••...•.••...•.•.••••.••••• $12, 790, 728 From 1825 to 1830 .......... '. ...................................... _ .••••• __ .... .. .. ••. •.. • ••• •••• 13, 67.9, 689 From 1830 to 1835... ••. . • •••. •. . ••• .. • • •• ••• ••• ........ .... .• .• ••. . .. . . ... • . ••• •.•.• .• •.. • . •. ..•• 40, 012, 769 From 1835 to 1838 (say 3t years) .................................................................. 107, 823,808

Total. ............................. _ ....................................................... 174, 306, 994

SENATOR BENTON'S VIEWS 01< THE SITUA'£ION.

Senator Benton took a very gloomy view of these state debts, ancl declared that almost the whole amount of what the states received for the $170,000,000 was British dr;r goods, which were "sold for paper money t-0 construct roads and canals aml to build up paper-system banks''·

The goods are worn out; t.he i1aper moll(ly has retnrned to the vlace from whence it came; the operation is over, and nothing remains of the transactions but the $170,000,000 of clebt, its devouring interm;t, ancl the banks, canals, and roads which represent it. The whole of these banks have failccl once, nncl most of them twice, in two years; the greater par~ of the roatls aml canals are unfinished, and of those finished several are unproductive. .

In the course of the same speech, in calling attention to what the states had realized for their sterling bonds ancl sterling interest, he said:

The heat of the banks are doing but little; the best of the mads and canals are hardly paying repairs, management, and interest. Tho mass of these institutions and works may be thus eharactcrizecl : barren banks, which cannot I encl; suspenclcd banks, w llich will not pay; broken banks, which cannot pay; unfinished roads and canals, which are useless; finished ones, which are either bringing their owners iu debt or baroly paying the expense of repairs, the cost of managoment, ancl interest upon the ontlay. This is thair condition. Their value at home is shown by tbp thermometer of the stock market, where they range at all the degrees below par down to the freezing point of zero. In Europe, although backecl by the creclit of sta·tcs, they rate from 0J1e-half to three-fourths of their nominal Yalne.

WILLIA;M OOST JOHNSON'S RESOLUTION LOOKING TO THE ASSU:i.\IPTION OF THE STATE DEBTS BY°THE FEDERAL

GOVERNMENT.

On July 9, 1842, Mr. William Cost Johnson, of Maryland, made his first move in Congress 'vith a view of having the national government assume the state debts. In his resolution he set forth the fact that the states, not foreseeing the embarrassments which now beset them, had, with a laudable desire to aclvance their interests, to develop their resources, and, by multiplying the means and facilities of inter-communication, to bring into active operation and value much of their otherwise dormant wealth, involved their credit and incurred heavy debts in the prosecution of works which are calculated to strengthen the bonds of union, multiply the avenues of commerce, and augment the clefenses from foreign aggression; that these debts, contracted in times of prosperity, ~hen capital was more plenty and confidence' more stable, hacl now become onerous upon the lJeople, and provisions for the annual interest and final payment of the principal would tmdoubtedly lead to a system of taxation which would still further depreciate the value of property, and become an unbearable burden to the taxpayer. The resolution admitted that many of the issues were improvident, but claimed that they were not the less binding.

' THE WILLIAM OOST JOHNSON REPORT.

The matter was brought up several times, and much opposition was exhibited to paying the state debts in this manner. In D_ecember of the same year, however, the question was referred to a select committee, who filed their report in March, 1843. The tables which accompanied the report of the select committee contain the :first official information relative to state debts. They show that the total amount of the debts of the states was $2071894,613 35, and that the amount of interest paid, or dne, annually, was $10,394, 730 64. Many of the states had omitted to pay the interest as it accrued, consequently greatly increasing their debt, while the gradual but general depreciation of property in such states continued to render the payment of accruing interest and the final liqnidation of the principal more and more difficult and doubtful with every delay ..

The main objection to the report of the committee set up by those who were opposed to the proposition was that the plan contemplatecl the assumption of the debts of the indebte~ states without extending any benefit to the non-indebted states, and that the latter would be responsible for the debts of the former; that if the states were intrusted with the stock or bonds of the general government they might apply·them to otl;ier uses than the payment

"This table is taken from Flagg's repor~, an cl does nut agree within.about $4,0001000 with the debt statement as giveu for 1838, on page 526. The diffe1·ence mainly arises from the· paymen~ by New York of that amount of the debt incurred lJCJt.wecn the yctus 1820 and 1825.

528 VALUATION, rrA.XATION, AND PUBLIC INDEB'l1EDNESS.

of their debts; that if the states were relievecl from their present difficulties and embarrassments, they would, in all probability, get heavily in debt again; and :finally, that, although the states might be relieved, the issue of the .amount of stock proposed would greatly embarrass the general government.

To meet the first objection, that no benefit would be extended to the non-indebted states, a plan of distributing the stock equally among· all the states was adopted. The table presented below* shows the amount of the debts of the several states, and also the amount of the $200,000,000 of government bonds that each state and territory would receive had it been clivided, as was proposed, among· the states, territories, and the District of Oo'lumbia {the territories and the District being assmnecl, for the purpose, to have one representative each), upon the basis of $1,000,000 for each senator, the residue to be divided among the states, and so on, according to the number of' representatives under the apportionment law of184:0. It appears that this would have involved the issue of United States stock to the amount of $651,982 38 for each representative in the Twenty-eighth Oongress. The table also shows the amount of debts that woulcl have been liquidated by the stock; the balance against the states after absorbing their portion of the stock; the balance of stock belonging to the states, etc., after payment of debts; the amount of interest due annually on the state debts at that time; and the amount that wot1lcl remain nifter the distribution to be paid.

Estimates of the debts of the several states anil territories.

.... § ~cia I>, rn ... ~ ~$ ,g] gf g·S~ "'"' "' ,,, "'"

,,:; M o~~

..,.,..w .;'.l O•i::_::

"" l~ i~ai :;l~p., Cl

~d i~~ ·a "' :@~ ""~"' """" """il A ~~~ .B.., ~ t;.'.j=s ·~:e~ 'g-~~

.; f;~~Q .:S-\1 ~ ..... Q ~<>'Ii 1" c " - t5-e .s g Qf'd ~~;t; 4l g£ ]..Or_;. States, territories, and " ,;3$ ~~ -~ .g.s District of Columbia. .e

g~_s:s 'd"' ·~ gc:: 1i1~~ .s " ,O.<!"' • !""! .;·S .S ~ 'S~ """ ~~~ .... +>.., --r .s ~~.s g;] <0"-

~ = g ~.:!; "'"' 0"' = 0 ... ~!m ~ .. " """ o-ilfr:r.:A .., ... 0" ... >=I ~u~~

~ ., ~fl ~'B """d = 8 ~·s 8 .... ~ f:lr;I ~ m~ c.:t tti

i: ... fil§ " ~ 6 §~] ~·a i:~ i: p.,~j ... 0 .§""<ii I: o o,::i~ ..... .s., "'"' al ~ u,.Q;.;.ai,.Q ~ ~cei=.i <J.El A <j AA" ~~.,., = P<d" rn

"" "" H

Maine ••••• 1 ............. 2 7 $1, 734, 861 47 $6, 563, 870 66 $1, 734, 861 47 ................. $4, 829, 015 19 $86, 743 07 ................. $104, 091 68 Now Hampshire •.•.••••. 2 4 6 ...................... 4, 607' 929 52 .................... .................. 4, 607, 929 52 . .................... . ............... ................ :Massachusetts •••• - • - •••• 2 10 12 5, 424, 137 00 8, 519, 823 80 5, 424, 137 00 .................... 3, 095, 686 80 271~206 85 .. ---- ............ 325, 448 22

Conneotioutt ••••••••••• - • 2 2 4 ...................... 4, 607, 029 52 ........................... ..................... 4, 607, 029 62 . ...................... .................... ..................... Vermont •••..... ·-·-·--· 2 4 6 ...................... 4, 607, 929 52 . ......................... ......................... 4, 607, 929 52 . ................... ................. ................... Rhode Island! •••••• A. ••• 2 4 6 ....................... 3, 303, 964 76 . ..................... ...................... 3, 303, 964 76 . .................... ....................... ................... New York ••••••••••••••• 2 34 36 21, 707, 267 91 24, 107, 400 26 21, 797, 267 91 .......................... 2, 370, 132 35 1, 089, 863 39 ..................... 1, 307, 836 07

New Jersey ••••• ·---·--. 2 5 7 ........................ 5, 259, 011 90 .................. ...................... 5, 259, 911 90 . .................... .................... ·------····-· Pennsylvaniat ...... '. - • - 2 24 26 36, 336, 044 eo 17, 6H, 577 52 17,647,577 52 $18, 688, 466 48 ........................ 1, 810, 802 20 $934, 423 32 2, 180, 162 64 De!awo.re ••..•••••.•••••• 2 1 3 ............................ 2, 651, 982 38 ...................... ...................... 2, 651, 982 38 ·-·-·-········· ....................... .................... Marylaml§ ... _ •• -·- ·----- 2 6 8 15, 214, 761 49 5, 911, 894 28 5, 911, 894 28 9, 302, 867 21 ......................... 760, 738 07 465, 143 36 012, ss;; 63

Virginia ... ··-··-·-···--· 2 15 17 6, 994, 307 54 11, 779, 735 70 6, 994, 307 54 ....................... 4, 785, 428 16 340, 715 37 .................... 410, 658 45

:lforth Caroliu11. -···-··-- 2 9 11 .................... 7, 867, 841 42 . ...................... , .................... 7, 807, 841 42 .................... .................. ..................... South Carolina •••. ·-·--- 2 7 ri 5, 601, 234 41 6, 563, 87 6 66 5, 601, 234 41 ...................... 872, 642 25 28±, 561 72 ................... 341, 474 co Georgia .. - •••••••.••••••• 2 8 10 1, 300, 750 00 7, 215, 850 04 1, 300, 750 00 ................ 5, 906, 109 04 65, 487 50 ..................... 78, 595 00 Kentucky •••..••......••• 2 10 12 3, 085, 500 00 8, 510, 823 80 3, 085, 500 00 ........................ 5, 434, 323 80 154, 275 00 ................. 185, 130 00 Tennessee ..••..•... _. _ • _ 2 11 13 s, 108, 166 00 o; 111, 806 1s 3, 198, 166 00 ..................... 5, 973, 640 18 150, 908 30 .................... 191, 889 96 Ohio ..•....... : ...•••.••• 2 21 23 20, 000, €00 00 15, 691, 62D 08 15, 691, 629 98 4, 808, 870 02 •••••••••• Ji. ••• 1, 000, 000 00 215, 418 50 l, 200, 000 00

Loulsianall··········-·--· 2 4 6 23, 985, 000 00 4, 607, 9.29 52 4, 607' 029 52 10, 377, 070 48 ..................... l, 1~9, 250 00 068, 853 52 1, 431l, 100 00

Indiau11 ..•• .' •••• ·-·-·--· 2 10 12 12, 751, 000 00 8, 519, 823 80 8, 510, 823 80 4, 231, 176 20 ................ .. -.. ~ 637, 550 00 211, 558 81 705, 060 60

Mississippi~ ..••.. -·-·--. 2 4- 6 7, 000, 000 00 4,, 607, 929 52 4, 607, 929 52 2, 302, 070 48 ........................ 350, 000 00 110, 603 52 420, 000 OD ·Illinois ..••••.•••.•••. ___ 2 7 9 13, 527, 292 53 6, 503, 876 66 6, 563, 876 66 6, 963, 415 87 ..................... 676, 364 62 348, 170 70 811, 037 55

.A.fabam11 •••..•. -···-· --· 2 15, 400, 0 00 00 6, 563, 876 66 6, 563, 876 66 8, 836, 123 34 .................... 770, 000 00 441, 806 16 924, 900 00 M:issoni'l .•....•.•. _ ... ___ 2 5 7 842, 261 00 5, 259, 011 DO 842, 261 00 ......................... 4, 417, 650 90 42, 113 05 .............. ..... 50, 535 66 Arkansas ..... _ ••.•.•. _ •• 2 1 3 . 2, 676, 000 00 2, 651, 982 38 2, 651, 982 38 24, 017 62 ........................ 133, 800 00 1, 200 88 100, 560 OD Michigan ......•..•.•.••• 2 3 5 5, 611, 000 00 3, 955, 94'7 14 3, 955; 047 14 1, 655, 052 86 ....................... 280, 550 00 82, 752 64 330, 660 00

Florld11 ...•.•••. ··-·-·-·- ...... 1 1 4, 000, 000 00 651, 982 88 651, 982 38 3, 348, 017 62 ·--·-······-1·· 200, 000 00 167, 400 88 240, 000 00 Wisconsin ..•..• _. _. _ ••• _ ·--· 1 l .. .. " ........... --...... 051,982 38 ··········--····· .. . .. .. . .. . . ~ ...... 651, 982 38 ................... ................... ................... Iowa ..•.....•...•...•.... ...... 1 1 ....................... 651, 982 38 . ..................... ........................ lliil, 982 38 . ................... - .. ................... ..................... District of Columbia •• _ •• ....... 1 1 1, 316, 030 00 651, 982 38 651, 982 as 664, 047 62 .. ........................ 65, 801 50 a3, 202 as 78, 961 80 ----- -----

52 227 279 207, 894, 613 35 200, 000, 000 00 128, 103, 917 55 79, 790, 695 80 71, 806, 082 45 10, 394, 730 64 3, 989, 534 76 12, 473, 676 77

*The terri.tories nnd the District of Columbio. are plnced upon the basis of one representative each, nnd $1,000,000 is allowed for each senator, and the residue is divided among tho' representation upon the basis of the apportionment law of 1840, whioh would be a fraction. of a cent more than $661, 982 38 for each representative in the 28th Congress. , ·

I It is eyident that the figures showing the numb er of representatives in Connecticut and in Rhode Island should be trnnsposed, but the above table is an exact copy -0f the tmbl1c doomnent. ·

tThe debt of Penusylvnni11, according to a report of the state treasurer, issued about this time, amounted to $40,000,000. Ma1;viand was actually indebted but $10,000,ooo, thoug:J.i. Mr nominal indebtedness amounted to the sum in. the table. Of tuis amount $22,200,000 was foi: the banlcs, of which'!ll!,811,111 10 was not negotiated, 11nd remained in the banks. The state denies its responsibility for $5,000,000 of this debt.

The above estimates of the debts of the several states and territories are taken from the report matle by the Secretary of the Treasury to Congress June 25, 1842. The calculations of the interest annually paid by the several states, etc., in the above table are made at 6 i~er cent., that 'Being the nearest average.

~Report of committees H. R., 27th Cong., 3d sess., Rep. No. 296, pp. 120, 121.

I I

' I

i I I I

I '

~ ! I ' '

HISTORY OF STATE DEBTS-INTRODUCTORY. 529

TIIE PROPOSED PLAN OF ASSUMPTION.

This plan the advocates ofthe assumption of the debts by the United States thought would sufficiently remove the first objection urged, that no benefit woulcl be extended to the non-indebted states. To the second objection, that .if the states were in trusted with the stock,s or bonds of the general government they might apply them to other uses than the payment of their debts, the memorialists answered that it was proposed to credit the states on the books of the treasury with their respective or relative proportions, and that the transfer was to be made, not to the indebted states, but to the holders of their bonds, in exchange for a :fixed equivalent amount of state stocks, when the contracting parties, the state and their bondholders, should have made amicable arrangements .. The above table shows that $128,103,917 55 would have been the amount of stocks paid, and that $71,896,082 45 would have been the amount standing to the credit of the non-indebted states. This amount, it was suggested, need not be issued, but credited on the books of the department, and the states might draw their semi-annual interest on the same and their proportion of the principal when :finally liquidated.

The third objection, that if the states were relieved from their present difficulties and embarrassments they would in all probability get heavily into debt again, was answered by the fact that the states most indebted in 17907

when the government assumed their debts, were Massachusetts ancl South Carolina, and that at that time (1842) these states had not become ago.in embarrassed.

DISTRIBUTION OF THE SURPLUS REVENUE FUND.

Ever since 1830 efforts had been periodically made to distribute the land revenue or surplus revenue, or to induce the government to assume the stocks of indebtecl states and to distribute an equal portion of credit to non­indebted states. In 1837 a distribution of the surplus revenues of the United States among the several states, provided for. by an act passed in 1836, actually took place. The fnnd originally proposed to be distributed among the states was $36,000,000, and $28,101,644 91 was in fact distributed, in three quarterly installments, the first amount transferred being under date of February, 1837, the second amount in April, and the third in July of the same year. The fourth and last installment, however, was not paid. A series of disasters,. culminating in the panic of 1837, so disordered the :finances of the general government before the distribution had been eompleted that it became necessary to lmve recourse to a new aet of Congress, which was passed on the 2d of October, to direct the postponement of the transfer of the remaining fourth until the 1st of January, 1839. A subsequent act was passed, i)ostponing the payment indefinitely. This last law fnrther provided that the amount deposited should remain with the states until otherwise directed by Congress. Here the matter has restecl for forty years.

The aniomit of rnoney " deposited " 1,vith the several states 1iniler the act of Jiine 231 1836.

Maine •• ___ ..• __ •. ___ • _ .. _ ... _ . __ . _ . __ . _ ... __ . ____ . $055, 838 25 New Hampshire .. _ •• _ •• _. ________ .••••••.• __ .. _ _ ___ 669, 086 79 Massacht1setts _ . __ • __ . __ . _ ... _ •..... __ . _ .. _____ . _.. 1, 338, 173 58

Vermont ·---·· •••• ·----· ___ : __ ·- --·· .. -·-. ___ . ..•• 669, 000 79 Connecticut .•• --·. ____ ..••• _ .. ____ . __ .. _. __ -·. ____ • 764, 670 60 Rhode Islancl __________ . ____ . __ ... _ . __ . _ .• ___ .. __ . _ 382, 335 30

New York. ___ .• ---- .• ·- •.••••.•.••••. ·- __ •. ______ . _ 4, 014, 520 71 New Jersey·-·- .... ________ ----·-. ___ .. ·-·--· ___ -·. 764, 670 60 Pennsylvania . ____ . __ . _ .•••••. ___ • ___ .• ·-- ___ . ___ .. ~, 867, 514 78 Delaware ... _ . _. _ . ______ . ________ . ___ .. _ .•.. _. _ . __ . 286, 751 49 Maryland·----_·- ••••.• __ -· __ .-· •. ____ . ___ ._ .... _._ 955, 838 25 Virginia-··- ..•. _---- .•.• ·--· ____ ··-----···---· ... _ 2, 108,427 99 North Carolina .... _-----··'---·--·· .... ____ .•...... 1,433,757 39 South Carolina._ .•. ______ . _______ . __ ..••• _ .• _____ . _ 1, 051, 422 09

Georgia .••••.•• ---·---· .••••••• ---· ____ -··----- .... 1,051,422 09

Alabama ·----- ·--- •.•••. --·· ---- .••.•. ·--· ·-····-· $669, 086 79 Louisiana._---··----·._ •. --· - -- ...• - -·· .... -- •. •. .. 477, 019 14 Missiasi1111i. .. ______ - -_ ..••• -.. - - - - - - --•.. - -.••. ___ . 382, 335 30 Tonuessee ..... __ --· --- _ --· - .• _ ••.. - ••... -··-· -..••. 1, 433, 751 39 Kentucky .....••••..•.••• ·----·----·-····--·--·--·· 1,433,757 39 Ohio. ____ ,---···---···-- ................. -··------· 2,007,260 34 Missouri .•..• ____ ----.~-.·--.--·_ .••.•.....•••. - - - - 382, 335 30 Indiana __ . _ . __ .. _ •. _____ •••• __ •. - - •• _ •.. - --••.. _ - - BGO, 254 44 Illinois .•. _ -· •••• ·- ·-- •.. _ -· ... _ -·. _. _ ... ----- - ___ . 477, 910 14 Michigan .. ··-·-- .... ····-- •••. ·---·-···--·-------- 286, 75t 49 Arkansas·----- __ .•••..•• ·---·· .•.. -·-··--· •••• --·· 286, 751 49

Total.. __ •... -••.•• -•.•• _ •••• - -••.••••.• - - • - . 28, 101, 644 91 --------

TilE EFFEOT OF '.l'IIE DISTRIBU'.l'ION OF THE SURPLUS REVENUE FUND .A.ND OF THE DISOUSSION OF FEDERAL

.ASSUMPTION OF ST.A.'.l'E DEBTS ON '.l'IIE PUBLIO MIND.

Undoubtedly this distribntion of national funds tended to stimulate improvident undertakings, and at the first signs of embarrassment it was not unnatural that tbe states should turn to tbe national government for succor ancl relief from their premature burdens. The table already given of the annual increment of debt from 1820 to the close of 183!) shows that from 1820 to 1825, when none of the distributive schemes had been thought of in Oongress, the amount of state debt incnrrecl was only twelve million ancl three-quarters in five years-about two and a half million ver annum, and this was confined to the old and populous states, whose resources were adequate to their undertakings and whose means were equal to the payment of their contracts. In the next period of five years, from 1825 to 1830, the increase of state debts was still in the same slow and moderate proportion, and, as a general thing, confined to the same class of states. About this time Mr. Dickerson's bill for the distribution of the surplus revenue was llronght forward. But it was at that time condemned by the Senate, and llence did not have an important

34 W D '.l'

530 VALUATION, TAXATION, AND PUBLIC INDEBrrEDNESS.

eff~ct upon the expenditures and undertakings of the several state legislatures .. T~~ thircl periodi f~om 1830 to 1835t was filled with bills and speeches for the distriblltion of land revenue, and maJont1es were found m both houses of Congress to countenance the projects. ·

Then it was [says Senator Benton, in his speech referred to] that speculfLtio~ and state debt received 11 ])owerful im].lnl~o,, ,null tho debts of the states made the gigantic stride of $40,000,000 in five years, being at the r11te .of $8,000,000 ])er .annum. :Wh?t was." o~~e, somn of the young states began to be infected with the heresy that state de1lts were state blessm~s, aml rushed mto u11.~e1taln~gs for wl~rnh t~iey

ere not ripe and for which thetcredit system had to fUmish the metLns'. The fourth period only embrncetl thrco yoalS am~ !l half, fiom ~3~ to 1837 aml a part of 1838 but it covere{l the period of the cluster of-bills for the distribution of the snrplns. ro vomrn, as it. was oa1lc<l, theoseducti~e speeches in tliei:: favor, and the dazzling tables of distribntivo shares, which then :tilled this chamber, ~ncl. wl11ch took tl:o ultimate form of !l deposit with the states. The state debts in t.hat <lelusive i1eriod advanced $108,000,000. Cou11trng tho $28,000,0CO­received from the United States, and the total advance was $136, 000, 000, the progressive rate of interest being cl~se ~n $40, 00~, 000, per n.nnuin. This frightful career of tlebt involved in its course even the youngest and weakest states aml. some of the torr1tor1es, aml t~e tosuH of tho whole was a larger debt contracted in that brief period by about one-half of tho states than the whole Union o.wed at tho highos.t po in~ of our national debt for all its wars and acquisitions of territory-ihc Revolut.ionary war, the Louisiana and Florid111rnrclrnsca, all mclnslYc.

NEW ENGLAND STATES. The history of the state debts of the New England states is of the most simple charactel'. The following

table presents the debt at six different periods:

-~-========~=====-=;,====o==-,~~---~-'"

1S41. 1Si'.i3, 1S60. .11.S'rO,

)..-rew :Engluml SUtteR. 1839. 1 j -~-- -------• Funde1l Other l•'un<letl I Other Funde<l Other Funded

tlellt. debt. <lout. I ueht. ilebt. I debt. <lebt.

Malne ·--~--- ......... ·:·=l--~~554, Oi6 b$1, 734, 8611 .......... -:-;m, 5001 '~~------~ -;;~~;-fi~ 1.~::· ... --~~s~;,, ;o~ Newlla.nrpshlre ............. \ ............................ \.......... 074,899 ......... 050,087 .......... d2,7521 200

Other tll~llt.

e $05, 000

1S86, ---·--··---~---

J<'nn1k1l I Otlrnt' tl~bt. dtibt.

$5, 8-,is, oon I.~~.~~:-~--· :l, r.01, 100' I $611, 100<

-Vermont ..................... [ ........................... , ................ 00••·· 1·········· vl75, 000 v $24, o:JO d 1, 002, 500 Mm!sachusetts ............... I a4,290,000 bo,4~4,137 ; .......... 06,445,000 .......... /6,817,127 /315,500 d27,128,164 c!l,142,717 f,3,020,4M i 14,'.!ll:l lThode lslnntl ' : . I u 2, 91H, 500 . • . . . . . . . • . . 2, o:M, 500 :1

••••••••••

•l; 000 1-- ....... .

c .... :::· : •· :: . : ··: i ~ ;.~~.,. ~ ,~,~ .~ i · :::.:: • • •. 0.;if · :. -• ,:;:,. ;;: . ~;: ,;: · ·.:: =~ :: ··;: ;:;· :;;' -.:: :::;,: I '. ;:: .:;: ·-·-~--~- ------'-' __ ___:._ ___ :......,. ____ , ___ --'----''--------·-·------·--···~-~,-~--

a AppendiI< to the Congre•sionnl Globe, 26th Congress, 1st session, page 90.

b House Re1lort N'tJ. 296, 27th Congr~RR, 3'1 RC~sion, c State treasurer. d :Ninth Cen'1JR.

e The authority la the Ninth CensuH. 'l'lrn amount shown Is hwh1Hlv1~ ut' $i5, 019 owed to trust funds.

.f Gove1-nor. g The nuthority Is the Ninth Census. '1'110 nmouut shown l• imlnRl\'i. nl'

$3,040 owed to the school fnn<1.

As will be seen by the foot-11otes, the figures of this table liave been taken from what was deenied to bo tho­most reliable source. It was impossible in all cases to make these figures agree precisely with those in the (fofa1ilecl reports. For example, it has been deemed that the cla.ta in the ·wmiam Cost Johnson report were, upon tlrn wlwle, the most reliable for that date. Still there can be found state documents for some sta.tcs which, purvortiug to bo for the same year, do not agree. with the :figures given in this report. It will be readily seen that to eHtt1blisli complete uniformity the 'William Cost Johnson report either~had to be accepted as a. whole or omitted altogether. l3eHeving it to be substantially correct, it. hn.s been used, with some modifica.tio11s in the wa.y of' foot-notes. Fnrther, the dates at which reports are made for a given year may vary from January to December, so that varying- statements­for the same year may both be true.

From the above table it appear8 that in 1839 the total debt of t.bese six states amounted to less than $5,000,000. Iu 1842 Maine, as we shall show in the defailed report on that state, had somewhat increased its Jiabilities, a,ml so hacl Massachusetts; but up to that period New HampsbirP., Vermont, Rhode Island, arnl Connecticut liad contJ.·n.ctc<l no llebts. At the close of the third period Maine had paid a large portion of its debt. The debt of J\fassaclrnsetts hnd increased abont $1,000,000, and New Hampshire liad a small debt of about $75,000. In short, there was but little fluctuation in the debts of the New England states from 1839 until the close of 1860, at which period there. was bn1; little change in the debt of Maine, New Hampshire, and Massachusetts. Vermont, owing to the burning of itH state-house, had contracted a debt of' nearly $200,000. H.hocle Island and Connecticut still continued on i;he list of those states that were free from debt.. Owing principally to the debts contracted for war purposes, and, in the case of Massachusetts, in part for public improvements, the debts of these New England states had increasecl sevenfold in the clecade ending in 1870, and the census of that ;year gives the aggregate amonnt of bonded and floating debt at $50,348,550. While the debts of individual states have, since that period, undergone some fluctuation, tlte)l virtually remained at about $50,000,000, in the aggregate, at the close of the census year 1880.

HISTORY OF STATE DEB'I'S-NEW HAMPSHIRE-VERMONT. 531

NEW HAMPSHIRE.

The first loans of importance of New Hampshire were made for war purposes, and the following- statement exhibits the fluctuation in the debt of this state, and also the annual reduction from June, 1867, to June, 1880:

1807 . . . . . . . • . . . . . . . . . . . . . . . • . . • • . . . . . . . • • . . . • • . . . . . . $3, 747. 776 95 $254, 293 18 ; 187-l. ............................................. . 1808 ..•....•...........•.....••....••.........•..•.. I 3, 487, 411 07 200, 304 08 1s7r. ....................•.•.•••...........••....... 1809 ..•.........•....••..•••.••.................... -1 3, 130, 879 33 suo, 532 04 1876 ...............•....••.•••.•....•........•..•..

$3, 826, 590 02 $305, 570 4~ 3, 741, 330 45 85,259 57 3, 629, 538 40 111, 701 06

1870 ..•...................••.•••..••.•....•.•....•.. ~ 2, 779, 291 98 357, 587 35 187i .........•........................... ' .•.......

1s1i. ••••.......•.......•.••.•.......••............. I 2, a6o, os7 52 419, 204 40 18rn ..•.........•.....•••••.......•.......••.•..••. 3, 570, 390 87 53, 147 62

3, 530, 190 07 46, 200 80 3, 573, 550 90 (!) 1872 ...•...........•..•••..•••••...••..••.......•.. -1 *4, 138, 124 20 427, 658 70 187!1 .......•.•...•...•...•..•.....•..•••..••.•.....

1873 .••.••.•. :~ :~_-_:_:==..:.:.:.:.:.~ ._ .. _. _· . __ ·_ ._ .. _. _· .-'-. _4_, 1_32_, 1_0_0 -'--44__,_ __ "_· 9_03_8_2__,_1_3s_o_ .• _ .. _ .. _. __ · . __ · ._ .. _ .• :~_-_· ._. -~-- ..•..•.•.•...•.. _. --·--'-· -----'----3, 501, 100 00 72,400 90

• Munklpnl war loan bomls, amounting to $2,205,695 44, distributed to towns to ef[nalize bounties antl adclcd to state debt. Old debt recluccd as stated. I Increase uf clcbt, $43,360 83. During yenr $94,704 40 disbursed on account new st11te ]Jiisou (see note, Jl· 1 state treasurer's report, 1870).

Tbe following is a statement of the bonded debt of this state on iYfay 31, 1880, as reported by Hou. Solon A. Carter, state treasurer. It shows the purposes for which it was issued, the rate of interest it bears, and the date of issue and of maturity:

Ilomlecl clebt, May 31, 1880 ....•... ' ................................................................ _ $3, 501, 100

fasu~<l for war purposes...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . • . . . . . . .. . . . . . . • . • . . . . . . . . . • . . • • • .. . . • . 2, 809, 100 \Issued for refunding... • • • . • • • .. . • • • • . . • • • • . . • • • .. . . . • . . . . • . . . . . . • . . . . . . . . . . . . . • • . . . . • . • . . . . • . . . . . . . . • GG2, 000 Issnec1 for public lrnilclings ................................................................... - .... - - . 140, 000

:l,501,100

.A.t 6 per cent. interest .......••..•.. - ..••• -•. - - - .•.. - .•. - •.... - ...• -•.. -••. - - ••.•••••.• -.......... - - - • 3, 061, 100• 440,00(} At 5 per cent. interest ............................................................................... .

ISSUE.

1861. •....•• -· .•....• - ••............••.•.. 1864 ...•................................... 1872 ....... - - ........ - . - .............. ' ... . 1873.:. - - .. - . - -.. - - -- .. - .................. . 1879 ...... --···· ··-··· ................. ----

$3,000 600,000

2,206, 100 252,000 440,000

3, 501, 10(} --------

MATURITY.

1880 ..................... - . . . ........... - •• 1881. .. . . . . . . . . . . . . . . . . . . . ..•.............. 1882 .... ······ ...•................•..•• ---· 1883 ........................ .•. : .. .... ····· 1884 ............••......•..•... -.....•.. -·. 1885 ............•.••.... ····-· .•........ ---

$255,000 14,000 14,000 14,000

464,000

1886 .......... --•..•........... - . . . . . . . . . . . 14, 000 1887. •. • . . .•.• •.. . . .. . . . . . . . . . . . .. • . .. . . . . . 14, 000 1888.... ...• •.•• ••.. .... .....•.. .... ....... 14,000 188() ...... ····-· .... ······ •.•. .... ••.. ..... 264,000 1890 ........•.. - .... ..... .. . ...... . . .. •. . • . 114, 000 1891. ....•.. ···••· ................. -- -----· 114,000 1892 .... --· .. --- ••••.....•... -·· •.•.. --- . -- 206, 100 1893 ..........• -·· .............. -- . - ..... -· 176, 000 1894 .... ····· ....................... _; __ .. - 174, 000 1895 .••••....•. - .· •••....••• - . . . • . • • • . . . . . . . 150, 000 1896 .................... --- ..•....• - ••... - . 150, 000 1897 .......... ------ ---- ··- --· .. -- -- .. •. . • . 150, 000 1898 .............................. - - - • . . . • . 150, 000

1

1899 .........•.... ·--··· ........ ---- ··-···· 150,000 1900 .....•.. ···--· ...• ····•· .... .••. .... ... 150,000

I ----

II After moo.... ... ....... ... . .. .. ... . .. ... ... 750, ooo

Tot.al. ...................... _.... . . . • • • • 31 501, 100 / Total.... . . . . . . . . • . . . • . . . . . . . . • • • • • . . 3, 501, 100

YEH.MONT.

The state of Vermont. as the tables show had no debt, except it might have been a temporary one, until tho winter of 1858-'59 when the state-house was b~uned, and the state authorized a loan with which in part to rebuild, nnd borrowed $14S 000 on an issue of notes or bonds all of which was paid in 1861, 1862, 1863, and 1864. In 1861

' l ' • h d l" h ancl 1862 a further issue of bonds was authorized to sup1'>ly funds neede<l in consequence of t e war, un er w nc

532 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

authority Vermont issued bonds, amounting in all to ~!l,650,000, which bonds were paid when due. There now remains unpaid $4 000 due in 1876 and the amount of the agricultural college funcl held by the state treasurer in trust, due in 1s9o, $l35,500. Th~ state has now funds on hand more than the total of all the state liabilities of all kinds.

RHODE ISLAND.

The debt of Rhode Island was also incurred for war purposes, and the following is a statement of its present condition:

Bonded debt .•••.•..•..........•..•.....••...•.. ······............................................... $2, 534, 500 =

Issued for war expenses, at 6 per cent. interest .............................................. •• • · · • • •• · 2, 534, 500

ISSUE,

1861 .••••.•.... ··•·· .......•...••.•...•••. 1862 .•.•..•..• ·••••• .••.•..••••. •·••·· ••.. 1863 .....••... ·••·•· .••••..••••. ·•••·· .... 1864 .••••.•••• -....••.. - . - -- .••••..••••.. -

$500 965,000 831,000 738,000

Total...... . . • . • . . . . . . . . . . • . . . . . . . • • • 2, 534, 500

MATURITY,

1881. ••••• -•••••.••••..• - - -...•••••..•••.. 1882 .••••...••••.•.••..•......••••.••••. '•. 1883 .................................... .. 1893 ..................................... . 1894 .•••.••..•••..•••..••••...••••••.•....

$500 965,000 200,000 631,000 738,000

Total. . . . . . . . . • . . • . • • • • • • • . • • • . . . • • . . 2, 534, 500 --------

CONNECTICUT.

The bonds of Connecticut were all issued after 1860, and, excepting the last ones, were for war expenses. The bonds issued in 1877 were for the purpose of redeeming optional bonds due .July 1, 1871, to 1881, and the bonds due October 1, 1874, to 1894, the amount of both issues then outstanding being about ~!l,078,000. The following statement from the state treasurer's report shows that the debt of the state was originally made for raising fHHl

equipping troops for the war, the amount being, at the close of the war, $10,000,000, but now reduced to less than half that amount.

Bonded del.Jt, December 31, 1879 .• -·-·. -- . _ .... __ . -·- .•. __ .•.•••••. __ •••.•.• _ ..••••••••••••• _. _ •••• _.. $4, 9G71 GOO ==

Issued for war e::qienses ................ _ ..........•.••........ _... . . . . . . . . . . . . • • • • . . • . . . . • • . • • . . . • . . . 4, 967, 600 --------

At 6 per cent. interest .••••...•...•.••........•. _ ..... _ ..... _ ......•.........•..•.•••...•..•••••...... At 5 per cent. interest ........................ ··---- .•.•...•••••.••••...••..•••••.•...•••••••.•....•.•

3, 93G, (iOO 1,031,000

4,967,GOO ==

ISSUE.

1863 .•........ ···-·· •••....•.•.•••.....•••• 1864 .•••.. ···- ---- ·----· •••••• ·••••· ...•..• 18fi5 .•.••..••• - ...•....•••••••••••....••...

1867 •......... ···- ...... ····-- ·--· ---· .••. -

$877,000 1,318,500 1,741,100 1,031,000

MATURITY.

1883 •••••• - -- . - .•.••• - --- •••• -...... - - ••• -·. 1884 ••.. ··-- ---··· ........................ . 1885 .••..... - - ......... - . - . • • • • • . • . . . .•... -1887 .•••••••••••..•••.......••••••. - - •..•••

$877, 000 1,318,500 1,7:11,100 11 o:n, ooo

Total. ••••.........•.....••.•••••.... 4,967,600 Total. . . • . . . • • • . • . . • . . . . • . . . . . . . . . . . . 4, 9G7, 600

MAINE.

The foregoing statement embraces the four New England states that virtually had no debt until war timos. The history of the clebts of Maine and of Massachusetts is of more general interest. In 1820 Maine, formerly a imrt of Massachusetts, was admitted as a state. Like many others during the period between 1830 and 1840, tho state was seized with a debt-creating mania, which severely taxed its resources at the time. The funded debt reached its maximum December, 1841, when it stood at $1,7341861 47. This debt was contracted partly for an insane hospital, partly for primary schools, and for expenses incurred under the border difficulties, and for other purposes, large sums being paid from its treasury, as bounty on the growth of wheat and corn, amounting to about 8 cents per bushel on the former ancl 4 cents on the latter, to farmers who raised over 50 bushels each. In one year the bounty paid was $871352 30.

The present outstanding debt of this state, according to the state treasurer's report December 31, 1879, wa,s . -" ' mcurrccl .ior war purposes, and stood, at the close of December that year, as fol1ows: Bonded debt, December 31, 1879 ................................ _ ~ ••. _ ... _ ........•••• , ...••.•••••••••. $5, 848, 900

== Iss11.ecl for war purposes .......................................... _ ..••...••.•.• _ •••••••.•••.•••••••••. 5,848,900

=""== Bearing 6 per cent. interest .••••..•••••.•••• , ..•••••••.. _ .••••••••..•••••••.•••• , ••••.•••••••••••••••• 5,848,900

HISTORY OF STATE DEBTS-MASSACHUSETTS. 533

ISSUE.

18G3 . . . . . . . . . • . • • . • • . • • • • . . . . . . • • • • . . . . . . . . . . . $692, 000 1864 . . . . • . . . . . • . • • . • • • • . . . . . . . . . . . . . . • • . . . . . . . 2, 330, 000 1869 . • . • • . . • • • • . • • . . • • . • . • • • . . . . . . . . . . . . . . . . . . 2, 826, goo

Total ................................... 5, 848, goo ------

MATURITY.

1880 ···•········ ·············-·····--·········· $307,000 1883 .... ··•·•····· ····••·•··•··•·••••·· .... •••. 385,000 1889 ••.....•.•.............•.•.•.•••. ·--- .••..• 5, 15G, goo

Total .......................... __ ... _. .• . 5, 848, 900

)IIASSAOHUSETTS.

For many years prior to 1837 there had not been, in Massachusetts, any permanent loans. In that anc1 in subseqnent years, however, boncls or scrip were issued in aid of the construction of certain railroads, and to procure the means to establish certain charitable institutions. The bonds then issued by the state have been promptly paid as they respectively became due, except the $400,000 of bonds issuecl in aid of the construction of the Norwich and Worcester railroad, which matured in 1857, fmd at that date were renewed for twenty years, at 6 per cent. interest, and paid in 1877. There is also outstanding $1,000 in bonds of the issue of 1856, maturing in 1862, which has not been presented for redemption.*

In 1837 there was loaned to the Western Railroad Company (Worcester to .Albany) $2,100,000. In 1839 a further loan of the creclit of the state was made to that company of $1,200,000, and in 1841 the sum of $700,000, making a total of $4,000,000. The state issued her bonds for these several sums, payable thirty years after date, in London, with interest at the rate of 5 per cent. per annum. In 1837 the state also subscribed. $1,000,000 to the capital stock of that company, and in payment therefor issued bonds llayable in twenty years, with 5 per cent. interest. The railroad company executed mortgages to tlle state to secure these several loans. There was also loaned, under similar conditions, during the year 1837, to the Eastern railroad $500,000; Norwich and Worcester railroad, $400,000; Andover and Haverhill railroad, $100,000; and, in 1839, to the Boston ancl Portland railroad, $50,000. No further permanent loans were made by the state until 1849, when the construction of a reform school, of lunatic hospitals, almshouses, and other public buildings, was commenced, and in that and in subsequent years until 1858 a debt of $1,314,000 was created, which has since been paid.

In 1861 there was an accumulation of temporary loans aggregating $300,000, and scrip to that amom1t was issued, which has been prJd. In 1861 and 1862 there were issued $3,000,000 of Union loan boncls bearing 6 per cent. interest, and $600,000 of similar bonds bearing 5 per cent. interest. These have been paid, as also $3,505,00(} of war loan 6 per cent. currency bonds, issued in 1866 and 1867.

The following table shows the amount of fimded debt on the dates mentioned. This table has been compiled from the governors' addresses for the respective years:

On January 11 1860 •...........•...•........•.....•.. On January 1, 1861. .....•••...............•.•...•. ~. On January 1, 1862 .•••....•.....•................•.• On January 1, 1863 ....•...•••••••..................• On J auuary 1, 1864 .••.•••...••••.••••.....•..••....• On J nnuary 1, 1865 ......••.•........••...........•.• On, J anlrnry 11 1866 .••...........•...•............... On January 1, 1867 ........•.•..•................••.. On January 1, 1868 •...........•..••••..•.•••....•... On J anua.ry 1, 18()9 ...........••.•.•.....•........... On January 1, 1870 .••••........••.....•...••..• - ....

$G,413,355 6,817,127

t5, 002, 047 t5,257,000 t6,338,000 14,372,g35 19,181,435 9,1, 399, 224 22, 9t13, 760 26,807,420 29,737,259

Ou January 1, 1871 ..................•.....••..•.•••. $27, 128, 164 On January I, 1872.... ... . .•• . ••. . . . . . . . . . •.•••. •.• . 29, 630, 364 On J11nuary 1, 1873...... .. . ... . . . . . . . . . .. . ... .. . .. . . 27, 692, 704 On Jamrnry 1, 1874...... .•.••. .....• •• •••. .•..•. .. .. 28, 477, 804 On J 11uuary 1, 1875...... . . . . . . . . . . . . . . • . . . • • • • . • • • • . 29, 465, 204 Ou Jmmary 11 1876 .• . • • . . . . . . . . . . . . . . . • • . . • . . • • • •• . . 33, 886, 464 Ou J11nuary 1, 1877. .• • . • • . . . . . . . . . . . . . ... • . .•• •• . .• . . 33, 550, 464 On January 1, 1878...... . . . . . • . • . • . • . . • • • • • • • •• . . • • . 33, 220, 464 On J auuary 1, 1879...... • • • . . . • . . . • • • . • . . • • . • • • • • • . . 33, 020, 004 On J 11nuary 11 1880 ....................... - • • . • • . • • . . 33, 020, 464

The funded debt outstanding January 1, 1880, is divided as follows: Issuocl for war rmrposos ..•..........•............... ".... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . • • . . . . . $10, 468, 188 Issued for railro11cl purposes .......................•.....................••.......•......•... -• - .. - · · - 17, 738, 906 Issued for public builllings .....•....................................................... · .• · · · · •. ·• · · - 4, 113, 280 Issued for improvement of rivers, harbors, &o .......•..••••.....•..•...••...••.•......•.••••..•••••.. - 700, 000

Total.................. . . . . . . .. . . . . ••• . . . . . . . . . . . . . . • . .• • . . . . . .• . . . . . .. . . . . • • . . ... . . •• . • . . . . . .• 33, 020, 464

== It will thus be seen t4at more than one-half of the entire state debt was incurred to aid in the construction of

railroads, and of this sum $14,139,972 was issued in aid and to secure the completion of the Troy and Green:fi.elcl railroad and the Hoosac tunnel. The building of this road and the tunneling of the Hoosac mountain was a private enterprise, undertaken by the Troy and Greenfield Railroad Company. Soon after the organization of the company, however, application was made for public aid, which was granted, and finally the state was obliged to take the control and management into its own hands, in order that the large amount already advanced and expemle(l might not be lost and the enterprise fail.

"Paid since the tlate of this report. t Exclusive of loans to rnilrou<l compauies.

534 VALUATION, TAXATION,· AND PUBLIC INDEffrEDNESS.

The first aid was granted to this company in 1854, when the legislature passed an act entitled "An act authorizing a loan of the state credit to enable the Troy and Greenfield Railroad Company to construct the IIoosac tunnel".*

This act authorized the treasurer of the commonwealth to issue scrip or certificates of indebtedness, in the name and on behalf of the commonwealth, for the sum of $2,000,000, payable at London in the currency of Great Britain, or at :Boston in the currency of the United States (at the option of the directors of the Troy and Greenfield Railroad Company when they should apply for the issue of the scrip), redeemable in tl1irty years, with interest at the rate of 5 per cent. The scrip to be issued was to aid the company in constructing a tunnel and railroad under and through the IIoosac mountain. Certain conditions were imposed on the company before any scrip was to be issned. They were to satisfy the gornrnor and council that they had obtained subscriptions to their corporate stock in the smn of $600,000, and that 20 per cent. of the amount had been actually paid in, and the scrip was to be issued in sums of $100,000 as t.he work progressed, the last $200,000 not to be issued until the milroad was opened for use through the IIoosac and a continuous railroad laid from Greenfield to the line of the state in Williamstown. Other conditions were also made regarding the paying of the subscriptions to the stock and the repayment of a portion of the amount derived from the sale of the scrip, for the Plll'I)OSe of creating a sinking fond. The railroad comp1111y executed a bond to secure the performance of the work aml to save the state harmless from the payment of the principal and interest, and also executed a mortgage on tlle entire railroad, with its income and all its franchises .and property. As a further security the company was required to make an assignment of all its interest in the Soi1t.lier11 Vermont Railroad Company, which was executed.

The act also providecl for the election of two directors by the legislature whenever $500,000 should have been advanced to the company. This act was modified in 1859,t but the amount was not changed. It provided t1

different mode of issuing the scrip, and gave the state the option of purchasing' the scrip, and extended tho time for the completion of the tunnel to December 31, 1865. Another change in the manner of issuing the scrip was made in 1860,t ancl the compan;r was authorized and required to purchase the road, franchise, stock, bond:,;, and other property of the Southern Vermont Railroacl Company, together with the income, benefits, and reversion of its lease to the Troy and :Boston Railroad Company, and subject to.its provisions, for the sum of $200,000; and to enable the company to make the purchase, and transfer the same to the commonwealth as security for tho .entire loan, a further issue of scrip in the amount of $200,000, . payable in federal currency, and to be of the .same description as that theretofore issued, was authorized, to be delivered upon the assignment to the state of tho .capital stock and lease of the Southern Vermont railroad. It was also provided that the railroad company should ,transmit the semi-annual interest to the state treasurer thirty clays before maturity.

The railroad company abandoned the work in July, 1861, at which tirue the state had loaned its scrip to the amount of. $725,388 88, and to October 1, 1861, had paicl interest to the amount of $18

1093 34, in addition to thn'

;$300,000 issued l\fay 4, 1860, to the owners of the Southern Vermont railroad for the purchase of the road.§ In the following year II the legislature passed an act authorizing the governor, with the advice of the comwil,

to appoint three commissioners to investigate the subject of finishing the Troy and Greenfield railroad and or tunneling the Roosac mountain, ancl report the facts to the governor and council. The com1.ian~· was authorized to surrender the mortgaged property to the state, and it was provided that the right of redemption should not ho barred until ten years should have elapsed after the completion of the road and tunnel and the Sltllle he open for use. The act directecl the commissioners to take charge of the road and tunnel and to lease the completed portion -0f the road; to audit certain claims, not exceeding $175,000; and, with the consent of the governor ancl council, to

·continue the work and expedite the completion of the tunnel; all expenditures to be within the two million dollm'1'. In 18G3~ further powers were granted to the commissioners, and the unexpended balance of the $2,000,000 was appropriated for the prosecution of the work, and certain contracts made between the commissiollers and certain railroad companies were approved.

In 1865 **the sum of $800,000 was appropriated for the further prosecution and completion of the roacl an cl tunnel and the payment of interest, ancl like scrip was to be issued therefor.

In 1866tt the further sum of $900,000 was a1lpropriated, the amount to be raised by the issue and sale of thirty-year 5 per cent. scrip, and $600,000 in 1867:j:t, to be raised in a like manner. In the same year the legislature authorized the issue of ~he scrip to be made s0 as to be payable in not less than five no~' more than twent~r years, and to be11r 6 per cent. mterest. The entire loan was Illaced at 5 per cent. In 1868§§ an act was passed authorizing tho funding of the unfunded' debt created in the construction of the Troy and Greenfield railroad and the Hoosao tunnel, and the issue of $3,000,000 of scrip was authorized, the amount to be expressed in the currency of Great :Britain and payable in Loudon in not less than twenty nor more than thirty years (to be d~termined by th~ governor and council), with 5 per cent. interest ll~r annum, payable in gold, or, at the option of' the governor and council, to be payable in Boston in lawful money of the Unitell States at the expiration of twenty years from date, nnd.. reueemabl? at any time after five years from date, with 6 per cent. interest, payable semi-annually in lu,wful monoy of the Umtecl States. The act also repealed all former acts authorizing the issue of scrip for the purvose, of ~~-1~~nwting said railroad anJ tunnel, beyond the amount already issued. '

"'Laws 1854. t Laws 1860, chapter 202. II L!LWS 1862, cliaptcr 156. 0 Laws 1865, chapter 211. H Laws 1807, cbiqitcr ~.ma. t La mi 1859, c11apter 117. § Govcruo1Js address, 1862. 1T Laws 1863, cha pt.er 214. tt Laws 1866

1 chapter 293, §~Laws 1868, chapter l'.>l,

HIS'l'OHY OF STATE DEB'l'S-MASSAOHUSErrTS. 535

A few months later* the further snm of $600,000 was appropri}1ted,. $250,000 to apply to the completion -0f the work, and $350,000 to pay interest on the loans. The governor and council were authorized to contract for the completion of the work, and to dispose of the interest of the commonwealth in the 'rroy and Greenfield railroad, the Hoosac tunnel, and the Southern Vermont railroad. The further sum of $5,000,000 was appropriated if a contract should be entered into for the completion of' the work, for which amount scrip was to be issued, bearing interest not to exceed 6 per cent., and to be paid in not less than twenty nor more than thirty years, and to be .expre.<:ised in such currency as the governor and council might direct.

Un(ler this act a contract was made December 24, 1868, b;y the governor and council, witlt Messrs. Walter and Francis Shanly for the completion of the work in March, 1874, for $4,594,268 in current funds (governor's address to tlw general court in 1869). By the same authority it appears that at that date the total amount expended by thn commonwealtll, including this contract and the purchase of the Southern Vermont railroad, was $9,262,694.t lly a subsequent act+ the governor and council were authorized to hypothecate the $600,000 above mentioned, and the scrip was to be made redeemable in not less than twentJ' nor more than thirty years. In the year 1870§ $101,500 was appropriated for changing curves, rebuilding bridges destroyed during a freshet, and making highways.

The act a11thorizing the governor and council to dispose of the state's interest in the railroad and tunnel was repealed on April 5, 1872.11 Ou the 12th day of December, 1872, the Hoosac tunnel, from the eastern portal to the -0entral shaft, was opened.~ In 1873** an approprit1tion of $200,000 was made, and scrip was authorized to be issued therefor, to be expended in laying tracks and purchasing necessar;y lands.

On the 27th of November, 1873, a passage was opened through the mountain,tt ancl iu June following $1,IJOO,OOO in scrip was authorized to be issued to complete the construction of the railroacl west of Bardwell's Ferry, to be issued in like manner, and to be payable as providecl for the flve million dollar loan; Hand the governor and council were directecl to appoint a commission to take charge of the railroad upon completion of the tunnel.

Subsequently, and before the final completion of the work, the Messrs. Shanly snrrenderncl their ,contract, the stt1t.e deducting $36,547 for unfinished work and making an allowance for extm work.§§ In 18751111 the governor and council were authorized to appoint a manager and make provision for laying t.rack, arching the tunnel, and so on, and $1,300,000 was appropriated, for Which like scrip WfLS to be issued. ml

On the 31st day of December, 1875, there had been advanced in money and credit for the Troy and Greenfield railroad (including the tunnel) $11,920,334: 67. The ,interest paid on loans to the same elate amounted to $3,203,628 99, making a total of $15,123,963 66, leaving an unexpended balance of the legislative appropriations at that elate of $1,414,162 82.***

In 1877 the governor, in his address to the general court (legislature), announcecl the completion of the tunnel, aud in that year the further issue of scrip to the amount of $372,500 was authorized to pay certain claims and make repn.frs.ttt These are all the ~111)ropriations made for the construction of the work. Whatever repairs and improvements are now made are paid out of the earnings. The road and tunnel are leased to several railroad corporations. During nine mouths of the year 1877 the net receipts from the railroacl and tunnel were $63,966 47.+++

The following is a statement of the funded debt incurred for this enterprise on the 1st clay of January, 1880, with the ch1te of i~sue and imtturity : .::--------;::·--

Dr1te iasuc11. Amount in Total .

J>Oumls amount m Htl'rliug * iiom;1ds

Amount in dollars.

Total amount in

ilollars. Wbcrll payr11>le.

I ... interest, Will mr1t11ro.

------- - -------·1·-· ---- ----1858, Octo!Jor 1. .. . . . . . . . . . . . . . . . . . . 22, 690 l

· · storlmg. "'" ____ ""-·----. -- --·----- ----1-- ____ , _____ , __

1

1859, Octo !Jor 1. . . . . . . . • . . . . . . . . . . . . 20, 300 114, 500 1800, Octo!Jer l...................... o~. 700 j

554, 180 . • . . . . . . • . . . • . Ln1Hlou .••••.. '. •• • •• .•• . •. 5 por cent ....... ·I Iu thitty years.

1808, April 1.... .. .. . . . . . . . . . . . .... 010, ooo /) 1809, Jul,. l...... . . . . . . . . . . . . . . . . . 413. 300 I 1871, July 1. . . . . . . . . . . . . . . . . .. . . . . . 7.13, 000 2, 070, aoo 1875, Jnmu1ry 1 . . . . . . . . . . . . . . . . . . . . 300, !iOO ·

10, 049, 292 10, 003, 472 ...... clo ......................... do ...••••.•.. In twenty yettrs.

18Gl, .<\.pril 1 .................................... ./.............. 210, 500 !

1800, 4\ p1·il 1. .................................. .- . . . . . . . • . • . . . . 200, 000 )

180:J,April1 ................................... : .......•••.••. OO!i,OOO, · l,100,500 Treasury,,Boston .•••.•..•••••. ilo ........... lutbirtyyeMa.

1804, April 1.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. . . . . . . . .. . . . 85, 000

1874, July 1... ... . . .. ... . .. . . . ... .. . . . . .. . . . . . ... . . . . ....... .. . aoo, 000,. 2, 000, ooo ...•. do ......................... ilo ........... In twenty years. 1873, July 1 .... : . . . . . . . . . . . . . . . . • . . . . . • .. .. . .. . . . . . . . . . . . . . . . • . 400, 000 }

1875,July 1 ......................................

1

.............. 1,300,000" 1877, Soptombor 1.................. .............. .............. .............. 370,000 ...... ilo ....•••..•••.....••..•.•• do··········· do.

' \ li,iiio, 0121. -----'------- *The ponnil st~~llng is computed at $4 84.

* La.ws 1868, chapter 333. t By the table following it appears tha.t prior to that date $4,673,080 in scrip ha.cl been issued, which, ndded i;o the contract price, would be $9,267,348.

t Acts 1869, cha1)ter 201. "*Laws 1873, eha,pter 346. §Laws 1870, chapter 252. tt Governor's address, 1874. !!Laws 1872, chn.pter 175. HLaws ld74, chapter402. 1T Governor's mlllress, 1873, ·-~

§§Governor's address, 1875. 1111Laws1875, chapter 77. '\I'll Laws 18i5, chapter 220.

*"* Governor'~ address, 1876. ttt Laws 1877, clmpter 249. Ht Governor's n,dd:ress, 1878.

536 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

Thus, from the $2,000,000 eredit of the staite, :first loaned to the Troy and Greenfield Raih'oad Company, which it was then thought would complete the work, the state has now a bonded debt of over $14,00o,ooo, and is the owner of the tunnel and of the railroad.

The following table shows the date of issue and the amounts of the remaining funded debt, where payable, etc.:

Date is sued. Amount

in pomads sterling.*

Amount in dollars.

Total amount in

dollars.

i I

Where payable. Interest. Will mature. For wlmt purpose issued. '.l'otal

arnountin ponnds

sterling. 1-------1-----1-----'1------·····---·····-----

1868, J' ul y 1 • • .. • .. .. • .. GO, 000

3, 5DD, 024 London .•.....•... l J'an. 1, 1000 )

5pcrcent. ::::~~ ::::::: Loanc<ltolloston, lforlfonl nml Erle July l, 1900 railroad.

1860, .January 1......... 100, 000 1 I 1869, .July 1 .... .. • . • • .. 160, 000 J 743, 600 ............. ·1 1860, .July 1 .... • .. ... .. 290, 800 1869, July 1 .... .. .. ... • 123, 800 •••• do •••••••

1861, May 1............. . . .. .. .. . . . . . . . . .. .. . .. . 70, 000 i } 1862, May 1. .................... - .. . . .. • . . . . . . . . lliO, 000

220, 000 Treasurer, Boston ..•.. do .... _ .. May 1, 1880 Filling back lu•y lnntls.

1874, September 1 ...... ............ ............ 400, 000 } 1876, September 1 ...... ............ ............ 300, 000 700, 000 ...... do .............. uo ..... { ~:;:: ~: ~:~: l Ila1·bor impl'l>Yument loan,

1, 5001 000 ...... do ............... do ....... In 20 years .. Da'nvc1·s Lunntk Ifos1iltlll.

lil'l"!,J'anuaryl......... ............ ............ 050, 000 l 1874, July 1 ............ .... •• •••••• ...... ...... 250, 000 , 1876, September 1 . • .. .. .. .. .. . . .. .. .. .. .. . • • . . . 460, 000 187'7, September 1 • .. • • • • .. • .. .. .. .. .. .. .. •• • • • • 150, 000

.••••. do ........... 1

1

.... do ........... do ....... Woi·c<'stcrLunatlcHospitnl.

London .............. do ........... do . . •• • • • Prisons Jonn.

{

••• do ........... , .••. do ....... In30ycars •• }

1875, May 1. ................................ - . .. 750, 000 l 1876, September 1 .. • •• • • • • .. • .. • ... .. • .. • .. .. • • 350, 000 S 1875,Jarmaryl......... ............ 267,000 ............. .

1864, August 1 ............. - • .. • • .. 820, 600 4, 000, 744 }

1, 100, 000

1, 292, 280

1803, July l ................ '....... . . . .. . .. . . . . 200, 000 8, 580, 244 Treasury ............ do ..... .. In 20 years.. Douuty !Olm. .... do ............... do ....... In 30 years •. 1864,:Mayl............. ............ ............ 4,379,500 I

1863, .July 1 ........ .... ............ • • •• ........ 388, 000 l 18M,Jannaryl......... ............ ............ 500,000 S 888, 000 ...... do ............... do ....... .July 1, 1883 Const defonsn loan.

1869, July 1 ............ ·-........ •• 206, 600 ............. . 1856.................... ............ ............ 1,000

Wnrlonn. 999, 944 London ........... , .... do ....... .July 1, 1889

Treasury ......... l .... do. ...... 1862t

I

1, 000

Tl.'Dy and Greenfield railroad ................................... _ .............. _. 14, 13D, 972

I--

Total............ ...... ...... .... .. ... .. . ...... ........ 33, 020, 464

*The p~mad sterling is computed at $4 84. t Not presented for redemption.

There were issued: Prior to 1860 ••..•..... -- .................. ---· ... -·· ............................... __ ••••••.•••••••••• $5, 204, 484 In 1860 ..• ··- ...... ·-···· .• ·-·· ••.•••••••. -·· ·-. - •. ·-- --· .............. - --· .. - --· ........... ·-·· ·- - -- • 503, ~68

1861. ... --·. -·-· ·-- --· ·-. --· •.••••.•• -·. -··· •• -- ..•• ·-·-·· ... - ...... - --· ...... ·- - ... - .• - -·· •• • • ... . 3, 885, 040 1862 .... ·- ............... ••••· ·--·. ·- -· ............. ·- .......................... ·-· ..... --· ·-. - ••• • luO, 000 1863 .... ·- ....... ·-· --·· -·-· .•• -·· •.•.. ----· ·- --·· .... ·- - ... ·- •••.•••• ·-·· .• - •••.•. --· .•. - . •• •• ... . 707, 000 1804 ....... -·· ...... ···-·· ........................ -· ·--· .••••• -·· ................ ·- •••.. - - - - .... - .. . 1865 ............ ·-·· .......... - ·- ....... ··-· ••••••.•••...••..••••. ··-- -· ·-· •.•. ·- .. ··- ·-· ........ .. 1867 .................... - - -· ... -· •.•••••...• ·-- .... -·-·· ·- - ............. ·-·-·· ................... .. 1869 ............ -··. ·- •. -· --·. ·-·. - ·- ·-. ---·-· •• ··-· .............................. ·- •• ·- - ••.• ·- •••• 1874 ......................... ··-· .... -·. -·-- ........ ·-·-- ........... ·- ...... ·-··· ·-. - . ··- --· ....... . 1875 ...... ··- ... - ....... - •..... -- ............. ····-· .•... - ................ ·--- ...... ··- •...• -· .•.. 1876 .................................... ··- ...................................... -··· ............ . 1877 .. ·-·. ···-·· ··---· .. --·· ... ·-· ........ ···- •• ·-- ••...• --· .... -· ........... - ....... ·- - .......... .

Total. •••••.•.•... _ .............. --·· ....... _ .......... ---· .•• ·- .... ·- ....••...•. ___ ....... -·

There will mature :

In i~~~~~~~:-. ~:~::·. ~~~::·. ~~~~----~~~~ ~~~~~~ :~~·-· ···--· ...... ·-·· ----··· ................ ·---·- ...... --·· 1888 I ••• •••• •••• ......... "'"''*"'""' •••• •••••• •••• ••••-• •••• • .,.,.,.,,..., .,.,..,,..,

-·· .. ----- -....................... -· ......................... -............................................. ; ....................... --- ................................... ..

~ :: : :: : : : : ::: ::: : : : :: : : : : : : : : : :: : : : : : : :: : :: : ::: : : : : : : : : :: : : : : :_: :_:_-:: :_: "::: :·:·::::::::::: :: : : : : : : : : : 1894 .......................................... -- ................... ·- ................................... ,.. --- - .............................. - -................................. .. 1895 ................................ ------ ............ ·--· ........... ·----- ~-·--· ··---· .............................................. ---· .................. ..

...................... ----- ... ---· ........................................... .. 1896 .. - - ...................... - - .. - ...... - - - ...... - .... - .... - ................................ .. 1897 ... - .. - .. - ... - - ..... - .. - - - - .. - .. - ......... - ...... - ........ - - ................... - - - - - - .. - ................ - ....... - .. - ......... - - - - .. - ...... - ........... .. 1900 .................. ·----· ......... ---- .. _ .......................................................... - ......................... ,, ..................................... , .. ..

............................................... ----·-···· .......................................................... -----· ........................................... .

10, 121, Q44 2,707,080

370,000 4,598,908 1,300,000 2, 04'2, 280 1,100,000

150,000 ------33,020,464 ==

$221, 000 1, 088, 000 3, 061, 300 3, 142, 128

503,1168 3,815,040

200,000 10, 921, 244

4, 840,260 1,100,000

520, 000 3,509,024

Total. ..•.••••...••.• _ ••• ··--·· ....... __ ...................... _ ........ ·-·· .. - - •.•• - • - ••. - • - . 33, 020, 464

HISTORY OF STA'l1E DEB'.I1S-MIDDLE STATES-NEW YORK. 537

,January 1, 1880, t.he sinking fund of tile state amonntecl to $12,235,218 30. To this may be auded $640,000 as the market value of the securities in excess of cost, making $12,875,248 20. The distribution is to the following funds:

'l'roy and GrecBfieltl railroatl fuutl ... _ ....••...... _ .... _ ......... _ .•..... __ .... _ ...... _ ...• _ .... _ ... $3, 962, 190 02 Boston, Ifartforcl and Erie railroaLl foml. ..•.•. _ ....... _ .•..•..... _ ..... _ ........•...........•. __ ... 1, 141, 991 31 Back bay lanLl fund ....•... _ .......................•.•...•...•..... _ .......................... ___ .. 220, 130 00 Commissioners of public larnls .. _ ........................ __ ... _ ............................ _ ..... _.. 255, 683 53 Prison aml hospital fund ............... __ ......................•...... _ ....................... _.... 555, 531 87 Bounty-loan funcl.... . . . . . . . . . • . . . . . . . . • . . . . .. • . . • . . . . . . . . . . . . . . . . . . .. . .• . . . . . . . . .. . .. . . . . . .. . • . . . . 4, 380, OHi 85 Coast defouse fund ................................................................ _ ...... _. . . . . . . . . 719, 704 71 '\Var loan fund .••••........ _.. . . . • • . . . . . . . • • . .. . . • . . . . . • • . . . . . . . . . . . . . • . . . . . . . . . • .. . . • . . . . . .. . • . . . . 1, 000, 000 00

1'otal . • . . • . . . . . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 235, 248 29 Adel market yalne in excess of cost ....................... ; ............ _ ......... _ ....... _. . . .. . . . . . 640, 000 00

Total .. • • . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . .. . . . . . . . . . . .. . . . . 12, 875, 248 29 Balance unprovided for, January 1, H!80 ....................................................... _.... 20, 145, 215 71

•rotal. _ ...... - ... -·· ................... __ ................................ ·-·· ................ 33, 020, 464 00 ===

Early in 1862 an act passed the legislature of lVfassachnsetts authorizing the banks to suspend specie payment. On the 22d of March, of the same year, an actwas passed providing for the payment of interest and principal of all scrip and bonds theretofore issned, or thereafter to be issued, as the same severally became due, in gold or silver coin, aml directed the treasurer to procure such coin when necessary. This early measure was taken to secure the credit of the state, ancl the policy has been adherecl to throughout.

MIDDLE STATES.

Under the title "Middle States", New York, New Jersey, Pennsylvania, Delaware,. and Maryland are included. Of these five states, New Jersey and Delaware have no debt excepting that incurred for war purposes. The former had in its constitution of 1844 a provision which prohibited the state from aiding or in any way loaning its credit to public improvements. New York, Pennsylvania, and l\faryland were among the first states to aid in the construction of canals and railroads and in loaning their cretlit to state banks. As early as 1839 these•three states were indebted to the extent of $54,984,389. In 1842 Pennsylvania and Maryland were obliged to suspend interest, andNmv York was on the verge of bankruptcy. At the present time, when we take into consideration the sinking funds and the resources of these states, their debts are hardly more than nominal.

New York ...••...•.•....•..........•.•........... ·-·· ............•.........••............ ···--· ...•.. $7,536,732 New Jersey ... -- ..... ·-· ... _.... .. . . . .. . ... . . . . . . . .• •. .. •. . . . .. ... . . . ... .. . ••. .. . .• . . . .. • • •. . .• . . . . . .• 646, 300 Maryland ............................................................................................ 7,627,668 Pennsylvania ............................................... ·-···· ....... , ...................... ·····-· 12,814,831 Delaware ••.•.............•.. ····-·................................................................... 880, 750

'l'oto.l net indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . • . . . . . . . • . • . • • . .. . . . . . . . . . . . . . . . . . . . . . . . . • • . 29, 506, 281

The following table shows the movement of :;tate tlebts iu the 1\'Iidtlle states* since 183!):

1S41. 1SIS3. 1S60. 1S'r0. 1§§0.

MidU!o States. 1839. l!'un<le<l. Other. Fun<lecl. I Other. Fun<le<l. Other. Tunded. Other. Fmulcd. Other.

----1----··----1----1----- ---· --------Now York ......... la $18, 262, 400 b$17, 561, 507 b $4,235,700 0$24, 323, 838 .•••••.••••• c$271 064, 58! 0$6, 5-05, 654 d$32, 400 144 $8, 088, 300 NewJorsoy .......................................................................... .•••.•..... : .. ............... e2,996,200 1,800,300 Pennsylvania .•.•.. / 25, 220, 003 / 83, 301, 013 . . • • • • . .• • • • 40, 272, 235 . •.. •• . • . . .• g 37, D69, 847 . • • . •• •• • • • • • • e 31, lll, 662 h 21, 501, 000 Doltlwm·o • . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . • .. . . . . . . . . . . . . . . . . . . •. . • • . . . . . . . • • . . . . . • . . . . . . • . . . . . . . . . . . . . . . . . . . • • . . . . . . . . . . . . . . . ,; 880, 750 Maryland . . . • .. . . . . a 11, 402, 080 b 10, 000, 000 b 5,214,701 g 10, 000, 000 H $5,356,224 j 14, 870, 058 .... •• . • • • • • • . e13, 317, 475 . •• . . . • • • . 11, 277, 111 •......•.•

Tot11l •...•...... G4,°084,"38ii" 00,862,fisO g;45o;40i 7i,500,mi5,ii50,2241----;;0,iill,ii891-0,505,fiM°f79,83.i;4s! ·== 44,604,511 ~:-:-:-:-a .A.pp. Cong. Globo, 20th Cong., 1st scss., p. 90. b House Rep., No. 290, 27th Con11:., Bel seas. o Governo1'. a The authority is tho Ninth Census, Tho sum shown is the total iuclobtetl­

ness less tho amount In the sinking fuu<l; it is inclusive of $2,845,307 owec1 to trust funds.

e Ninth Census. I State treasurer. g State auditor or comptroller. h lnolua:ve of$500,000 owo<l to tho State .A.gricultnrnl Collogo fnml. i Incl.:isive of $165, 750 owed to tho school fnncl.' j Secretn.ry of state.

NEW YORK.

The financial transactions of this stn.te, now containing oYer 5,000,000 inhabitants, have been of great magnitude. The treasury accounts of New York are divi<led into six principal heads. First, the general fnnu, which represents the regular and dirf'ct finances of the government; second, tJ1e common school fund; third, the literature

•The cleht of the District of Colnmhirt iippeam in the tahlti of municipal intlehte<lness,

538 VALUATION, rrAXArrION, AND PUBLIC INDEBrrEDNESS.

f d . fourth the canal fund· :fifth the bank fund being the amount created by the contribution of the banks under un ' ' ' ' · ' h th · t ll t · l the safetyfuml act of 1829; sixth, the United States deposit fund, being the amount oft e ree ms a men s recerve<

in 1837 from the federal government under the act for distributing the surplus reve~ne~. T_lrnre are several oth~r fmds of minor importance of which the state is a trustee, and many of the comphcat10us m the finances of tlns s~ate arise on aecount of transferring these securities from one fund to the other during important exigencies in tho affairs of tlie treasury. .

At the close of the revolutionary war New York found itself possessed of an immense extent of nnimprovetl lanµs lying within its boundaries, which had been the "'crown lands", owned by tlie moth~r countl'y. There were also quit-rents, which had been reserved on extensive patents granted by the sovereign, wlneh reverted to the state. Chiefly from this source and from the proceeds of the sale of the lands a geneml fond was mtitle up, tho aumml revenues of which were intended to defray the expenses of the government and relieve the people from taxation. At this periocl it was actually a fund the proceeds of which discharged the state expenses.

From the lands above described the s~ate appropriated liberal bounties to its soldiers, and with the proceeds of 500 000 acres constituted a school fund, which was, however, for a time diverted from that use ancl loaned to individuals and corporations. By failures resulting from these loans $161,000 was thrown upon the general fund, ]n accordance with an act passed iu 1819 for that 1mrpose. The school fund was in this year increased by tho quit-rents transferred to it from the general fund, and in 1821 the new constitution transferred all the lands, amounting to 991,659 acres, from the general to the school fund. In 1827 a further transfer of $1331616 in stock was made, and in. the following year the premium on a sale of state stock, amouutiug to $46,551 75, was added to the capital of the school fund, notwithstanding which appropriations a deficit of $81,853 in the a.mount required to make diviclencls was, up to 1830, supplied from the general fund.

The history of the school fund for the :first forty years of its existence was, ill brief, this : Its capital, after deducting losses from bad investments, was $21031,059, and .it had distributed to school districts in clividemls extending over thirty years the sum of $2, 780,560.

In the years 1786, 1792, and 1808 the state had contracted debts chargeable upon the general fund. Iu 1814, notwithstanding the operation of the school fund, the capital of the general fund amounted to $4,396

1943 and the

state clebt to the .sum of $1,503,681, leaving $2,893,259 as surplus, out of which the state paid tho direct tax levied by the general government for war purposes. On the restoration of peace the state imposed a tax to replenish tho general f'nnd, which tax ceased in 1826.

In entering upon its.system of internal improvements in 1817 a clear and well-defined iioliey wa~ a,doiitcd. -vvhen the construction of the Erie canal was begun it was determined to constitute a fund whieh should, without possibility of failure, meet the interest on the loans· which were reqnired to construct it. To this end certain rev en urn,; were taken from the general fund and constituted a canal fund, under the charge of commissioners, whose duty it was to limit the loans to an amount the annual interest on.which should fall witliin tile snm of these reYenuoH. Under their management the loan was disposed of at a premium of $663,623, realized on a total of $7,737,777

1 borrowed up to the date of the completion of the work, in 1826.

The constitution of 1821 set apart the tolls on the canal, together with the salt aucl the anctiol1 duties, as ~L sinking fund for the extingnishment of the canal debt. So well had the policy been observed of vl.aciug beyond couting·eucy the payment of the canal debt that all of it which fell due in 1836 was paid, and a fuud of $3,031,132 accumulated to meet the remainder, amounting to $3,762,256, clue in 18451 for which the commissioners offered premiums of ll: 18, and even 24 per cent. without inducing the holders to surrender it. In 1836, the money to disclmrgo Urn dobt having been l'ealized from the sinking fond, an amendment to the constitution restored to tbe general fund the snlt and the auction duties which ha(l been diverted from it, and also appropriated to it $200,000 amrnallyfrom tho cannl reV"enues. The total yielcl of these duties to the canal fund from 1817 to 1836 had. been $5,6,17 ,497, being $2

1055,458

from salt and $3,5!}2,039 from auction duties, which, with an amount of $73,500 derivecl from steamboat tax, hnd been ex1iende(l upon the canal, and haclreduced by that amount the debt which would otlterwise have been contracted in its construction. These duties, aided by the canal revenues, finally discharged the debt ..

In 1825 the construction of lateral canals was undertaken without specifically providing by taxation for the interest, reliance being placed solely upon the prospective revenues of the works to discharge the indebtedness incurred in their construction. In that year a bill was passed to borrow money for the construction of the Oaynga .and Seneca canal, which loan was to constitute part of the canal debt, to be paid out of the canal fund.

Laws for.t~e construction of other lateral canals followed, which works, proving to be profitless undertakings, threw an add1t10nal debt of nearly $10,000,000 on the canal fund without any provision being made to incroase tho means to meet it. ·

The enlaa:gement of the Erie canal about the same time was advocated, and $721,441 from the snrplus rovenneA of the canal fund was expended for that purpose prior to 1838, in which year a bill was passed authorizing n, loa,u .of $4,000,000 to carry out the work more speedily. The existing debt of the canal fund at that date W}bl:I given at $10,801,839, a11d its increase to $21,000,000 was contem1Jlatecl in adopting a policy of extensive construction, based upon prospective revenues to be derived from completed works. Under this polic~' the actual funded debt iu 18<11

HISrl'ORY OF srrATE DEB'rS-NEW YORK. 539

:a.mounted to $1 ~,561,567, while the amount required to finish works in progress was $24,590,026, and at the same time works had been surveyed to complete which would require $26,648,111, making the debt actual and prospectiYe a~ this date $68,799, 704. ' '

In accordance with the policy of lo~ning the state credit to companies, entered upon in 18271 stock to the amount of $5,228,700 was loaned to ten companies, chiefly railroads. Four of these subsequently failed, and the general fund became burdened with their indebtedness, amounting to $3,665, 700, of which sum $3,000,000 became cha.rgeable on the failure of the Erie raihoad in 1842. This fund, already exhausted by the payment of $1,500,000 of old debt prior tO 1825 and tlte transfer of its revenues to the school and canal funds, had also contracted debts which amounted, in 1842, to the sum of $1,948,000; so that when, in 1840, it was called upon to restore an amount borrowed from the ba.nk safety fund it was founcl necessary to have recourse to a loan, ~ml $348,000 in 5 per cent. stock was issued. The current revenues hacl been barely adequate to meet the annual expenses of the government .aml the interest on the stock issued to the defaulting· railroads.

In this condition of affairs the solvency of the state was put in great jeopard;\·, and but one course was, by general consent, to be adopted. Tllis was to sto1) all expenditures upon the public works, to issue stock in order to pay outstanding indebtedness to contractors n,nd preserve tlle credit of the sfate, and to impose a tax to make good the .deficiency for the support of the go\'ernment ancl for interest on the state debt. This course was adopted by an act passecl in 1842. .A.t the da.te of its passage the canal debt amounted to $18,056,000, and, to pay arrearages to

.contractors, an additional sum of $3,17.15,000 was borrowed in a 7 per·cent. bond. The act established a sinking fund, which was to extinguish the whole debt in about twenty-two ;years, reqniring at that time to meet, in principal

. and interest, a sum of more than $40,000,000, or neal'ly $~,000,000 per annum over and above the state expenses. The stocks which hatl been issued by the state up to this year (1845) may be summecl up as follows:

====== .. ··-· .. -------·-.. ··-c=o=-=-.occ.c.c===~~~'='=~~====~=========== Issued. Redeemed. Outstanding.

Erlo nn<l Chnmplniu c.11nnl ................................................................................................. . $7, 737, 771 $7, 737, 771 ............. . •Other cn.n11l isso.es (profitless) ............................................................................................. . 14, 472, 267 2, 949, GS! $11, fi22, 720

~::~::;:n~~~-s·t-~~~~~:e.~i:~ ::::::: :·.: :::::: :: :: '.::: ::: : '.: ::: ::: :: : : ::::::::::: :: :: : ::: : :::: ::::::: ::: : : ::: :: :::::::::::::::I 5, 422, 136 346, 006 5, 070, 130

900, 500 .... -.. ....... 909, 500 Jlankrupt companies............. . .• . .. . . • . . • . . . . • . . .. . • •. . . . .. . . . . .. . . . . .. . . . ... . . . .. . . .. . . . . ... • . . . . . . . • . .. . • .. • • .. • .. .. a, 005, 700 .... .. . • • •. .. . a, 605, 700

.So\ventcompnnies ... . .... ... . .. . .... .. . . . ..• . ........ ......... .... ...... ..•••. ....... ............... .•.•.. .............. .. 1, 51l3, 000 500, 000 1, 063, 000

---~.rota].~:~·-:_·:_···_:::~~:.·~:.· ......................... ~:_·~~:··~::~·-··: .. ~:::~::~·.::.::.:·-·~ ... ::.=~:-~:~ ~!3, 7t~-364 I 11, 533, 308 22, 237, 056

Such was the condition of the state tlebt in 1845. A constitutional convention wa1:1 helcl at Albany, and a new .constitution adopted October 9, 1846.

The :first section of the seventh article of the constitution which was then formed established the canal-debt 1:1inking fund to be con1:1tituted of the sum of $1,300,000, taken anmrnlly from the revenues of the canal until 1855, . and $1, 700,000 annually after that. period to pay the interest and redeem the principal of that part of the state debt . called the canal cfobt, until the same should be wholly pai<l.

The second provision of this article aut.Jwrized what was called the general-fund-debt sinking fund, consisting . of tlle sum of $350,000, to be annually appropriated an cl Ret apart from the revenues of the canals, to pay the interest, . n.ncl redeem the principal oft.hat pn,rt of the state debt callecl the general fund debt, including the debt for loans of the state credit to railroad compiinies which had failed to pay the interest thereon, and also the contingent debt on Rtate stocks loaued to incorporated companies which hacl hitherto paid the interest thereon, whenevei' and so far as any part thereof might become a charge on the treasury or the general fund, until the same should be wllolly paid. In case, howeYer, the aniount tltken ilrst to be aclded to the canal debt sinking fund shonltl absorb too large a part ·Of the canal revenues to enable this payment to be made, then the sum so deferred should be paid, with quarterly interest, to the geneml-fnml-debt sinking fund as soon as it could be clone consistentl;y with the just rights of the creditors holding the canal debt. It was further provided that when the canal indebtedness shoultl have beeu liqnidatecl the amount to be paid annually into this sinking funcl should be increased to $1,500,000. It was further provided that the sum of $200,000 should be paid out of the surplus canal revenues into the general fund for the purpose of defraying the current expenses of the state government, and that whatever amount might remain onr should be applied by the legislature to the completion of the Erie canal enlargement and the completion of the Black Hiver and Genesee Valley canals. After 1854 the sum of $350,000 was authorized to be thus paid into the general fund. These provisions amounted, practically, at the time to an entire snspension of the public works for an indefinite period. An attempt wal3 made (in 1851) to correct this difficulty, and, after a renmrkahle contest in the senate, a bill was passed appropriating $9,000,000 fbr the completion of the canals, under })l'OYisions which were subsequently declared by the court of appeals to be unconstitutional. The result was a c011tr0Yersy, to reconcile which the constitution was so amended in 1854 as to authorize the creation of a new debt for the cm1argement and ·completion of the carntls, ancl of a. sinking fund, to be constituted of a snm to be set apart annually" sufficient to pa.y the interest as it falls due arnl extinguish the principal iu eighteE\n years". It was further providell that ·"the rates of toll on persons aml 1n·opertr trausporterl on the canals shoulcl not he reduced bPlow those of the

540 VALUATION 'rAXATION, AND PUBLIC INDEB11EDNESS. ' '

year 1852, except by the canal-board, with the concurrence of the legislature". In case the sinking funds, or either of them, proved insufficient to enable the state to meet its obligations to its creditors, the legislature was required to. levy equitable ta:xes, that it might so "increase the revenues of these funds as to make them, respectively, sufficient to preserve the public faith". The constitution also guards .explicitly against the creation of further indebtedness, except in the matter of loans of less than $1,000,000 to meet casual deficits or failures in revenues, or for expenses not provided for, or debts wllich may be· contracted to re1Jel invasion, suppress insurrection, or defend the state in wnr. All propositions to create such indebtedness mnst be authorized by a law having a specific object, which law must impose and provide for the collection of a direct annual tax sufficient to pay the faterest arnl liquidate the principal within the period of eighteen years. The bill must nfterwarcl be submitted to the people at a geneml eleetjon, or rm election rtt which proposed amendments to the constitution shall l1:77e been submitted and recejve a majority of Yotes in its favor.

· Under this J)rovision of thf\ constitution the law creating the bounty state debt (chapter 325, laws of' 1865) was enacted. It authorized the creation of a tlebt not exceeding $30,000,000, and levied a direct annual tax to pay the interest on tlle debt as it should fall <lne, and sufficient to pay the whole principal of the debt within the space of twel v~ years. .

The debt of New York probably reached its maximum in 1865-'66, at which time the canal debt waR about $10,500,000, the geneml-funcl debt $6,000,000, and the bounty debt $27,644,000, maldng a total of $53,144,000. Since then it has gradually decreased. In 1870, according to the Census Report, it was $32,409,144. In 1880 the bonded debt of the state was $8,988,360. There is not in the history of state debts a more striking example of tho beneficent effect of the aid of constitutional legislation in the liquidation of state debt. The general-fund state debt and the bounty delJt are to-day all paid, an(l a large balance in the canal sinking fund leaves the amount of that debt unprovided for, September 30, 1879, only $7,536,732.

NEW JERSEY.

The constitution of 1844 of the stiite of New Jersey provides that the credit of the state shall not be, directly or indirectlyj loaned in any case; that

T:lle legislature shall not in any mauner create any debt or debts, liability or liabilities, of the state wbich shall, singly or in the aggregate, with any previous debts or liabilities, 11t any time exceed $100,000, except for purposes of war or. to repel invasion, or to· suppress insurrection, unless the samo shall bo authorized by a law for some single object or work to be distinctly specificcl therein, whicli law shall provitle the ways and means, exclusive of loans, to pay the interest of each debt or liability as it falls due, and also to pay and dischal'ge the principal of such debt or liability within thirty-five years from the time of the contracting thereof.

In view of this it is not surprising to find New Jersey without debt until 1860. It was not until May 10, 18Glt that the legislature directe(l tlle governor and treasurer to borrow, for war purposes, on an issue of 6 per cent. bonds, exempt from taxation, none of which were to be made payable at a later date than January J, 1885, a snm not exceeding $2,000,000. Under this act $1,798,900 in bonds were issued. By a supplementary act approved March 24, 1863, the same officials were authorizecl to borrow for like purposes, and on similar bonds, none of which were to be made payable later than January 1, 1896, an amount not exceeding $1,000,000. The issues nncler this aet amounted to $1,002,000. By a further act approved April 14, 1864, the same officials were authorized to borrow, for like imrposes, such sums of money as, with the money borrowed under preceding acts, should not exceed $4,00o,ooo, and to issue bonds therefor at 6 per cent., none of which should have a longer time to run than to January 1, 1902. The bonds of this issue, however, were not exempted from taxation, and none of them were sold prior to the passage of an act approved April 4, 1866. Tliis latter act recited in its preamble that $4,000,000 had beeu heretofore appropriated for paying the expenses incident to the suppression of the rebellion, bnt that not more than $3,000,000 had been borrowed, leaving authority to borrow $1,000,000 more, and since the state was indebted more th~n $600,000 for expenses incident to said suppression, this act prov:iclecl that the governor and treasurer might bonow the snm of $1,000,000.

The act of 1861 providecl that not more than $100,000 of the principal of the amount borrowed should be made i1aJ·able in any one year. The same provision was found in the supplementary act of 1863, except that in the latter it is enacted that no part of the i1rincipal shall 11e paid before 1886, and the further supplement of 1864 declares that not more tl!au $200,000 of the principal authorized by its provisions shall be made payable in any one year, and.no part thereof before 1897. The payment of interest and prineipftl as they become due is made the duty of the commissioners of the sinking fund, from the moneys of the funds furnished them by the treasurer, whose duty it is to pay over to them all moneys raised by law and receiv'ecl by him for the purpose of liquidating the principal and :interest of' this bonded debt.

HISTORY OF STATE DEBTS-·PENNSYLVANIA. 541

The following statement of the bonded debt of the state (January 1, 1881) has been furnished by Hon. E. J . .A.mlerson, comptroller:

Bonded debt J alilnary 1, 1881. ...... , . . . . . . . . . . . . . . . . . . . . . . . . . . • • . • . . • • • • . . . . . • . . . • . • . • . • . • . . . . . . . . . . . . . $1, 89G, 300 -------Issueu for war imrposes and bearing G per cent. interest:

Issued in 18Gl . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . • . . . • . . . . . . . . . . . . • . . . • . • . . • . .. . . . . 300, 000 " 1863 ....................................... ! .. : ............................................. 1,002,900 " 18G4 . . . . • • .. .. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . • • . .. . . . . . . . • . . . • . . . . . . . . . . . .. . . . . . .. • . .. 593, 400

Total. ....................................................... "..... . . . . . . . .. . . . .. . . . . . . . • . . . . . . . 1, 89(), SOO

Maturingin 1882 .................................................................................... .. IC 188:3. ............................................ •••• •••• ................................. . '' 1884 .. . - .................. - ... - -- ... -- .......... - ............. - ................. -.. - ......... - ................... - ............................... .. ' ' 1886 ..... - - .......... - ... - ............................ - .. - ........ -- .... - .................... ~ .................. - -...... - .. - ....... - - -- .. - - - ...... .. '~ 1887 ..................................................................................................................................... · ........................ .. ' ' 1888 ........ ............................................................................................................................................................ .. ,, 1889 ..................................................................................... . '' 1890 .. - ...... - ............................... - .............. - ............... - .......................................................................... - .......... .. " 1891. ....................................... ····•· ....................................... . '' 1892 ................ .............................................................. ---- ...................... --~' ................................................ .. " 1893 ..................................................................................... . '' 1804 .. - .... - .. - - .. - - - ........... - .......................................... - ...................... - - ............... - .. - ...... - ~ - .......................... . ,, 1895 .............. ................................. - .................................................... - ....................................................... -- .. ,,. ' ' 1896 .... - .. - ...... - .. - ............................... - .......... ,, ...... - - .. -- ............................ - ........ --- ...................................... .. ' ' 1897 .. ........................ - - .. - ... - .... - ........ - ...... - ............... - .......... - ..... - .................................. - ................. - .... - - - .. ' ' 1808 .................... ................................. - ...... - .. - .. - - ................................ - ......................................... -- ......... .. ' ' 1899 .... ............ - .. - .. - .............................................. - ' .... - ...... - : -................... - .. - ........ - ...... - .. - --- - ...... - - .. - .. .I.' 1002 .. ........... - .................................. - ............ - ...................................... - ................................................... - .. - - ..

100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 62,GOO 9(),300

100,000 77,000 67,000

190,400 :wo,ooo 12::1, 000 71,000

Total...... .. .. . . .. .. . . . . .. . . . . . .. . . . .. . . . . . .. . .. . . . . . . . . .. . . .. . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 1, 89G, 300

PENNSYLVANIA.

The necessity of internal improvements, by which the inland resources of Pennsylvania should be made available {)U her seaboard, became evident at an early date, and in the year 1789 the state commenced a series of works of various descriptions, which encountered difficulties and embarrassments that retarded some 11nd produceGl the

' abandonment of others. The acl vantages of connecting the great lakes with the sen,boarcl was perceived long before the extensive line connecting the Ohio river with Philadelphia was undertaken and finally entered Ul)Oll. Between the years 1791 and 1828 there bad been expended in Pennsylvania, for roads, bridges, and inland navigation, the sum of $22,000,000, and works were then in progress, to be completed by 1831, at an additional estimated expense of $12,000,000.

The expenditures for these objects at this time were upon the most liberal scale, and in the year 182!J a bill was passed authorizing an appropriation of over $3,500,000. ·

.A.t this lleriod the great work of the state was the canal and railroad connecting Pittsburgh with Pbilaclelphia, the cost of which, prior to its completion in 1834, was $14,583,816. 'rhe lateral canals were also completed in the following year at a cost of $61472,000. At this time the debt of the state amounted to $24,589,7431 while a scheme .of direct taxation to pay the interest 011 the state loans which ha~l been introduced hacl the effect of making the lJeople sensible of the inl.lonvenience of a public debt .

.A.t this juncture the charter of the United St&1tes Bank expired, and, Congress refusing t-0 renew it, great efforts were made by that institution to procure a state charter. An offer to the state of nearly $10,000,000, most of which was to be expended on its works of internal improvement, aided the spirit of Rpeculation then prevalent, and :procured the passage of a bill in 1836 to charter the bank and to continue and extend the improvements of the .state and to repeal the tax on real and personal pro11erty.

By the acceptance of the charter the Bank stipulated to pay the state of Pennsylvania a bonus of $4,500,000; to take the stock of the state to the amount of $6,000,000; and to loan the state or to subscribe to sundry roads in all a sum of $1,675,000-making a total amount of $12,175,000.

Under the impulse of this act a new series of improvements were .begun, which involved the state in an ,expenditure of many millions of dollars on works which were afterward abandouecl or passed into the hands of private companies. This e,xpencliture constitutecl a portion of the public debt which afterward went il1 default. Soon after the United States Bank undertook these heavy payments the money market began to lower, and increasing stringency was followed by the universal suspension of 1837. The stock of the state held by the Bank then became its support in part and formed the basis of its credits abroad. When the Bank failed in 1839 the 5 per cent. stock of the state, which solcl for $1 15 in 1833, would not sell at all, so greatly hall the credit of the state declined under the policy of the Ba!Clk in using the state stocks which it held to relieve its embarrassments.

542 VALUATION, 'rAXA'rION, AND PUBLIC INDEB'l'EDNESS. *

As the state had repealed her taxes and dependecl altogether upon borrowing to pay interest, the irmbility to· borrow involved failure, and this became imminent in 1840, at which time the state endeavored to ~vrnid it by recourse to a variety of expedients other than taxation, but was finally compelled to adopt measures to create revenue for the payment of interest and extinguishment of the public debt. This it did by the passage of au act, in 18401

which imposed taxes estimated to yield about $600,000. This sum, together with other resources of the stat<\ waH supposed sufficient to liquidate the interest a0count withot\t farther resort to loans. The act, however, failed to produce the amount anticipated, 'and a new plan was proposed an!l adopted by act of May '1, 1841, in accorda11ce with which certain banks were anthol'ized to subscribe to a loan to the state of a certain am<;nmt in propo1'tion to their respective ca11itals, the amount of the loan to be placed in the treasury, for the use thereof, in notes of the said baulrn .

. By the terms of the law the loan was redeemable at any time within five years, and the notes were to be retired and th(} Joan pai<l on or before the 4th of May, 1846. The banks were to receive these notes at par in payment of debts dno them, and it was thought that by making the notes peremptorily redeemable at a definite time, and dependent upon the faith of the state as well as of the bank, a safe and reliable currency would be constituted and the stato obfatin it loan atl instead of 5 or 6 per cent. The amount of these notes so issued was originally $2,220,265. .As these speedil,y became clepreciatecl, i1nd as they were the only medium in which the state received its l'evenne, the e111ba1•fitssment of the treasury was complete. vVithont credit and with a depreciated currency baukrnptcy was inevitable. Tho public works had been stopped, and it became necessary to provide for the payment of claims for amounts ex11ornled in their construction. To meet these obligations a law was passed to sell the bank stock owned by the sritte, which had cost the treasury $4,200,000, and in 1843 the sum of $1,395,400 was realized therefrom. The ctmcellation of' liho relief notes, above clescriliell, was directed by acts passed in 1843, under which $G82,087 were to ho destroyed, anc1 a further ca.ncellatiou to the amount of $200,000 per annum was ordered by an act passed in t.lrn following yeltr.

In the meantime the revenues of the state were completely disorllered, 1111d the governor had recourse to the provision in the charter of the banks under wh.ich they were bouutl to loan to tho state a sum not, exceeding iJ per cent. of their capital. By these atHl other means the. treasury had accumulated $859,000 to meet the int01·est due in February, 1842, which sum was placed on deposit in the Bank of Pennsylvanh1, tlie legal depository of the fnnds ot' the state and the agent for the payment of its interest. The credit of this institution bn,ving become impaired, the governor and.state treasurer endeavored to induce it to pay the interest in adVH,JlCC. 'rbis was, liowe,'oe, not done; am1, becoming convinced that the fonds of the state were being paid out on other demands, the governor proonretl an injunction and recoyered $500,000 of the amount depositetl with the bank. Tho delay and loss thus occasioned deferred the interest due in February, while that due in August could not be.paid at nll.

A law was passed, however, authorizing the issue of 6 per cent. scrip to the interest-creditors, insteall of mouey, and this was continue(l until resumptio11, which took place under the restored finances of the state in 1840. In tl1at year a carefnlly defined scheme of taxation was adopted, and the ex1mnditures of the state having been red need t~ho application of a large amount to the reduction of the debt became practicable. The following table has l>ecn compiled from the most reliable original sources. As a general thing, the figures have been taken from tho treasnrerJs reports, but when those documents for the respective years could not be obtained or wero not in tlrn Congressional Library, the governor's reports, and, in two or three instances, the American Enc;y~lopedia, have been referred to. It presents the total of the funded debt of Pennsylvanht for each ;year, beg·inning iu 1835, clown to 1880:

Pennsylvctnfa state tlebt. 183;;. -- ... ·-- --· ·----. - - - . -· .. -· --· - - - ·- ... -- ... -- - .. $24, 589, 743 1836. - - - - - . - - - - ... - ... - . - - - ... - • - .. - . - ... ~·-. - - ... - - . . 24, 265, :303 1837. ·- ·-. ··-·. ·- -- ... - -···. -- . - -- - - . -.•.. - --·· ·-. - .. 24, 329, 004 1838 ...••. -- ·-·- ·-- -- . ---· ---- --- . - ---· --- ... -··· .•. . 25, 327, 003 1839 .•. -- . -- . --- .....•••... - ••....•. ·- -- ..... - . . . . .. . 25, 2~W, 003 1840. ·--· .... --- ..•..... - . -!---· .. ·- .. --· .. -- --- . --· - 20, 914, 003 1841.. - -- • - - -·· - . - - -· --- ·-· .. -· .. ·--· ·- .. - . - -··. - - . . 33, 301, 013 1842* ---·-· .. -· -· -· - ·-· ·----- ··- --· ------ -- ..•... ·-·. 37, 319, 39fi 1843 .•.•••.•. -·· ··- .•. ---·--. -·· ..... ---- - ··- -·-· ·-·. 40,491, 708 1844. ·-----. - - --· .• ·--· ·---· - ·-· _· __ --- --·. - .. - ·-. - -· - 39, 290, 461 1845. - - - ...•• - - .•• - .••• - ••• - • - - .. - - - - .. - - - - . - - - - - .• - • 40, 803, 866 1846 .......... ---- ·----· -·-- ··---· ---- ···--· ·-··· ·--- 40,896,393 1847 ...... ·-- --- ·-- ··-. ----·- --- .. --· - ·- - ------ -·. --· 40, 789, 577 1848 .... ---- ·---·· -··· ·----· ---··· ·-·--· -··. ···-·· -·· 40, 628, 949 1849 ....•........ ·-·-·· ·-·-·· ·-···· -·····--·· .... ---- 40,474, 736 1850. - - . - . - . - . - - .. - . - ... - .••. - - - - . - - .. - ...... - : ... - . . 40, 775, 485 1851. ............... -· - -- .. --- - - -- - ..... ·- .. - ---· ---· 40, 116, 258 1852 .. - - . - .• - .. - - - - .• - - - - . - ... - . - - - . - .. - - - - .. - - - .. - • - 41, 47 4, 595 1853 ...• ·--- -- --- -- . --- -·. ---· -- -- -- - - .. -- -- ..... ---- 40, 272, 235 1854 ..... ·-- - .. ·-- - ' ·- ..... -- --- . - - ..... - • -· ··-· - -·. 41, 698, 595 185G ..•••. -- - •••.•• - . - -- --· --- ... - --· .•........ - -·. - 40, 196, 194 1856 ____ •. ·-. -- - --·· ··-. -··· ..•. -· ---- - --- - ·- - . -· ···- 40, 117, 835 1857 .•.••• ··--··-·-···· ··--·· ---··· -·---·--·- -··· ---· 30, 734, 592

18G8 .••....•... ·----· .••••• ·----· ...•...... ·--· ....•• 1859 .•• - ... - - - - - - - - - - . - •. - .. - ... - - - . - - . - - .. - . - ...... -

1860 .. -··· ·-·--· -----· ··---· ---· - ·-·· ........ -··· ·-·· 1861. ... - . - ... - • - . - -•••.... - .... - .. - - .. - .... - - ' . - .• - . 1862 ...... - - - - .•• - - - •. - .. - ...•• - .•..... - - .... - . - - .•• 1863. - - --· ·-. ·-·. - .. - ..• - - ... - - . - .••••.• - ••. - - •... - •• 1864 ...••• ' ••. - . - - - - .. - - ... - .••. - - . - - . - - - • - .. - •... - •. 1865. - - - - - ..• - •... - - ... - •• - . - - - - • - •. - ... - - - - ....• - ••. 1866. - .•... - - ... - .. - - - - •• -••. - - - - • - - . - - - - - . " .••. - - - - .

1867 ·----· --·--· ··---· ---- ·-·-·· ··-·" ···-··. ·-·· .••. 1868 .. - ..•.. - - - .. - - ••..•. - .... - . - • - ...... - .. - •. - .. - •. 1869. - - - -.. - - . - ... ' - - - - . - - •..••••••...•. - •. - . - - ...••. 1870 . - •••.... - - .. - ..•.••• - •.... - - .•••.• - - - ..••... - .•. 1871. - - - - . - - - - ••. - - - - .... - • - - .•• - - .. - . -•..... - - ... - •. 1872 .•..•• - ... - - • - - - - . - .• - ••.. - - - •.. - - • - • - - .•••.•. - - .

1873 ...• ·-·····- ·-·-·· ...•.••••. ··-··· ·-·· ·--· ·-----1874 .••••. - - - .. - - . - ....•.• - .•• - - •••.•• - ..••• - •.. - .••. 1875 . - ....•. - . - . - .. - - .. - • - • - ..••• - •.• - - .... - . - - . - ..•• 1876 ..•. ···-·- ·-·· ·-·· ---- _. ___ --·· .•.••. -···. --·· ·-·· 1877 ...... ·----· ··-··· ·----· ·-·· ---· -·-- - ·-·· ·----· •. 1878 ..... - ••. - . - - - .. - - ... - ... - . - - • - ......... - • - ... - - •. 1879 ____ -·-· ··-·. -- . - .... - - - ·- - . -- - -- .• - - - ...••. - ··-. 1880 .•...• ·••••· ---- ··•••· ··•••· •••••• ··-·. ···-·· ••••

$!in, au4, 285 38, Cl38,9lll 37, 960, 8•17 40, 580, (JG(j

40, 4i18, 21:l 39, 49Ci, 596 39, 37<1, 431 35, 52'2, 052 35,622,052 34, 766, ·131 33, 28(1, 94() 32, 81<!, 540 31, 111,6()2 28,080,071 27,303,494 25,798,821 24,568,l\:{5 23, 233,137 22, 078,950 22,043,814 21,586,200 22,190,6()9 21, 561, 990

ii.

HisrroHY OF STATE DEBTS-PENNSYLV4NIA. ·543

The total of the debt, as here givell, includes, of course, the relief notes, the interest certificates, an cl the domestic· creditors' certificates. From this table it will be seen that in December, 1835, two months before the incorporatiq.11 of the Bank of the United States, the state debt of Pennsylvania was $24,589,743. At the close of 1849 it stood, exclusive of the amount received as a deposit· from the general government, $110,474,736, making an increase in the state debt duriug fourteen years of $15,884,993, notwithstanding the receipt in the meantime of $2,867,514 of surplus revenue from tbe Unitetl States and of $3,446,780 as premiums for bttnk charters. The debt seems to have reached its maximum in 1854. From tlrnt period to 1859 it was reduced $3,059,634. The state at this time held assets valuec1 at $12,49,:1,832, leaving the net indebtedness at this time (1859) $26,144,129. The debt was increasecl again by the military loan of May, 1861.

According to a report issued in 1866 by the Hon .. J. F. Hartranft, then auditor-general, the indebtelluess of the· state was $35,622,052 lG, described as follows:

Fnnclcd clebt., 6 per cent. loa1rn ..•.. .... ...•.. .••• ..•.... ...••• ...... .•.•.. ...•.. .•.• .... .... ...... $400, 630 00 Funcled deM, 5 per cent. loans ...... ·"- ........... ___ ............................ --· .....•.••.• - ... 32, 073, 192 59 Fumled debt., 4t per cent. loans ............................... · ........................ - .•. - -- -• . • • . 213, 200 00

------32, 687, 0-:22 59

U11fmulcd debt, relief notes in circulation ................ -... .' .•••......•.•..••.•. -..... $96, 625 00 Unfnrnlecl debb1 interest certificates outst.a11cli11g .......... - ..•• •... .... ..•••. ..•... ... ... 13, 086 52 Unfumlcrl (fobt, interest certi:ficatns nnclnimecl ....... -.... - ............................. · 4, 448 38 Unfunded debt, clomcstic credit.ors' certificates ..................... - - -.................. · 119 67

114,279 57 Military loan, per act. of Mny 15, 1801.. __ .. _ .... - ................... -.................. · - .. •· · · • · · • · 2, 820, 750 O{}

Aggregate clebt, December 1, 1866 ............ ---·-· .......... ---········· ··-· ••·· ··•· .... ·----· ····~~

The following statement shows the details of the funded debt:

SIX PER CENT. LOANS.

Stock lum1, per act of April 2, 1882; due J nne l, 1841. ........ - -•.....•..•••••. · - · • · · • • • • • · · · · -· · · · · · · Inclinec1-p1mrn Jon.ii, per net· of April 10, 1849; clue April 10, 1879. -..... - ........ · ... ·· .... ·· · •·· ·· · ··· ·

FIVE PEH CENT. LOANS.

$630 00· 400, 000 0()·

Stock luau, per act of-March 24, 1828; clue Decemlwr l, 18G:l ........ - - - .......... - .... - --- ·· • •• · · ·· · · · - • • · · · • · · · · · · · ••· $1, 339, 671 99 Decl'lmbor18 1828· dne,Jamrnr:vl, 185'1 ......................................................... 3,730 00· April 22 1829· clu~ December 1; 185'1 .......................... ···•·• ··•••• ··•· ···· ··•••· ··-- ···· 1,580, 078 86 Deccmb~r 7, 1S2H; bank cl111rt.11r lm\.u ... -................. -••....••.• -·. · ·· · · .. · · · · · · -· - -· · • • • ••• 50, 000 00· Mnreh 13, 18!10; due March 4, 1858 ................ , _ -.....•••..........••• · .. -- - · · .. · · · · · • · - · · · · 3, 34~, ~~ 0~ March21, 1831; duo,Tnlyl, 18tiG ................................................................ 1,97 • 5 ~~ Mnrch 28, 1831; dnc March 28, 1801 ....................................................... ··---· 300 ' March 30, 1832; due Jnly 1, 18!i0 ......... - -............. -- ••.••..••••... -. · • · · • •· · .. · · · · • • • • · · · · I, 806, 160 99· Aprilfi 1832; dncJnlyl,1860 .................................................................. 249,97876 Fobru;ry 10

1 183!3; clue ,Tuly 1, 1858 ........................... -........ -- • · · . • · · · · -· • .. · · • · · · · · 2, 100, 044 96:

March 27 183:3 · clue .Jn!y 1, 18~R ....................... - -......................... · · .. · •· · - - · · · · 379, 975 12 April5, 1'133,1; clue July I, 1862 ............... ~ .........••••..•.•••...••..•...................... 1,661,7~7 53 April 13 1835; duo .July 1, 186ti ...................... -··· .•......•... ···· ···· -· -- •··· ··-·-· ····· 797, 964 OB J I '>6 ll:J3!) l J j 1 18~" ••• ••·• ...... ...... 9(37, 892 55. anuary ~ , ; t uo u y , . ,)., .....•• - •. -- - - - ... · - · · • · • · · · · · - .. · · .. - -· · · · , February 9, 18:39; clue .July 1, 1807 .. -............... -•.....••••. · ... ··· · ·• ·••· · ·· •·· .... ··• · ··•• 1, 03~, 979 2~: March 16 1839; due July 1, 18Gt1 .......... -......................... • - • · ·• • • • · · · · • - - -· .... • • · •• · 82, 612 22

' . . •. -........ -- - . • . . . . . . . . . . . • • • • .. 456, 020 53" March 27, 18.39; due July 1, 1868 ·•• ••· -- -•· · ·· · · ·· ·· · ·•· · ·•· · · 69 . .Jnuo 7, 1839; tlnc Angnst 1, 18G9 ---· ............ ···••• ••·• ---- ······ .... ···· ··-·-· ···· ····-- ···• 4~, 45~

2,

June 27, 1839; tlne June 27, 18lM ......................... , •••••• .... ·-· ... ··--·· •·••·· ·••••• ••• · 9:3•24b 6

,

J 1" 18"9 1 J 1 1 18('8 •..•......•... - • . . . • 1, 634, 824 79 nly . "' . ,). ; c uo n y , > •• • ... • • • • • • • • • •• - • • • •• • • • • • .. • ••• • • .. • • • • • • •• 48 Jannar~,2:~, 1840; due January 1, 1865 ..••• ···········-······················ ····•••· ·--·········

636• 43~ 30. April 31 1840; l1 ue August 1, 18()4 .............. · · • • • • • • · · · - .. · • · • • • · · • · · · · • .. · · .... · • · • · · · • • • • • • •

572' 59

29 June 11, 1840; due July 1, 1870 .... ·••· ........ •••· ···· -··· •··· ···-······· ...... ·••••· ·•·• ••••··

1·~~;·;~~ Z<» May 5, 1841; bank charter loans •. •• · ·••· ·• •••· ··· · · •· · -- ·· - •· · ·· ·· ···• ·•·· .... ···• •••· ·-· ·-- · · ' 129 02 April 29, 1844; clue March 1, 184!J · · • • • · · - · · • · • • · · · .. • .. · · · • • · · · · · · · · · .. · · .. · • · • • • • · · · -· · · • • • · · • · ·

31 498, 716 73

April 16, 1845; due An gust 1, 1855 -- - - .. · · • • -· • ·• · •· • · · · · · · · · · .,. · · ·· • · · .. · • • · · ·••• •• • ••· • ~ - - • · .. · 19, zoo 00 January 22, 1847; bank clrnrter loans .... - -.................... ·-·· ...... ••·• ·· •· ........ •• •••· -

Coupon loan, per aat of-April 2

1 1852; dne July 11 1882 ................ -··· ···· .... ••·· ······ ........................... .

May 4, 1852; clue August 11, 187'7. - - ... · - - - · · · · · · .. · · • ·· · · - · ·· · ·• ·•· ·· -· ·· ··-· ·• •••· •· ·· ·•·• •• ·· · April 19, 1853; due August ll, 1878 .•.•.••••••••• • • • • • • · · · • · · · · • • · · · · · · -· · - · · • • · • · · · - • · • · • · · • · · · ·

FOUR AND A HALF ;PEH CENT. LOANS.

538,000 00• 4, 095, 000 00'

360, 000 00'

Stock loan, per act of March l, 18a3; clue April 10, 1863 · • ·• · •·•••· · ••••• ...... •· •· ·- •· •· ·• ·· ·· ·· ·· ·· •• $i~~:~~~ :, Coupon loan, per act of April 2, 1852; clue July 1, 1882 .......... •• .... ·· ·· ·· .. ·· •· ·• •· ··· .... ·· ·• ·• ··

544 VALUArrroN, 'l'AXArrION, AND PUBLIC INDEBTEDNESS.

At this time the only memento of the dhlastrous effects succeeding the great :financial revulsion of 1837 remaining in Pennsylvania was the unfunded debt of $114,279 57. The relief notes, which, it will be remembered, were issued under authority of the act passed .M:ay 4, 1841, had virtually disappeared from the state :finances, there being at the date of this report (1866) less than $41,000 unredeemed. These notes bear no interest, and were made due May 41

1864. A few of the "interest certificates" had not been claimed, and on this account in 1866 some $17,535 were due. These were the certificates originally issued to the llolders of the public loans for interest due in 1842, 1843,. and 1844. Under acts passed Apl'il 29, 1844, and April 14, 1845, the certificates were afterward funded. There were no less than $4,502,824 of tl1ese certificates issued between August 1, 1842, and August 1, 1844. Of this amount there was funded $4,353,525, paid into the treasury $G,968, redeemed at the treasury $129,243, leaving but a few thousand clollars outstanding ancl unclaimed. Of the scrip certificates which were issued to domestic creditors, to the amount of $1,514,332, all have been redeemed.

The military loan of $3,000,000, issned under act of May 15, 1861, is a 6 per cent. loan. A special sinking fund of half a mill on the dollar on the taxable valuation. was provided for its redemption.

It was estimated by Governor Ha,rtranft that the total cost of the canals and rail ways constructed by the commonwealth of Pennsylvania was $35,099,083. Of this amount about $18,615,663 belonged to the cost of the main line of the public improvements from Philadelphia to Pittsburgh, which line was sold to the Pennsylvania railroad under the act of May 16, 1857, for the sum of $7,500,'oOO, for which amount bonds of the said company have been deposited with the state treasurer. These pay 5 per cent., and are redeemable in anu nal installments. The original cost of the works sold to the Sunbury and Erie Railroad Company was about $10,985,569, which works were disposed of under act of April 21, 1858, for the sum of $3,500,000 5 per cent. bonds, which amount has been deposited in the sinking fund. These amounts constitute the capital of the sinking fnncl for the redemption of the fnmlecl debt of the commonweftlth, and all 1)ayments, principal and interest, on account of tlle same form a part of the annual income thereof. Besides this, the sinking funcl received certain taxes, licenses, ancl fees, which yield a considerable annual income. Tlle liquidation of the debt has continued. During the year ending December 31, 1872, the state debt of Pennsylvania was rednced $2,500,000, leaving it, less assets on hand, only: $16,521,039. During the 'next year the debt was reduced $1,504,672, and the total debt in 1873, as will be seen by the table, was $25,798,831. From this mnst be deductecl the bonds of the Pennsylvania Railroacl Company and those of the Alleghany Valley railroad in the sinking fnncl, amounting to $9,200,000, and the cash in the treasury, November 30, 1873, $1,825,151, leaving the balance of indebtedness unprovided for only $14,773,670. November 30, 1875, there remained in the sinking fund $934,028, hntl the governor of the state announced that there could be no furtller reduction of tlle public debt until August, 1877, as au state loans reimbursable prior to that date had been paid. In tbe meantime the sinking fund, in addition to the above amount, cont.inned to accumulate. On the 1st of lVIay, 1877, bids were opened by the sinking fund commissioners for a new loan of $8,000,000. These bonds netted. the state a premium of $201,922. The loan was reimbursable in :fifteen years, and payable absolutely in twenty-five years, at D per cent. interest. With this loan matured 6 per cent. bonds were to be redeemed. Of the 5 and 6 per cent. bonds falling due .August, 1877, $8,324,900 were recallecl.

The funded debt of the state, December 1, 1877, was $22,943,814. Deducting from this the assets set aside for the payment of the debt, amounting to $9,591,427, left the indebtedness unprovided for $13,352,387. Tlle debt stood December 1, 1878, $21,586,200, showing a reduction of the debt $1,357,614: for that year.

In June, 1879, the commissioners of the sinking fund issue4 bonds to the amount of $2,000,000, the proceeds to be applied to the payment of part of the matured. debt bearing 6 per cent. interest, these new bonds boa.ring interest at the rate of 5 per cent. Later in this same year (1879) the interest ceased on the 6 per cent. bonds, second series, ancl also on the inclined.plane loan, and tbe principal was redeemed. On the 30th of November, 1880, the bonded debt stood, according to the state auditor's report, as follows :

Bonded debt, November 30, 1880 ........ --· ... _______ ........•••• --· ---· •..... _ .•.. _ ·-- ........... ___ . $21, 561, 990

Issuedforrefuncling old debt .•.•........ ···--···---- .•..•. ·-·--· ...... --···----- .................... . Issued for canal. •. __ . _. _ ....... __ . _ .. _ .... __ ... _ .. __ . __ . _ .. _. _ .• _. _ •.. _. __ . _ ....•••. _ ... _ ....... _ .•.. Issued for funding :floating clebt ......... - . _ -• _ ... __ ...... __ . _ .... __ ...••• _., .. ___ . ____ ......... _ ... _ .. Issued for war purposes ......•. -· .............•.....•. _ .............................. ·-- _. -·- .. _. ·--.

== 20,427,462 511,592

24,77G 2,080

Issued fo:r: agrieultnral co]leg11 •.....• _ ..... -- _, _ ................... __ .. ~ _ .. ___ ...... ___ ...... _ $500, 000 Issued for relief Joan ...•.... ----··-·-··-·- ....•. ____ .................. ·--- .. __ ... __ .. _. __ ... UH, 160

596,160

Total. .................................................... - .. . .. . .. .•• • .•...... .. •. .. .. . ... . . . . 21, 561, 990

Be11-rlng 4 per cent, interest-----·····-- ............................................................. . Bea:r:ing 4t pe:r: cent. inte:r:est ...•.....•......... _ .•.•.. _ .. _ ... __ ..... _ .. _ ..•• ___ . _ ... __ • _ .. _ .. _ ...... . Bearing 5 per cent. interest ·---·· ...•.....•........•....•..................•.....••.. ·----· ......... . Bearing 6 per cent. interest ..• __ ..• _ ...... _. __ • _ ..... _ ... _. _ ... _ .... __ . _ .. __ ... __ . __ .... _ ... __ ... __ .. Bearing unspecified interest .......... ·- .... --- .......... 1 ••••••••••• __ ••• --- ••••• _ ••••••••••••••••• _.

== 2,000,000

87,000 O, 2G5, 687

10,108,521 100,782

Total .................................. -·- .•.•....• - --· ............ ·--· .•...• _ ..... _. .. .. .. .. . . 21, 561, 990 --------

HISTORY OF STATE DEBTS-DELAWARE-MARYLAND.

ISSGE.

Previous to 1860 ............................ . Previous to 1861 ........................... . Previous to 1867 .•••••.••••..•••.••.•••.•••. Previous to 1877 .••••••••• : ................ . Previous to 18.79 .•••.••••••••.....•......•.. Previous to 1871 ........................... . Previous to 1872 .......................... .. Unspecified ..•.•...••.......................

$642,968 2,000

10,412,400 8,000,000 2,000,000

149 500,000

4,4i!3

MATURITY.

Overdue .••••........•.....•.....•.•..•••••• 1882 .•....••••.••••..••••••••••.••••.•.••... 1892 ........ •·••·· ·•·••· .•.• ···•·· ••••••••.. After 1900 ................................. . Unspecified ................................ .

$153,736 898,000

9,995,800 10,500,000

13,854

T.otaL .•••••.••••..•...............•.. 21, fi61, ODO Total ................................ :.!1, 561, 990

DELAWARE.

545

In January, 1880, the state of Deh1wt1re had a funded debt of less than $1,000,000 and at that date had safe hwestments and cash in t.he treasury to an amount in excess of her clellt. ' ·

J>rior t-0 the civil war the state had no bornlecl debt, and the first bonds, am'tmnting to $1,100,000, were issnell J~~nnary 1, 18':5. 'fhis is known as the war loan, ancl of this amount $588,000 has been redeemed, leaving outstall(lillg $512,000, which will become due Januar~r a, 1885.

By an act of the general assembly, Jauuai·y, 1867, a further loan of $400,000 was negotiated, Of which amount them had been redeemed in January, 1880, the snm of $170,000. The remainder of this loan, $230,000, will mature ,Jnmrn.ry 1, 1890.

Ont.he lst of Jamutry, 1874, a loitn of $200,000 wnis made, of which $116,000 remained unpaid January 1, 1880. These last two loans ·nre callell the internal improvement bonds, the bonds issued having been loaned to certain

railroad companies within the state. The state holds a first mortgage on the railroads, and the companies are promptly imying the interest. The

outstanding funded clebt on January 20, 1880, was $918,000, and the :floating debt (for school purposes) $22,000, making a total of $!140,000. At t.hat (fate the assets of the state consisted o~ the following: e

Mol'tgago on Junctio11 am1 Hreakwaterrailroncl ....................................................... $400,000 00 Mortgo.go on Breakwater ancl Pmnkforc1 railroML .. . . . . . • . . . . . . . . . . . .. . •. . . . . . . . . . . . . . . . . . . . . . . . .• . •. . :JOO, 000 00 Stock in Farmers' 1md Delaware Bank...... . . • . • . . . . . . . • • • . . . . . . . . . .•• • . • . • • . . . . . . • . • • • . . . . •• • ... . • • • 73, 050 00 Investments for use of free schools.... . . . • . . . . . . . . .. .. . . . . .. . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . • • . . 448, 099 00 Cush on hund...... . . . . . . . . . • • . • • . • • • • . . . . . . . • . . . • . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .• • •• . . . iD, 1ii8 75

Total nRsets...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .. . 1, 200, :l07 75 Floating and fun cl ell debt* .................................................................. : . . . . . . . 940, 000 00

Balance in f1ivor of state...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . . . . .. .. . •. . . . . . . . . . .. . . . . . . . . . . . . . 2GO, 807 75 -==

The two most reliable aut.lrorit.ies 011 tlrn hii:;torj· of llie (lebt. of l\Iar_ylnnd are Judge Ourthi, whose contribution to the snhject has been frequently mentioued, ancl 'r. ·r. Kettell. '.l.'he former g·ives an excellent summary of the financial condition of the state of Maryfancl soon after it hacl failed to meet the intere::it on its state debt in 18•12, ancl Mr. K(~ttell docs the same from t.he origin of the debt to 1849. Mr. Curtis' account was carefully revised b,v John- Il. B. Latrobe, csq., of Baltimore. From these two accounts it would seem that the whole of this cleht, which in 1842 amounted to about $15,000,000 was, with the exce1)tion of $215,947, contracted for the purpose of internal illlprovements, partly by subscription to stock in canal and railroad companies on account of the state, and partly in ·the form of grants by loans to snch companies, they being bound to pft;y interest on bonds, and ultimately to repay the principal, the >V'orks of the cornpnnies being mortgaged for the security of the respective debts. In making these large advances aucl entering into these engagements the legislature of the state relied upon the income of tlle works to meet the interest on the debt. In this expectation they were disappointed. .At the time Mr. Curtis wrotn, the Baltimore and Ohio railroad loan had made an adequate return for the expenditure. The sum of $1,022,000 invested in the stocks of this railroad had earned an income of 7 per cent. per annum. The sum of $2,232,000 invested in the bonds and stock of the Baltimore arnl Susquehanna railroad had made at tliat time some small return, and there was a prospect that the income from this source would slightly increase. On $1,000,000 loaned to the S11squehan11a an<l Ticle-Vfater canai no return had then bee.n received, but it, was confidently

"The entire state clebt was refunded July 1; 1881, a,t, which date thore were issued $715,000 4 per cent. wur boncls 11ncl $165,750 for 101.Jool purposes, bearing 6 per cent. interest, ancl they will mat.nre. ns follows:

In 1886,..... . • • • . • . • . . . • . • • • . . • . • . .. • . . . . • • . • • • . . . . • . • . . • • • • • . . . . • • . • • . • . . • • . . . . . • . • • . . • • . • . • . •• . • • • . $300,000 , In 1801. ................. ·•·••· ·••••• .•.•.••••••••••• ····-· .............. ·•••·· .•••••.••.••••••...••• ~ 250,000 After 1900 ...•...•..•••••••••••••••••••• ::.... .•.••. ••.• •.•• .••••• .••• .••••. .•••.. •••• ••.•.• •..• ..••.. 330,750

880,7ri0 3.J w]) '.l.'

546 VALUA1.1ION, 'l1AXArrION, AND PUBLIC INDEBTEDNESS.

anticipated that this canal would shortly be able to pay the interest on the loan, amounti~g t~ $60,000 per .auumn, The largest investments had been made in the stocks and bonds of the Chesapeake and Ohio canal. This canal was unfinishecl, and required a further sum of $1,500,000 o~· $2,000,000 for its completion. No income :vas to bn expected from it until the means could be found to raise that sum and ex~end ,.t~e canal to the coal mm es near Cumberland. Some smaller advances had also b13en made to other corupames which were not expectecl to make anu return. The annual income therefore which could be reasonably anticipated from the public works wiis

._T ' ' , 4

limited to about $150 000. The residue of the interest, amounting to about $!50,000, had to be met by taxation. A direct tax sufficient f~r this object was voted by the legislature, but in consequence of the severe.embarrassments of the previous three years, ancl of the want of a proper system for the collection of direct taxes, 11 htrge proportion of the taxes for the years 1841, 184:&, and 1843 was suffered to fall in arrear, an1l in consequence the means of tho treasury were inadequate to.the payment of the interest on the debt.

The embarrassments into which the state was drawn by this system of improvements resulted in such a deficit in revenue that ;hen the foreign markets were no longer open to the sale of stock the pa.yments of the interest on the debt became impossible, and, as no system of taxation had previously existed in Maryland; the same diffioulties in levying and collecting a tax which had been experienced in Pennsylvania were encounterechinthQit state. ·. 'l'he. revenue of the state would'. meet only its current expenditure, and it became necessary to raise· the whole· interest~ nearly $600,000 per annum, by taxation.

The legislature passed a law March 23, 1841, which, with its supplement, enacted in the December following} imposed a tax for the first year of 20 cents, and for the next three years of 25 cents on the $100 of assessed value ot real and personal property. These were estimated to yield $456;000 per annum. In aid of this tax other laws wero passed, expected to realize $2001000; and taxes imposed upon incomes, silver plate, watches, and the like, which, wit;lt the interest expected from the Baltimore and Susquehanna Railroad and the Susquelutnna and Tide-Water Oitrnll companies, would, it was confidently hoped, add to the resources of the year $145,000. All these estimates provml fallacious, mostly from causes incident upon the commencement of' a system of taxation. Thus, ship-o,vners conte.sted the constitutionality of a tax on tonnage, and three years were required to confirm the right to tax. ~rlH\

banks also contended that they were exempt by their charters from taxes, and legal decisions against them required time~ When it is recollected that prior to the act of March, 1841, the largest amount of clirect taxation e''et' levied upon the people of Maryland in any one year was $60,818, and that even that imposition was con tiuue<l but for a few years, it can be no matter of surprise that apprehension of the ability of the state to mise in this wny upward of' $600,000 shoulcl have been entertained. It was also the case that, under the impression that no serious. attempt to pay the state interest would be made, the several companies that hatl received aid from the stitte helcl back in their payments. When the direct tax was levied, the property of the state was estirJ.ated at $300,000,000~ but the assessed value was ascertained to be only $190, 723, 788, subsequently reduced to $177 ,139,645 by tho actiion of the specially constituted appeal tax courts. This seemed to leave no alternative for those who inteudell to p:.iy the interest on the public debt by taxation but to increase the rate of' the levy from 20 to 30 cents on the $100. Thi1:1~ however, was not done, the legisla.ture choosing to rely upon other sources of revenue. The anxiet;y to avoid :.tl\ increase of taxation resulted in attempts to sell the state's interest in the public works, and in March, 1843, :.1 law was passed to sell the following- at the sums annexed: Chesapeake and Ohio canal, $5,ooo,ooo; Baltimore ancl Ohio railroad and Washington branch railroad, $4,200,000; Susquehanna railroad, $1,500,000; Tide- Water mrnal, $1,000,000-all to be payable in 5 per cent. state bonds. This act remained a dead-letter upon the statute-bookst no offer being made which the state treasurer felt justified in accepting.

In the midst of this unfortunate condition of affairs business began -t9 improve; :.1ncl, as the country cmerg·ed from the disastrous condition caused by the great collapse of the credit system, it was evident that the sense of the people tended more toward the payment of the debt. The actual receipts from taxation gradually approxi­mated the estimates, and the reduction in state expenditures enabled a larger amount to be :ippropriatecl to tho interest. When the state could no longer pay the interest coupons as they foll due they had been received fo11

taxes, by which means a considerable amount came. annually into the 'treasury diminishing by so much tho accumulation of arrearage interest. This steady increase of receipts and taxatio~ continued, nntil for the yea1' ending December 1, 1846, the treasurer paid on account of interest no less than $732 289 99 * being $76 868 mor6 than the accruing interest for the year. ' . ' '

It now became evident that the finances of l\faryland had reached a position which woulcl permit of resumvtion, At the s~ssion of 1847 a law was passed directing the state treasurer to restl.me pa.yment of the current interest on th~ public debt on the 1st of January, 1848. This law was carried into effect, and resumption took place.

The debt of the state of Maryland, odginating as has been briefly described, amounted in 1849 to the gross sulll of $16,140,077 42, including small loans contracted for the university, the penitentiaQ·, and the Baltimore tobacco warehouses. From this should be deducted the $3,200,0UO. not issued by the Baltimore and Ohio railroad. There was also.$~,050,000 of stock in the Baltimore and Washington branch, the iuterest on wh,ich was more than met ~!the dmdends and capitation tax on l)asseugers. The interest OJ,l the $1,000,000 issued to the Susquellannf!I

~ Paid in cash, $259,874 HO; by coupons a.ncl certificates of interest, $472,415 19; totnl, $732,289 99.

ll

HISTORY OF STA'I'E DEBrrS-MARYL.A.ND. [>47

canal was paid by that company. These items at that time made $5,348,000 fairly provided for, leaving $10, 792,038, on which interest had to be paid oy the state, of which, however, the state itself owned $1,780,000 as the sinking fund. The following are the details of the debt at that date:

Debt of the state of Maryland, January 1, 1849, iUstinguishing the several loans of this state, the act of tlte general assetnbvy authorizing them, the rate per cent. of each, the period when redee111able, and their respeotive amoimts.

CHESAPEAKE AND omo 0.A.N AL.

When created.

Rnte. 'TJmo payable. When redeemable. Wh'erc, A.mountofloan. S<lllll. Chap.

1827 1830 1833 1834 1835 1838

1838

1827 1830 1833 1838

105 5 per cont...... . . • . . . • . . . . . . . . . .. . Quarterly........... . ... .. .. • .. . .. 1843......................... Loan office ................. . 40 ...... do ................................. do ........................... 1843 ............................... do ................... ..

239 •••••• do ................................. do ........................... 1843 ............................... do .................... . 241 6percent .•.•••..•.••......••........••. do ........................... 1871. .............................. do .................... -. 395 ...... do ................................. do ........................... 1885 ............................... do .................... . 386 5 por cent·. ster . • • • • • .. .. . .. .. .. . . Semi-annually .. . .. . .. • .. . . .. . . . . . 1800......................... London ................... .. 300 •••••• do ................................. do ........................... 1800 ................ · ............... do ................. : ...

Total .... ~ ................................................................................................................... ,

BALTIMORE .A,ND omo RAILROAD.

104 5 per cent................... .. • • .. Quarterly...................... .. . 1843......................... Lonn office ................ .. 46 •••••• do .•...•.... • ....................... do ........................... 1843 ........................... , .•. do ................... ..

105 .••••. do ................................. do ........................... 1843 ............................... do .................... . 386 5 per cent. ster . • • . . . • • • • .. .. • . . • . . Yet in hands of company ................................................................... • ..

Total ....................................................................................................................... .

BALTIMORE .A.ND W.A.SHINGTON BR.A.NOH.

$202, 500 00 234, 500 00 125, 000 00

2, 000, 000 ()() 35, 0-00 ()()

B, 162, 606 06

1, 875, 0-00 00

7, 1114, 666 66

25-0, 189 00 115, 811 00 125, 000 00

a, 200, ooo oo a, 097, ooo oo

~~sLl~_s_sil_5_p<.1_r_cc_n_t_;._ •• _._··_·_··_··-·~··_·_ .. _ .. _._ .. _·~·l_s_om_i·nn_n_u_ru_1y_.·_·_ .. _·_··_··_·_;·_··_·_··_·_ .. ~l_1s_50_._··_·_··_··_·_··_ .. _·_··_ .. _·_··_··_·~·l_L_o_an_om_c_e_ .. _·_ .. _··_·_··_·_··_ .. _·_ .. ~l--w-o,_o_oo_o_e BALTIMORE AND SUSQUEHANNA R.A.lLROAD.

---~----

1830 110 4lt por cont........................ Quarterly......................... 1846......... •••• •• . •• ....... Lonn office.................. 100, 000 00 1834 241 o 1ier cent ............................... ilo ... • .. . . • • .. . .. .. . •. • • .• . . . 1871 ............................... do • • •• . . • • . .... .• ... • • . 1, 000, 000 00 1837 802 B per cent ............................... clo . . . . . . • . . . .. . • •. . • .. .. . . . . 1800 ................................ do • • ........ ....... •••. 600, 000 00 1838 805 5porcont ............................... do ........................... 1890 . .' ............................. do..................... BB,710 97

1839 20 o per cent ............................... <lo ........................... 1890 ............................... do ..................... __ M_a_,a_a4._s_2

Total ...................................................................................................................... .. 2, 282, 045 29

SUSQUEHANNA AND TIDE-WATER CAN.AL.

-rss;r· 4161 ster. 5s ......................... ···I s~mi-nnnu11Uy .................... \ 1890 ......................... \ London ..................... 1 1, 000, 000 00

1838 18iHl

1838

1880 1841

ANNAPOLIS .A.ND ELK RIDGE R.AILROAD.

886 ster. 5s..... ..... •. . .. .. .. . .•.•. .. Semi,annu11lly .................... 1800 ......................... London..................... 60, 000 00 12 con.5s ............................ Quartorly ......................... 1800 •. , ....................... Loan office .................. __ 1_5o_,7_24_4_5

'.Cota! ...... ' ................................................................................................................ .. 219, 724 45

EASTERN SHORE RAILROAD.

386 ster.5s ............................ Semi0 an11ually .................... 1800 ......................... London .•.•.•. .,............. 60,000 00 828 con. 58 .................................. clo .. . . . .. . . .. • . .. . . . . . • . . .. .. 1800......................... Lonn office................ .. 81, 405 77

6 6s ....................................... do ........................... At pleasure ....................... do ..................... 1 ___ 11_,_so_~_3_7

Total ....................................................................................................................... . 15~, 7UG 14

INTEREST .A.RRE.ARS FUNDED.

;~-I 2as I G percent .. :: .. ~~:: ............... 1.A.nnually ......................... 1 Atpleasuro ................. 1 Loau ofilce .................. r--B~~~3 :;3

MARYLAND UNIVERSITY-MEDIC.AL DEPARTMENT.

1821 I 8815 per cont ......................... -, Quart~rly ......................... ,.1851. .......... -.............. 1 Loan office ............ ·--~----i---~~~

548.

I

When created.

VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

Debt of the state of Maryland, January 1, 1849-0ontinued. PENITENTIARY.·

Sess. I Chap.

Rate. Time payable. When redeemable. Whore. .A.mount of loan.

~:~ r ~: -~-~~~d~~: .... ~.·.·:.-:::::::::::::::::: -~~~~!:r~::::::::.-::::::::::::::::: ~:!::::::::::::::::: :::::::: -~~~~d:~~~;:: ::::::::: :::::: *!~: ~~~~~ '~::: :~~ -~-;~~d:e~~::::::::::::::::::::::::: '8~:i:;'.!:;1~~;~·::::::::::::::.::::: ~~:~::::::::;:::::::::::::::: ::::::~: ::::::::::::::::::::: __ ·~~:~~~ ~

18351

1843 !845 1845 1845 1846 1845

Total ................................................................................................ '. ...... ·................. 07,047 30

TOBACCO W .A.REHOUSE LO.A.N.

35{) 6 per cent ......................... Semi-annually .................... Contingent ............ · ..... Loan office.................. 30, 000 00 31() ...... do ................................. do .. .. .. • . .. . • • .. .. .. .. ...... .A.t pleasnre ....................... <lo • • •. . . • .. .. . . • • • • . • •• 90, 000 00

97 ...... do ................................. do ....................... ·~ ......... do ........................... do..................... 25,000 00

97 ...... do ................................. do ................................. do ........................... do ...... .. .......... .• . 20, 000 00

97 .... :.do .............................. ,.do ................................ do ........................... <lo .......... .... •• .. ... 23, 000 00

348 ...... do ................................. do ................................. do ........................... do .. .... ... • . ... • ..... . 20, 000 00

97 •••••• do ................................ do ....................................................................................... ____ 1_s, _o&~ Total ...................................................................................................................... . 101, 08•115

===== Grand total ..................................................... : .......................................................... .. 10, 140, 077 42

On the 30th of September, 1866, the funded debt of Maryla.nd amounted in gross to $13,540,796 53, but deducting amounts cance1ecl and the amount on which the Ba1timore and Ohio railroad was liable to pay curl'ent interest, the actual debt appeared to be only $7,514,413 43. At this date the state held property to the estimnted value of $25,049,739 85, of which amount $6,932,097 18 was productive property.

The fluctuation of the net debt of Maryland since this period has mainly been due to the productiveness or unproductiveuess of its assets. 'Ihe funded debt of the state, September 30, 1880, according to the report of Hon. Thomas J. Keathlg, comptroller, is as follows:

Bonded debt ............................ -··· ..•••.....•. -................................ : . ......... "$11, 277, 111 --------Funding floating debt .............................................. ---· ............................ .

Public buildings ................................................................................... . Railroads ................ ·- ............................... - .... --·- ····-· ..•••....•.•.. ~ · ...••• ···· · Refunding old debt ................................................................................. . War purposes ..... , ................................................................................ .

Total ........................................................................................ .

500,000 690,000

5, 720,996 1,039,364 3, 326, 751

11,277, 111 ==

Of the bonded debt, $6,445,510 draws 6 per cent. interest; $4,562,601 5 per cent. interest; and $269,000 3 per cent. interest. The date of issue and maturity of this debt is as follows :

ISSUE.

Previous to 1860 ..................... _.. . • . . $8, 519, 392 1870 .•.••• •··•·· .. --- . ·-. - ........ - ... .. . . .. 628, 355 1872 ........................................ 1,369,364 1874.... •••• .••••. ........ .... ...... .... .... 125, 000 1876 •••••.••.•.••• •·•••••• .••••...••.•.. ---· 135,000 1878 ...................... -- . • • • • • . • . • .. • • • • 500, 000

Total ................................. 11, 277, 111

MATURITY.

1880 .• - . - ..•••••.••••.. -••••......•••..••••. 1883 ....•. ·••••• .................. - ....... .. 188.5 ....................................... . 1887 ....................... - .............. .. 1889 .................... ···-·· .•..••••.•••.. 1890 ...... ---- ..................... - ....... . 1891. •••. - .....•.•• - • - . - -•.•••...•• -....... . 1893 ...................................... ..

$24,000 3,326,752

628,355 1,369,364 4,360,556

933,084 135,000 500,000

Total. ................................ 11, 2771 111 --- -----~-- -----

The defense loan, which was negotiated for the payment of bounties, will fall due in January, 1884. By its terms it cau be IJrovided for and taken up at any time after the year 1883. The governor recommended, in his message of 1880, that provision be made tO retire this loan by the issue of one for a smaller amount'bearing 5 per cent. interest, payable in fifteen years, and the legislature of 1880 passed an act to create a loan of $3,000,000 to provide for the exchange or the redemption and payment of this debt-the interest on the new loan not to exceed. 4i per centum, and the loan to be redeemable in fourteen years from the date of its issue,

*As an offset to this debt, the state holds stocks and bonds upon which, according to the comptroller's report of 1880, intcre~t·i;· promptly paid, amounting to $3,649,443, leaving as the net debt upon which interest has to be provided $7,627,668. ·

In addition to these paying securities the state has unproductive assets in the shape of stocks, bonds, etc., amounting in the aggregate to $25,726,051, which, if converted into cash, would be more than sufficient to liquidate the remaining net indebtedness.

11

HISTORY OF STATE DEBTS-DISTRICT OF COLU~IBIA. 543

DISTRICT OF COLUMBIA.

The District of Columbia. became the permanent seat of the government of the United States under the provisions o~ an act of Congress approved July 16, 1790, aml the three commissioners authorized to be appointed by the President were directetl " to provide suitable ·buildings for the accommodation of Congress and of the President, and for the public officers of the govemment" prior to the first Monday in December 1800 · but no

. t' l . ' ' ' appropria ion was mac e for carrymg on the work. Their only resources were derived from the sale of lots arnl grants of money, Virginia having cop.tributed $120,000 and J\far;ylancl $72,000.

In 1796 Maryland made a loan of $100,000 to the commissioners of the District for the purpose of aiding in the completion of the public buildings, and in the following year another loan for a like amount. In 1799 a further sum of $50,000 was loaned by Maryland for the same purpose. The credit of the District at the time these loans were made was very low, and the state i1nthorities obligetl the commissioners to giye their personal obligations for their reimbursement, notwithstttmliug the fact that their payment was guaranteed by the general government. Even under these circumstances the best terms that could be made were to receive these amounts in United States stocks and afterward dispose of them for cash. As tt result the sum of $160,873 41 was realized from the first two loans, and but $40,488 06 for the latter loan of $50,000. Of this amount the sum of $25,000 93 was repaid by the Unitecl States in 1802, with $3,250 as interest.

By an act approved April 18, 1708, a loan of $100,000 was made by Congress for the purpose of completing the public works already commcncell.

By the act of May 1, 1802, Congress authorized the payment of the money borrowed from Maryland in l'i96 ancl 1707 in five annual installments of $40,000 each, and interest thereon, amounting in the aggregate, principal an1l inoorest, to $262,223 91.

From 1800 to 1835 n.o fnrther l~ans from the general government appear to have been made, although appro­priations were made from time to time for specific purposes in aid of publio improvements.

On the 20th of May, 1836, Congress passed an act authorizing the Secretary of the Treasury to assume on behalf of the Unitecl States tlw debt of $1,5001000 incurred by the three corporate cities-Washington, Georgetown, andA.lcxandria-in their subscription for stock for this amount in the Chesapeake and Ohio Canal Company, provided the stock was trausferrccl to the United States. The assumption of this debt, and the payment of the interest until finally liqnidate<l. iu 1856, cost the general government $2,765,107 97.

A.n a.et of Congress n.pprovecl June 28, 1834, authorized the payment of $70,000, in quarterly installments, for one year, to be applied, under the direction of the corporate authorities of the city of Washington, in extinguishing a like amount of the interest annually accruing on'·their public debt, and this sum was i1aid.

No further assistance in the way of loans appears to have been renderecl by the general government prior to its organiz~ttion as a territory, in 1871, although large appropriations were made for public improvements.

On the 26th of May, 1845, a.n official report was made to the board of common-council of Washington, from which we' gather the following data relative to the origin and history of the municipal funded debt:

Very soon aftci: tho site for the city was selected debts were incmre<l in the opening of streets and other improvements. In 1812 these tlcbts amounted to $17,000; aml by an act iipproved May 10, 1816, this sum was iipportioned among the then existing wards. Beside this amount for ward iniprovem.ents, other sums had been borrowed upon the credit of the corporation i1t various times for general purposes. These amounts had become so considerable in 1818 tlrnt it was determined to funcl the whole clebt of the city, and on the 11th of July of that year several ordinances were passed fonding the city debt to the amount of $60,000, redeemable on and after January 1, 1830, and establishing a sinkiug :fi.md, consisting of one-fmmh of the taxes of each year, for the payment of interest and redemption of tlJ.e principal. This debt was also made chargeable upon and distributed among'"the wart1s and the general fund in their several proportions, as follows: the sum of $33,094 was apportioned to the wards, then fom in number, and $261006 to the general fund. .In 1820 the city was clivided into six wards; ancl by an ordinance of April 21, 1821, at which time the warcl debts amounted to $46,456 SO, the apportionment was chf.tngecl, and the sinking fund so modified that, instead of one-fourth, one-sixth of the taxes was set aside for the payment of interest and redemption of the principal. Fi'om 1821 to 1837 the wards hacl reduced the dehts so apportioned to $32,117 54, but had in the mmmtime contracted many other debts, which were funded under an act approved July o, 1832, and stock issued to the amount of ·$48,000, redeemable at pleasure after twelve yen.rs from January 1, 1832. From 1832 to 1837 the wards hatl incurred other debts, and on the 15th of .April, 1837, au act was passed for funding these ward debts and consolidating them with those already fonded under prior acts, the amount then folil.nd clue amounting to $108,513 11. The .same act repealccl all previous acts so far as tb,ey related to a sinking fund, but made provision for payment by the several wards of an annual sum, to be applied, first, to the payment of the interest., and next, to the redemption of the principal. In 1845 this principal amonuted to $93,185 00. Referring to the debt due from the gen~ral foncl, the report says: On the 11th of December, 1824, an act was passed for the issue of stock to the amount of $12,000 for the payment of debts due certain city banks. On the 1st of August, 1826, stock to the amount of $3,000 was ordered to be issued, to raise ii.mcls to be used in tJrn

550 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

extension of the Centre Market-house, and on the 20th of July, 1827, a further issue of stock, amounting to $4,000, to be used in the improvement of the Anacostia riYer. The corporation, under authority granted to it by one of the charters of the city, undertook to raise money by lotterfos, and thereby became so involved as to render it necessary to raise considerable sums of money by the is!!ne of stock, which accordingly was issued under several different ordinances.

The total amount of this lottery 5 per cent. stock, issnecl under these several acts; amounted to a1>out $Hl7,181 84, all of.which, with the vast sum paid as interest thereon, and the enormous jnclicial expenses n,ttending the controversy (thero had been IL long litigation about the payment of the prizes in the lotteries), has been a total loss to this city; the aggregate of whicl1, np to the prosent time, cannot he less than $375,000.

Under the provisions of an act approYecl .Tanuary 3, 1831, stock amounting to $50,000 was issne<l for the 1mrchase of the Washington canal, and there was also issued, under this act and subsequent acts, for the purpose of enlarging and completing the canal, $137,050. Stock was also issued at various tim~s, under several different acts, in order to raise the necessary funds to pay the interest due from the city on the Holland loan, negotiated for the purpose of paying the city's subscription of $1,000,000 of the capital stock of the Chesapeake aml Ohio mmal, afterward assumecl by the United States. The amount of stock outstanding on this account in May, 1845, was $242,430. It appears from the report of the committee that at that date, l\ifa.y 26, 1845, the debt of the city of Washington amounted to $740,243.

By an act approved May 28, 1847, the smn of $58,000 was set apart, pledged, r1ind iippropriated from tho general fund for each year, to constitute a siriking fund for the payment of the interest and redemption of the principal of the funded debt, and the mayor of the cit'y, the chairman of the committee on finance in the board of aldermen, and the chairman of the committee of ways aml means in the board of common council, for the time being, were constitutecl commissioners of the sinking fond, and this act eon tinned in force until the re1lertl of tho eity C\harter by an act of Congress approved February 21, 1871.

In the message of the mayor to the common council, dated October 30, 1854, the amount of the debt is stated at $793,250, and the same in his message of March 3, 1856. Mayor Wallach, in his messages of .Tune 2u, 18u5, n.ncl July 16, 1866, states the amount of the debt to be $793,000. It will thus be see1:i- that tho funded debt of the city changed but very little from 1845 to 1866*.

Under an act of UongTess "to provide a government for the District of Columbia,", approved Febrlmry 21, 1871 (16 Statutes, 419), the city charters of Washington and Georgetown were repealed on and after June 1, 1871, and a territorial form of government provided, with a governor, legislative assembly, and delegate in Cougress. Tllo net also provided for a board of public works, under whose authority vast im1)rovements were made in the streets and avenues of the two cities. These improvements necessitated a corresponding expenditure of large sums of money, which could only be providecl for by increased taxation and the issue of bonds. An act of Congress r1ipprovecl ,June 20, 1874, abolished this tenitorial form of government, and substitutecl therefor the present system. The various loan transactions during this period are embraced in the fo}lowiug synopsis of the acts of Congress and tho District legislative assembly, so far as they relate to bonds outstanding at the date of closing this report:

Pemianent-hnproveinent six pe1· cent. bonds.-By acts of the legislative assembly, approved July 10, 1871 1 ltnd December 16, 1871, in order to enable the hoard of public works to proceed with certain in11n·ovomeuts, the governor was authorizecl to issue, or cause to be issued, registered or coupon bontls to an amount not exceeding $4,000,0001 in denominations of $50, $100, $500, and $1,000, payable within twent;y yen,rs from date of issue, and to bear interer:t, imyable semi-annually, at the rate of 6'per cent. in golcl or 7 i)er cent. in currency.

Section 7 of the act of July 10 provifles for the payment of the interest and gTaclual redemption of the bonds by authorizing a sum sufficient for the imrpose to be annually levie~l and collected u1lon ~he nssessecl vttlue of property, respectively, in the cities of Washington ancl Georgetown and the county of Washington, in proportion to the improvements which shall have been made therein. . The bonds issued were coupon bonds, bearhq date December 20, 1871, payable in twenty years. The interest

is payable on the first days of January and July in each year. · Section 8 makes it a misdemeanor for any officer, fiduciary agent, qr employe of the District government to

appropriate. or apply, or in any manner consent, aid, o:i; assist in ap1)ropriating and applying, any portion of any money provided for the redemption of the bonds aforesaid, or for the payment of the interest thereon, or to tlirect or use any money belonging to the improvement fund for an'&· other purposes than those for which the funcl wmi created.

This act was ratified and confirmed by an act of Congress approved May 8, 1872. The amount outstanding, June 30, 18801• was $3,995,000.

Water-sto~k bonds.-By act of the legislative assembly approved July 20, 1871, the governor was authorized, in order to provide means to defray the expense of laying n, new thirty.six-inch water-main to issue or cause to be . . 1 . t' d ' ' l&mel, regis ere or coupon bonds, designated on their face as "water-stock", to an amount not exceeding $450 000. · sai~_boncls to bear interest not exceeding 7 per cent. per annum, payable on the first clays of January and

1July

*Wehl)'s Digest of the Laws of the Corporation, pp. 165-168.

HISTORY OF STA1,E DEBTS-DISTRICT OF COLUMBIA. 551

lu each and every year in cmrent money of the United States. There is set apart, pledged, and appropriated1

ou1 of the water-fund, such sum as may be necessary to pay the inte1;est on said bonds until redeemed and not less than $15,000 is to be set apart annually for their gradual redemption, which money is to be applied ~very year to then purchase, in open ma.rket or by advertisement. . The bonds issued were coupon bonds, in denominations of $1,000, and bear date October 1, 1871, and arc payi1bk il1 thirty years from date of issue.

Section 2 solemnly pledged the faith of the government of the DJstdct of Columbia for the punctual payment of the interest and graclual redemption of the pdncipal. The amount outstanding, June 30, 1880, was $397,000.

Mm·lcet-stoclc bonds.-By acts of the legislative assembly approvecl August 23, 1871, and June rn, 1872, the :gonwnor was directed, in order to provide means to pmchase sites and erect market-houses in the northern and western sections of the city, to issue, or cause to be issued, registered or coupon bonds, designatetl on their fa.ce ''market stock", to an amount not exceeding $300,000, payable twenty years from date of issue, and bearing interest at a rate not exceeding 7 per cent. per annum. The~e is· set apart, pledged, and appropriated, out of the funds arising from the markets in the city of Washington, such sum as may be necessary to pay the int€.rest on said bonds until redeemed, and not less than $15,000 is to be annually set apar£ for their gradual redemption, the commissioners of the sinking fund to make the pmchase in open market or otherwise, as they may think best.

One hundred thousand dollars of the amount issued were registered, the balance were coupon bonds, in denominations of $50, $100, $500, and $1,000, and bear date July 26, 1872, with interest' at the rate of 7 per cmnt. per annum .. The amount outstanding, June 30, 1880, was $150,000.

Twenty-year funding bonc7s.-By au act of Congress approved lVIay 8, 1872, the commissioners of the sinking f'nnd were authorizecl to fund tlie liabilities of the city of Washington, consisting of floating debts and trust funds, t'ouucl ·to be due J nne 1, 1871, not exceeding $1,150,000, and to issue registered or coupon bonds, in denominations of $50 01· ml'y multiple of that sum, not to exceed the amount of said liabilities, bearing interest not to exceed 6 per cent. ver annum, lmya.ble serni-arnrnaUy in gold, ancl having a period to run of not more than thirty nor le.ss than fifteen years; said bonds to be solcl at a rate of discount not to exceed 3 per cent. on their par value. Section 2 1tnthorizec1 the legislature of the 'District to cause to be levied and collected annnally, from all taxable property of the city of Washington within its limits, a ta.x sufficient to pa,y the interest on and create a sinking fnud for the 1·e111~mption of said bonds at maturity.

The bonds are coupon bonds, in cfonomiuations of $50, $500, ancl $1,000, bear date July 1, 1872, ancl pa.yabll\ to ,J. & vV. Seligman & Oo., or bearer, July 1, 1892. The interest is payable semi-annually, on the :first days of Jammry mid .July in each year. The amount outstanding, June 30, 1880, was $1,150,000.

Thirty-year fnncling boncfa.:--An act of the legislath'e assembly, approved June 20, 1872, authorized the 1iommissioners of the.sinking fnnd to settle, after examina.tion and approval by them and the aud}tor and comptroller of th<.~ District, such contracts and obligations of the city of '\Vashingtou, including the 7 3-10 certificates of lmlebtedness, as were not included in the l'eport of the auditing· commission or provided for by the act of Congress 111Jproved M~ty 8, 1872, and to issue registered or coupon bonds, in the name of tbe city of Witshington, in (lenominations of $50 or any multiple of that sum, not to exceed the amount of said liabilities, bea;dng interest not to exceed 6 per cent. per annum, payable semi-annually in go1<1, and having a period to ru~ of not more, than thirty nor less than twenty years. Section 2 provided that a tax should be leviecl annually on all of the taxable property of the city of Washington sufficient to pay the interest on said bonds ancl to create a sinking fund for their redemption at maturit;y. The collector was directed to ttn'n over all funds collected for the purposes named to the sinkiug-fnud commisi:!ioners, out of which they shoulcl pay the interest on said bonds, and invest the balance as a sin king fund. There were prepared for issue $1,650,000 of these bonds, but only $662,300 were actually issued. The balance, after being used at various times as collateral for temporary loans, was destroyed. The bonds issued · were coupon bonds, in denominations of $100, $500, and $1,000, dated November 1, 18721 and are payable in thirty years from date. Interest is payable on the first clays of May ancl November in each year. The amount outstanding, June 30, 1880, was $660,000. ·

First ·issite o.f seven per cont. 1Jermanent-improi1cment bonds.-By an act of the legislative assembly approved June 23, 1873, the govQrnor was authorized to issue bonds, not to exceed in amount $260,000, of t'h:e character described in the act of July 10, 1871, authorizing the issue of $4,000,000permanent·improvement bonds, said bonds to supply the deficiency occasioned by the sale of the $4,000,000 of permanent-improyement bonds at a discount.

The bonds issued were coupon bonds, bearing date .Tnly 1, 1873, in denominations of $1,000, payable to J. & W. Seligman & Oo., or bearer, July 1, 1891, with 7 per cent., cu1Tency, interest, payable on the first clays of January arnl July in each year. The amount.outstanding June 30, 1880, was $224,000.

Second issite of seven per cont. permanent-improvement bonds.-By an act of the legislative assembly approved June 25, 1813; in order to enable the governor to pay certain appropriations s1}ecifi,ed, he was authorized to issue bonds of the District of Columbia, not to exceed in amount $530,000, bea7i11g interest at the rate of 7 per cent. per annum.

The bonds. issued were cotwon bonds, dated July 1, 1873, in denominations of $100 ancl $1,000, and are payable

552 VALUA'rION, TAXArl'ION, AND PUBLIC INDEBTEDNESR

to J. & W. Seligman & Co., or bearer. The interest is payable on the first days of January and July in each year. The amount outstanding, J1me :Jo, 1880, was $446,000.

Water-stook bonds.-By an act of the legislative assembly approved June 26, 1873, to provide means to pay a deficiency in the appropriation for laying the thirty-six-inch and other principal water-mains, as required by the act of J·uly 20, 1871, the governor was authorized to cause a further issue of water-bonds, to an amount not exceeding $35,000, under the same conditions and restrictions as provided for in the act of July 20, 18Jl.

The bonds issuell were coupon bonds, in denominations of $1,000, having thirty years to run from July 1, 1873', with interest at 7 per· cent. per annum, r)ayable on the first days of January and July in each year. Am01mt outstanding, June 30, 1880, $26,000.

Three-sixty-jive bonds.-By an act of Congress approved June 20, 187 4, as amendeu by an act approved February 20, 1875, the co,mmissioners of the sinking fund of the District of Columbia were authorized to issue bonds of the District of Columbia, in denominations of $50 and $500, bearing date August 1, 187 4, and payable fifty years after date, bearing interest at the rate of 3.G5 per cent. per annum; said bonds to be exempt from taxation by federal, state, or municipal autltoritJ'- The faith of the United States was pledged to provide for the payment of the interest and to create a sinking fund sufficient for the payment of the principal of said bonds at matmity, by proper proportional ap1)l•opriations, and by causing to be levieu upon the property within said District such taxes as wonlcl ~~ .

By act of March 3, 1875, the registered bonds were authorized to be isi:;ueu in denominations of $1,000 nml $5,000. .

By act of June 16, 1880, the United States treasurer, as ex o:tfioio sinking fund commissioner of the District of Columbitt, was directed to iss.ue bonds of this loan in payments of judgments of the Court of Ohtirns and of outstanding certiftcates of the late board of audit of the District of Columbia, provided that the gross amount of the bonds issuecl and to be issued should not exceed $15,ooo,ooo. Tbe amount outstanding, June 30, 1880, was $13,5041900.

Twenty-yea1· fwiding bonds.-By act of Congress approved June 10, 1879, the commissioners of t}•10 District of Columbia were authorized to prepare, execute, and deposit with the Secretary of the Treasury bonds 0Jr the District of Columbia, bearing interest not exceeding 5 per cent. per annum and payable twenty .rears afte1· date, to the amount of not more than $1,200,000, the proceeds to be· used only for the redemption of the funded indebtedness of the District of Columbia, or of the late corporations of \Vashington and Georgetown, whiclt becmm.~ due January 1 and }rfarch 1, 1879, or those payable 11t pleasurr1; saicl bouds to be in such form us the Seerctn.ry of the Treasury should 11pprove, to be sold by him to the highest bidder.

The bonds issued were coupon and registered bonds, in denominations of $100 and $1,000 for coupons and $1,000 for registered. They bear date July 1, 1879, with interest pa,yable semi-annually, on the first days of Jan nary and July in each year. The amount outstanding·, June 30, 1880, was $1,092,300.

By an act of the legislative assembly of .August 19, 1871, the sinking-fund commission was revived, and the­principal duties of the commissioners prescribed as follows:

They sha,11 ha,ve entire clmrge and control of the mltnttgemcat of the funded aml-bonded tlebt now clue by the cities of \Vashingtou and Georgetown, the county of ·wusbh1gto11, or whi.ch nmy hereafter lie created by the District of Columbia.

They shall disburse upon their wttrmnts all moneys collected ancl received by them on account of interest, or of the sinking fundr bonds, stocks, certificates of indebtedness, or loans due by saicl cities and county, or which may hereafter become due by the District. of Columbia. Wlrnu au amount equal to ten thousand dollars sh'.111 have accmmulate(1 in their ha,nds on account of the sinking fund, tl10 said commissi01aors shall acl vertise an cl receiYe proposu,ls for the purehase of the bonds, stocks, ttncl certificates of imlebtedness of the su.iih cities, county, and District, and shall purchase them upon tm·ms most advantageous to the public interest, and thcrnupou cancel the sa,me, inscribing the amounts of said ca,nceled bonds upon the books of the commissioners. It shall be their dut.yto collect regularly all interest accruing upon tho amount so inscribed, and to apply the same toward the purchase and cancellation, as aforesaid, of the principal of the­

, bonds authorized to be issued.

The act of Congress of June 20, 1874, expressly continued the sinking-fund commissioners, and left undistmbed the above powers.

The act of June 11, 1878, provicling a permanoot form of government ·for the District, abolished the offices of sinking-ftmd commissioners, and provided that "all duties and powers possessell by said commissioners shonlll be transferred to, a.nd exercised by, the treasurer of the United States, who shall perform the same in accordance with existing· faws". Under this authority the United States treasmer has entire charge and control of the management of the fumlecl aml bonded debt of the District, and the disbursement of all moneys connected with the pa.yment of the interest and reclem1}tion of the principal of the debt.

In his ftrst annual report to Congress, dated November 30, 1878, United States Treasurer Gilfillan, as commis· sioner of the sinking fund, thus refers to the funded debt of the District on the in'ecccling 30th of June: ·

The funded debt of the District of Columbia, including the late corporations of \Vashingtou and Georgetown, is repr~seuted by bonds of sixteen different loans, bearing interest at various rates, from 3.65 to 8 per cent., and redecwable, five at the pleasure of the District and eleven at various dates from 1879 to 1924, as follows: At the pleasure of the Dist.rict, $993,800 ; in 1879, $281, 500; in 188 l, $20, 000;

· in 1884 or before, $20,000 ;. in 1891, $<11665,000; irr 1892, $1,300,000; in 19011 $397,000; in 1902, $660,000; in 1903, $26,000; and in 1924, $13,143,250. The above does not, of course, include any of the floating iudebtec1ness, nor the outsfanding 8 per cent. certificates of indebtedness.

HISTORY OF STATE DEBTS-DISTRICT OF COLUMBIA. 553

Yery little of· the funded debt matures before 1891, by which t~nie, with proper management of tho finances of the District, and with adequate provision for t·he sinking fund, a large portion of the c1ebt will be paicl aJ1(l the credit of the District bt1 upon such a footing that auy iiart of the debt maturing at that time, which it is desirable to continue, can be placed at a very aclvantageoi1s mte. The average rate of interest now borne by the debt is more than Gt per cent. per.annum, not iuclucling the three-sixty-fives. ,

Since .June 11, 1878, when the offices of the sinking-fund commissioners were ahtilish~tl and their powers and uuties transferred to the United States treasurer, the bonded debt of the Distfi<lt lias been: fetlucecl, by operation of the sinking fund, $418,326 67, and the annual interest charge has been redtiC(jd $30,154 11, while the credit of the District has so appreciated that the 6 per cent. bonds, which in 1878 coulll be boTight at 5 per cent. below par, are now at lOz per cent. premium, and the 3.65 per cent. bonds, which could b(j bought in 1879 at 82~, are now at from 2 to 4 per cent. premium.

Alexandri.a was retroceded to the state of Virginia by an act of Congress approved July 9, 1!346, the closing section of the act providing that Congress would in no event assume aml pay the debt, or any part thereof, theu due by the corporation of that city. No reliable datn, is at hand as to the amortrit due at that period.

The city authorities of Georgetown have never made any attempt at adopting an extensive system of imblic improvements, and the loan transactions of this city have been quite limited; the bondecl indebtedness on the 30tl,i of June, 1880, amounting to but $21,300, of which sum $1,300 had already cflased to bear interest. The amonut sWl bearing interest was issued under an ordinance of the corporation of Georgetown a1Jpro>ved May 12, 1871, ancl is in certificates acknowledging the indebtedness of the corporation for a specified amount to the party named therein, payable on the 1st day of July, 1881, bearing intere~t at 8 per cent. jj(jr arini:tm, p·ayable quarter-yearly, on tlrn 1st days of January, April, July, and October, in currency.

The following is a statement of the funded debt of the District of Columbia tt1ici fat(j CO'l'p'Ol'Ettions of Washington and Georgetown, June 30, 1880:

Description of bonds. .Authorizing net.

I . I tufotefft, : Dnto of maturity. ----,....------,---------1

I Rllto pei· COili b'r M1t' · I cent, foiiby. When Jlll;,Yable.

Amount otlt' stun(liltg:

I ! ---D-IST_R_I_CT_O_F_CO_L_U_ldll_Ll._.--·l-------------~1---~~--- 1--~

Pcl'mnnent improvement ..•.•.•..•...•• Assembly, JulylO nndDec.16, 1871 .... i July 1, 1891. ...... Clim ..... - - . Jan. a.ml July.---· $11, !'lll3, 000 o~· Perm11nentimprovement............... " Juno23 and25,1873 ........

1 July l.,18Ill ....•.. Curre:IJcy ... Jan.~ndJn~J ..... I 070 000 00

Market stook • •.. .. ....... ..... ........ Ang. 23, '71.andJuno 19, '72. i July 26, 1892 ...... 7 .... dll ....... Jan. and July..... 150, 000 UO

Watorstook............................ " July20,l871 .............. I Octoberl,1001.... 7 1·--.dll ... ::,. jnD..andJuly..... 397,000 00 Watoratook ........................... - June 20, 1873. --·-- -- . - .. --·I July 1, 190ll . ...... 7 •••. do' -...... Jan. and.:iuly. .... 26, 000 oo· Fifty-yeo;rfunding ..................... Congress, June 20, '74, Fob. 20 nn<l i Augnstl,192~ ,... 3I\llt .... Qo ••••••• Feb.and.Aug..... 13,504,flOO 00'

March 3, '75. I

Twenty.yea.r funding ................. . Co1>gresa, June 10, 1870 ............... , 1

July 1, 1899. --·- ..

I Congress, May 8, 1872 ................ I July 1, 1892 ..... .. Assembly, June 20, 1872 ........... ····[ Novembcrl, 1902 .. Congi•oss,Jnly7,1870 ................. July30,19'3 ..... .

WABl!INGTON.

Twenty-year funding .. : .............. . Tbirty-yenr funding ...•...•.....•....•• ThTIJe.year (Emery) ................... . Genorulstook .•••••.......•....•....... City, Ang, 19, 1828 ..................... At plensnro ...... .

G.EOllGllTOWl!,

.... Ub' ....... Jnn.m'u1Jt\1y .... .

Cdlri ........ ja:h.andJuly ... .. 6 .... db ....... :M:aynmll:<ov ...• [ 7-i',; Curte!ioy ....................... ,

. ... tlb ...•... dan., Ai>ril, July, i and October. [

l', 092·, 300 O'O

1, 150, 000 00

660, 000 011 100 0{)

~3. 023 3;1

Gcnornlstook ...... -----· .............. City, M11y 12, 1871 ..................... July 1, 1881 ..... .. .... do-·-···· Jnn., .April, .tuly, l 20, ooo oo· aiid Octobd. I _____ _

Total. ...................................................................................................... , ................................. j ~1, 688, 323 3:! '

Stooks and bonds outstanding on whioh intere.~t has cectsed, there being funds for tlw ptt:!J11Wnt of the 11rilloipal an(l . interest depositerl in tlte United States Treasury.

Corporation of Washington ten-year bonds ............ -- .. -· ... -· ......... - .... --- -- - -- - -- · · - - --- -· ·•·• " " " five per cent. gcu er al stock ........ : . - .... -..... -.... ---. ---- -' .••••.. - ... -.. " " " six per cent. " " . - -. -.... ~ .... -... -- .... ---· · -- · -· · - · - • - • · -- - · '" · " " " .six per cent. canal stock ............................ ··--··---- ...... ····•··•

Corporation of Georgetown six per cent, general stock .................... ···-··:····· ·• •••• '· '"· "'"··

The amount outstanding· October 1, 18811 was $21,896,450.

$i50 00' 2, 010 00' 7;580 17 ' 200 00' i,300 00'

-"'----11,240 11

554 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

SOUTHERN STATES.

The following· table exhibits tlle amounts of tlebt of th'e sonthern states at varfous periods from 1830 to 1880:

:lS4l. :lS/i3. tSflO, • S'fO. l.SSO.

Houthern states. 1839. -;umlecl. ! Other. . -;::;:~t~;.·-·· -- Funclecl. I Ot~::- -;:ncl~~---;~,;:::- . Jo'undml. Oilier.

'Virginia ..••......•.•. -;;, $0,0112,089 b$4,037,200'

1

!~ ........... c$l2,089,3821 .•....•••.•. d$33,248,14;· 1 ~.-- .. ~= -:;30,2~~~~ ·:;~:~~~,014 $20,~•tn,2~6 WestVirginia ................................. ! .......................... !············ ................................................................ . North Carolina . ..... .. •.••.. •••.. • .......... , .......... .. / 2,224,000 • . . . . ... . .. u 0,120.505

1

....... ... .. e 20,000,040 ....... · • .. · 5,006,0IG $700,000 'SnnthCarolina ....... a5.753,770 b3,6Dl,234,- ........... uJ,925,8931-······ .. ··· u4,040,540 .••...•••••. e7,005,00D ........... 6,039,171 •(lporgia .. : ......................... bl,300,750 j............ 1'2,802,472 i...... ...... i2.'070,750

1

............ e0,544,500 ............ 0,051,500 Ol,3M Florld1t............... .............. bl00,000 I b$3,900,000 ..............

1

........... i383,000 ............ j l,012,372 e~70,3~5 j 1,280,500 .dlabarun............. 1t 10,800,00U b 15,400, 000 ,. . ... • .. . . . 4,497,000 "........... / 3,445,000 . •. • . . • • • • . e 5,382,800 k 3,005, 218 0,008,000 fl.1,76;;

L<rnisiana ............ 1t 23,735,000 IJ23,985,000 ••••• .... .. 1" 9,580,207 .•.••• ...... d4,031,000 d 530,108 o 22,500,233 o 2,401,liOl o 22,430,oOO 1,006,8-W ~iAsis•ippi. ... ...... 1t 2,000,000 b2,ooo,ooo i b 5,ooo,ooo Z 2,271,ooo / t$5,ooo,ooo /753,4131

1

/$5,ooo,ooo e100,ooo 1n1,ooo,2ao 3i!>,.J85

TP1ms ................ 1 ......................... f........... r,5,341,528 ~............ ............ ............ ........ .... p508,6oll 115,li00,928 Arkansas .. . . .. . .. .. . 1t 3,000,000 b 2,076,000 i ... . .. . .. . . . / 2,488,839 I' 1,614,217 i 3,092,022 ..... • . . . . .. q 3,050,000 c ·109,557 q 2,81 :J,fiOO 2,232,900 '.f<>nnessee ........... · a7,148,160 b3,398,000 ,............ d3,053,856 ........... d20,808,0061............ 1·31,892,l<H 1·0,047,058 20,991,700 G,448,7:!1 .J\:entucky......... •. . a 7,300,000 b 3,085,500 I_.......... s 5,571,297 ~ .... . • ... • • s 5,•!70,244 ,. . . .. . .. .. . s 3,070,480 s 810,000 s l,858,008 ......... .

Total.. ........... 0o;:i"68,02() 59,U8~,0S4 '--s.ooo,OOO ro;:i;;u,140 l--0:014,217 87,177,821. -il,530,108 --U,0,482,708 2·1,00a,74•1 115,271,4:14 HJ,;;4:1,fi4,;

' I ----- ------------- ·-

It A.pp. Cong. Globe, 20th Cong., lRt scss., p. 90. For Louisiana, see also foot-note" o ". b House Rep. No. 290, 27th Cong., 3<1 HeAs. 1''or Lonialn11n, 8<10 nlHo foot-note "o". c Secret11ryof state. d State auditor or comptroller. e The anthorltyfor 1870 la the Ninth Census. The amount sl10wn fOJ' Virginht in 1P80 is e:>:clusive of the amount which that state claims Hl1onld be paicl by "rest Virginia: /Governor. u State trensm·e1'. 1' Secrotnr,Y of o"ocuti\·o dopm·tmeut. ·i Financial Chronicle, vol.1, p. 043. j The nntlwrity for 1870 is tho Ninth Census. 'l'be debt shown for tbat. yea1· is inclusive of bonds l10hl b,1· t.110 eclucntlonal fill!!

inl<•rnal improvement funds to the amount of $307,045, anii for 1880 it. is foclusive qf bonds held by tho educational 11ncl sinking funds to tho amonnt of $QO:J,OOO. ·k The nnthorlty la the Nintl1 Census. The floating <le1Jt shown is inclusive of tho sum owecl to the e<luoational aIHl smplus mvenuo ftlntls, amotmtil1g; tn $2,71lii,210. l American .Almanack, Sen. Doc. No. 42, 3H<l Cong., lst sess. 1n, Tho nuthority is tlrn Ninth Census. The floating clebt shown is lncluslvo of tlrn sum owed to th~ 'leilucn.tionnl fnncl, amounting to $1,138,404. It is pos~ilJ1o that indebteclncss of this character enters into tll!l exl1ibits for earlier pm'iocls. n Cnshim• Cnnitl nud Banldni:t Company, Sen. Dor. No. 42, 33!1 Uong., lst sess. Sec also foot-note "o ''. o In the e"l1ihlt for 1860 the debts due on nccnunt of "propel'ly bn.11ks ", municipalities, and trust funds nm not included; in tlm e:>:hibits for 1830, 18H, 1853, and 1870 they ure incluclc<l; in tlmt for 1880, 1is rnportocl, only t.110 trnst-funcl ch1ht ·appears to be inclllclfcl, By reference to pp. 507-509 the amonnts of these spPcies of del>t, at differe11t periods, may bo s<rnn. 'rho authority for 1870 is tho Ninth 'Census. The amount shown fur 1880 is tbe olcl clebt of 1874. '1.'hore hn<l been fnndeJ of this in now consoliclntecl honds, Jnnunry 1, 1880, $18,034,800. 11 Tlw -nnthority for 1870 is the Ninth Census. The nruount sbown for that year is nn cstiruato by the state comptroller. It does not inclndo li1tl1ilitios for rnllroacl nl<l, th« amount duo tho Unite11 States on account of tho" cllrect tux", nor the amount (reported then n• of uncertain vnlidit.y) clue tho common-school fund. '.l'ho amount ·shown for 18f0 is inclusive of $537,008 owecl to the school funds. q Tho authority for l8i0 is the Ninth Census. 'l'he nmotmt al1ow11 fol' th1it do.to doc1s not lnchule boutTs amounting to $2,150,000 issuecl In aid of railroads, nor honds amounting to $2,301,0i2 issue<l in ai<l of brmks. Tho amount shown fot· 1880 cloes not inclnclo tll!! 'railroncl nicl debt, but docs inchule a portion of the ba,nk debt. ?'The authorit.y for 18iO is the Ninth Census. Tho amount shown for tlrnt yonr ls 11otlnnlnaivll or t·ailroad aid bonds, lndorsed liy the state, amonntlug to $2,172,000, but is inclusive of ot.irnr raill'oncl ni<l boncls. 8 Tho authority for 1853 Ir, tho atnto 1111<lltol'; for 1860, the secretary of • tnte 1 for 1870, tho Ninth CenRus. Tho amounts shown for 1853, 1S60, 18i0, ancl 1880 nm incluslvo of sums owecl to tho cd11cnt.tono.l f'un<l. '.l'lrn 'amonnt of bonds helcl by this fnucl in 1853 nml 1860 is n_ot exactly known, hnt in 1870 it was $l,U52,087, nnd in 1880, $1,077,014. This ls nu frreclnoll,lo <lnM 011 whiuh 11le stat" pays interest semi-annually.

VIRGINIA.

Like many of her sister states Virginia emerged from tbe Revolutionary w.ar incmnbered with a hen.vy debt, for tmredeemed paper money. By means of the system of funding established about 1700, the state slowly became relieved of her embarrassment. The steady increase of Virginia's population, from 691,737 in 1790, to 1,015,260 in 1840, and the constaut1y growing commercial interests of the state demanded the establishment of comprehensive permanent public improvements. In their development the obligations of the state grew as the years went on until, in 1845, her public debt bad reached the sum of $7,38i,794. On the 1st day of January, 1852, the debt had grown to $11,971,838, aml from that time np to, and including a part of, the ;vear 1861, this sum was gradually increased by tlle annual creation of debt authorized under act of the general a~sem bly passed March 25, 1851.

This act, })roviding for the issuance of coupon bonds, authorized the board of public works to borrow from time to time, on tlle credit of the state of Virginia, such snms of money as might be need!•d to i'edeem the engagements of tlie state under laws then in force, and, for the money so borrowed, to issue certificates with coupons atta,cbed. 011 the 26th of March, 1853, an act was vassed by thfl general assembly, establishing a sinking fnn<l to provide for the payment of interest and the redemption of the public debt. ,

h was enacted that "there shall be appropriated annually from the public treasury, commencing- with tlle ;year 18;5:3, out of the accrning reve11nes of the commonwealth, the sum of $838,028 66, this f1mount being 7 per cent. on $ll,97r,838, the debt of the state January 1, 1852". It was also enacted that wheuever, after .fanuary 1, 18.52, a deut shall be contracted by the commonwealth, there shall be set apart in like manner annually, for thirty-four ;rears, a sum exceeding by 1 per cent. the aggregate amount of annual interest agreed to be paid thereon at tlie time of its contracting, which sum shall be a part of the sinking fund. The following statement shows the amounts of debt incurred in each of the years from 1852 to 1861, inclusive, under authorit~· of the act of the general assembly passed March 25, 1851, al'ld referred to above:

In 1852, $2,979,087; 1853, $4,605,917; 1854, $4,112,184; 1855, $1,504,403; 185(), $2,053,570; 1857, $630,260; 1858, $1,866,800; 1859, $11,454,600; 1860, $3,621,825; 1861, $1,110,070; tot.al, $24,538:716.

HIS1,0RY OF STATE DEBTS-VIRGINIA. 555

Of the debt as it stood on the 1st day of January, 1852 ($11,971,838), there was redeemed, up to 1861, the sum of $1,700, 730, ,which, with the amount converted into the sinking fund, left the debt of the state, October 1, 1861, as follows:

Debt of the state, January 1, 1852 .••••...••.•.••••.•••• , ••••••... · ................................. $11, 971, 638 00 Amounts issued from 1852 to 1861, inclusive . . . . . . . . . . . . . . . . . . . . •. . • . . . . . . . .. . . • . . ... • . . . . . . . . . . . . . 24, 588, 716 00

Total. ...... •......... . . . . . . . . . . . . . • . • . . . . •. . . . . . . •• . . • . . . . . . . . . . . . .. . . . . • . . . . . . . . . . . . . . . . . . . 3G, filO, 554 00

Amount redeemed from 1852 to 1861 .•••.•••••..•....••••...•••..•...•.••••.•••••...•.••.•.••.••... Amount in sinking fnn<l. .................................................................... ' .. , .. Amount of debt, less sinking funil, O(\toher 1, 1861 ................................................ .

This debt was composed of the following classes of bonds:

Registered six ii er cents :

=== l,i00,7aO 00 1, 129, :nri oo

il:~. 080, fi09 0-0

A.'mount of six per cent. rngistered <lebt outstanding Jnly 1, 1861. ................................... $19, 988, 074 00 Amount ofloans obtainec1 since.................................................................... 117, 100 00 ·Gnamnteed bonds of James River ancl Kanawha Company, changed sh1co...... .••• .•.. ...• .•. . . .... 150 oO" Coupon boncls payable in New York, converted since............................................... · 1, 008, 000 00 Coupon bonds payable in Richmond, converted since................................... •. •• . . . . .•• . 17, 000 00

Whole amount of six per cent registerec1 debt, October 1, 1861 ..••••••••••.•••••••...•••..•.• Amount of coupon bon<ls payable in Now York on October 1, 1861. ................... $11, 497, fiOO 00 Amount snpposerl to have been lost at sea, in ste11mer Aretio .. • . •. . . .. . .• . • . . .• . . . . . . 145, 000 00 Amount of coupons payable in Richmourl October 1, 1861... ... ... ... ..•. .. ..•... •... · 64, 000 00

Amotmt of i·egi:l:!tero(lanc1 conpcm bonds boaring six per cont. intereRt. ····-· ............ ·-···· ..... . Five per cents:

Amount of ihe per cent. sterling coupon b<mcls (£365, 000) hc;ltl iu England, vitlnecl at .. $1, 865, 000 00 Registerc<l fi vc per cent. bornls .. _ ................ _ .........•... _ .... _ ...... __ ....... 108, 000 00

Pub1ic clebt October 1, 1861 ...................................................................... . Less the clebt owned by the sinking fnnd ..........................•.............•............•..•..

21,130,324 00

1'1,70G,500 00

32,836,824 00

1,973,000 00

34,809,824 00 1,729,315 00

Total debt helcl hy others than the conunomvealth...... ... . . . . . ... . . . . . . . . . .. .. ... ... . . . ... .. 33, 080, 509 00

This debt was incurred principally for works of public improvement, including railroads, camtls, turnpikes, bridges, aml so on. In the following table will be shown the amounts expended for the various irnrposes above named:

Aloxanclria, Loudoun an cl H11111pshiro railroacl ............................................... _ .... .'.. $50, 862 00 Blno Ridge railroacl ................................................................................ 1, i44,72:.l 00 Chcs11pe11ke and Ohio milroa<l ........... _ ..... __ ...................................... _.. . . . . . . . . . . 2, 484, 134 00 Norfolk 11n<l Petersburg milroad ................ _ .••..................••••...................... _. •. 1, :341, :l41 00 Orange aucl Alexandrht milroad ............. _ ...•................. , ................. _ .. . .. . . .. . . . . . . 1, 151, 207 00 Richmond and Danville railroacl. ... .' .......•. _... .• . . . . .. . . . •. . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . .. . . . . 1, 847, 585 00 Richmom1 and J?otorshurg l'ailroad .... _........ . . . . . . . •. • . . . . . . . . . . .. . . . . . . . . . . . . . . . • • . . . . .. . . . . . . . . 385, 600' 00 Richmond aml York Rlver railroad .... _. _... .. • • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . 490, mm 00 Son th Sitlo railroa.tl .......................... _ .........•.... _.. . . • . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . .. 1, 883, 500 00 Virginia and Kentucky railr01tc1. .............. _.. . • • • • • . • . • • • • • • • . • . • . • • • • • • • • . • • . • • • • • • . . • . . . . . • • . . 10:3, 348 00 Virginia ancl 'ronnesseo railron.<1 ....•.... : . . . . • . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . • .. . . . . . . .. .. . . . . . . . . .. :1, 755, 000 00 Marietta and Cincinnati railroacl ......................... _ ...................... ; . . . . .. . . . . . .. . . . . . 202, 611 00 J11mes river aucl K{tnawh11 canal .................................................................... 10, 400, 000 00 Other navigation comp11nies ............................ _........ .. . .. . •• . . . •• . . . . . . .. . . .. . . . . .. .. .. 1, 192, 6111 00 Plank-roar1s, t.tu-npikos, and bridges ........••...•.......•... .'~...................................... 4, 710, 083 00 Chcsape11ko ancl Ohl.o canal ... _ .................... _. . . • . . . . . . . . . . . . . . . . . . . . . . . .. . • . . . .. . . . . . .. . . . . 900, 000 00 Selc1~n, vVithors & Co ............................. .' .............................. _ .......• - . . . . . . . . 430, 000 00

Total.... . . . . . . . . . . . . .. . . . . . . . • .. . . . . • • .. . . . . . . . . . . . . . . . . • . . . .. . . . . . . . . . . . . . . . • • . . . . . . . .. . . . . 33, 080, 509 00 ===

Thus it will be se~n that the public debt of :Virginia, October 1, 1861, according to the biennial report of the auditor for the years 1860 and 1861, amountecl to $33,080,509.

During the periocl of the civil war the principal of the debt, of course, remained unchanged, while the interest thereon was constantly accumulating.. On the 11th of June, 1861, a convention was held by the people of :the western part of the state to take action looking to tbe formation of a new state, to be composed of the counties represented by delegates in the said convention and to be known as the state of West Virginia. The result of this action wa$ that in 1863 a constitution was adopted, and a new state immediately organized. The organization of

556 VALUArrION, TAXATION, AND PUBLIC INDEBTEDNESS.

the new state was the basis of the claim made by Virginia that West Virginia should become lial>Je for a portion• of the public indebtedness of Virginia as it stood on the 1st of January, 1861, in proport~on. a? the popul~tion and. area represented by the new state was a part of that possessed by the former state of Vll'gnua. The adJustment of the debt of the state was first considered by the general assembly of 1866 and 1867, which convened under the Alexandria constitution. February 28, 1867, a joint resolution was passed by the assembly authorizing the· appointment of three commissioners "to treat for the restoration of Virginia to its ancient jurisdiction ancl. boundaries and to treat upon the subject of the proper adjustment of the debt". •

The general assembly which convened in 1866, several months after the close of the war, found it impossible,. in the impoverished condition of the state, to provide for the payrn13nt of the interest then matm:ed on the public· debt, and therefore passed an act, on the 2d of l\1arcll, 1866, entitled "An act to provide for funding the iuterest-of tlle public debt".

'fhis act provides that the holders of registered bonds of the state issned prior to April 17, 1861, might invest. the interest due on such bonds in registered bonds, bearing the same rate of interest as the principal of the bond. bears, and payable at such time as the holder might elect, not less than ten nor more than thirty.four years from date; the bonds to bear date January I, 1866; to be issued in sums of $100 or multiples tllereof; the interest on sne~. bonds not to be payable, however, until July 1, 1867.

It further provides that the holders of coupon bonus issued prior to said April 17, 1861, might invest the· interest due, either in coupons or registered bonds bearing the same rate of interest as the lH'incipal of the bond. bears. These bonds are to be dated and payable as the bonds first above ·mentioned, and, if coupon bonds, to be· issued in sums of $500 or multiples thereof, and, if registered, in sums of' $100 or mnltiples thereof. CL'he first intnest on these bonds also was to be paid July 1, 1867. ·

For fractional parts of $100, in either of the cases above-mentioned, certificates of indebtedness were to be· issued, payable in one, two, three, and four years, with tlle same interest as is provided for in the issne of bonds.

The act further provides for the funding of the interest clue on any bonds issued prior t0 said April 17, 18617 as. well as of such as were issued since the crewtion of the state of West Virginia not funded under the above provisions. (:sections 1and2 of the act) after January·l, 1867, in the same manner as above stated.

Under this act a large pr6portion of this matured interest was funded. The public debt on the 1st day of January, 1867, amounted to $43,383,679. At this time there was iu the sinking:

~md literary f'nuds the amount of $2,377,681, leaving the interest-bearing debt at $'11,005,998. An act was passed by the general assembly, March 21, 1867, that provided for the payment, on Jnly 1, 1867, and January 1, 1868, of 2 pm" cent. of interest upon .the principal of the public debt of the state, "that· being the interest which this state feels· obliged to pay until there is a settlement of accOLmts between tl.J.is state and vVest Virginia." Not long after the· passage of this act, Virginia passed under military control, by virtue of congressiom1l enactments, and from that time nutH the state was reorganized under a new constitution and restored to her representation in CongTess, by act of' January 25, '1870, tlle affairs of the state were administ~red by military authority. The interest on the principal oii the public debt, the payment of whicll was provided. for by tlle act of March 21, 1867, above referred to, was paid a.t

· the dates indicated in said act. Other laws of the general assembly, passecl clnrin:g the session of 1877, mn de provision, for the further payment of interest, but various circumstances beyond the control of the officials of' the state, incident. to the occupation of the state aurl the administration of her affairs by military authority, p1·evented such pn;yment .. There was paid, however, 2 per cent. interest on the sterling bonds, clue January 1, 1869, and 1 per cent. interest on the dollar bonds, c}.ue in August, 1869. Tllese two payments, together with those of JuJ~r, 1867, and January, 1868, comprise all the interest paid between the close of the war and January 1, 1870, at which date the public debt stood as foll-0ws:

Olcl funded debt ........................................... __ ...•........ _ ......... _ ..... _ ............ $32, 77!l, 263 New funded debt .... ---- ...•.......................•...................•.......... _ .....•••..•.•.... _ 7, 884, 914 Interest dne an<l unpaid ......... _ ..... _ ... _ ....... _ ........................... _ ......... __ ..•..... : . . 4, 996, 111 JamesRiveraudKanawha, bouds .............. ·----· ...... ...... ...... .•.. ....•. .... ...... .... ....... 212,,130

Total ........................ _ ......•................... __ ._ ..............•.••...... _ ....... _ .. 45, 872, 778

The new constitution, unde1' which Virginia was reorganized in January, 1870, contained the following i)roviso: "The general assembly shall provide by law for adjusting with the state of West Virginia the proportion of the public debt of Virg~nia IJroper to be borne by the states of Virginia a)ld West Virginia, and shall provide that such sum as shall be received from West Virginia shall be applied to the payment of the imblic debt 9f the state."

FUNDING .A.CT, 1871.

Ou March 30, 1871, an act was passed entitled "An act to provide for the funding and payment of the pnblic debt".• ··

The preamble to the act recites that in the formation of the state of West Virginia there were included within its.

•Laws 1870-'71, p. 378,

HIS'I'OHY OF S'I1ATE DEBrrS-VIRGINIA. 557

tboundaries about one-third of the territory and of the population of the state of Virginia; that in the ordinar!ce ~.authorizing the organization of the former state it was provided that said state should take upon itself a just 1proportion of the public debt of Virginia prior to the 1st day of January, 1861, which provision had not yet been tfulfilled, although repeated and earnest efforts had been made in that behalf by the state of Virgin fa; that the peuplc •of the latter state were anxious for the prompt liquidation of her portion of said debt, which was estimated at two­fllirds of the same; that it hn,d been suggested that the state of West Virginia might prefer to pay that state's :portion of the debt to the holders thereof, and not to the state of Virginia, and tllat this act war; passed for the ,pnrpose of enabling her to do so, and that the credit of the state of Virginia might be promptly restored.

Section 1 of this act provides that after the passage thereof no bond, certificate, or other evidence of indebtedness .should be issued for any portion of the debt of the state, nor should any interest be paid upon any portion of said ·debt except as provided by the act. ·

The act then provides that the owners of any of the bonds, ~tocks, or interest certificates theretofore issued by the state which are recognized by the constitution and laws as legal, except the 5 per cent. dollar bonds ancl the :sterliD;g bonds, but including the stock of the old James River Company, and the bonds of the James River and Kanawha Company, guaranteed by the state, might fnnd two-thirds of the amount thereof and two-thirds of the

1interest due or to become due thereon to the 1st day of July, 1871, in 6 per cent. coupon or registerecl bonds of the denominations of one hundred [dollars] and multiples thereof, elated that da;y, to become due and payable in thirty-four years after date, but redeemable at the pleasure of the state after ten years, the interest to be payable 'semi-annually, on the 1st days of January and July; the coupon and registered bonds to be interconvertible, the -coupons to be receivable at and after maturity for all taxes, debts, clues, anc~ demands due to the sh1te, which was to be expressed on their face; and that the bonds should bear on their face a declaration to the effect that the rellemption thereof is.secured by a sinking fund provided by the htw under which they were issued. The 511er cent. ·dollar bonds might be funded in a similar manner, but they were to bear only 5 per cent. interest. For all sums less than $100 certificates were to be issued, headng the same elate, rate of interest, and pn,yable at the same time .as the bonds mentioned, such certificates, iu sums of $100 or any mu1tir>le thereof, to be excha,ngeable for bonds, and that upon the surrender of the old and issue of the new bonds for two-thirds of the amount due a c0l'tificate sl10uld be issued to the llolder for the other one-third, bearing the same date as the new bond, reciting the amount <Of the bond which is not funded, and tirnt payment of said amount, with interest thereon at the rate prescribed in the surrendered b~mi, will be provided for in accordance with such settlement as should thereafLer be made between the states of Virginia aml West Virginia. It was further provided that until such final settlement there 13hould be 1)aid on wlrnt are known as the sterling bonds two-thirds of the interest acerning on the principal of said bonds ·a,fter July 1, 1871, and that for the interest accrued to said date certificates dated on that cfay should be issued, ·drawing tlle same rate of interest as the bonds, two-thirds of which shoulcl be paid as proYided to be paid on the bonds, the remaining one-tllinl of the unpaid interest both on bonds and certificates to be payable in money, and the principal of said certificates in new sterling bonds of the same character as the old, in accordance with such final .settlement as might be made with West Virginia.

The act provides for the manner of executing and issuing the bonds and certificates, and for reg·istry thereof. For the purpose of creating a sinking fund it was enacted that the sum retilized from the claims of the state against Selden, Withers & Co., an cl the Chesapeake aucl Ohio Canal Company, antl from the sale or disposition of the stocks and bonclt> and debts owned by tlle state against any and all railway and other improvement companies, and all sums realized from claims of the state against the United States, and from any sales of real estate then owned by the state, should be paid into the state treasury to the credit of such sinki~g funq, and that in the year 1880, and .annually thereafter until all the bonds issued under this act are paid, there.should be levied a,nd collected a tax of two cents on the $100 of assessed valuation of all property in the state, persomil, real, and mixed, and paid into the treasury for the like purpose, and the treasurer, auditor of public accounts, anq seconcl auditor were appointed -commissioners of the sinking fund, to have the control and management thereof, and annually; or oftener, to apply such money in the tre:;1si,uy as might be to the credit of the sinking fund to tl.J.e purchase and redemption of bonds issued by authority of this act.

The provision that the coupons shoulcl be receivable for taxes was, as above stated, made a part of the contract, ibut in the following year an act was passed declaring that in the collection of taxes or other demands of the state by the officers charged therewith it should not be lawful for them to receive in payment anything else than gold or .silver coin, United States treasury-notes, or notes of the national banks of the United States, and repealed all laws in conflict therewith.* This actrrepeals so much of the fonding act as is in conflict with it, but of course does not affect the taxpaying quality of coupons already issued.

The pasr;age of tlle fttnding bill of 1871 aroused considerable hostility among a portion of the people of the .state, while it was a.cceptable to the creclitors. Up to the 1st clay of December, 1871, there had b13en funded t-211610,691 under this act, which recognized the debt to be funded at $47,090,867, which amount hnd been reduced ·during the year 1870 by the sale of the stocks held by the state in the Richmond \and Da.nvme and the Richmond

*Laws 1871-'72, p. 141.

558 VALUATION, rrAXATION, AND PUBLIC INDEBTEDNESS~

and Petersburg railroads from which the sum of $1 610,324 was realized and applied to the redemption of the debt. Thus the actual amount to be funded was $45,480,543 (one-third of which amount the state claimed should he paid by West Virginia.), as follows:

Old dobt .........................•••..............••••..••.•..............••••........•.•.••......... $31, 143,224 Interest thereon ..••............•......•............... -- ..•• • ••. -.. -•.•...... -• · · · .. · - · • • · .. · - · · · · - · 6, 221, 806 Debt created under act of March 2, 1866 .................•...•••••••.........••• • ...•..... • • •· - · · · · · · · 6, 576, 914 Interest thereon ....... _. .................... -... -........•.• · · · · · · - - · · . - .... · · · · - · · - - - -- · · · • · • • · · · · • · 2, 703, 284 James River and Kanawha Company clebt, aIHl interest thereon ...•..........................•.. ··• - . . . 445, 630

47,090,867 Less amount rnalized from sale of Richmoucl aucl Dan\·ille auu Richmond an<l Petersburg railroad stock. 1, 610, 32,1

Total. ..•.....••.......•.............. : ...••...........•.........•.. , ....•.....•••...•.•.•..... 45,480,543

The amount funded under this act up to December, 1871 ($21,610,691), was known as the "consol" debt. A portion of the remaining amount was thereafter funded and called the "peeler" debt, while that part left unf:unded was known as the "unfunded" debt.

Xbe public debt of the state, as exhibited by the auditor's report, September 30, 1872, amounted ut; that elate to $45 718112, and remained substantially unchanged without calling forth special legislation until the year 1878, ' ' . . on the 1st day of October of which year the debt was placed, by the report of the auditor of the state, at $29,367,959, exclusive of the one-third ''recognized by Virginia as the proportion of the debt to be settletl by v;.r est Virginia, and for which, in funding, certifica.tes have been or will be issued"·

On the 22d day of February of this year (1878) the general assembly passed a bill (commonly known as the Barbour bill) which, while providing more especially for the levying and apportionment of taxes, recited that the people of the state were unable to bear heavier financial burdens than those already existing, and declaring· the inadequacy of the income of the state to pay, in addition to the general expenses of the government und for the support of schools, the interest on the public debt and the principal claimed under the funding bill of 1871. This bill was vetoed by the governor February 27, 1878. ·

On the 14th clay of March following an act was passed to provide for the consolidation of the public debt aud the payment of a uniform rate of interest thereon. The act authorizes the issue of three per cent. interest-1.Jearhig bonds to mature in thirty-two years, in lieu of certain other outstancling bonds. No action was taken under this aet, however, and it was repealed by the act of March 28, 1879. This act (legalizing what was known as the :McCulloch bill) entitled ".A.n act to provide a plan of settlement of the public debt", recited in its in·eamble that it was believed by the general assembly that the rate of interest heretofore agreed to be paid by the state on the public debt was greater than could be borne without destroying the indust1fal interests of the state, and that the foreign bondholders and the funding association of the United States had, in view of this fact, expressed thefr willingness jointly to endeavor to obtain the consent of the creditors to an abatement in the rate of interest. It. was therefore enacted "that, to provide for funding the debt of the state, the governor of the state is hereby authorized to create bonds of the state, registered and coupon, dated the first day of Januar~', eighteen hundred and seventy-nine.:.._the principal payable forty years thereafter", bearing interest at the rate of three per cent. for ten years, four per cent. for twenty years, and five per cent. for ten years. Section 3 of this act states :

The outstanding indebtedness of the state shall be funded in the new bonds, 'l> bo issued under this act·, as follows : Bo11cl1:1 Hhall be· JJrescnted for exchange with all coupons attached maturing after date of presentation, and shall be e:x:ch1mgecl at tll!l face vnluo of saic1 bonclR, dollar for dollar, for the new bonds, wit.h all coupons attached maturing after the elate of })resentatiou.

In section 4 it is 1>rovided that all due and unpaid interest may be funded under the provisious of this act at the rate of fifty cents on the dollar, and shall be funded at that rate under the third section of this act and taken under the provisions of said section in lieu of bonds of class II, i. e., all bonds funded under the act of March 30,. 1871, as amended by act of March 7, 1872, and two-thirds, with two-thirds of mipaid accrued interest up to the 1st day of July, 1871, on all nnfuncled bonds, including the sterling bonds.

The first section of this act provided that the coupons attached to the new bonds should be ta,x-receivaole,. and that the principal and interest should be forever exempt from taxation within the state.

The terms of this act were to become a contract, if on or before the lst day of May 1879 the council of foreig·n ' ' ' bondholders and the funding association aforesaid should file with the governor their assent to and acceptance of!

the terms of this act, and the governor wa11 authorized in this case forthwith to provide for the l)reparation of the-bonds provided for by the act. ' ' · ·

The said corporations may present for funding * " * at least eight millions of dollars of the outstanding obligations of the state· prior to the :first day of J auuary, eighteen hunured and eighty, and duriug each pcriocl of six mouths from and after the thirt,y-first day of D~'<!embcr, eighteen hundred aud sevent.y-ninc, they may present an additional amount of at least :five million dollars until the whole debt is funded, • " • But if the said corporations shall fail to file with the governor their assell't and agreement as ~foresaicl by the· first clay of :May, eighteen hunclred and seventy-nine, or shall fail to present for funding the outstanding bonds in the proportion andt amounts and during t11e periocls heroinbefore specified, then the governor may1 in his discretion, make a like contract with 1:esponsible· parties for the funding of the debt of the state umler this act.

HisrroRY OF, S'rATE DEBTS-VIRGINIA. 559

With reference to the West Virginia indebtedness this act specifies that-

The owners of all classes of bonds mentioned in this act, who shall exchaugo their secnrities for the bonds created under this act and who shall not ~av? !et received ~ertifica~es representing the remaining one-third of their principal and interest due and payable b; the state of ·west Virgm1111 shall receive ccrt11J.catos of a like character to those issued unde1· the act of March thirty, eighteen hundred and seventy-one, when they make such exchange; and the state of Virginia will negot,iatc or aid the creditors holdino" all of such certificates issued under this act or previous acts in negotiating, with the state of West Virginia for an amicable settlement"'ofthe claims of' such creditors against the state of West Virginia. The acceptance of the said certificates for West Virginia's one-third issued under this act, shall be taken and held as a full and absolnte release of the state of Virginia from all liability on account of the sald certificates..

.In the twelfth section of the act there is a further provision that if there sbtmld be no money in treasury to pay die rnterest on these bonds at the semi-annual periods at which it would fall due. theu it sliould be borrowed and certificates issued therefor in sums of one dollar and its multiples, r~eivable for all taxes and to be hypothecated or sold at not less than seventy-five cents on the dollar.

Under this act there was issued, to October 1, 1879, in registered and coupon bonds and certificates, the sum of $8,049,450, of which amount $105,135 was purchased by tlie commissioners of the sinking· fund. At this date the amount of the public debt, e~clusive. of the proportion which West Virginia was expected to pay, was $29,667 ,305} as will be seen by the subjoined table :

Debt under act of Marcl~ 30, 1871, known as "consol" debt, Cla.ss I. ................................... $14, 604, 94d Debt under act of March 30, 1871, as amentled by act of March 7, 1872, known as "peeler" debt, Class

II, and the unfunded debt of same class........................................................... 7, 118, 042 Amount funded undct• act of March 281 1879, less amount purchased by sinking fund . . . . .. . . . . . . . . • . .. . 7, 944, 315

Total. ............... ;.. ••• •.•. .•.• .. . .. . . . . . .... . •. ••• . . . . .. . . . . .. .. . . .. .. . .. . . . .. .... .. . ... .. 29, 667, 305

=== Amount recognized by Virgini:t ns 'Vest Virginia's pro1>ortion for which certificates have been or will be

issued._-·-·--. - ... - ... ·-- -· .•.. : ··-· •..... - --· -----· -- - .................. --· ••.• -·-· .... ·-·· ••... 15, 239, an ------------

On the 1st day of March, 1880, the general .assembly passed an act "to re-establish the public credit". 'fhis ~wt (known as the Riddleberger bill), before its passage, was amended by striking· .out its thirteenth section ancl inserting in place thereof the following:

, 1'11t1 treasurer of the commonw!lalth is authorizecl and directed .to pay thc.i interest on the bouds issued under this uct, as the ~ame ~hall bcoo1ne due and payable, ·out. of, any money in t,he tre&Bll).'Y not ot<herwise 11ppro1!riated.

'rhe twelfth section of the bill was also stricken ont, and the following inserted in lieu thereof: Executors, administrators, and others acting us fiduciaries may exchange any state bonds l1elcl by them for bonds issued und(1r t,his

net when so authorized l1y the court having ,i uriscliction in the i1remises; and the same when so made shall be cousiclered a lawful investmeu t.

The fourteenth section was slightly amended, and the eighteenth section stricken out . .Below will be found the bill as originally presented for the consideration of the general assembly:

A BILL to 1·0-estnblish the public crecl!t.

Whereas the people of Virginia have renounced the basis and principles of the proposed settlement of t,he ii.nhlic debt which are comprehended in the act of assembly app11ovecl Mnreh 28, 1879; and

Where11S it is confidently believed that the people of this state will never acquiesce in any settlement which ah111! obligate them and ·their posterity to pay auy i)art of the interest upon the public debt which accrued during the war and tl111 period of reconstruction; ancl

Whereas the priucipal of the debt reeoguized by the act approved March 30, 1871, computed to the 1st of July following, and titken us the debt of the state 'before. the creation of West Virginia ai; $45, 718,112 231 embracetl $151025,604 of capitalized interest which had ncerueci during the period of war and rccoustrnctiou; and

Whereas every considemtion of equity and the circumstances of' war, the imrneuse loss of property by the people of Yfrginla, aggregating five hundred millions of dollars, and the shrinkage iu assessed values from $72:l,OOO,OOO to $336,000,000, reducing the revenues from over four millions to two and a h11lf millions, further jnBLify the elimination of such capitalized interest from any computation of the debt; and ·

Wherens the amount of such capitalized interest constittrtes, as near as rnay be, one-third of saill imlebteduess so corupntecl to Jnly

1, 1871; and 1 Whereas legislation assigning two-thirds of saicl indebteclness to Virginia and one-thinl to West Virginia haB been generally acquie~ce!l

ln, and the principal of the indebtedness tlrns wrongfully apportioned to Virginia nuder the computation 0£ the act approvecl March ao, 1871, is, as of January 1, 18t:l0, $31,102,571, whereof $22,909,447 is evidenced hy bonds or other obligatio1~s issuccl uucler acts of March 30, 1871, n.nc.l March 21:!, 1879

1 and hereinafter denominatccl as Class .A, nnd the remainder by bonds and other evitlcmce of debt, designated as Class II

b~' the act a.pprovecl March 28, 18791 aggregating, as of January 1, 1880, the sum of $8,193,124; and Whereas the holclers of said obligations of Class .A. (except tLS to $2,500,000 of Class II, fnn!lecl under tho said act of March. 28, 18i9}

l1nYe for nine years, including July 1, ltlBO, receivetl interest, uominally at 6 per ceut., upon a pdncipal one-third too large, by the wrougfu1 onpitaliza.iion of interest, as· aforesaid, which, reokonecl at 4t per cent., amounts to over $3,000,000, ancl ought not in equity to have beel\ paid, therefore the principal of said indebtedness, as it now stands1 amounting to $22,909,447, ought i:o be reduced by the amount of interest so wrongfully capitalized and the i~terest upon interest tlrns wrongfully llaicl· to the holders of such bonds; imc1 therefore the principal of t.his class of the state indebtedness shoulcl in equity be reduced to $12,142,006, or at the rate of $53 for every $100 of the face of such indebtedness as is uow outstan11iug; ancl

Whereas the principal of that part cif the deht known as Class II in the act of March 18, 1879, 11mountiu.g1 as of Janmn·y 1, l8t0, to $8,193,124, is one-third too large by the wrongful capitalization as afores11id, the same should be reduced to $5,46g,os3, or at the rate of $66 66f for every $100 of the face of such i~debtedness as is now outstanding; nncl

'

560 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

\Vhereas interest for nine years to lst July, 1880, has been allowed upon the principal o.f tho debt embraced in Class II aforesaid, wbich principal is too large )Jy one~t]J.ircl 9f the amount thereof because of tho capitalization of interest aforesaicl, and there is now pnst c11Je an<l unpaid of such i:q.t,crest $3,4:351145, therefore it is equitable that the same should be recluced by the sum of $1,474,762 (that being i . .nterest upon the one-tl).ird of principil'l so wrengfully capitalized) or funded in the bonds anthorizecl to ho issued under this act at the mte of $60 for eve-,:y $100 of such past due p,nd unpaid interest aforesaid; ancl

Wl,wreastheequit:i,ble adjustment of the public debt of the state, as determined by tho application of tho fact~ and principles aforoimi<l, fixes the aggregate there.of at $19,665, 1'16; and

·whereas there are now O]lt~tand~ng $783,241 flO of past-due tax-receivable coupons ancl balances dne t:b the schools, asylums, ancl on other accounts, amounting to some $1,800,COO, for the payment of which it is of paramount im110rt.ance that iirovision be marlo in the apportionment of t1ie current net revenues of the state; and

Whereas the not revenues of the state cannot be safely relied on for more-than $2,165,000 after the reassessment requirecl to lie made in 1880, owing to the re,ducti,on in tf/.xable values estimated to be consequent thereupon nncl certain necessary reforms iu tho system of assessment of property and licenses; and

\Vhercas the existing ;rate of taxation is recognized to be the highest that can be enc1 urocl unclcr the circumstances of tlle long distress and heavy burdens .of this people, and i'.he search for new subjects of taxation has been exhausted; ancl

'Vhereas the necessary expenses of conducting the government, after adopting ancl applying every in·acticnblo measure of reform and economy, cannot safely be estimatecl he low the sum of $900,000, and the proportion of' such estimated revenue due to tho public schooJs will be $431,700, the balance remaining for the liquidation of the public debts aforesaid, aml for tho payment of interest upon tho llomla created hy th.is .act, cannot exceed $833,300; and

\Vhereas tlie means of prompt and regular payment should be apparent, 1mcl the people's apP.ro)Jat.ion of this settlement should ho expressed at the polls, in order to give assurance of the good faith and performance thereof: Therefore,

1. Be it enacted by the ,qeneral assembly Qf Vfrginia, That the board of commissioners of the sinking fnml of tho state bt1, aml they nrtl hereby, empowered .~P,.tl directed to create bonds, registered ancl coupon, to such au extent as may be necessary to comply with tlrn provisions of this act.

2. Said honcls shall he dated July 1, 1880, and be payable at the offir;e of the treasurer of tho state on the 1st <lay of ,Jn]~', ll!20: Pro1•i dnl, That the state may at any time, ancl from time to time after July 1, 1890, redeem any part of the same in·inci1)al ancl interest at par. In case of' such retlemption heforn m.:i.t)).rity the b.onds to he paid shall be c1eterminecLby lot by saicl board of commissio1~ors, and notice of the bonds so selectec1 to l)e paicl shall be given in a newspaper published at Richmond, New York, ancl London, England, whmt int.crest from ;mcl after ninety U.ays from tlm clato of such imblication in London shall cease upon the llonds so designated to be paid,

3. The form of the bond shall be as follows, to wit;

The commonwealth of Virginia.acknowledges herself indebted to --- (in tho case of a conpon bolHl to bearer, aucl in tho case of a re.gistemd bond inserting the name of the person or corporation) in the sum of$---, which she promises to pay in lawfol ruonoy of tho Unitecl States, at the office of the treasnrer of the sfate, Richmond, Virginht, on the 1st da.y of January, 1920, with tho option of payment at par, principal ancl interest, before matnrity, at any time after July 1, 1890; an cl interest at the office of the treasurnr of the stafo in 1411<:h lawful money on thB 1st days of J1111uary and Jnly, at the rate of three per ccntnm per annum, until iinid (accorcliug to the tllnor of thl' annexed con pons, in the case.of coupon b,QJ~cls). .

In testimony wliereof, witness the signature of the treasurer and the· countersignature of the secon<l amlitor, lwreunto nfllxer1, 11ccorcling to law.

4. The form of coupon for coupon bonds shall be as follows, to wit :

No. - (of bond).

The commonwealth of Virginia will pay to bearer --- dollars, iu la.wful money of the United States, at the office of tbe trcaanrer, Eiehmoncl, Virginia, on the lat clay of January anc1 July alternately, the first coupon to be payable January 1, 1880.

$--. ----,

Each coupon to lJc impressed on the back with its number, in the order of maturity, from 1 forwanl. Trcas111'e1·.

5. The said board of commissioners are authorized to issue such boncls, in denominations of one hunclred, ilve hundred, and 0110

thousand dollars, as m~y be necessary to carry ont the provisions of this act, each cleuomination to be of clifforeut tint: P1'oviclcd. Tl111t registered bonc1s may be issued of any denomination multiple of one hundred, and all registerec1 .bonds to be of tho same tint; ancl they are anthorize~l to issue such bonds, registered or coupon, in exchange for the outstanding obligations of the ·state lteroiubef'ore J)numeratecl, including the bonds helc1 by the literary fund, as follows, that is to say:

(a) For th.e principal of all boucls or other evidence of debt embraced in Class A, at the rate of' 53 per cent.; thnt is to say, $53 of the bonc1s authorized under this act (principal all!l accrued interest from the preceding period of maturity to the date of exchange at par) ;tre to be given for every $100, face (principal and accrnccl interest from the preceding semi-annual period of maturit,y to the date of exchnngc of such indebteclnPss), and ;for any interest which may be past clue and unpaid t1pon such indebtedness funclecl boncls, issued under this actJ ma.y be giYen, dollar for dollar.

(b) For the prii;icipal of all bonds or other evidences of clebt embraced in Class II, at the rate of 66t per cent. • that is to say, $6G 66! cf the boll!ls authorized 1;>y this act (principal and aecmed interest from the precediug periocl of maturity to the cl: to of excbango at }Jar) jlre to be given for every $100, face, of the principal of sncb inclebteclness.

(o) For two-thirds of the interest past clue and unpaid upon the unfunded debt, including tho sterling bonds since July 1, 1871, ancl for ~11 other past clue a_ncl unpaid interest upon other bonds ancl evidences of debt embraced in Class II, to the elate of exchange, at the rate pf 60.1 per cent.;that is to say, for every $100 of' such interest, so computed, $60 of the bonds issued under this not (principal and accrnecl interest from the prece~ling periocl of maturity to the date of exchange at par) are .to be given. . . 6. For the one-th1rc1 of the unfunded debt, inclucling the sterling bonds, com1mtecl as of the 1st of' July, 1871, the saicl boarcl of

1m1kmg .fund commi$$ioners shall issue a certificate as follows: · No.--.

The comn,ouwealth ofVirgh1ia has tl).is clay clischarg~cl her accepted share of the (registered or coupon, as the case may be) bondiJ for ---clolfars, held by----, datecl the -- day of--, and numllered-- leaving a balance of---clollars with interesl fr?111 the1st ~day of J"t~ly, 1871, to be accounted for by the ~tate "of West Virginia, witho~t recourse upon this commonwealth.

Done 11. t),l.e capital of tl).e st;ite .of Virgil).ia this -- day of--, 18--.

-.------, .SCconi! A 11i!itor.

------, Treasu1·er •

HISTORY OF STATE DEBTS-VIRGINIA. 561 7. The said board of eommis$ioners are empowered to issue for any fractional part of one hundred dollars of the indebtedness funded

under this act the following certificate:

Register No.--.] FRACTIONAL CERTIFICATE. [Transaction No.--,'

T~is certificate entitles the holder hereof to the sum of $-, fundable. at its f~ce in the bonds of the commonwealth of Virginia, authorized by an act approved the -- day of--, 1880, when presented, wrlih certificates of like tenor, or in conjunction with other evidences of debt fmidable under said act, in amounts of $100 and multiples thereof.

Done at th~ capital of Virginia this -- day of--, 188-.

------, Treasurer.

,----, Second Auditor.

The certificates so issued shall be registered by the second auditor in a register kept for that specific purpose, giving the do,te and number of the transaction to whieh it relates, the amount of the same, and the name of the person or corporation to whom it was issued; and as such certificates are refunded the so,me shall be canceled and preserved, as herein provided in re~pect to other obligations refunded.

8. AU the bonds and certificates of debt ancl evidences of past clue and unpaid interest taken in under the provisions of this act shall be caucelccl by the treasurer in the presence of the board of commissioners of the sinking fund as the same are acquired by the treaaurcr, and the same shall be carefully preservecl until such time as the general assembly may otherwise direct. A schedule of the bonds, certificates, and other evidences of debt so canceled from time to time shall be certified by said board and filed with the treasurer for preservation.

9. All the cou1Jons ancl registerecl bonds and fractional certificates issued under this act shall be separately registered by the second auditor in books kept for tho specific purpose, in each case giving the date, number, and amount of the obligations issued, and the name of the person or corporation to whom issued, ancl the elate, number, and amount and description of the bond, bonds, or indebtedness surrendered.

10. The plates from which the bonds ancl fractional certificates authorized by this act are printe(l shall be the property of the commonwealth, ancl shall remain in the keeping of tho said board of commissioners of the sinking fund.

11. In the year 1890, and annually thereafter until all the bonds issuecl under and by authorit.y of this act are paid, there shall be separately leviccl 1111d collected, as other ta:xes are collectecl, a tax of two cents on the $100 of the assessed value of all property in the state subject to taxation for other purposes, which shall be paid into the treasury to the credit of the sinking fund; and the commissioners of the said sinking fund shall annually, or oftener, apply the same to the redemption or purchase (at a rate not above par) of the bondij issuecl uncler this act, ancl the bonc1s so redeemed shall be cancelecl by the said board, and the same registered by the second auditor, in a book to be kept for the pur11ose, giving the number, the date of issue, the character, the amount, and the owner at the time of purchase of the bonds so recleemell ancl canceled.

12. Executors, administrators, and others acting as filluciaries, may invest in the bonds issued under this act when so authorized by . the county, corporation, or circuit court, to which such executor, administrator, or other·fiduciary is accountable for the trust-subject, and the same, when so macle, shall be considere(l a lawful investment.

13. That the semi-annual interest, as it may become due and payable u1Jon the bonds issued under this act, may be promptly and regularly met, one-third of the net revenue collectecl from the levy on 1111 property (personal, real, ancl income), and one-half of the net revenue collected from licenses, shnll be separat13ly collected and paid iuto the treasury to the credit of the public debt, and the same applied to tho payment of tho interest thereon: Provirlcd, '!'hat the legislature may, at the end of every succeeding two years from the 1st of January, 1882, pass to the credit of the sinking funcl such balance as may then staucl to the credit of tho,t account over and above any interest which may then remain due ancl unpakl upon the bonds issuecl uncler this act, such balance, so transferred, to be employed by the said commissioners of the sinking fund in the redemption of the said bonds, as provided in the eleventh section of this act.

14. The several tax collectors of this commonwealth shall receive in discharge of the taxes, license taxes, and other dues, gold, silver, United States treasury notes, national bank currency, aml the temporary-loan certificates, as hereinafter llrovidecl, and nothing else: l'i·oviiled, That in all cases in which an officer charged by law with the collection of revenue due the state shall take any step for the collection of the same, claimecl to be due from any citizen or tax-payer, such person against whom such step is taken, if he concedes the same to be unjust or illegal, or against any st11tute, or to be uncomititutio1rnl, may pay the same under protest, and upon such payment the officer collecting the same shall pay such revenue into the state treasury, giving notice at the time of such payment to the treasurer tha:t the same was iiaicl under protest. The person so ).laying such revenue may, at any time within thirt.y days after making such payment, and not longer thereafter, sue the said officer so collecting such revenue in the county or corporation court in which said revenue was assessed, and if it be determined that the same was wrongfully collectecl, for any reason going to the merits of the same, then the court trying the case may certify of record that the same was wrongfully lll1icl ancl ought to be refunded; and thereupon the auditor of public accounts shall issue his proper warrant for the same, which shall be paicl in preference to other claims on the treasury. '!'here shall be no other remedy in any case of the coUection of revenue or the attempt to collect revenue illegally, or the attempt to collect revenue in funcls only receivable by said officers uncler this law, the same being other and different funds than the tax-payer may tender or claim the right to pay, than such as are herein provided, ancl no writ for the prevention of any revenue claim, or to hinder or delay the collection of the same, shall in any wise issue, either injunction, supersecleas, mandamus, prohibition, or any other w1·it or process whatever) but in all cases where for any reason auy person shall claim that the revenue so collected of him was wrongfully or illegally collected the remedy for such person shall be as above provided, and in no other manner. In all such cases, if the courts shall certify of record that the officer defendant acted in goocl faith and diligently defended the action, the necessary cost incurred by him shall be taxed to and paid by the state as in criminal cases. The commonwealth's attorney of the county or corporation in which suit is brought shall appear and represent the defense. In every case where judgment is rendered'for the defendant a foe of ten dollars shall be taxed in favor of said attorney and against the plaintiff, and whenever,the court shall refuse to certify the good faith and diligence of the officer clefencling the caso a like fee often dollars shall be taxed againetthe sttid officer. Any officer chargecl with the collection of revenue, who shall receive payment thereof in anything other than that hereinbefore provicled, shall be deemecl guilty of a misdemeanor and fined not less than $100 nor·mo~e than $500, in the discretion of the court but nothing herein contained shall be construed to subject any officer of the state to any smt other than as herein before provided for ~ny refusal on his part to, accept in payment of revenue clue the state any kind or description of fundJ!, security, or paper not authorized by this act.

36 W D T

562 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

15. The auditor of the state shall prepare ancl furnish to the clerks of the county and corpomtion courts of the commonwealth, on or before the 15th day of July, 1881, a book known as ''Temporary-Loan Book", which shall consist of printed forms of certificates and stubs, as follows:

STUD.

No.-.

[Name of lender.]

[Date of issue.]

[Amount of certificate.]

r .Amount of cash received,]

CERTIFICATE.

No.-, County (or city) of--, - <1o.y of--, 188-.

The commonwealth of Virginia owes ----, of-- county (or city), Virginia, in consideration of money loaned her to meet a casual deficit in the revenue and to redeem previous liabilities of the state, under act of-- day of --, 1880, -- dollars, payable on clem:md, without interest, at tho office of tho treasurer of Virgini:1 on presm~tation of this certificate by said -- --- in person, at the rate of one for two, or receivable at par by all collectors of taxes for any and all taxes on real or personal propcrt.y assessed againstth9 above-named lender, for which he is not delinquent if presented within six months from this elate, and not otherwise. Not transferable.

--- ---, .Audito1·.

Saicl stnbs and checks shall be signeil by the auclitor in person or by stencil and numbered serially, beginning with No. 1 for each county (or city), and the number of such for each county (or city) shall be at least equal to the number of land owners and property holders therein. On or before the lat day of July the several Clerks of the county or corporation courts of this commonwealth shall execute and forw:ml to the auditor of the state a boml in the penalty of $10,000, with security approved by the jmlge of the county or corpomtion court of which they are respectively clerks, conclitione~l faithfully to perform the clnties. imposed upon such clerk by tho provisions of this act, an<l to account for and pay over to the treasurers of their respective counties on the first of every month, lieginniug August 1, 1881, :ill moneys roccivccl under this act. ·

.A.ccompanying saicl temporary-loan boolrs the auditor shah furnish to saicl clerks printecl allvertisements, at least five for every election precinct in their respective counties or cities, as follows:

To all good cilizens of the connty ( 01· city) of--, 8late of Virginia: The commonwealth of Virginia, in order to meet a casual deficit in the revenue, and in order to recleem existing liabilities of tho

state, clesires to borrow from her citizens a sum sufficient to meet said casual cleficit and redeem said liabilities, imcl solicits from tho citizens of this county (or city) subscriptions to a tempora.ry loan. Every citizen of this county (or city) is invited to subscribe to sttid loan. Subscriptions to any amount not exceeding in any instance the amount of taxes annually assessed against the land ancl personal property of the subscriber for which he is not delinquent are solicited from the citizens of this county (or city). Any person sub~criliing to said loan will apply to the clerk of the county (or corporation) conrt of this county (or city), and upon the pityment, in cash, of liis 1mbscription to saicl clerk will receive a certificate of indebtedness, elated upon the day of such subscription, acknowledging the liabilit,y

, of the state to him for an amount twice as large :is his subscription, payable on presentation of saicl certificate by him in person at tho treasury at the rate of one for two, or receivable at par by all collectors of taxes for any or all taxes on real or personal property nssesse1l against him for which he is not delinquent if presented within six months from its date, and not otherwise. Not transfemble.

· -- --, .. t1.1idilo1·.

Upon receipt of saicl :iclvertiscments sn,id clerks shall immediately post the same at the court-house door of their respective courts, aml in at least three public places in each voting precinct of their respective counties (or cities). .A. similar advertisement shall bo inserted by the auditor in some paper published in each of the cities having a corporation court, and in every county in which:.. paper is 1mblished, beginning July 1, 1881, at least once a week for eight weeks, and inviting subscriptions to saill loan.

And any 1ierso11 or corporatfon so desiring may apply directly to the treasurer of the state to subscribe to sakl loan, and upon tho payment, in cash, of his or their subscription shall receive from the auditor a certificate such as herein before clescri\tecl, Ilrovidod the same shall not exceed the amount of taxes on real ancl personal pro1lerty assessecl against him on ancl after the 1st of February, 1881. The clerk receiving such book shall receipt for the same and state iu said receipt the number of certificates therein. llpon application of ::my subscriber and payment in cash of his subscription, the clerk of the court to whom such payment is made shall fill up the first blank certificate upon l,lis book with the date of payment, 1;he name and residence of the subscriber, and an amount double the subscription.

On the stub he shall enter the same and the actual amount of cash received. If in making ont any certificate he clamages the samo so tlrn.t it b\lcomes useless, he shall leave it nntorn from the book, obliterating the signature and indorsing the stub, and take the next serial number. If auy certificates be lost or stolen from said book, he slmll forthwith notify the treasurer of his county (or corporation) of tho missing numbers ,and warn him not to receive the same, ancl shall likewise notify the auditor of the facts concerning said loss or theft, a.ml on the stub of the lost or stolon certificates shall indorsc the facts. Upon affidavit ofthefaets satisfactory to him, any clerk mayissne a duplicate for a certificate whioh has been lost or destroyed to the person entitled thereto, ancl across the face aucl on the stub of snch he shall intlorse c1uplieate of number. The trnasurer of the county (or city) shall, on the 1st day of .A.ugust, 1881, and upon the 1st of each succeeding month, so long n,s the temporary loan-books remain in the liancls of the clerk, call n11on him for his books. The treasurer shall, upon blanks to be furnished him by the auditor, make up a tabulateil statement as follows:

Clerk oftlw county (or city) of--, in acconnt with the commomvealthof Vi1·giniafor BttbscriptionB to temporai·y loan of 188- for the flt0nth of---. -

Number of ccrtiftcnte. Name of sub- Do.te of .A.mount of .A.mount of Redeemed. Not re-scriber. issne. ccrtiflcate. cash received. deemed.

For the amount of cash received by said clerk he shall write his receipt at the foot of said tabular statement, and shall forward a duplicate of such statement aud receipt to the auditor. The clerk shall immediately pay over the sum so received by him to the treasurer

· upon his teuclering ·said receipt. If he fails so to do, it shall be the cluty of the treasurer to move n,gainst him and his securities forthwith upon his boncl in the court having cognizance of such motions, and to notify the auilitor of his default. It shall be the cluty of the clerks vftlie contts to whom said temporary-loan books are transmitted by the auilitor, on the 1st of July next following their receipt, to return the same to the auilitor, together with the recei_pts of the treasurer, for verification. The amount"of subscriptions to said loan received in

HIS'l'ORY OF STA'rE DEnrrS-VIRGINIA-WEST VIRGINIA. 563

any county (or city) shall in no case exceecl the aggregate of revenue from taxes on larnl au cl personal property due the commonwealth for the current fiscal year by more than 10 per cent., and preference shall be given to the land ancl proiierty owners of each county an cl city in receiving subscriptions to saicl loan. Any clerk who shall falsely and :framlulently issue any temporary-loan certificate authorized by this act, without rccci ving the cash therefor at the time it issues, shall be cleemecl guilty of a felony, aml, u pou conviction thereof, shall b& confined in the penitentiary not less than one nor more than five years. The county ancl city treasurers of this state shall rciccive at par, in payment of taxes on laml and personal property assessed in their counties or cities which are not delinqucint, the certificates afores11id, issucid by the clerk of their county· or corporation, when the same are presented by the person to whom they wcm issncd, or his 11gcnt, in payment of his taxes on real or :rersonal property. Saicl treasurer shall arrange 1111 such certifici1tes recleemetl hy him accorcliug to their serial numbers, aucl returu tho same, with his accounts, to the treasurer of the state. The treasurer of the state shall receiye at par, in payment of any taxes assessed on or after February 1, 1881, clue to tho commonwealth, which are pay11ble to him directly by faw, whether such taxes be delinquent or not, temporary-loan certificates issued by the auclitor, as hereinabove provi<letl: Provided, however, That the aggregate of temporary-loan certificates issued directly from the office of the auditor for subscriptions to the treasurer of the state under this act shall not cxceecl $1,000,000. Any treasurer who shall fail to move int.he proper court against any clerk who is c1eli11quc11t for ten clays in paying over on the first of the month the amount of temporary loan suliscribecl for the previous month shall be deemecl guilty of a misdemeanor, ancl, on conviction thereof~ slrnll be fined not less than $100 nor more than $500, arid he nnd his securities upon his official bond shall be liable for the amount Clue 1>y said clerk; 1111d the county 11ncl cit.y treasurers of this state and their securities shall forthwith appear before the court which took their boncls and so alter the same ns to make them embrace their liability under this act, nnd they i,ihall forward to the auclitor a certific11te of the· cfork that said bonds have been so altered. The clerk receiving said subscriptions shall be entitlecl to a commission of -- per cent. on all subscriptions received by him unclor this act, and may deduct the same from such receipts in account,ing with the treasurer. .

16. All necessary expenses incurred in the execution of this act shall be paid out of moneys in the treasury not otherwise appropriated, on the warrants of the auditor of public accounts, drawn u:ron the treasurer, on the order of the boarcl of qinking-funcl commissioners.

17. It shall be tho cluty of the officers conclucting the election at the sever[tl places for holding elections in the state, as provided by Jaw, on the Tuesdn.y after the first Monday in November next, to prepare a separate ballot-box, in which shall ho depositClll tho ballots of the qmtlified voters of the state who shall desire to vote upon this uct. Ballots slu1ll be, respectively, as follows: "For the act;" "Ag11inst the act." '.l'he ballots so cast shall be .cleorncd and taken as a vote for or against this act. All persons entitled to vote for members of' the· general assern bly shn.Il have the right to vote "for" or "against" ·tho act .

. The manner of receiving 1111d canvassing the ballots cast at such election on the question of the adoption or rejection of this act, ancl making returns and abstracts of the results thereof, shall conform in all respects to the regulatious prescribed by the gencrn.l election laws of this state, except that the certificates of the judges in this respect shall be as follows:

We hereby certify that at the election held on the -- clay of November, 1880, -- votes were cast "for the actl' n.11tl-- were cnst "against the act".

Signed by the judges : ----. ----. ----.

And providccl f111•the1', That the commissioners of election shall make on a separate sheet an abstract of said votes for aucl against the act, which abstract shall be duly signed by said commissioners and certified to the secretary of tho commonwealth.

Ancl if from such returns and abstract of votes it shall appear that a majority of those voting at said election have voted in favo1· of said act, then it shall be the duty of the secretary of the commonwealth to certify the same to the governor, who shall immediately make proclamaticin thereof, by publication in one or more newspapers published in tlrn city of Richmond having the largest circulation in the ·Country, and from aucl af-ter the elate of such proclamation all the foregoing provisions of this act shall be in full force and virtue.

18. All acts and parts of acts in oonfliot or inconsistent with this act are hereby ropealecl, · 19. This act shall be in force from its passage.

This act, as amended and passed, was vetoed by the governor March 5, 1880.

WEST VIRGINIA.

The state of West Virginia has no recognized sta.te indebtedness. The constitution of the state forbids the creation of any liability in the nature of a public debt, excepting so much thereof as is contained in the provision 1•egarcling the assumption of ".an equitable portion of the public debt of the commonwealth of Virginia prior to January 1, 1861, after such portion shall have been ascertained by the legislature of West Virginia". Such portion has as yet not been agreed upon by West Virginia and Virginia.

The first convention held for the purpose of forming a new state, and which assembled at Wheeling on the 11th clay of June, 1861, in their ordinance passed August 20, 1861, embodied the following provision (see section 9) as to how t:4e legislature of the proposed new state was to proceed in ascertaining West Virginia's equitable proportion of the debt of the commonwealth:

'l'he new state shall take upon itself a just proportion of the public debt of the commonwealth of Virginia prior to the first day of January, eighteen hundred sixty-one, to be ascertained by chargi.Itg to it all state expenditures within the limits thereof, ancl the just proportion of the ordinary expenses of tho state government since any part of said debt was contracted, and deducting therefrom the moneys paid into the treasury of the commonwealth from the counties included within tho said new state during the same periocl.

The constitution for the new state of West Virginia (and schedule thereto annexed), proposed by the convention which assembled at Wheeling November 26, 1861, and which had been consented to by the restored and recognized (by the United States) government of Virginia, contains the. following provision in regard to the debt of the commonwealth:

An equitable portion of the public debt of the commonwealth of' Virginia prior to the first clay of Januarj', eig11teon hundred and sixty-one, shall be asaumecl by this state, and the legislature shall ascertain the snme as soon as may be practicable and provide for the liquidation thereof by a sinking fund sufficient t.o pay the accruing interest, and redeem the principal within thirty-four years.

.,,1)64 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS .

'.Jrhe adjustment of the debt question was first considered by the general assembly of Virginia in the ym~r '.1866-'67, it being the first legislature elected after the war. This assembly, acting under the so-called "Alexaudrm constitution", which instrument provides that-

The general assembly shall provide by Jaw for adjusting with the state of West Virginia the proportion of the public debt of Virgh1.ia proper to be borne by the states of Virginia and West Virginia, respectively, aud may authorize, in conjunction with the state of vVest Vir"inia, the sale of' all lands and property of' every clescriptiou, including all stocks ancl other interest owned and held by tl1e state of Vir~inia in ba11ks, works of internal improvements, and other companies at the time of' the ~ormation of the s.tate of Vf es~ Vi;·ginia, and ~o ordinance passed by the convention which assembled at Wheeling on the eleventh of June, eighteen hunclrecl sixty-one, adJustmg tho public debt between Virginia and West Virginiii., shall be bincling upon this state (see section 27 of article 4),

authorized by joint resolution of ]!'ebruary 28, 1867, the appointment of three commissioners, with the power to treat, first, for the "restoration of Virginia to its ancient jurisdiction and boundaries", and, second, upon the subject of the proper adjustment of the debt. ·

The legislature of West Virginia, at its session February 28, 1867, passed a joint resolution declining to treat for her reunion with Virginia, but authori.zmg the appointment of commissioners, to treat with the eornn;iissioners :ap1Jointed by Virginia for the adjustment of the public debt, as soon as the snit of Virginia (institutecl March, 1806) against West Virginia, pending in the Supreme Court of the United States, to recover jurisdiction over the ,coimties of Berkeley .and Jefferson should be finally determined, as no proper adjustment of the debt coul<l be made until it should ha-ve been determined which state held jurisdiction over said counties.

In January, 1870, the state government of Virginia was reorganized under its new constitution, and was xecognized and restored to representation in Congress by act of January 25, 1870. This constitution contains the following in regard to the debt:

The general assembly slrnU provide by law for adjusting with the state of West Virginia, the proportion of tho public debt of Virgin in. }Jroper to be borne by the states of Virginia and West Virginia, and shall provide that such sum as shall be 1·eceivecl from \Vest Virgiui::i. '8llall be applied to the payment of the public clebt of the state (see section 19, article 10).

On the 18th of February, 1870, the legislature of Virginia passed a joint resolution authorizing the appointment ·<>f commissi01rnrs to treat with West Virginia, and under this resolution commissioners were appointed, who visited the legislature of West Virginia, then in session; that body passed a joint resolution authorizing the appointment -of a joint committee of botlJ. houses to confer witlJ. the commissioners of Virginia, whieh joint committee was so .-appointed. This resolution was superseded in a few days by a joint resolution, passed on the last day of the session, :authorizing the appointment of commissioners to treat with the authorities of Virginia direct; but as no provisions had been made to defray the expenses of such commissioners, action was postponed till the next session of tho Jegislatnre. In 1871 the new legislature passed a resolution (February 15) to reappoint such commissioners, which was acted upon by the governor; but as the general assembly of Virginia, on the 11th of February, 1871, bad aclopte(l .11 resolution tendering t~ the state of West Virginia an arbitration of all matters touching the apportionment -Of the debt, thereby changing the manner of negotiations then authorized, which tender having been declined by . \Vest Virginia, the legislature, by resolution adopted February 24, 1871, requested the state of Virginia to permit megotiations to proceed through the commissioners already authorized by the two states.

On tlJ.e 30th of March, 1871, the legislature of Virginia passed the funding bill, by which it agreed to fnud -two-thirds of the debt by issuing new bonds therefor, and to issue certificates for the other third, pltyable iu accordance with such settlement as should thereafter be hacl between the two states.

The certificates so issued for that part of the debt which West Virginia is expected to pay are dated Richmond, Virginia, July 1, 1871, and are generally called "West Virginia deferred certificates", "West Virginia bonds," or 4

' West Virginia sixes", and are worded as follows : TREASURER'S Ol!'FICE, • .Richmontl, Tlfrginia, Jnlu 1, Hli'l.

This is to certify that thero is clue unto -- heirs, executors, administrators, or assigns -- cloll!1l's, being one-third of bonc1 '8urrcmdered under the provisions of an act approved March 30, 1871, entitled ".An act to provide for the funrliug ancl 11ayment of tho public debt" (dz, boncl No. -, with interest amounting to - clollars). Payment of said one-thircl, with interest thereon at t.ho i·ate of .six per cent. i>er anuum, will be provided for in accorclance with such settloment as shall hereafter be hacl between t110 states of Virginin, .and \Vest Virgini::i. in regard to the public debt of the state of Virginia existing at the time of its dismemberment aml the state of Virgiufo .holds said bonds so far as uufimded iu trust for tho holder hereof or his assigns. , '

In testimony whereof', this certificate ha.s been signed by the treasurer and eountersignecl by the second auditor, as provillcd by la,w. ----,

-- ---, Second .Amlitor. TreaB1irer Commonwecilth of Vi1'g·inia.

West Virginia has never issued any such papers as "West Virginia certificates" ancl "West Virginia bonds". 'The claims of the holders of thes.e certificates and bonds issued by Virginia, although having been repeatedly ;pr~sentel1 to the state authorities of West Virginia, have not been recognized; and no ])roposals for a, settlemeut -0n the part of these holders to the state authorities have found any legislative discussion (see letter of Governor Jackson, elated l\fay 16, 1881, in reply to George K. Kearston, esq., London, England, regarding such claims).

The funding bill of Virginia recognizes an amount of from $45,000,000 to $46 000 000 as .J:he de9t of Virginia t>efore th0 creation of West Virginia (which amount is computed up to the 1st of July: 1871), and apportions one-

HISTORY OF STATE DEBTS-WEST VIRGINifo-. · 565

third .of that am?unt to West. Virginia as her proportion of the public debt, on the ground that West Virginia. contamed one-third of the territory and population formerly belonging to Virginia.

The debt ~~mmissioners of West Virginia, acting under joiut res.olutions of the legislature (February 15 and 241

1871), aft.er failrng in their effort to treat with the authorities of Virginia, in their report to the governor dated: August 9, 1871, state the amount of debt clue Virginia to be $953,360 23, which amount they compute as foll~ws:

Dr. l!'or amounts expended and invested in her territory up to January 11 1861 .......•.•....•....•.. $3, 343, 929 29 Cr. By one-fourth of the estimate<l value of public lmilc1ings aml other assets ...•...•.•. $968, 750 00

By three-thirteenths of the United States surplus fund............................... 446, 032 92 By three-sevenths of the literary fond.............................................. 647, 079 92 By the amount collected in West Virginia after January 1, 1861. ...•.. .. ...... ...... 328, 706 22

2, 390, 56!) 06

Balance due V:irginia .......••....••....•......•.••...............................•••....•.. 953,360 23

The commissioners say that: ===

All, or nearly all, of tho whole fnnded debt of, Virginia cxis1iing on the 1st day of January, 1861, nmounting to $31, 779,067 32 (after all dcc~uctions), was incnrrecl for ancl actually expcnclecl in works of imblic improvement, such as canals, railroads, turnpikes, pla,nk·roads, aml bmlges ; that thereof' the sum of $28,994, 738 03 was expended for improvements in the present state of Virginia, ancl only $2,784,329 29' for public improvements in the present state of West Virginia. This sum, increased by $559,600 (tho stock of Virginia in West Virginia. banks and the Yalue of the Lewisburg law library), will give tho total expenditures for all purposes made in West Virginia, viz,. $3,343,929 29.

Further, that the present state of Virginia contains 41,352 square miles, and West Virginia 20,0001 or less tha,n one-tlrird of tho area. of the commonwealth.

Furt.11er, that the counties composing what is now Virginia contained, aeeorcling to the census of 1860, a population of 1,220,829, anci! those composing \Vest Virginia 37 4, 985, or less than one-third the entire population of the state.

Further, that $328,706 22 were collected from counties in West Virgini!L nfter January 1, 1861.

In their report they claim to have chargecl West Virginia with all that they founcl expended within her limits, viz, the amount of the funded debt created for improvements within her territory, the amount investecl in her bauks, and the amount expended on asylum and library.

They also credit ·west Virginia with a share of the estimated value of the public property ancl assets of Virginia! other than the property represented in the bonded incle btedness; claiming that Virginia has that property and owes. the debt which it represents.

They estimate the value of public buildings, institutions, and other assets of the two states paid for out of the­gcneral revenue at $3,8713,000, and credit West Virginia with one-fourth thereof, on basis of population.

The surplus revenue of the United States deposited with the state of Virginia under act of Oongress, June 2:3,. 1836, was $2,937,237 34, of which they claim Virginia hacl received $1,932,809 33. This act assigned to each state its share of deposits on the basis of its representation in Oongress. Virginia, in 1860, having thirteen representatives, three of whom were from West Virginia, they therefore claim that three-thirteenths of the surplus funcl belonged to West Virgiuia.

The literu.ry fnncl of the two shttes prior to 1861 amounted to $1,509,853 16, and, as this was apportioned throug110ut the state on the basis pf the white population, they follow this rule and assign to West Virginia three­seveuths thereof, that being the fraction for the white population of West Virgiiiiain 1860.

The debt commissioners also state that subsequent inquiries m_ay change the general result of their labors, and give it as their opinion that the principle upon which the debt should be adjusted is the first and most important point to settle.

The legislature of West Virginia clicl not give its assent to the conclusions of the debt commissioners. Their report having been referred to the finance committee of the senate, that committee~ in their report of December 22, 1873, state that they do not concur with the conclusions drawn by the debt commissioners, believing that the controlling question had not been discussed by these commissioners, by reason of embarrassments surrounding their action.

The finance committee express their opinion that, if the conditions precedent to the admission of West Virginia as a state are to be acceptecl as the basis of adjustment aucl final settlement, Virginia's claim for expenditures coulcl ' very properly be offset by West Virginia's contributions; that upon this basis this subject would be one of eas,y solution, containing no other items than that of creditor and debtor, with balances to be struck upon agreed principles.

Virginia's legislative history establishing the fact that the :first act of assembly to create a debt or issue a bond was passed in 1821, and the executive records showing that the first bond had been issued in 1822, the finance­committee date West Virginia's liability from these ;years, arnl proceed as follows: ·

1st. How much of the.bonclecl debt of Virginia existing January, 1861, hacl been expended within the limits of West Virginia. '

2d. How much had been contributed by the counties forming the same during that· period~

566 VALUATION, TAXATION, AND PUBLIC INDEBrrEDNESS.

The report of the debt commissioners shows that aU state expenditmes within the limits of West Virginia prior to .January, 1861, amounted to $3,3431929 29, and the finance committee accept this amount as importing an obligation upon the people of West Virginia to ~eturn every dollar which had been so contributed to the development of the territory of their state. '

They omit to calculate interest, for the reason that there would be as nmch interest upon West Virginia's contributions as upon receipts from Virginia.

Against the above amount of expenditures they set the moneys paid into the treasury of Virginia from the counties included in the state of West Vfrginia during the same period, which, by a somewhat peculiar mode of computation, they malrn to be $3,892,000; in excess of West Virginia's proportion of the ordinary expenses of the government during tbat period. This sum set against this amount ($3,343,929 29) admitted to have been expended within the state of West Virginia, would leave Virginfa in debt to the new state in the amount of $548,070 71.

The finance committee conclucle that West Virginia is not indebted, and declare in their report: "West Virginia owes no debt, has no bonds for sale, and asks no credit."

On the 28th of March, 1879, the legislature of'Virginia passed the act already cited entitled "An act to provide a plan of settlement of the public debt", etc., which contains the following provision regarding the amount claimed from West Virginia: ·

The owners of all cl!18scs of bomls mentioned in this act, wl10 shall exchange thi\ir securities for tlie bonds cren.tecl under this act, ancl who shall not have yet received certificates representing the remaining one-third of their i1rincipal anc1 interest due and imyable by thCl state ofvVcst Virginia, shall receive certificates of a like character as those issued under the aet of March thirt,y, eighteen hundred and seventy-one, when they make such exchange; and the state of Virginia will negotiate or ai<l the creditors holding all of such certificates issuetl under this act .or previous acts in negotiating with the state of West Virginia for an amicable settlement of the claims of such creuitors against the state of West Virginia. The acceptance of the said certificates for '\Vest Virginia's one-third, issuecl undor this Mt, shall be taken aml he-1<1 as a full a.ud absolute release of the state of Virginia from all liabilHy 01i account of the said ce1·tificates.

This act of March 28, 1879, as an amendment to the funding bill, explains why the authorities of West Virginia have been repeatedly approached by the holclers of such certificates and bonds, demanding a settlement between themselves and -west Virginia direct, as before stated.

The above statement, prepared by llfr . .A.. E. Shuman, of West Virginia, who obtained the facts from the state authorities at Wheeling and from documents of Virginia filed in the Congressional Library at the ca1Jitol at Washington, embodies all negotiations regarding t.he public debt hacl between these two states. The acts, bills, and resolutions by Virginia are herein referred to for the purpose of exhibiting this debt question in a. more comprehensive manner. It is as yet an open question, subject to future settlement between these states. By 1'eviewiug the last actions had by either state-the funding bill of Virginia of 1\forch 30, 1871, and act of lVIarch 28, 1879, and -west Virginia's senate finance committee report of December 23, 1873-it is shown that Virginia claims an amount of over $15,000,000 from West Virginia, while that state disclaims any ancl all such oblig~tions.

Siirnrnary of bills, acts, anil resolutions of Virginia anil West Virginict legislatiwes, herni.n referred to.

VIRGIJ:','IA.

.Alexam1rfa constitution, section 27, article 4. Joint resolution general assembly, February 28, 1866, . New constitution (recognizecl by act of Congress, Januar~- 251

1

1870), section 19, article 10. Joint resolution of legislature, February 181 1870. Joint resolution of legislatme, February 11, 1871. Funding bill, March 30, 1871. Act March 281 18i9.

WEST VIRGINIA.

Ot·dinance Wheeling convention, .August 201 1801. Constitution of West Virginia, ado11ted 1863. Joint rcsolntion legiql:J,ture1 February 28, 186i. Joint resolution legisl:iture, February, 1870. Joint resolution legislature, February 151 1871. Joint resolution legislature, February 24, 1871. Report debt commissioners, .August 91 1871. Report senate finattce committee, Deceml>er 23, 1873.

NORTH CAROLIN .A..

This state was comparatively free from debt until the year 1849. It had, previous to that time, inclorsed or assumed bonds amounting to a few huuclrecl thousand dollars, issued by one or two of its early railroads.

The general assembly, 'at its sessions of 1848-'49 and 1850-'51, authorized the issue of $4901000 of bonds of the' registered class (without coupons), which were the first state bonds proper.

At the same session, 1848-'49, the first coupon bonds were authorized, which were for the construction of the North Cal'Olina ra.ilroad from Golds borough to Charlotte. The first of these bonds bear date ;fan nary 1, 1853.

HISTORY OF STATE DEBTS-NORTH CAROLINA. 5()7

The following statement gives the bonded debt in detail, as contracted from time to time, and the authority for the issue:

For what purpose. .A.uthority. Date. Time to I •.... ------------------------1--------·l------------1-ru_n __ · .1 ,,_mount.

Yean I 10 $370, 000

20 120, 000

10 152, 000

To pny debt of state ...... -................................................. .A.eta of 1848-'49-'50-'51. ... 1849-'52.· ........................... · .. . Fayetteville nnd Weston plank-rond ....................................... .A.ct of 1849 ............... 1849-'52 ................................ 1

Gaston and Weston railroad and Neuse and Tar rivers ..................... .A.ct of 1840 ............... S J'uly l, 1854 ; J'annary 1• 1855 ....... t · l J'ulyl, 1855 ........................ S .

1 North Carol!nlL railroad ......... •• ........... -............................. .A.ct of 1849 ................ J'uly 11 1853, to J'annnry 1, 1855 ....... . 30 I 2, 000, 000

30 Do ................................................................... .A.ct of 1855 ................ April 1, 1855 .......................... ,

F tt '11 d Ce tre plu k road .A.eta of 1854and1855 ...... S April 1• 1855 .................. ···-- }! aye ov1 e an n n • .................... .................... ( J'nlyl, 1858 ........................ ; 20

Fayetteville and Wttrsaw plank-roacl ..... -................................. .Acts of 1854 nntl 1855 ...... J'uly 1, 1855; J'nly 1, 1857 ............. 1 20 Tar river ................................................................... .Acts of 1854ancl1855 ...... J'anuary 11 1856....... .... ............ 30 lnaanoasylum ............................................................. .Actsof1854-'55-'56-'57 .... J'anuaryl, 1858............. .......... JO

Do .............. : ..................................................... .Acts of 1858-'59 ........... J'uly l, 1859............................ 30 At.Jantic an<l North Carolina milroad ................ - . - - . .. . . .. • .. • .. . • • .. .A.eta of 1854-'55-'56-'57.... J'anuary 1, 1856, to October 1, 185i.... ao Albemarle and Chesapeake canal. ......................................... Acts of1850-'57 ........... Ap~U 1, 1857; April 1, 185D........ .... ao Western milroad from Fayetteville ..................... : .................. Acts of 1858-'50-'60-'61.' ... Sundry elates.......................... ao Wostom North Caro!intirnilroad .......................................... .A.eta ofl854-'55 .................. do................................ 30 Wilmington, Chnrlotto and Rutherford rnilronc1 ............................ Actsofl858-'59am11860-'0l ...... do ................................ J ao Certain purposes ........................................................... Acts ofl858-'50 ................ .clo......... ... ...... ...... ... .. •. . 30

Do ......................... -......................................... Acts of 1858-'59 ................. do................................ 10 Cape Fear nml Deep rlvor, North Cnroli~a ................................. Acts of1854-1858 ................ do ................................ 10nnd30 Fundiag debt .............................................................. .A.ct of March 10, 1866 ......

1

J'nnuary1, 1866 ..... ....... ...... .••. 34

Do ................................................................... .A.ct of August 20, 1860 .... October 1, 1868.................. ...... 30

Total. ............................................................................................................................................ .

l, ouo. 000

50, oao

20, 000

15, 000 115, 000

10, 000 . 1, 466. 500

350, 000 600, 000

4, 000, 000 2, ooo, 000

1, 103, 000

107, 060

400, 000

2, 41i, 400 1, 721, 400

----18, 107, 300

Under acts of the general assembly, by which Yarious classes of bonds were retired, this debt was largely reduced. The general assembly of 1879 passecl "an act to compromise, commute, and settle the state clebt".· The act provided tha.t the bonds therein provided for should be taken in exchange for the principal of outstanding bonds; some ~tt 40 i)er cent., which were old or ante-war bonds; some at 25 per cent., which were bonds issned for certain railroads since the war; and some at 15 per cent., which were the bonds issued under what are known as the fnncling acts of March 10, 1866, and August 20, 1868.

The bonds issued for the North Carolina railroad are specially provideu for. Of the amount stated in the foregoi~g table there had been retired, at the date when the act of 1879 was passed, $2,484,255. This act authorized the exchange of bonds to the amount of $1217271045, classified as follows: · ·

$5, 577, 400, at 40 per cent., in new bonds ............................................................... $2, 230, 960 3, 261, 045, at 25 per cent., in new bon~ls ............................................. '. •• • •• . . . • •. . .• • . 8Hi, 261 :l, 888, 600, at 15 per cent., in new bonus ...................................... _. ................ , ....... ~' 290

12, 727, 045 ,bonds to be e:x:changecl for .................. '... • • • • • • • • • . . • • • .. . . . . • • • . . . . . . .. • . . • • • . .. • • • • 3, 629, 511

Under the operations of the "com1Jromise act," the bonds exchanged down to the 17th of June, 1880, amount. to $6,461,445, for which new four lJer cent. bonds to the amount of $1,901,496 25 were issued. In another transaction, where stock was exchanged for olcl bonds of the state, an additional amount of $100,000 of the boncled debt was retired.

The bonds outstanding on the 17th of June, 1880, exchangeable under the" com'promise act'', are as follows:

l!'n,yetteville ancl Western plauk-road ............................................. • · ... · · • .. · • • • · -.. · · · · $4, 800 Gnstt'.lu au<l vVelclon railroad and Neuse ancl Tar rivers ..................................... ·•••·· ·••••· 22, 000 l"ayettevillc; ancl Center plank-road .................................................................... - 20, 000 Fityetteville ancl Warsaw pl auk-road •• '. ................... -............................. - .. • • •• -.. · • • · • 6, 000 Improvement of Tar river .••••...•••••..•••••••••.••••.••••.•. -.................. · • • • • • · · • • • · - · · • • · • • -• 8, 000 Insane.asylum ........................................................................................ • 47,000 Atln.uLic ancl Nort.h Carolina milroad .................................................... - ••...• -·· .••• - 634, 000 Albemarle and Chesapen.ke canal....................................................................... 146,000 Western rn.ilronrl from Fayetteville ......................................................... -•••••. • - - • • 198, 000 W cstem North Carolina milroad ............................................................ •• • • • • • • - · - 1, 680, 500 Wilm inn-ton Charlotte and Rutherford railroad ••••••••••••.••• ." ........................ ; •..••••••• •• • • • 666, 000 .,, ' For certaiu purposes ............................... .' ••••••.•..•.•••• -...... · · · • · • •• • • · · - • . : .. · · · • • · • • · · 418, 300 Cape Fear ancl Deep River Navigation Company ....................................................... •• 81, 500 Funding aGt of March 101 1866 .•••...•.•..••••••• · ..................................... •• - · • · • · • •• • ••· •• • · 1, 441, 000 Funding act of August 201 1868 ......................................... -· • ••••·· ·••••• •••· ••••• · ·••• •• • 792, 500

'l'otal ............................................................... · • • • • • • • · • • -• · • • • • - • · • • • • • • • 6, 16~;!~

568 VALUATION, rrAXATION, AND PUBLIC INDEBTEDNESS.

The following are issues outstanding not provided for in the "compromise act" of 1879. Those marked (*) are of the special tax issues. These bonds ($12,805,000) are not recognized by the legislature as a part of the lawful debt of the state:

For what purpose issued. Authority. Date. 'l'uno to ru11.

YeMs.

.A.mount.

Chatham railroad ••• • • • ... • • • • .. . •• . .• .•• . . . . .•• . • . . .•••... •• •• . . . • • • • . .•. • • • • .•• •• ••• • . . . ••• • ••• . . Ordinance 1862 .••••••••••• J'l!Jl. 1, 1803 20 $215, 000 Do.......................................................................................... Ordinance 1808.... •• • .. •• . Apr. 1, 1808 30 1, 030, 001)

Williurnston and '£ar1Joro' railroad ....................................................................... do ................... Oct. 1, 1809 30 150, 000 *Do .. .. .. .. .. .•. ••. ... ... .•.• .. ... . .. .... . ..... •.. . .. . . .. .... . ....... .•. . . . .. .. .. . .. . . . .... •• . Act 1868-'00 ................... do . •• • • • . 30 300, 000

*Wt•stern railro:ul. ....................................................................................... do ................... Apr. 1, 1809 30 J, 320, 000 •Western Xoi-th Carolina railroad ........................................................ .' ......... Act 1868 .................. Oct. 1, 1808 30 4, 000, 000

*Do .......................................................................................... Act 1808-'60 .••••••••••.••. Ap:o:. 1, 1809 BO 2, 640, 000 *\Vilmington, Chmlotte andRntherfordrailroad ........................................................ do ....................... <lo....... 30 3, 000, 000 *Atlantic, Tennessee nnd Ohio railroad .................................................................. do ....................... <lo ....... 30 100, 000 Penitentiary....................................................................................... Act 1868 .................. Oct. 1, 1868 30 ___ 4_4, 00~

Total ................................ : ............................................................................................. .. 12, 805, 000

The bonds authorized under the act of 1879 bear 4 per cent. interest for thirty years, aud are exempt from taxation. Their coupons ate receivable in payment of all state taxes. They are of the denominations of $1,000, $500, $100, aml $50.

The original issne of bonds for the construction of the North Oarolina railroad was $3,000,000. The state has retired $205,000, leaving outstanding $2,795,000. The stock of the state in this company is pledged for the redemption of the principal of these boncls, and the dividends accruing thereon are applied to the payment of the interest. The general assembly of 1879 provided for the appointment by the governor of a· cmnmission to compromise and settle this part of the state debt by issuing new bonds in redemption of the old. The exchange has not been effected, and the old bonds yet constitute a part of the state debt.

Recognized public debt of North Carolina, December 31, 1880 ................•................•..•..... $5, OOG, 616 ==

Issued for railroads......................... ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • • . • ••• • . • . • •• . . . •. • • 2, 795, 000 Consolidated debt .........•...•................. : . . . . . . . . . . .. .. .. .. . . . . . . .. • . . . •. • .. . • .... ••••••••... •. 2, 211, 616

'.l'otal.. · ·. · · · .............. - .•. · · · - •.... -...•.•..•••••.•.••••.•••••••••••...•••..••••..••••..••• ~006, 6W · .. ==

Six per cent .............••..•.....••.......... ;.... •••• •••• •••• ..• .•• .••••. .. ••.... .•.. •. •• •. . • • • • • • • 2. 795, 000 Four per cent ............ · ................•.......••..........•.••...•••...•••.••..•.•••• , __ .......•••• 2, 211, 616

Total........................................................................................... 5, OOG, 616

ISSUE.

Previous to 1860 . • . . . . . . . . . . . . . . • • . • . • • . . . . . $2, 795, 000 1880 ... - --· .. - . -.. ----.· •. - ••.... -- .....•.. - 2, 211, 616

Total. .••..••••..•••••..••••.•••.•..• 5,006,616.

MATURITY,

1883 ............... - ....•.••. ·-· ..•••. - .. . ••• $977, 000 1884 ...•..•..••...•..••• ·••••• •..••. .•.• ..•• 573, 000 1885 .. -•...•. -- ..• - -- ... - - ... - • -- .. - ' .... - .•. 1, 245, 000 .Aiter 1900 .............••••...•...•••••...••. 2, 211, 616

Total. ............•...•••••..••..•..••. 5, 006, 616

SOUTH OAROLIN.A..

The history of the debt of South Oarolina, from the organization of the state up to 1861, reveals nothing of any special interest when compared with its subsequent history.

Tbe state aidecl private enterprises liberally, guaranteed the bonds of railroads to a large amount, arid established the Bank of the State in 1812, the state being the only stockholder.* The bank was incorporated by the name and style of "The' President and Directors of the Bank of the State of South Oarolina", and it emitted bills for the redemption of which the faith and credit of the state were pledged.

Until the beginning of the civil war the credit of the state was good, ancl the bonded debt, as reported by the comptroller-general in November, 1800, was $4,046,540 16. These bonds were isRuecl for va,rious purposes, viz, the Charleston fire loan; to aid the Blue rndge railroad; and for the new state-house.

The assets of the state were ample, however, to meet all liabilities. On December 22, 1860, the issue of 4,000 certificates of $100 each, to bear six per cent. interest, was authorized; 1,000 certificates to mature on June 1l 1862, 1863, 1864, 1865, respectively, and the proceeds to be devoted to the military defense of the state. The act prov'ided that the certi:fi.eates should be receivable for ta:x;es.

"In 1827 an aet was passed to admit and incorporate private stockholders in the Bank of the State of South Carolina, but it was repealecl by act of December, 1828. . .

HISTORY OF STATE DEBTS--SOUTH CAROLINA. 569

On January 22, J 861, * an act was passed anthorizing the loan of $400,000 for the purpose of continuing the construction of t.he state-house, to evidence which stocks or bonds were to be issued to bear six per cent. interest, payahle semi-annually; $200,000 to be redeemable on July 1, 1882, and the remainder on July 1, 1886.

On December 21, 1861, an act authorizing a loan to pay· the Confeclerate war tax was passed; it provided that the treasurer of the lower division and the president of the Bank of the State should borrow a sum equal to the net amount of the tax to be raised, ancl the faith and funds of the state were pledged for the repayment of the money and the interest. On the same day a loan of $1,800,000 for the military defense of the state was authorized, the stock to be issued therefor to bem· seven per cent. interest, pa,yable semi-annually; $100,000 of the principal to mature on July 1, 1867, and a like a.mount on the same day of each succeeding year until the whole amount was recleemecl.

The following l-!tatement shows the condition of the public debt on September 30, 1865, as taken from the comptroller's report:

CREDITOHS:

Bank of the State for current fonds ... - .. . .•... ... •.. . . ... . .. . ... .... ... ... .... .• •.•. .. ..•••. .. . . •. $1, 178, 789 60 Three per cent. sta·te stock............................... .... .. .. . ... ........ •••. .•.... .. .... .••• 38, 836 60 Six per cent. stock and five per cent. bonds, fire loan .. _ .... __ .....•• _ .. ____ . _. __ ·- .. __ .. _ ..•••• __ . _ 802, 603 86 Six per cent. boncls, Blue Ridge railroad ..... __ --· ... __ .......•...... --· .......•••.•..• --·· --·. .•• • 1, 310, 000 00 Six per cent. bonds ancl stock, new state-house ..•......... ··---· ................... ·-··-·.......... 2,275, 000 00 Six per cent. bonds, mi1i tars defense act, 1860 ...... _ .•..••••.... _ .......... _ ........ _ ... _ .....• __ •. 239, 200 00 Seven per cent. bonds and stock, military defense acts of January aml December, 1861.. ••... .. . ... . . 2, 002, 640 00 New state-house, Columbia ... - .................... _ --· .• _ ••. ·-. __ ......... --· ........ _ ·--···. ... .. 13, 916 60 Blair tuition funcl. ••••......... _ ..............••••. _ ...... _. -· ..... _ ··- .•.••...................• _. 8, 258 08 Balance due to free schools all(1 public ofllcers ..... ___ ............... __ .•. . . . ... .... .. .. ...•... .. . . 144, 392 23

---. Total - . - - ...••••.. - ..•..... _ ................. _ ................. _ ..•••......... _..... •. . . • . . 8, 018, 636 97

The report shows assets amonut.iug to the nominal sum of $8,306,772 63, among which there is a cash item of $3,508 08 belonging to the Blair tuition fund. By an actpassecl on December 20, 1837, the state ltad guaranteed the boncls of the Louisville, Uinciuuati and Charleston Railroad Company in the sum of $2,000,000 on certain conditions (wllich act was a.mended December rn, 1838). To aid the South Carolina railroad, which succeeded the former, an act was passed on December 21, 1865, which was amended on September 19, 1866, authorizing the treasurer to indorse the bonds of the latter company to the extent of the canceled guaranteed bonds of the former. The act provides that the conditions attaching to the first guarantee should remain, viz, a mortgage upon the estate, property, and funds of the company.

An act to provide for the funding of the following debt of the state was passed on September 21, 1866,t which was supplemented by an act of December 20, 1866,f viz: $3,705 46 issued under the act of June, 1838, which was then past due, to bear interest from January 1, 1867 ; the past clue interest on $314,453 89 of stock issued under the same act; $310,000 bonds past clue issnedunder act of the legislature passed in December, 1859, and the interest thereon; the interest on $1,000,000 bonds issued under act passed in 1854; the interest on $250,000 issued under act of December, 1853; the interest on $250,000, issued under the act of 1855; likewise the interest on $1, 775,000 of six per cent. stock issued for building the new state-house, under acts of 1856, 1857, 1858, 1859, 1861, an<l 1863, ancl the interest on the three per cent. stock of the state. For this purpose bonds in the denominations of $100, $500, and $1,000, or (at the option of the holders) certificates of stock were to be issued, one half to be payable January 1, 1887, and the other in 1897, and to bear interest from July 1, 1867, at the rate of six per cent. per annum, payable semi-annually.§

Untler the reconstruction acts of Congress a new constitution was adopted, by a convention which completed its labors on March 17, 1868; it was ratified on April 14, 15, and 16, 1868, and contains the following provisions:

ARTICLE IX. SEC. 7. For the purpose of .clefraying extraordinary expenditures, the state may contract public debts; but such debts sha11 be authorized by law for some single object to be distinctly specified therein; and no such law shall take effect until it shall have been passec1 by the vote of two-thirds of the members of each branch of the general assembly, to be recorded by yeas and nays on the joumals of each house respoctively ;· and every such law shall levy a tax annually sufficient to pay the annual interest of such debt.

SEC. 10. No scrip, certificate, or other evidence of state indebtedness shall be issued, exce1)t for the redemption of stock, bonds, or other evidences of inclebtedness })reviously issued, or for such clebts as are expressly authorizec1 in this constitution.

On December 21, 1865, ancl 1:3eptember, 1866, acts were passed authorizing the issue of bills receivable to the amount of $500,000, ancl to recleem these, as well as for the payment of bonds or other obligations of the state (except those created for the military defense of the state during· the civil war), the faith and credit of the state were pleclgecl by an ordinance ntloptecl by the constitutional convention on January 29, 1868. .

"Erroneously statecl as 1860 in the certificate to the act. t Acts 18G6, special session, p. 366. t Acts 1866, P· 390. § From the re11ort of the comptroller-general, it appears that the outstanding bonds ancl stocks on October 1, 1867, were as follows:

'.rotal :principal of boucls and stocks (including the issues for the military defense of the state)--·· •... $7, 101, 558 33 Bafancc debt not yet funded under acts of September and December, 1866 .••... --· •••.... - . .• . . • . . . . . 547, 496 90 Interest clue October 1, 1867 ..•. ·-···· ...... ...• ...• .••••. .••••. .... .... .............• .... .....• •... 720,200 41

Tot.al . _ •••.....•.....•......• _ ..••••..••••.. _. _ .....•..•..•.••..• _... . • . . . . . • • • . . . • • • . . . . . . . . 8, 378. 255 04 ===

570 VALUA'I'ION, TAXATIDN, AND PUBLIC INDEBTEDNESS.

On August s, 1868, at the first session of the legislature subsequent to the reconstruction of the state, the governor was authorized to borrow $125,000 to meet the current expenses, and to pledge, as collateral, such bills receivable, or other securities of the state owned by the state, as might be necessary tu effect the loan.

Two acts were passed on August 26, 1868: one authorizing the loan of $500,000 to redeem, within twelve months, the outstanding bills receivable of the state; the other authorizing a loan of $1,000,000, or so much thereof as might be necessary (within. twelve months), to pay interest on the public debt, the bonds to be issued for said loan to bear six per cent. interest, payable semi-annually, and to he redeemable in twenty J~ears.

These acts provide for tlle levy of a tax, in addition. to an other taxes, to pay tbe interest on the loan. On September 15, 1868, an act was passed to close the operations of the Bank of the State of' South Carolina.

It J)rovides for the funding of the bills of the bank issued prior to December 20, 1800, ancl accumulated interest, into bonds to be issuecl, dated January 1, 1869, payable in twenty years, with six per cent. interest payable semi-annually. The act repeals so much of the law as provided that the bills of the corporation should be receivable for taxes. The faith and credit of the state to redeem the bonds and 1iay interest were again solemnl.r pledged. 'On the same day an act authorizing additional ai<i to the Blue Ridge Railroad Company was passed. This company, which was to connect with the Georgia ancl East Tennessee railroad, had been granted aid in 1854 to the amount of $1,000,ooo, upon certain conditions, which, as appears by the act of 1868, were not comvlied with. This act authorized the guarantee by the state of $1,000,000 of the bonds of the.company, and the further guarantee of $3,00o,ooo, from time to time, as the company made contracts for the completion of tlle road. The act provides that as soon as any bonds of the road were indorsed by the comptroller, then the estate, property, and funds of the road in South Carolina, North Carolina, Georgia, and Tennessee should stand pledged to the state for the prompt payment of the bonds and interest. This condition was subsequently repealed, an cl the state had no security.

An act entitled" An act ~o authorize a loan for the relief of the treasury" was passell on Februar;v 17, 1869. It proYides that $1,000,000 might be borrowed upon coupon bonds (within twelve months from the ch~te of the act), to hear seven per cent. interest from January 1, 1869, principal redeemable at an;y time, at the option of the state, within twenty years from date of the bonds.

As will appear hereafter, the bonds issued under this act were declared void. At the same session the comptroller was directed to indorse the bonds of the Greenville antl Columbia railroad to the amount of $50,000. An act to provide for the "conversion of state securities" was passed March 23, 1809. It, antliorizcd the treasurer, on application of any person holding stock of the, state, to take the same, and issue, in lien tllereof, couvon bonds in sums of $100, $500, and $1,000, bearing six per cent. interest, interest to be paid semi-i1nmuil1y, mid principal within twenty years. The act also provides for the conversion of bonds into stock in sums of' $100, $500, anu $1,000, the new issue of stocks to bear the same intl'rest as the bonds for which they were exchangcn,ble. This act is known as the" conversion act", and will be referred to by that name hereinafter. By an act passed March 20, 18GO, the time fixed for borrowing $500,000 to redeem bills receivable by act of August 26, 1868, was extended to twenty-four months, and the financial agent of the state in New York was authorized to pledge the bonds of the state which he then had or which might thereafter come into his possession. On December 18, 1869, rm n.ct was passed which provided for the payment, in gold or silver coin, of all interest clue on bonds and stocks of the state, except those issued cluring the period from December 1, 1860, to April 19 1865 with the further 1>rovisio11 that the . . ' ' rnterest on the new state-house bonds should also be paid in coin. The treasurer was authorized to make the necessary exchanges, through the financial agency at New York, to effect the purpose of the act.

The following is a statement of the public debt at the close of the fiscal year ending October 31, 1870, as . appears from the comptroller's report:

Class of securities. I Issued under I Wh nots of- en recloemetlJ!e. Prlncipnl,

Stato of South Carolinn stock ......................................................................... . 1794 At plonsure. $38, 836 60 1sas 1870 , soa, B4B so 1850 l 877 180, ODO 80 1857 1888 127, 441 37 1858 1888-185 804, 870 00 1859 1887-'80 215, 470 24

1861 1ss2-'80 I 1so, a15 oo

180~ I 1890 I l, 740 00

~:~: ....... -... -· .. --~~~~·I 4~:: ~~~ ~~ 1854 1875-'76-'77-'78-'79 970, 000 00

1853-'55 1871-'81 I 499, 000 00 1860 1885 11, 600 00

1866 1887-'97 I 1, 131, 700 57 1868-'69 1ss8-'89 a, ms, 950 oo

Fire loan stock ..•••. ··:, .... ·--· •.. ·········-- ...................... ·--· ............................ .. Stato capitol stock .......... ··---· ..•.....•...•..•. ·-·· ............................................ .

Do ••...••••........••..••..••................•••••..•.•....••.......•.•..........•.....•.•..•••.. Do ............................................................................................. . Do .•....•••••..••.•.••..•.•.•..........•..••..•...•..........•••......•.........•.•.•••••••......

Do .•....• ···--··--_ .•...•.••••• ·-·-·- ..•. ····-- .................. ·-·_ ...••. ·-·-_ .. _ .. -··- ... ·- .. . Do

Com-ersi~~-~~~·;~:::::::: :: : ::: ::::: ::::: :: :::: :: : :::::::::: :: : :::: :::::: :::::: :: : :: ::::: ::: :::: :: : : :: : Fire loan bonds* ..•..•.••••• ··---· ............ ··-----···-····· ........ ····--·· .•.••• ···-·- ...•.•...... BlueRlilgerallroad bonds·-······-·····-··---···-· .. ···-··--···-··········--· ........................ . State capitol bonds ..•••••..•....•..•.......•...••.......••.. ·-·····---····-········--······-·······--·

Do .••••••..•.•.....•.••••.•••..•....••.•...••..•...••.........•.••...•••.•.....••••....•.••.•.•.. Funded debt

l!onds of 1~·~~:::::::::::::::::::::::::::::::::::::_·:_·::.·.".".".".'."." :::::::::::: :::::: :::::: :::::: :::::: 1~65,90800

~~---;;:r;;:::l:::~~~~:--~:-=--:-:-~~~~~_!___~~____'._~, ~These bonds a.re held in Europe. The assets of the Bank of the Sta.to are liable and fully sufficient to meet tlie payment.

Rnto or intcn·est.

a 6

a ()

()

(l

()

fi

6

0 6

0

6

HISTORY OF S!T ATE DEBTS-SOUTH CAROLINA. 571

.Another funding act was passed on March 7, 1871. It is known as the" Sterling funded debt".* It provides for the issue of bonds amounting to $1,200,000, to bear six per cent. :nterest. This loan was never placed on the market, and it is therefore unimportant to give the details of the act, although it was frequently claimed that these bonds hacl been disposed of, and that the funds arising therefrom had bei:m misappropriated. There being no money in the treasury to pay the members of the legislature, an act was passed authorizing the speaker of the house and the president of the senate to issue certificates of pay.t .A. large amount were issued, but the exact .amount could not be ascertained from the records.

Oharges of monst1:ons fraud in the issue of the bonds of the state of South Carolina having been freely ·circulated throughout the state and published widely over the country, the governor, in his annual message, -deemed it necessary to say, in a preface to the debt statement: "It shows the present debt of the state •in its -entirety, suppressing nothing."

Following is the statement of the bonded debt on October 31, 1871, as taken from that document:

Statement of total amount of bo:id3 and stoclcs p~·inted by the American Bank Note Company, and accowiteil. for.

500 bonds, rc(lomption bills reoeiv!1ble, !1t $1,000 ...................................................... . 2,000 bonds, p!1yment interest public debt, !1t $1,000 ................................................... . 1,000 bonds, relief of the treasury, !1t $1,000 .......................................................... . 700 bonds, 1!1nd commission, !1t $1,000 ................................................................. . 800 bonds, redemption bills Ba.l)k of State, at $1,000 ................................................... . 1,500 bonds, redemption bills B!1nk of State, !1t $500., ................................................. . 800 bonds, reclemption bills Bank of State, at $50 ..................................................... . 3

1500 bonds, conversion st!1te securities, 11t $11000 ......................................... · .............. .

4,000 bonds, conversio11 st!1te securities, 11t $1,000 ...................................................... . 1

1200 bonds, conversion st!1te securities, at $500 ........................................................ .

1,000 bonds, conversion st!1te securities, at $100 ........................................................ . Sterliugloan ............................................ --·· ...... ---- --···· .................... •·••· -Certificates conversion stock ................................ - .......................... - --- •.. - -- ---·.

$500,000 2,000,000 1,000,000

700,000 800,000 750,000 40,000

3,500,000 4,000,000

600,000 100,000

6,000,000 2,550,000

Tot!11. .......................................................................................... 22,540,000

.Accounted for as follows : On 11!1nc1 in st!1 to treasury:

Bonds for the conversion of st!1te securities, not signed ..... ' .•• -•........ -......• • • · ·• · ....• • .. · • • · ... • Bonds for the relief of tre!1sury (711cr cent.) ................. · ·· · ·· ...••. · -· -- -· -· ... · -· -··· ...... ·•· .. Boncls for the payment of interest public debt ........................... --. -• - •. · .. • •• - ·• .. · · -· • - -... • Bon els for tho rndemption of bills of B!1nk of tho State .................... -. - •• - -..................... . Stock for the conversion of state securities ....................................................... -- .. .

------

$473,500 101,000 50,000

331,000 2,117,300

3,072,800 Deposited for safo-keeping with American Bank Note Comp!1ny, sterling loan ............................ 6, 000, 000

'The following bonds '\Yere canceled and destroyed : 500 bonds 'for the imyment of interest on 1mblic clebt, burn eel in st!1te.honse .••••••. - ....••.••••••••••••• 500 boncls for the conversion of state seenrWes, erroneously printed, returned and o!1nceled by American

Ba.nk Note Company ................................ -····· ...... , ....... ·•••······ .............. .. Conversion boncls issuecl in effecting conversion at st!1to treasury •.....••... - -...••.. -••••... • • • • · • · • •• · Conversion boml No. 520, canceled and destroyed at state tre!1sury ............... - -................. • ..• Bonds for the redemption of the bills of the Bank of the St!1te, issued at sta.te tre!1sury ...... - . · - . • · •• -• Conversion stock issuecl, canceled, and tmnsferred at state treasury ............... • ............. · - · ... -

9,072,800 ==

$500,000

500,000 1,260,500

1,000 1,259,000

432,700

13,026,000

Leaving llttl!1nce ................... , .................................. ···• ••·· --···· .............. ···· D, 514, OOO ~=

Statement of debt. -Olcl debt .................................... ---~ ............................................. , ...... :f$6, 6fi5, 908 98 Less olcl boncls paid J nly 1, 1871. ......................................... -· -- -- --· - · · -• · • .. · • · · · • ·· 212, 000 00.

6,453,lJOS 98 ==

New bonds ........................................................................................ 9,514,000 00 Less in hands of :finftnci!11 !1gent to the credit of sinking fund commission .•.•.••...•• • - • • .•••• · • - · - -· 200, 000 00

9,314,0DO 00

" Repealed by act of March rn, 1872. · t See report of the joint investigating committee, 1877-'78: · + It will be noticed that this amount is $1,000,000 less th!1n is shown by the report of the comptroller for the preceding year, the

reason for which does.not clearly ap1)ear.

572 VALUATION, TAXATION, AND PUBLIC INDEBrrEDNESS.

New bonds in hands of financial agent, now in use as collateral security for loans • • . • . . . • .. . .. . . • . • . . $3, 773, 000 00 ===

Amount of new bonds sold.................... .. .. ••. . . . . . .. .. .•.. ... .. . . .. . .. • .. . .. ... ... . . . . . . •. . 5, 541, 000 00 Old debt as above ............................................................................... - . 6, 453, 908 98

Total ....................................................................................... 11,094,908 98 ===

The legislature was not satisfied with these statements, and appointed a committee to investigate the :financiai condition of the state, who submitted an elaborate report covering several hundred pages, and from that report it appears that the state was virtually bankrupt and unable to. meet its large debt, for the existence of which no adequate reason could be given to the people.

In their report to the legislature at the session of 1871-'72, the :financial investigating committee, after setting forth the testimony of the :financial agent, governor, and others, say : ' ·

" ~ * IIerc the examination of the financial agent, aml tho books of his office, virtually ended. Not content, however, with thu information obtained with the question: "How many bonds have been issued or put upon the market 1" still unanswered, the committee, about the last of October, obtained a tabular statement from the books of the American Bank Note Company.

From this stat.ement, which will be appended, it will be seen that there has been print.eel by this company since September 19, 18681.

n.ml !leliYered into the hands of the goYernor, state treasurer, and comptroller-general bonds amounting to $17,490,000, and registered 8tock amounting to $2,550,000, making an aggregate of $20,040,000. Beside this the company have printed, arnl in their possession, ready for signature, and subject to the order of the proper authorities, the balance of the sterling loan bonus, viz1 $2,fiOO,OOO, whieh makes th& entire total of bonds an<l stocks, or(lered, printed, ancl delivered, on account of the state of South Carolina., $22,540,000.

Of this amount there has been sent by the .American Bank Note Company to the governor, $2,3GO,OOO; to the treasurer, $17,490,000 r to the comptroller-general, $200,000, and there remains in the hancls of the Bank Note Company, Hubject to order, $2,500,000.

\.Vhat was the object of printing these bonds, has been asked, if it was not the intention to use them f If there is no informality in. tlrn transaction, why let the credit of the state be hazarc1ec1 by withholding the actual amount of these bouds now upon the mnrlrntf Why need such a sum be in the hands of the state authorities~ What object have they in possessing moro than the laws authorizing the respective loans have called for' Is there any statute authorizing au indefinite printing of bonds, "to be in the possession of t7w state· authorities," to be used at will Y Can the acts of the legislature to imy the indebteclness of the state, or for thb converi:;ion of its securities, be construed into such a wholesale prerogative~

Is there a necessity to provide more bonds then there itre needs for them f Plainly must we declaro we cannot believe other thau t11e· fearfnl truth that sfares us in the face, that the boncls and stocks printecl by tlie American Bank Note Company represent tho liu.hilities of the state, for which tho faith and credit of the state, however unlawfully presented, have been pledged for tho payment. That, instead' of the debt of the state of South Carolina being, as the comptroller-general, in his report for the fiscal year ending October 31, 1871, sayH, $7,G65, 708 98; or, as l\>Ir. Trenholm, of the taxpayer's eonvontion, giYes it, viz, $9,869, 108; or, as tlio governor, in his statement to the congressional eommHtee makes it, viz, $9,528,964 10; or, as the present committee for the investigation of erroneous accounts have, in• the previous pages, shown, viz, $9,86G,908 98; it is, allowing all t11e deductions to be made that in October last, while in New York,. were claimell should not be less than $14,040,000, without the addition of the present contingent liabilities of tlie state, viz, $6,787,608 20~ which would represent a debt of $20,827,608 20.

The committee made a very extended report, excecdin gly severe upon the officia.Js through whom the state ha(t been brought into such a condition.

It is saicl the sterling loan bonds should be deducted, as they had been returned by the tren.snrer to the , American Bank Note Company, viz .. _ ... ·----- ........ ·-· ....... _ .................... _ .............. $3, 500, 000

Also, bonds for the conversion of state securities, printed by mistake of the Bank Note Company, with green backs instead of blue (the uniform color), to the amount of $500,000 ................ ·-···· ···-·· 500, 000

Also, the :first issue of the bonds for the payment of the interest on the public debt, which, 11aving those words printed on their face, would, the financial agent thought, if issued, i11jure the credit of the state; therefore, by his recommendation, an ec1nal amount, with the wurcls "Authorized by act approved Angust 26, 1868 ", upon their face, were printed: this deduction claimed is . _.. . . . . . . . . . . . • . . 1, 000, 00()

Also, the cop.version bonds delivered the treasurer, October 4 and 11, 1871, which the governor refusecl to sigu,viz .................................. _ ......................................................... 1,000,000

Also, tha bttlanee of sterling loan bonds waiting signature am1 orders for clelivery, already printed ancl in the hands of the American Bank Note Company, viz ............... - .......... -. .... .... •••• .• .. •.•.. 2, 500, 000

Total of clecluction claimed .•.. ··-· ....•...•..•.••••• , ••..• ·---- ...... ___ .... -·· ......... _...... 8, 500, 000

The deduction ($8,500,000) taken from the $22,540,000 alreacly give:n, reduces the boncls and stocks for which the authors say the state is accountable, ancl the goyemor, while in New York, intimated might be correct, to ................................ _ ................................................. __ .. ---· 14, 040, 000

== To the estimatecl amount of $20,827,608 20 set forth above, the committee submitted that the conversion

bonds, etc., referred to in their report (page 262), and also the bonds in the hands of the financial ageut, lrnrchasecl from the proceeds of the sale of 180,000 acres of college-land scrip, say $200,000, should l1e acldec1, making an aggregate of $22,190,000. "This," said the committee, "is the debt of the state as represented by all its actual bonds. and stocks, old and new, vrinted, subject to issue: conversion, or hypothecation, by the present aclmiuist ru.tion, to which must be added the railroad bonded debt, viz, $G,787,608 20, and we :fin<l ourselyes facing; the total of $28,977,608 20. This astounding sum, so far as is known, represents the present actual and contfoge11t liabilities of the state, as the committee :find them." .

HISTORY OF STATE DEBTS-SOUTH CAROLINA. 573

The indebtedness of the already overburdened state was largely increased by the creation of the land commission. This commission was a creature of the constitutional convention, and was designed to assist those who were desirous or were compelled to sell all or a portion of their lands, ancl at the same time furnish homes on easy payments to actual settlers, and thus promote immigration. By an ordinance of convention adopted March 7 1868, it was made the duty of the general assembly to provide for the establishment of a "board of commissioner~ of public lands"; the comptroller-general was to be a member thereof, and the duties and powers of the board were to be defined by law.

The ordin~nce provided that the commissione~s should have authority, under regulations to be prescribe(l by law, to purchase, at public sale or otherwise, improve(l and unimproved real estate within the state, which in their judgment, was suitable for cultivation, such purchases not to exceed in the aggregate in any fiscal year the ~ar value of the public stock of the state created ancl appropriated by the general assembly for that purpose during such period, and that the rate at which the purchase was to be made should not exceed seventy-five per cent. of the appraised value of the land .. It provided for the sale of the lands, and the lands so purchased and the proceeds of sale thereof were pledged for the payment of the principal aml interest of the bonds or stocks to be issued to the commission.

The general assembly was also directed to provide by law for the security of the funds in the bands of the commissioners, for the accountability of such officers, and to require bonds to be given therefor.

In pursuance of this ordinance au act was passed in March, 1869, and amended in 1870, creating the office of land commissioner, and providing that the governor, comptroller-general, state treasurer, secretary of state, and attorney-general shonlcl be au advisory board, and that such advisor~' board shoulcl appoint the commissioner, whose duty it was made to act uncler the instructions and advice of the board. It was made the duty of the commissioner to lmrchase, or cause to be purchased, any lands in any l)Ortion of' the state, improved or unimproved, at such price as the said advisory board might determine, not to exceed, in the aggregate amount in any one fiscal year, the par value of the bonds of the state created by the general assembly for that imrpose. The laml so purchased was to be paid for out of funds to be raised by selling· the stocks and bonds of the state, and the land was to be sold on specified conditions as to cultivation and payment.

The moneys derived from the sale of lands and the interest on deferred payments were to be deposited with the state treasurer, aucl the commissioner was to be requirecl to give 1Joncl in the sum of $20,000.

By these two acts (1869 and 1870) $700,000 in bonds were authorized to be issued. The bonds were disposed of by the financial agent at New York at the best figures they would bring; land, which had been .offered to the state, ·was from time to time purchased from third parties at a rate largely in excess of the market value, and the provision in the act of }\'larch, 1870, that no lands shouW be purchased unless the commissioner had knowledge that he would be able to dispose of them without delay, was totally disregardecl.

The financial investigating committee, in their report in 1872, to which reference has heretofore been made, in speaking of the land commission, characterize it as a "giga1itic folly, about which there has been mo~e saicl and less known than any other branch of the state government", and as managed for private benefit.

It appears from this report, that an examination of the books in the treasurer's and comptroller's offices showed the total amount expended on account of the land commission for the fiscal year ending October 31, 1870, was less than $90,000; but from a subsequent examination of the books of the financial agent and other sources of information, it appears that the total expenditure for and on account of the land commission to the periocl mentioned, was $7 46, 724 07, which was largely in excess of the appropriations made for that purpose.

Some of the bonds issued to the land commitlsion were sold as low as sixty cents on the clollm-. The committee conclude their report upon thi.s branch of the investigation by denouncing the work of the commission.

The act creating the office of land commissioner was subsequently repealed, nncl the secretary of state was charged with the duties of that office.

Mention has been made of the loaning of the credit of the state to the Blue Ridge railroad in the sum of $4,000,000. These bonds were deliyerecl to the company, and by an act subsequently passed, the iinancial agent of the state was authorized to advance money, from time to time, on these bonds, which he clicl.

It soon became apparent that the company would not be able to pay interest or principal, and that the state woultl become lh:tble, and thereupon an act was passed directing the financial agent (with the consent of the company) to transfer the bonds guaranteed by the state in his hands, as collateral for the advances made to the state treasurer, for cancellation, ancl that thereupon the company shoulcl be discharged from all liability to the state on account of the advances made, and that whenever the said company should surrender the remainder of the $,1,0001000 bonds, then the treasurer was to issue to them $1,800,000 in revenue scrip, or to giYe them a pro rnta amount of this scrip for such of' the bonds as might from time to time be surrendered. This scrip was receivable for all state taxes, oxcept taxes for interest on the public clebt. There is no official statement as to the amount of scrip issued in place of the surrendered bonds, and the validity of the transaction is yet undetermined.

Doubts ha;dug been entertained as to the validity of some of the bonds and obligations of the state, an act was passed on the 13th of March, 1872, known as the validating act. It declares as valitl the bonds and obligations

574 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

referred 'to, viz, the bills receivable issued under the act of August 26, 1868, and the bonds and stocks issued under the following acts, viz :

"An act to authorize a loan to pay interest on the public debt," August 26, 1868. "An act to provide for the appointment of a land commissioner," March 29, 1869. "An act to amend the last-named act," March 1, 1870. "An act to authorize a loan for the relief of the treasury," February 17, 1869. ".An act to provide for the conversion of the state securities," lVforch 23, 1869; and also declared the act passed

March 26, 1869, to authorize the :financial agent to pledge the state securities, as valid. The act provides that all the bonds mentioned in the treasurer's report of October 31, 1871, set out nbove* are­

valid, but that none shoulcl be included in this act unless they are reg·istered. (The supreme court has decided,. however, that registry is not necessary to validity.)

The credit of the. state was now entirely destroyed. It was with the grerttest difficulty that the officers of the· state insane asylum could purchase $4,000 worth of provisions on creclit, although appropriations had been made, to he payable out of the revenues which were then about to become due. .

In deciding a case, the supreme court of the state say that out of sheer desperation the people had adopted the· following amendment to the constitution, which was ratifiecl in 1873:

AliTICLE XIV. To the end that the public debt of South Carolin11 m11y not here11fter be increased without the lltrn consider11tion aud free consent of the people of the stat.e, the general assembly is hereby forbidden to cre11te any further debt or obligation, either liy the· lean of the credit of the state, by guaranty, endorsement or oth~rwise, except for the ordinary ancl current business of tho state, without first submitting the question as to the creation of any such new debt, guar11nty, endorsement, or loan of its credit, to the people of this· state at a general state election, and unless two-thirds of the qualified voters of this state, voting on the question, shall lie in favo1· of a further debt, guaranty, endorsement, or loan of its credit, none such shall be created or rnacle.

Official statement of the public rlebt of the state of South Garo Una, at the close of the fiscal year ending October 31, 187 3.t

Class. 1 ____ u_nd_e_r _w_ha_t_a_ct_. ---l--------F-or_w_h_a_t __ v_urp_os_e_. ------ 'When redeemable. _P __ r_1n __ c_1p_a_i._1

__ T_'e>-t1_11_. __ 1

_n_n_to_.

Stock ••.... 1794 .•••••.•.••••..•.•. --- ....... Revolutionary war clnirns ................................ At pleasure .•••••• Do ...•. J'une 1, 1838 ..................... Charleston fire loan....................................... 1870 .............. . Do •.•.. December 20, 1856 ............... Construction state capitol................................. 1877 .............. . 'Do ..... December 21, 1857 ..••.•..•.••....••.•. do ••••.•.... do ...................................... 1888 •......•.••.••• Do •..•. December21,1858 ..................... do .......... do ...................................... 1883-'85 .••..••••.. Do ..•. Dccember22,1859 ..................... do .......•.. do ...................................... 1887-'89 •••.•.••••. Do ..••. January 22, 1861 ••.•••.••.••.•...•••.. do ..••••.•.. do ...................................... 1882-'80 .......... .

Do ...•. February 6, 1863 ....••••.•.•••••.••••. do .•••••.•.. do·······--------······················· 1800 .............. . De>.---· September and December, 1860 .• Funding pa$t due interest and principal .....••.••••.....• 1887 ..••••.•• , .... . Do ...•. March 23, 1869 ..................

1 Convnrsion state securities .•••••.. ... ••..••. .• ••••. .••••• 1888 ............. ..

I

Bondo . -··. J'une 1, 1&'!8 .•.•••.•••.•.....••.. Charleston fire loan .................................. : .••. 1808 .............. . Do ..••. December, 1853 •....•••....•.... Co~struction state capitol ................................. 1871 .••..••.••••.. Do ..••. December, 1855 -··- ••••....•••....•.•• do ........•. do ...................................... 1881. ••..••••...•.. Do .. - .. December, 1854 ................. Aid to Blue Ridge railroad ...•••.••.....•••...•••••••••••. 1875 .............. . Do .•••. December, 1854 ....................... do .......... do ...................................... 1870 .••......•.•••. Do .... December, 1854 ....................... do .......... do ...••..••••••..•••••••••••••••••.••••. 1877 •.•.•••.•..••.. Do ...•. December, 1854. ...................... <10 ••••••••• do ...................................... 1878 .... , •...•••••. Do ..... Deceml1er, 1854. ...................... do ......• : .. do ...................................... 1870 .............. . Do.---· December, 1866. .••••••••• ..•••. Construction state capitol .••.••.•......•••.•••••••.•..... 1885 .............. .

$38, 830 00 303, 340 80

1ao, aau 80 121, 051 87 302, 710 00 215, 17ll 24

12a, ao:; oo 1, 500 00

79, 413 O·i . ............... , ···--·····-·····

04, 000 00 ···- ........ -·-.

481, 044 51 . --- -----· --·--·

I IJll, 438, 782 84

38, 000 00 .•.• - ...... -·---240, 0-00 00 ·----- ......... . 200, 000 00 100, 000 00 200, 000 00 200, 000 00 170, 000 00

11, 000 00 Do ..... September and December, 1806 .. Funding past due interest and principal.................. 1887-'97.... .• ••• .. 930, 200 oo ............... . Do ..•.. August 26, 1868 .••.•..••....•••. Redempti?n bills recei':able ...................... ;- _ ....•. ! 1888 ..•..••.••..• "I 481, 000 00 .••••..••.•..•. Do .•. '· August 26, 1868. --·-· •. ---··· ••. Payment mterest pubhc debt............................. 1888. .• . . •••. ••• . .. 1, 107, 000 oo ....•..•........• Do .. -- . September 15, 1808 ·-------- ...•. Funding bills Bank of the State ...................... : ... 1888. ......... •• . .. 1, 180, 000 oo ..•.••.••..•.•.• Do .•••. February 17, 1869 ...... -··------ Relief of treasury ••••••.•• , .............................. 1888. ... . . . .. •••••. 856, ooo oo Do .•... ; Mitrch23, 1869 ..•.•...••••.••••. Conversion state securities ............................... 1888............... 7,542,500 oo Do .•.• · March 27, 1869 -- ....... --------- Lancl commission ......................................... 1888. .••.. ... •.•• .. 124, 000 oo Do .•.•. Marcbl, 1870 .••...••.••••.•.••...•••• do ................................................... 1889 .............. ,

1--·-343, 000 00

15, 851, 027 85

14, 412, 844 f>l

it.· (li

6

6·

6

G

6' 6

6· 6•

It appears from the same report that the appropriations for the year 1872-'73 were $2,418,872, while the receipts. from all sources was $1, 719, 728.

On December 22, 1873, an act was passedt authorizing and requiring the 'state treasurer to receive from; the holders willing to surrender the same, all the certificates of stock issued under net of 1794 and redeemable all

•The report is identical with the one set out iu the governor's message. t Senate journal, 1873-'74, p. 103, mcsBage of Governor l\fose8. t Act to reduce the volume of the public debt and to riroYi<le for the payment of the same.

Hl8TORY OF STATE DEBTS-SOUTH CAROLINA. 575

Jlleasure, amounting to $38,836 60; the certificates of stock issued under act of June 1, 1838 redeemable in' 1870 t . $ ' ' amoun mg to 303,343 89; the certificates of stock issued under act December 20, 1856, redeemable in 1877,

amounting to $189,385 80; the certificates of' stock issued under act of December 21, 1857, and redeemable in 1888, amounting to $121,051 37 ; the certificates of stock issued under act of December 21, 1858, $156, 720 of which redeemable in 1.883, and $145,990 in 1885; the certificates of' stock itlsuecl uncler act of December 22, 1859, $75, 746 24: ~f which retle.emable in 1887, and $139,430 in 1889; the certificates of stock issued under act of :January 22, 1861, .,,57 ,890 of' which redeemable in 1882, and $65,415 in 1886; the certificates of stock issued under act of February, 1863, redeemable in 1890, n,monuting to $1,560; tlle certificates of stock issuecl under act of September aml December, 1866, redeemable in 1887, amounting to $79,413 94; the certificates of stock issued under act of March 23, 1869, redeemable in 1888, amounting to $64,000; the bonds of the stn.te issued under act of June 1, 1838, redeenrnblc in 1868, amounting to $481,944 51; tJ1e bonds of' the state issued under act of December; 18153, i·ecleemable in 1871, r1imonnting to $.'38,000; the bonds of tho state issued under act of December, 1855, redeemable iu 1881, amounting to $249,000; the bonds of the state issued under act of December, 1854, $200,000 of which rccloermvble in 1875, $196,000 in 187G, $200,000 iu 1877, $200,000 in 1878, and $170,000 in 1879; the bonds of tlle state issued under act of December, 1866, recleema.ble in 1885, amounting to $11,600; the bonds issnecl under tl1e acts of September tvntl December, 186G, $465,400 of wllich redeemable in 1887, ancl $464,800 in 1897; the bo:u.cls of the state issued under the act of Augnst 26, 1868, redeemable in 1888, amounting to $1,197,000; the bonds issnecl under the act of August 2G, 1868, redeemable in 1888, amounting to $484,000; the bonds issued nuder tlle act of September 10, 1868, redeemable in 1888, 11imounti11g to $1,18D,600; tlle bonds issued under act of Febrmtry 17, 1869, redeewable in 1888, t1mounti11g to $856,000; the bonds issued under act of March 27, 1869, recleemable in 1888, amounting· to $13~l,OOO; the bonds issneil under act of' March 1, 1870, recleemrtble in 1889, an1onnting to $343,000; the ·bonds issued nncler act of' March 23, 1869, redeenrnble in 1888, for the purpose of exchange of any of the certificates of stock or bonds above enumerated, said fact l1eing ascertaimtble from the treasurer's registry of bonds and stocks converted, amounting to $1,577,500; and tllat he should thereupon, in exchange for and in lieu of saill bonds alHl stocks so surrendered, issue to said holders other coupon bonds or certifimttes of stock as they may <1esire, equal in amount to fifty per centnm of the face value of tlle bonds or certiticnfos of stock so surrendered.

The act also declared certain of the bonds known as the conversion bonds, amounting to $5,965,000, and wllich were put upon the market without nny authority of lnw, to be absolutely null and void.

The bonds and certificntes of stock to be issued under this act were to be known as, nnd to bear upon their face tlle words "Consolidation bonds, certillcates of stock"· They were also to bear upon their face the declaration thi1t the payment of the interest and tlle redemption of the principal is secured by the levy of an annual tax of two mills on tlle dolhtr upon tlle entire taxa,ble property of the state, which dcch1ration 'was to be considerecl a contract outerecl in to between the state aud every holder of sn.frl bonds 11nd stocks.

The act declares further, however, tihat no tax shall ever be levied to pay the interest or principal on any of the class of' bonds or certificntes of stock above-mentioned, as long as such bonds or certificates should remain outstanding in their present form.

These bonds and stocks were, by the terms of the act, to bear interest at tlle rn.te of six per cent. i1er annum, pityttble semi-annually, tho principal to be payable within twenty years from the date of tlle passage of the act, and to be dated Jamu1ry 1, 1874. Tlie stocks aud bonds were to be interconvertibleupon application to the state treasurer.

This act is known as the consolidation act, and will be mentioned as such hereinafter. Soon after tlte consolidation act was in force it was reported by a legislative committee* that coupons w11ich

had been clipped from bonds before the sale thereof, and which should have been canceled, were transferred to thircl parties, and funded under the act of 1878.

From the comptroller's re1)ort, dated November 23, 1875,t antl submitted to the legislature at the session of 1875-'76, it appears tlu"Lt there had been funded uncler the act of 1873, during the year 1874-'75, bonds and stocks amounting to $5,233,343 60; the total amount flrnded up to October 31, 1875, being $7,220,512 65. The comptroller7

. in commenting upon the report of the committee, hereinbefore referred to, says : '.l'he result of the investigation by a committee of the gene:i:al assembly at its last session, having shown thiit a very large amount of

courons m1Ltm:ing between ,July 1867 1Lnd October 1, ll:lil, had beeu funded, although the records of tho treasury prove thiit they !J.ad lJeen previously paid, and that

1

prob~bly many more of such coupons were illegally ontstandil).g, I lrnve deemed ~t my official duty to rlccliue to countersign any cousolidation bonds or stock to be used in funcliug any coupons matt1riug iirior to O?tober 1, 1871, unless su~h coupons were attached to the bomls on which they wore originally issued; ancl none such have been funded smce I have been 11lacedm charge of this office, although frequently presented.

":Reports ancl resolutions, 1874-'75. t T. C. Dunn, comptroller-general.

576 VALUATia°N, TAXATION, f\-ND PUBLIC INDEBTEDNESS.

The following statements are taken from the official report of the state treasurer* for the fiscal year ending October 31, 1877:

Class. Under what not. For whnt purpose. Principal fund- Principal fund-

When redeemable. aple uncler net ed under not Rato. 1873. Docom ber, 1878.

Stock ••.••• .Act 1794 .•• : ...•••••...•...•.••. Revolntionary war claims ............................. .A.t pleasure....... $17, 411 08 ... • • • •••• .. ··• ••• Do ..... Junol, 1838 ........................... Rebuilding city of Charleston·····~·······---···-·-·· 1870....................... 150,671 S7 ........................... ... Do ....... December20, 18513. .... .... .. ......... Const.ruction state capitol .............................................. 1877 ....... .... .. .. .. ......... 52, 018 SO ·-· - .. · ....... ·· ··· .. · · Do ..... December21, 1857 .................... do .••.••.. do ..................................... 1888............... 18,103 57 ................. . Do ..... December 21, 1858 ..................... do ........ do ..... , ............................... 1883-'85 ........... 143, 460 00 ·••• ........ •••• · • Do ..... December22,1859 .................... do ........ do ..................................... 1887-'89 ........... 57,884 67 ................ .. Do ..... January 22, 1861 ..................... do ........ do ..................................... 1882-'86 ........... 16,405 60 ................. . Do ..... Febrnnry0,1863 ...................... do ........ do ..................................... 1890............... 1oeo ................. . Do ..... SeptemberamlDeccmlrnr, 1806 .. Funding ................................. ; ............ 1887............... 32,833 04 ................ .. Do ...... Marcb23,1809 .......................... Conversionstatesecnrities ...................................... 1888...................... 20,000 00 ............................ .. Do ..... Deccmber23, 1873 ............... Reiluction of the volume of the public debt ........... 1893.... ........ ... ...... ...... ...... $241, 290 ·U

Bonds ..... Jnnel, 1838 ..................... nebuildingcityof Charleston ......................... 1868............... 481, 044 61 ................ .. Do..... December, 1854 ............. _... .A.id Blue Ridge railroad ...................... -.. . ... . 1875-'76-'77-'78-'70 400, ODO 00 ... • • • ... • .. -- • • - • Do ....... 1853-'55 .......................................... Construction stat& capitol ............................................. 1871-181. .......... ...... 191, 000 00 ..................... ··· .... ..

Do ....... Septembe-ran!lDecember, 1866 .. Funding ...................................................................... 1887-'07 ................... 205,600 00 .............................. ..

Do ..... Septemborl5, 1868 .............. Fnndlngllills,Bankof State .......................... 1888............... 215,350 00 ................. . Do ..... .A.ugnst26,1868 ................. Redemptiouofbillsreceivable ........................ 1888............... 70,000 00 ................. . Do ..... .August 26, 1868 ................. Payment interest on public debt ...................... 1888.... ........... 140, ODO 00 ................. . Do ..... Februnry17,1869: .............. Reliefofthetreasury ................................. 1888............... 7,000 00 ................. . Do ..... 1

1

March23, 1869 .................. Conversion stato securities ............................ 1888. .............. 411, 200 00 ................. . Do ..... Marcl127, 1869 ..... .- ............. Landcommission .................................................. 1888.................... 10,000 00 .......................... . Do ..... Marchl,1870 ..................... Landcommission .............................................. 1889................ S,000 00 ....................... .. Do I Dccember 0 3 1873 Reductionofthevolumeofthepublicdebt ........... 1893............... .................. 4,165,000 00

..... , - ' - ... ..• ..... ... --2, 704, 551 54- 4, D96, 200 44

Contingent Uabilities of the state of South Oarolina, arising from the indorsement of railroad bonds, Ootobm• 31, 1877.t

South Carolina railroad bonds, payable 1868, secured by first mortgage .....••••.•••..•• __ ....• _. . . . . $2, 093, 312 40 Charleston and Savannah railroad bonds, payable in 1877, secured by first mortgage .. ___ •.... ,_..... 505, 000 00 Savannah and Charleston railroad bonds, under act of 1869, payable in 1889, secured by first mortgage. 245, 750 00 Laurens raih·aad bonds, payable iu 1879, securec1 by first mortgage................................... 75, 000 00 Spartanburg am1 Union railroad bonds, payable in 1878-'79, secured by first mortgage................ 350, 000 00 Greenville and Columbia railroad bonds and certificates of indobtedness, payable in 1881, 1882, 1883, ancl

1888, under acts of1861, 1866, ancl 1869 ......................................................... 1,.136,545 80

Total. .•.•.....•... " .... _ ....•••••.••••..•• - .......................... _ ...... _ • . • . . . • .. . . . . . . 4, 7051 608 20

Assets of the state of South Oarolina, October 31, 1877.t

Shares, Cheraw aud Salisbury Railroarl Company ................ -.· ••.•..... _ ...•••.••••• _ ............ __ . $120, 000 Sh11res, Spartanburg and Union R:;i.ilroad Campany_ .......................................... , __ ••. __ .• _. 250, 000 Shares, Pend~etou Railroad Compnny ••.•.••..••••........•• _ ........... _ ............... _.. . . . . . . . . • • • • . . 42, 500 Sh11res, Columbi11 aml .A.ngustn Railroad Company .................................................... _... 42, 200 Shares, Cheraw and Coalfields Railroad Company .................. , ........... ···--- •. •• .. •• • . • . . . .• . ••. 200, 000 Shares, Laurens Railroad Company ..................................................... _ ....•.. _, . . .. . . .. 50, 000 Shares, Charleston and Savannah Railroad Company ....... _ .•.... ___ .............. _ ................... _.. 270, 000 Shares, Keowee and Tuckaseegee Turnpike Company .......... _ ...•...••..•.......•.... _ •...... _ ..... __ •. 6, 000

Total. .......................................................................... --·· .............. $980, 700

6

a 6

6

0 6

6

6 6

0

0

6

0

0 7 6

6

6

6

By joint resolution adopted June 8, 1877, a commission was appointecl to investigate the indebtedness of the state, an cl also to ascertain" whether there is in the state treasurer's office, on fl.le, as vouchers, canceled bonds, coupons, and certificates of stocks of the issues described" in the act of 1873, which were issued in accordance with law, ancl to report whether any stocks, bonds, or coupons hacl been unlawfully or otherwise improperly issued under said act, together with the evidence upon which the illegality or nonconformity to law rests.

Under this authority the commission (who were in session from August 1, 1877, until February 7, 1878) macle their report, setting forth that $5,184,062 of vouchers :j: had been issued according to law and authorized to be consolidated under the act ·of 1873, and that there were in the treas1uy vouchers amounting to $3,608

1707,§ which

were not issued in accordance with law and authorized to be funded by the act of 1873.

"Reports and resolutions, 1877-'78, llP· 631 64. t From ciomptroller-general's report, November 26, 1877.

.j: Representing $2,592,031 of consois. 9 Representing $1,804,358 50 of console.

HISTORY OF STATE DEBTS-SOUTH CAROLINA. 577

The commission also reported the ~vidence taken, as well as their conclusions of the law relating to these bonds and stocks. 1

As a further example of the manner in which the financial affairs of the state hatl been conducted, we cite substantially from the "report of the commission to investigate the indebtedness of the state", made to the general assembly on Febmary 7, 1878 (see house journal of 1877-'78, p. 341).

The act to authorize a state loan for the payment of iuterest on the public debt, approved August 2G, 18G8, empowered the governor of the state to borrow, on the credit of the state; on coupon bomls, within twelve months from the i)assage of the act, a sum not exceeding $1,000,000, or as much thereof as he might deem necessary for the J_rnrpose contemplated by the act.

The testimony of the governor who siguecl these bonds and of the state treasurer, supported by the e\~idence developed in the examination of the vouchers for conversion and consolida,tion bonds, and b;}' other evid.ence, leave no room for doubt that $2,000,000 bom1s were issued, or $1,000,000 in excess of the amount authorized by the act.

The " first issue" of $1,000,000 was printetl in September, 1868, the bonds of this issue being designated and imlorsed as "loans to pay interest on the public debt" j the bonds of the "second issue" of $1,000,000, printed in August and Novmnbeii, 18091 were designatell and iuclorsed as "issued undet cwt app1'ovell. A-ug1ist 26, 1868".

The report Sttys : . ·

The commission are of the opinion that the whole of the second issue was fmmlulently' issneu and 11lacecl upon the market withoul authority of law, and were null and voicl ab initio. Nor can there be any pret.ense that the second issue was iu any wise necessary for tho imrposos of the act.

As a result of this investigation, the legislature created a court, known as "the court of claims", by a joint resolution passed March 22, 1878.

This coli.rt was established with jurisdiction to hear and determine any case or cases, to test the validity of' any of the consolidated bonds, coupons, and certificates of stock, or any of the various classes of them mentioned in the report of the bond commission as resting on vouchers not issued in a,ccoruance with faw.

A number of ca,ses were brought before this court, involving constitutional questions, as well as questions of fact, and upon the latter the proof was convincing as to the illegal funding of certain coupons. The cases were determined in that court, and upon appeal to the supreme court (12 S. 0. reports, pages 202, 313) the cases were consoiidated aml there determined, and the following decision was rendered by the said court:*

1. Thu.t all the bonds issueil undm: an act cmtitlecl "an act to reduce the volume of tho publie uebt and provide for tho payment of the same", are valid obligations of the state of South Carolina, except as follows: 1. Such as were issuecl in exchange for bonds issuetl null.er t1ie aet eutitletl "an act to authorize a loan for tho relief of tho treasury"t .or for the coupous of said bonds. 2. Such as were issuecl in exehaugo for the seoo11a iss1w of boncls umler au act entitleu "au act to authorize a state Joan to pay interest ou tho 1rnblic clobt",t or the coupons of such bomls. 3. Such as wore isstl.Od in exchange for those conversion bonds which were issued iu exchango for either of the two classes of bonds last montionecl, viz, bouds for tho relief of tho treasury, aml the second issue of bonds to imy iutercst on the public debt, or in oxchiinge for the coupons of Buoh conversion boncls.

The supreme court decided that the cfass of bonds issued nuder the act for the relief of the treasury (February 17, 1869) were not valid obligntions of the state, because the· act is in conflict with section 7 of article IX of tlrn constitution.§ ·

The court sa.y :

This act (act February 17, 1860) we regard as liable to two coustitutional objections: 1. It purports to create a dobt which was not '~for tho purpose of defraying extraordinary expenditures"; and, 2. '.rho debt thereiu sought 'to be croatetl is not" for some single object", anu such object is not "distinctly specified therein".

,,. 1f If .,,. * * if if #

Money horrowetl for the relief of tho treasury might and woulu be applieu to as many clifferent objects as there were demancls upon· the treasury. Wo think, therefore, that this act clearly violates both the clauses of the constitution above referred to, and " " • ()very bond, together with its coupons, issuocl under tho authority of this act is absolutely void, even in tho hands of a bona fide holder, because issued without any authority whatever, antl hence every consolidation bond resting upou such bonds or coupons, is, to the extent that it does rest upon such bonds or coupons, not a valicl debt of the state of South Carolina.

In determining the question as to the validity of the second issue of bonds under the act of August 2-0, 1868,11 the supreme court say:

In the case of tho second iss~e of bomls for the payment of the interest upon the public clebt * " * 'there does not seem to have be~n the shadow of authority of any kincl, and whioh, therefore, are absolutely void, no matter in whose hands they inay be; for, if the act be construed as giving authority for a second issue, there is no conceivable re!lson why a third or fourth or an indefinite number of issues could not have been made upon the same construction; ancl certainly a construction leading to such a result cannot be a correct one.

The court further decide that-If any consolidation bond rests wholly upon any of the throe objectionable classes of bonds or coupons • " " mentioned, then

it is wholly void; but if it rests only in part upou·such objectionable bonds or coupons, then it is only void to the extent which it does rest n11on such objectionable boncls or con110ns, and for tho balance it is a valid obligation of the state.

" Opinion delivered September 29, 1879. t Act of August 26, 1868. II Sec extract from report of bond commission, ante, p. 316.

37 W D '.l'

t Act of February 17, 1869. 9 See page 313, ante.

578 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

In these cases the court adjudged the validity of all consolidated l1onds which rest upon the following obligations that hacl been in question: For funding bills of the bank of the state; for. payment of interest on tµe public <lebt (:first issue); for redemption of bills receivable, conversion bonds (act March 23, 1869), except such conversion bonds as were issued for the relief of the treasury, and for the second issue of bonds to pay interest on the public debt; land commission bonds, 1869, and land commission bonds, 1870.

The acts creating this indebtedness were an assailed by the state, but the result has been as above stated . .At the next session of the legislature an act was passed creating the office of special commissioner, whose dnty

it was to ascertain and establish the validity, or the percentage and amount of invalidity; of each and every >eonsolidated bond and stock certificate, aml of the interest thereon, lUJ.der the decision. of the supreme court above referred to. This act was approved December 23, 1879,* and in pursuance thereof the commissioner, on November 26, 1880, made a repo11t from which the following extracts are taken:

.A.11 t.he consolidated bonds and certificates of stock issued by the state up to February 12, 1880, have been examined nnd reported to the state treasurer.

The total number of $1,000 honcls issued were....... . . . . .. .•. •.• .. . ••. ... .•. •. . . . . . . .. . . . . . . . ... . . . . .. . . •. . . 4, 394 The total number of $500 bonds issued wore...... . . . . . . . • . . . . . . . . . . . . • . . . . • . . • . • • . . . . . . . . . . . . . . . . . . . . . . • • • • 1, 477 Tho total number orcertificntes issuecl were ..••.........••....•.......................... _ ... _... . . . . . . •. . . 2, 082

Total number of 11ieces........... ••• •. . ••. .• • • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . • . 7, 953

Of these there hacl been exchanged sixty-seven bolllls of $1,000 each; twcnty-ni:ao uonds of $500 each, and a vast number of certificates of stock. Eighteen holllls of $1,000 each, and thirty-six bonds of $500 each, were purchased by the sinking-fuml commission, BO that we have-

.A.mount of $1,000 boncls fosued to February 12, 1880..... ••••. •• • • •• .•• • . . . • . . .• • • • • . . . . . . . . . • • . • • • . . $4, 394, 000 00 Less sixty-seven l1onds exchanged..................................................... $67, 000 00 LeB.I! eighteen bonds purchasecl. .. :.. . • . . . . . . . . . . . • • • . . . . • • • • • • . . . • . . . . . . . . . . . . . . . . . . . . 18, 000 00

85, 000 00

Leaving totn1 outstanding February 12, 1880.... . • • • • • • • • . • • . . . • . . . . . • • • . . • • • • • . . • • • • . • . . • • • . 4, 309, 000 00

.A.mount of $500 boncls issued to February 12; 1880 .••.•..•.••••••.• : ...••. _ ......•......•.•..•.•• _:. 73~, 500 00 Less exchnngecl. .......... : . . . . . . . . . . . • • . .. • . . . • • • • • • . . . • . . . . • . . . . . • • • . • .. • . • . . . • • . • . . . $14, 500 00 Less iiurchnsed... •• . . • . •. . . • . . . .. . . . . . . .. . . •. . . • •. . . • • • • . .• . . .• . •.. . . . . . . . . . . . .•• • •• . . . 18, 000 00

32,500 00

Total, $500 hom1s outstancling February 12, 1880 .... : ••••• ................................... 700,000 00 ===

Total boncls ............................................ · .•• - · · · · - • • • · · · -- - • .. -• • · • · • • • • • • • · · • • • • • Total stock ...................................................................................... .

5,015,000 00 590,811 04

Total bonds and stock ....................... ;. . . . . . . . . . . . . • . . . . . . . . . . . . . . • . . . . .• . . . . . • . . • • . • 5, u05, 811 04

Invalidity in $1,000 bonds issnecl ...........................................................•...••. Invaliclity in $500 boncls issued ..•.••.•............•...••................................... , ...••. Invali<lity in stock outstanding February 12, 1880...... • • • • . • • • . . . • •••......•••..•.............•..

==~

1, 052, 613 60 77, 008 75

@, 916 05

Total invalidity.... . . . . . . . . . . . • . . . . . • • • • . •• • • • . . . • • . . . . . . . . . . .. . . . . . . . . • • • . • . . . . . . • • .. . . . • . . 1, 138, 538 40 Deduct invaliclity in l1onds exchanged...... . • . . . . . • . • • . • • . . . . . . . • • • . . . . . . . . . . . . . . . • . • • . $11, 7Gu 41 Deduct invalidity in bona.a purchased •.... .... ... . .... ...•.. .... ...••. .... ....•. ...... 9 00

·And we nave........................ . . . . • . . . . • .. . . . . . . . . . . • . . . . . . . . . .. . . . . . . . . • . • . . . • . . . • • . 11, 775 41

Total invaliclit,y iu bonds am1 stocks outstanding Febnrnry 12, 1880....... . • . . • . • . . • • . • • . . . • • • 1, 126, 762 99

This amount represents tho invalidity in the principal, ancl does not include the invaliclity which atta'ches to the coupons or interest past due or fnndable.

Detluct this amount from the total amount of bonds and stook (face Yalne) outstanding February 12, 1880, and we have tho total valid consolidated dabt February 12, 1880, in accordance with the decision of the supreme court, face vnJue of bonds all.cl stock, i4,479,048 Oii.

This principal only includes the consolidatecl debt, under the act of D.ecember, 1873, and has no reference to other yalid outstallCling bonds which had not been converted into consols under said act.

The special commissioner also reports the examination of valid billl!! of the Bank of the State amounting to $710,136 45.

"".A.ct to provide for the settlement of the consolidated debt of the state in accord.a.nee with tlte decision of the supreme court of South Carolina," ancl act amending snme, approvecl February 19, 1880.

HISTORY OF STArrE DEBTS-SOU'rH CAROLINA. 579·

This examinatfon of these bills, with a view to the funding of same, was done under the act of December 24,-1879. . •

The final adjustment of the consolidated debt is now in progress, under the authority of the act of Decemuef 23, 1879 (amended February 19, 1880), entitled "An act to provide for the settlement of the consolidated uebt of the state in accordance with the decision of the supreme court of South Carolina", which act also appointell the "special commissioner" to ascertain and establish the validity on the percentage and amount of invalidity of the consol bonds and stock in. conformity with the principleR laid d0wn by the supreme court.

This act as amendecl provides that every holder of any consol bonu or certificate of stock, or of the unpaid interest thereon to July 1, 1878, reported by the special commissioner a:; wholly valid, or as pa,rtially invalid, shall have the right to surrender the same for cancellation, and to receive from the state treasurer a new consol bond or certificate of stock bea.ring interest at six per cent. for the exact amouu t of the valid portion of such bond, or certificate, or coupon, or interest; that the same privilege of exchanging or rl'funding shall be externled. to embrace £1etached 001-tpons and interest orders dne on or before July 1, 1878; that the interest clue and unpaid to July 1, 1878, on the valid portion of the consols reported by tlie commissioner pa1tially invalid, and on the consols so reported wholly valid, shall be "fnnded" in new consols bearing interest from July 1, 1878; am~ that the new consols issued in exchange for those surrendered as above, and all consolidated bonds and certificates of this state, that may at any time hereafter be issued (viz, after February 19, 1880) shall be distiugnis]led by their coloi· from tile consols formerly issued,* :mt shall be in other respects (except as abo1·e provided) of the same class and character, mature at the same date (1893), bear tho same rate of' interest, and' have the same rights ancl privileges as do the bonds and stocks authorized to be issued under the original consolidation act of December 22, 1873.

The report of the comptroller-general for the fiscal year ending October 31, 1881, shows the riresent COl'll1ition of the consolida.ted debt under the operation of this act.

SETTLEllffiNT OF THE FLO.A.'.I.'ING OR UNFUNDED DEB'.!.'.

An act'' to provide for the settlement of the unfnndecl debt of the state incurrell before the.first of November, 1876 ", approYecl March 22, 1878, arnl amended December 24, 1878, established a "court of claims", to be 11 uld by a commissioner, for the purpose of ascertaining all legal and just cla.ims which had not been funded in 11 incls or stocks, ancl which were in existence on November 1, 1876. This court had jurisdiction to acljm1icate upon all claims of this character (other than for bonds, or stocks, or coupons, or interest thereon), and including the bills of the Bank of the State, and so much of the funded debt as is known. as the "Little Bonanza", the warrants drawn by the comptroller in pursuance of act December 24, 1875, providing for the settlement ancl i1ayment of "certain claims against the state", and the liability of the state lly guarantee of the Spartanburg ancl Union railroad bonds, the balance due thereon by judgment of the court after applying the proceeds of the sale of said roacl.t ,

The act required that all claims provided for therein shoulrl be dul.r sued or brought for adjudication before the said court prior to .April 1, 1879.

·This act also authorizell the issue of bonds and stock certificates, to be known as "clejioienay" bonds ~nd certificates, in the settlement of a,. portion of such claims as were adjudicated by this court; the other portion of claims so adjudicated was authorizecl to be paicl out of appropriations made or to be made for that purpose.

"Deflc·iency" coupon bonds (im·denominatfons of $1,000, $500, aud $100), and deficiency stock, are redeemable in ten years, and bear 0 per cent. interest, payable semi-annually and accruing as follows, viz: From .July 1, 1878, in cases brought before the commissioner comt of claims prior to November 1, 1878, and from July 1, 1879, in cases brought before said commissioner from November 1, 1878, to April 1, 1879 ..

The amount of "cle'ficiency" bonds and stock outstanding on October 1, 1881, after deducting amount i·etired by purchase of commissioners of the sinking fund, was, $562,577 50.

The time .tixecl by previous acts for funding in consols the 1mqiwstionable debt of the state hiwing expired, the act of December 24, 1880 removes the limitation as to the time of funding, and authorizes the continued issue of consols (brown:j:) with' interest at 6 per cent., payable semi-annually, in exchange for the following bonds and stocks, inciuding unpaid interest on same to January 1, 1880, at fifty percentum of the principal and said interest, as ftxecl by the consolidation act of December 22, 1873, the consols to carry interest from January 1, 18801 viz:

1st. Issues prior to January 1, 1866.

Stock: Revolutionary war claims, redeemable at pleasure of the state. Act 1794. Bonds and stock: Rebuilding city of Oharleston, redeemable 1868 ancl 1870. .Act 1838. Bonds: .Aid Blue Ridge railroad, redeemable 1875, 1876, 1877, 1878, 1879. Act 1854. Bonds : Oonstruction new state capitol, redeemable 1871 and 1881. Acts 1853 and 1855. Stock: Construction new state capitol, redeemable 1817. Act 1856.

redeemable 1888. .Act 1857.

*The color of the new consols is brown, but they a.re engraved from the same plates as the g1·ec11 consols iasued under prior acts. t.A.mounting to $4741600. t See net Febru11.ry 19, lf~BO.

580 VALUATION, TAXATION, AND PUBLIU INDEBTEDNESS.

Stock: redeemable 1883 and 1885. Act 1858. redeemable 1887 and 1889. Act 1859. redeemable 1882 and 1886. Act 1861. redeemable 1890 and --. Act 1863.

These are exchangeable at the state treasury on surrender thereat, with further reference.

2d. Issues sinee Jam1ary 1, 1866.

Bonds and stocks: ''Funding," redeemable in 1887 and 1897. Acts September ancl December, 1866. Bonds: ''Redemption bills receivable," redeemable 1888. Act August, 1868. Bonds: Payment interest public debt, redeemable 1888. Act August, 1868 (first issue). Bonds: "Funding bills Bank of State," redeemable 1888. Act September, 1868. Bonds and stock: "Conversion state securities," redeemable 1888. Act March, 1869. Bonds: "Land commission," redeemable 1888. Act March, 1869. Bonds: "Land commission," redeemable 1889. Act March, 1870. These bonds and stocks (issued since January 1, 1866), with the unpaid coupons ancl interest to January 1,

1880, are exchangeable upon surrender thereof at the state treasnr,y, afte1' the same have first been examined by tlle comptroller-general of the state, and in accordance with his official report setting forth the validity 01• the amount of invalidity of same, as establishecl by the decision of the supreme court rendered September, 1879, in the consol cases already referrecl to. The coupons of bonds of these issnes, however, which matured 1Jrior to July 1, 1872, and which have been detachecl from the bonds to which they belong, are not included in the privileges of this act (December 2J, 1880*).

The following is an extract from the report of the comptroller-general for the fiscal year emling October 31, 1880:

Oonsol bonds and stocks (green ancl broicn). Funded to November 1, 1880 ........................................................................ $0,368, 556 82 Less retired by sinking fund commission................................................ $:31, 000 00 Less invalidity fu green bonds exchanged ~or brown.... . . . . . . • • .. . • • • • . . . . . . . .. . .. . .. . . . :l50, 911G 89 Invalidity in green bonds aml stocks not yet exchanged . • . • • • . . . . . .. . . .. . . . . .. .. . . • . .. . . 775, 813 11

---- 1,157,703 00

Total console ............................................................................... . Deficiency bonds and stocks ....................................................................... . State scrip, Agricultural College ................................................................... .

5, 210, 703 82 564,855 98 191, 800 00

Total funded debt .•• •.. . • . •. . . •• •• . . • • • • . . • • •• . •• . • • . . • . . . .. . . .• . •• . .. . . .. . . . . . • . . . • . . .. • . . . 5, 967, 449 80

.A.nte-bellum bonds and stocks ........ , ..•• : ............................................ $276, 860 44 Post-bellum bonds and stocks........................................................... 451, :306 00

The former amount is all valid, and in being fumled is allowed interest to July, 1879. Estimating seven years as average period for which interest is allowed, it would increase ·the ante-bellmn amount by $116,281 38, making $393,141 82 to be funded, ancl equal in consols to ...............•..........

Ofthepost-bellum securities unfunded $186,:106 is whollyvalid, and would give in consols. $93, 153 00 The balance, $265,000, is only partially valid, being "interest on :public debt" and

"conversions". Estimating for these the same ratio ,of invaliclity as has been founcl in the securities of these classes already fnnclcd, ancl it amounts to about 7t per cent., say $19,875, leaving to be funded $2115,125, equal to consols . . .. .. .. .. . . .. . . . . .. . . . •• . 122, 562 50

But these post-bellnm bonds have interest allowed from 1872 to 1880, say au average of seven years, which intorest is required also to be funclecl. This would give seven years' interest on $431,431, equal to $181,201, or conaols .................... :. .. . .. . . . • . . . .. 90, 600 50

There is also funclable interest (past clue to 1878) to be consolidated ......... :............ 181, 097 61 This also has moro or less invalidity, which, estimatecl at same ratio as that alreacly funded, ·

amountsto ......................................................................... 34,408 54

Leaving to be consolic1atecl .............................................................. , .•..

The whole amount of bills of the Bank of the State passed upon by special commissioner, and authorizecl to be £uncled, is, say ....................... : ........................ $730, 000 00

There has been funded ................................ ,................................ 685, 710 00 . ----

Leaving......................................................................... 44, 290 00 Which, at 50 per cent., gives consols ........ -.............. - ..• -..... -. - ...••.•••••..•. - .... -.......•.

*See report of the boncl commission appointed by joint resolution of June 8, 1877.

196, 570 91 ==

306, 316 00 ==

146,GSD 07

' 22, 145 00

=

HIS'TORY OF STA'I1E DEBTS-SOUTH CAROLINA-GEORGIA. 581

. RECAPITULATION.

Total consohi · - · - · · · · · • • · · · · ..................•. -••............................................•... $5, 210, 793 82 Total deficiencies .......•......•.................. __ . . . . . . . . . . . . . . • _ •.......•....•............ _... 564, 855 98 State scrip, Agricultural Co~lege.... .... ...••• .••••. .... ...•.. ...... .... ..•.•. .... .. .•.. .•.. .... .... 191, 800 oo To be funded for ante-bell um principal aud interest, say............................... ... .. . ... . .. .. 196, 570 91 To be fund eel for post-bell um principal and interest, say........... . . . . . . . . . . . . . . . . . . .. . . . . . .. . .• • ••• 306 316 00 To be fnntled for fnnda ble interest, sn,y ••••••••••••••••••..•••••••••••••••••••••••••••••••••••.. _... 14o'. 689 07 To be funded for bills, Bank of Stiitc, say .... -~. _ ...............•....•....•.•.... _ .......... _... ... • 22, 14& oo

-----Total bon<lecl debt of state, say ....................................... _. _.. . . . . . . .. . . . . . . . • .•. 6, 639, 170 78

GEORGI.A.

In tho early history of Georgia~ so far as relates to the public debt, nothing occurred worthy of detail. Internal improvements received early attention. The University of Georgia was established in 1785; the Central _Bank of Georgia, a state institn ti on, was chartered and established in 1828. The imblic debt of the state amounted to $725,000 in 1837, and to liquidate this the Central Bank was authorized to borrow the money, payable within twelve months out of the capital stoek of the bank. ·

The issue of $1,000,000 of 8 per cent. interest-bearing bonds was authorized by an act passed December 23 184.0, in denominations of $5 and upward, to mature in five years, for the payment of which the faith and credi~ of the state and the assets of the bank were pledged. These bonds were to be used exclusively for the purpose of redeeming· the outstanding bills of the Central Bank..

An act was passed December 29, 1847, n,uthorizing new bonds to be issued to redeem the bonds above mentioned, tbe new bonds to' be in the denomination of not less than $500, to be payable at such times as might be agreed on, but not more than $75,000 should fall clue in one year, and that the bonds should bear 7 per cent. interest.

Tlle state was a stockholder in the Bank of Augusta, the Planters' Bank of the State of Georgia, the Bank of the State of Qeorgia,, and in the Bank of Darien. These shares of stock constituted, in part, the capital stock of the Central Bank, and some of them were sold in 1841. The remainder, yet helll by the state, are deemed worthless.

In 1836 an act was passed providing for the construction of a railroad from some point on the Tennessee river, near RossYille, to some point on the southeastern bank of the Chattahoochee i·iver, as a state work, to be known as the "\Vestern and Atlantic Railroad of the State of (}eorgia. The road was completed and is now the propert,\' of the state, and nirious bonds, stock, and scrip were issued upon it. The .Atlantic and Gulf railroad was incorporated by an act approvecl February 27, 1856, in wllich the state invested $1,000,000. To provide for the payment of the stock the governor was authorize.cl to issne bonds (if there were no unappropriated money in the treasury) as the snl>scriptiou became due, to run twenty years, and to bear 6 per cent. interest per annum. Some of the bonds issued for that purpose are yet outstanding, as will appear by the official statement of the public debt.

On l\1arch 3, 187 4, it was enacted that by reason of the clisasfa·ons conseqnences of the civil war to said company, and for the purpose of insuring the completion of the road connecting the "Atlantic with the Gnlf of Mexico, through the state, as originally contemplated", three-fonrths of the stock owned by the state should be assigned to said company on certain conditions ancl pledges. It is to be presumed that these conditions had not been complied with up to October 1, 1880, inasmuch as the state was the owner of the stock at that elate.

On December 11, 1858, an act was passed directing the governor to issue new bonds, bearing the same rate of interest as those then in the hands of holders, to be arranged upon such seheclule, and payable at snch period, as that, by providing annually a sinking· fund, the whole principal of the public debt should be paicl when the last bonds became due; the sinking fnnd to be created out of the earnings of the Western and Atlantic railroad. The ·act further provided that on payment of any portion of the public debt the governor should execute bonds, in the sum of $~,000 each, equal to the amount so paid, payable to the treasurer of the educational fund, with interest at 6 per cent. per annum, so that as the public debt was decreaised the educational fund should be i1;10reasecl. This JlrQvision was repealed, however, after the reconstruction of the state. ·

No debts were incurred during the periocl of the war which the state is authorized to pay. The constitutional conventio:r;i, which met in 1865, directed the issue of $500,000 in bonds to meet the wants of

the treasury tU,en pressing, there not being a dollar therein, but only $301000 were placed on the market. These were Sl1bsequently converted into other bonds. .

During the period of reconstruction, which terminated in 186.8, several acts were passed authorizing the issue of bonds, among which was one authorizing the loan of $200,000 for the purchase of corn to relieve the suffering poor.

On the 12th clay of March, 1866, an act was pas~ed authorizing the issue of the following bonds: First. To meet appropriations and to better equip the Western and Atlantic railroad, $1,500,000, with interest not

exceeding 7 per cent. per annum, payable semi·annually, to run thirty years, or, at the option of the governor, to be redeemable after five and payable in twenty years. A sinking fund was created out of the income of the Western and Atlantic railroad sufficient to pay the interest and 31ler cent. annually of the principal.

Second. For the purpose of renewing bonds then clue, $830,550, to be issued on like terms and upon like security as the above bonds. ·

582 VALUATION, 'TAXATION, AND PUBLIC INDEBTEDNESS.

Third. Six hundl'e<l thousand (lollars, for the purpose of i)aying the land tax, assessed against the people of Georgia by the United States, amounting to $tiS4,367 33, with not exceeding 7 per cent. interest, and to· be payable at such time as the governor might see fit. The provision relating to the sinking fnnd· does not apply to these bonds. These lwndt-:i ($600,000) were prepared but not issued, and the legislature, by an act passecl December 13, 1866, directed the governor to issue them in exchange for, or in redemption "of, such bonds as might become due in 1868, 1869, and 1870.

By an act approved December 3, 1866, the governor was insthlcted to inclorse the 'bonds of the Macon and Bmnswick railroad to the amount of $10,000 per mile.

The (lebt on November l, 1866, was as follows: Boll(ls, issued prior to 1861, not yet due ............•....••................... : ............•.. - - - - ... - - • . $2, 676, 500 Bonds issued under the act of 1\Iarch 12, 1866, inclucling loan for purchase of corn ................... - -- - 3, 030, 000 Bonds issued to the Atlantic and Gulf Railroad Com1inny in 1666, under act of 1856 . ·"· ............ - . . . . . 134, 500

Total. .••••...........•........•.......... ~·····................................................ 5,841,000 ==

The superintendent of the Western and.Atlantic railroacl purchased of the United States government railroad property amounting to $472,944 66. To secure the payment of this sum the superintemlent of the road and tlrn state treasurer executed a penal bond to the United States, in the sum of $982,310 72, conditioned that tlle state of Georgia wonld pay for the property within two years from date of purchase, and interest at tlle rate of 7 .30 per cent., payable quarter1y. B,y an act approved December 18, 1866, the faith of the state was pledged for the payment of debt aml interest. The amount was paid, but it was afterward claimed that more than its value had been paid for the rolling stock, and an effort was made to reopen the negotiation, which at last proved successful, and iu 1877 the sum of $199,038 58 was allowed by the United States Court of Claims and paid to the state.

The fol1owing provision is contained in the constitution of 1868:

[Article III, section 6, paragraph 5.]

The general assembly shall pass no law making the state a stockholder in any corp orate company; nor shall tho crcclit of the atato be granted or loauecl to aid any company without a provision that the whole property of the company shall be bound fol' the security of the state, prior to any other clel.Jt or lieu, except to laborers; nor to any company in which there is not already an equal amount invested by private persons; nor for any other object than 1~ work of public improvement.

Under this provision of the constitution state aid to a large amount was granted to railroad companies. Tho several act~ authorizing such grants will be mentioned hereinafter, but the total amou11t of the 1iontiugent lia.bility originally assumed cannot be ascertained, because the pnblished records •contain only the amount guaranteed per mile, and the leng'th of the respective roads is not given. As will appear hereinafter, a number of these indorsements were declared null, void, and unconstitutional.

The following aid was granted in 1868: rormi!o.

To the Macon· anrl Augusta railroad ........••...•.•......••..•...........••............. _ .......... _.. . • . . $10, 000 To the Georgia air-line .....•.........•••........••. ·--~-- ...•...... ." ...........•.........•....••••.•..... 12,000 To the Soutli Georgia and Florida and Georgia railroad ...••....•... __ . _. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • 8, 000

On October 10, 1868, the issue of bonds sufficient to pay the interest due and mi.paid and to become dne np to February lJ 1869, was authorized by an act which does not provide when the bonds to be issued should matnr0 nor what interest they shall bear.

On the 18th day of March, 186!), an act was passed granting aid to the Brunswick and Albany railroad, originaUy the Brunswick ancl Florid~ railroad, recognizing a claim against the state in favor"of said comIJany, since a portion of the rails ancl material had been used on the Western and Atlantic railroad, the property of the state. The state was to imlorse j;he bonds of the company to the amount of $15,000 per mile.

Aid was also granted to the following companies at the same session, to wit: . Per mile.

Alabamaanrl Chattanooga .........•.... ~ ........••.•••..••...•....••..............•................•..•••. $8, 000 Cartersville antl Van Wert .•••••••..•...... _ .......... _ .•... __ ....... _ .....•••.......•••.....•.•••.. _ .••.. 12, 500 Dalton and Morgantown ........•......•..........•........••.••..........•....• _ .•. .'. . . • • • • • • • • • . • . . . . . . . 12, 000

The several acts i1rovide for a first lien to the state, ancl that the bonds should not be sold at less than 90 cents. An act was adopted, August 27, 1870, authorizing a loan of a sufficient amount to pay the expenses of the general

assembly, to be paid out of the first funds coming into the treasurer's hands, amended October 51 1870, by providing for interest, if the loan be effectell by bonds, at a rate not exceeding 7 per cent., and the principal, wllen (lue; that an amount should be borrowe<.1 sufficient to pay the officers of the civil establishment and other expenses of the state, but restricting the authority to these purposes.*

.Under the authority of these acts currency bonds amounting to $2,0001000 were issued. It is claimed that it w.as

not mtencled to put these bonds on the market or in circulation, but that they were from time tq time hypothecated

*This is the act authorizing the quarterly gold bonds, poat. .

HISTORY OF STA'I1E DEBTS-GEORGIA. 583

for loans made and re~lacecl by the gold quarterlJ· boucls, which were then being engraved. The entire issue was afterward declared v01d, because the bonds were not all retumecl. The act of voidance makes no exception as to the status of the holder. '

An act was passed on September 15, 1870, authorizing the governor to issue bonds to run twenty years with· seven per cent. ~nnual interest, pa,Yable quarterly, interest and principal payable in gold, sufficient in amo~t to meet all outstantlmg bonds and conpont-l then clue or to become due until otherwise directed. Three million dollars in bouds were issued under this act. • '

D nring this year stnte aid mis granted to the following raih·oads, in the respective sums mentioned, by indorsing tlie bonds of the companies : ·

Perm!lo. Albany and Columbns .................................................................................... $12, 000 Allmuy, Mobile and New Orleans ............................................................... _ ••• .• .... 12, 000 Americus and Isabelln 12, 000 Americus ancl l~lorenc~::::::::::::::: :-.·.::: '. ·.·.::: :-.·. :: :: '. ~: :::·:.·.·.·.-.-... -... • . ._._._._._·:: :: :: :: :-.: : :: : '.: ::: : :: : ::: 12, 000 Americus and H0iwkiusvillc .................................... ._.. •• . . • • • . .. .. • •• . .. • . •. . . • . .. . . .. • .. ... . 12, 000 Atlanta and Blue Ridge .................................................................................. 15,000 Athens au!l Clayton ................... '.... . . • • .. . • • • • • . • • .. . • .. • .. .. • • • . • • • . • • • • . • • • • .. • • • • • • • •.• • . • • • • • . • 15, 000 ;Atlanta ancl Lookout $1,875 per mile for first 8 miles, and $3,000 for each further mile. Augusta ancl ·Hartwell • • • .. . .. • • .. •. • • • . . . . .. . . .. .. . . • • ... • • • .. . .. • ... . • • .. . • • • • • .. • • • • . • .. • • • .. • .. • . • • • . 15, 000 Camilla and Cuthbert...... .. . .. • . .. . . . . .. • .. .. • . .. . • . .. . .. .. • • .. . . . • . . . . .. . .. . • . .. • • . . . .. . • • • • • • • • .. • • .. 12, 000 Chattahoochee ........................................................................................... 12,000 Columbus and Atlanta Air-Line ....................... , .............................. , ........... -··.. .... 12, 000 Dalton and J\Iorgauton . . . ... . . . . •. .. • •. . .. ... . ... ... .... .. .. ... . •••. .. • .. . ....... .... ..•. ...•.. ••.. .. .... 15, 000 Georgia Seaboard and Northwestern...................................................................... 12, 000 Grauel 'l'runk . . . .. . . • .. .. . . • .. • .. . .. . . . .. . . . .. . .. • .. . . .. . .. . . . • .. . • • • .. .. .. • .. • . . • • . . . .. . .. . • .. .. . . . • .... 12, 000 Great Southern...... . . . . . . . . • • • . . . . . . • • • . . . . . . .. .. • .. . .. . .. • . . • . . • • • • . . . . .. . . . • . .. • • . . • • • • . . .. • . .. . .. .. . 12, 000 Griffin, Monticello and llfo!lison .... .... ...... ...... .... ...... ...... ...... ...... ...... ...... .•. ... .... .... 15, 000 Lookout Mountain ............................................................................ ~-......... 15, 000 Marietta, Ciinton ancl Ellijay .. . . ... . ... . .•• ••. .... ... ••• ... ... .•.• .. . ••• .... .... ... •.. ...... ... . .... .... 15, 000 1\fcDouough \Vcstern ..................................................................................... 12,000 :Memphis l3rnnch .................................................................................... .'.... 15, 000 Newnan mul Americus .••••• .... ...... .... .. .... .... ...... ...... .••• ...... ..... ...... ...... ...... ...... .. 12, 000 Northwestern ...................... -~-................................................................... 15, 000 Nort,h and South......................................................................................... 12, 000 North Georgi:t aml North Carolimi.... . . . . . • . • .. . . . • .. . • . • • • • . .. .. .. . • .. . . . . . . . • .. . . .. .. • .. . . . .. . . . . .. • . . . 12, OW Omnulgee ltiver ................................................................................... :.. .... 15, 000 Polk!:; St:1tu Quarry ...................... , •• , ................................................ , • • .. • . .. . • . 15, 000 St. l\fary.'s and '.Vestern ...... .... .... ...... .... ...... .••••. •••• ••.• •••••• ...... .•.. ...... ...... ...... .•.. 15, 000 · San1mrnh, Griffin and North Alabnma ... ... ••.• .••••. ...... .... . ...... ...... •.•. ••.• ...... .... ...... .... 12, 000

The aid to the Macon and Brunswick railroad was increased to $13,000 per mile on the entire roa,d, and on the Sonth Georgia and Florida to $12,000 per mile on the unfinished portion.

An act was passed at the same session directing the governor to lease the Western and Atlantic railroad at $25,0UU per montll, which was acconliugly leased to the ·western ancl Atlantic Railroad Company.

It appear::; that an act was passed on October 17, 1870, granting ltid to the Brunswick and Albany railroad, although the act itself does not appear among the publisheclacts of that session. It is referred to in governor's niessa,ge:, reports of committees, subsequent acts, and in the constitutional amendments. From th~se sources it seems that the act authorized the issue of the bonds of the state to said company at the rate of $8,000 per mile, amounting, iu the ag·gregate, to $1,8801000, in exchm1ge for the entire issue of second-mortgage bonds of the company, amounting to $2,350,000. The bonds to be issued were to be of the denomination of $1,000, to be i)ayable in twent;r-iive years, with seven per cent. interest payable semi-annually, interest and principal payabie in gold. Bonds o:t' $1,000 each, 1,800 in number, were issued to the company, but the entire issue was subsequently declarca void. .

Ou December 9, 1871, au act was passecl over the governor's veto entitled "An act to protec~ the people of the stiite of Georgia against the illegal and frauclulent issue of bonds and securities, and for other purposes connected with the same"· A preamble to the act recites that divers bonds purporting to be bonds of the state of Georgia.7

and divers boncls bearing the inclorsement of the state, had been issued by the late governor of the state, and that divers bonds issued i)rior to his administnition hacl been negotiated by him, and that it was believed that a large portion of such bonds hl'td been illegally ancl fraudulently issued and negotiated, the extent and amount of which was unknown to the general assembly. The act provides for the appointment of a committee of investigation for the purpose of ascertaining all facts connected with the history of the bonds. It was enacted that all persons holding bonds of the state, or bearing indorsernents thereof, shoulcl report the same for registration before April 17

1872, and that failure so to report was to be deemed prima facie evidence that they were illegally or fraudulently issued. Until the furth~r orders of the general assembly .the treasurer of state was forbidden to pay any in~erest on bonds issued or negotiated since .Tnly 4, 1868.

584 VALUATION, rrAXATION, AND PUBLIC INDEBTEDNESS.

This committee made an elaborate report pointivg out the objections to the several issues of bonds claimed to be void and unconstitutional. At the same session, resolutions were adopted* appointing four different committees of investigation, to wit:

1st. A committee to investigate the official conduct of the late goveruor, including his management of the finances of the state.

2d. To investigate the management of the Western and Atlantic railroad. 3d. To investigate the fairness or unfairness of the contract made between the late governor aml the· lessees of

the Western and Atlantic railroad, known as the ·western and Atlantic Hailroacl Company. 4th. To investigate as to whether any claims had been wrongfully allowed b;y certain commissi.oncrs theretofore

appointed to audit claims against the Western and Atlantic railroad. . These several committees made reports, and a resolution was adopted, that the lease of the railroatl was deemed

to be advantageous to the state. Acts were passed, declaring certain bonds unlawfully and unconstitutiounlly issued, and the action of the legislati.ue was sustained by the peo!)le, in adopting certain constitutional nmendments.

An act approved January 18, 1872, authorizecl the issue of bonds to the auionnt of $700,000 for the pur1)Qse of funding, exchanging, or redeeming the st~1te bonds maturing in 1872, these bonds to bear not exceeding seven per cent. interest, and to nm twenty years. By the same act a temporary loan of $300,000 was authorized for the purpose of pa;viug the interest due upon bonds issued prior to June 1, 1868, the amount to be repaid out of the taxes of 1872.

By seveml acts adopted at the session in J:\..ugnst, 1872, t the indorsement of the state's guarant:y upon tlle bonds of the Bainbridge, Cuthbert, and Columbus Railroad Company, the Cartersville and Van \Vert Railroad Compau~", the Cherokee Railroad Comprmy, ancl the Brunswick and Albany H.ailroad Company, was tleclared null and Yoitl, and the payment thereof forbidden, and the issue of state gold bonds in aitl of the Brunswick and Albany railrorul, under the act of August 16, 1872, was declared null, void, and unconstitutional. Certain gold bonds held by a New York banking firm, 112 in number, were declared void, ancl of uo binding force against the state; one of tho bonds was afterward (February 22, 1877) declared legal, it appearing that a mistake hacl been made. A resolution was ado1lted at the same time declaring the validity and biuding force of the state's indorsement of the bonds of the Macon and Brunswick Railroad Company.

A further loan was authorized February 19, 1873, providing for the issue of bonds to the amount of $1,200,000r to bear interest not exceeding eight per cent. per aum:1m, payable semi-annually, $100,000 to be redeemed amnrally. The bonds were issued for the purpose of obtaining means to redeem the past-clue bonds ancl interest. They 1verc to be exchanged for such other bonds ancl coupons as might fall clue during the then ensuing next three years, or to be sold from time to time to the number necessary to raise the required amount to meet the payment of falling-due bonds. To secure the prompt payment of these bonds the goYernor was instructed to increase the percenta.ge of taxes, so as to produce. the sum 0£ $100,000 annually, to be applied to the extinguishment of this debt nnt.il all should be paid, and the faith of the state was IJledgecl that this provision should not. be repealed. The bonds issued under this act are, by the terms thereof, exempt from state, county, aud municipal taxation; and it is also provided that upon the sale of these bonds a11 unnegotiatecl bonds and coupons issued under the act of January 18, 1872, shall be withdrawn from the market and canceled. Another act was passed on the same da~r appropriating one-half of the income of the Western ancl Atlantic railroad to the extinguishment of the public debt. It provides that as often as there should be $25,000 in the treasury belonging to the fund thereby created, bonds of the. state should be purchased at the lowest market rate.

On the 17th clay of February, 1873, it was enacted that if railroads should be sold on account of non-payment; of interest accruing on bonds indorsecl by the state, the governor might purchase such roads, rolling stock, aud equipment~ for the state, and make disposition of the same, subject to the approval of the next general asseru.bl:v.

The Macon and Brunswick Railroad Company failed to pay the interest on the bonds indorsed by the stato which fell due on July 1, 1873, and on the 2d clay of July the govern er seized the road and its property. Tlrn amount of the outstancling· bonds .was $2,550,000, ancl the amount of net earnings was ~stimated at $60,000. There were also o.utstanding about $70,000 of what were known as pass-bills issued by the company, aml it was deemed advisable to redeem these, ancl the net earnings during the years 1873 and 1874 w.ere applied to this o~ject.

Although the state had by resolution declarecl the validity of the indorsement of these bonds, yet the governor claimed in his message delivered in 1875, that a portion of the bonds indorsed were invalid. Under the act of 1806-there had bei:m indorsed $1,950,000, ancl under the act of 1870, $600,000. A resolution was adopted at the then session of the legislature declaring the indorsement on the former valid, ancl on the latter nnconstitutiom1l and void, except as to a few bonds which were specially excepted. All of the earnings 0£ the roacl up to January 11 1875, had been used to pay the "change" bills, of' which there were yet outstanding on that date, $16, 750. +

.Better to protect the interest of the state where its indorscment has been obtained upon railroad bonds, it was enacted on March 5, 1875, that in an event of the sale of any of the railroads, bJ' reason of the non-compliance with or_ non-~erformance of the conditious im1l0sed by the several acts authorizing the guaranty by the state, the govemor might bid for and buy such railroad under certa,in limitations. .

•November 28, 1871. December I, 1871. t Laws 1872, pages 5, 6, and 7. t Estimated.

HISTORY OE' STATE DEB1.,S- GEOHGIA. 585·

On the following day a resolution was passed directing the goYernor to sell the. Macon and Brunswick railroad,. In accordance with which the road was sold in Jnne of that year, the state becomiug the purchaser for $1,000,00'0. · The road was again sold by GoYernor Colquitt, under acts of September 3 and October H, 1879, for $1,125,000.

The Cartersville and Yan Wert or Cherokee railroad also failed to pay interest clue in December, 1871, but before the same could be seized it had been sold on execution to pay laborers and employes.

The North arid South railroad, upon whose bonds to the amount of $240,000 the iuc1orsement of the state had been placed, also failed to meet the interest, and the state became lirtble for 'the principal and interest. The road was seized on April 23, 1874; and was operatecl by the state until September 5, 1877, when it was sold for the sum of $40,t>OO, to be paid Jmrnary 1, 1884, with seven per cent. interest semi-annna1ly in adYancc.

The bonds of the Memphis branch railroad to the amount of $34,000 were inclorsed in J.\Iay, 1S7 4. This company also failed to meet the pa.~~ments, was seized, and the property of the company, except its franchise, road-bed, and a bridge across the Oostananla river, was sold in August, 1877, for the sum of $0,000, payable January 1, 1881, with seven per cent. interest.

In consequence of these sevcml losses and aclditioua1 burdens, mHl in accordance with the go,·emor's i·ecommenclation, the provisions in the charters of the several railroad companies heretofore incorporated, by which the inclorsement of tlle state was authorized to be phtccd upon the bonds of such railroad companies, 110 matter upon what terms aid was to be granted, were repealed by an act avprovctl Febrnar;v 25, 1874. This, however, <lid. not affect vestccl'rights, irncl the act i1r0Yides for the adjudication of m1y claim of such right b;y the courts.

By a resolution adopted the Northeastern railroad wits specially excepted from the operation of this act. No further bonds were indorsecl after this tfate, exccpt-lst. The bonds of the Memphis branch railroad in the smn of $34,000, to which the company was entitled, the·

road having been partially constrncted befo1;c the imssagc of the act. 2d. The bonds of the Northeastern railroad were indorsecl in 1878 to the amount of $260,000. The public debt (actual) on January 1, 1874, was $8,343,0CTO, and on Januar3' 1, 1875, $8,105,500. Tlie interest

on the debt was promptly pa,icl as the sa,me became due. The amount of the outstanding bonds of the rai1roalls which had defaulted, and the validity of which was admitted by the stateJ is not included in the above amount.

On Febnrnry 27, 1875, an act was passed to Yoicl the state's inclorsement on the bonds of the Alabama and Chattanooga, Railroad Company; the act recites that the bonds thus inclorsed by the goYernor, under the authority of the act of March 20, 1869, are second-mortgage boncls, and upon their face expressly recognize the existence of a prior and first mortgage and lien upon the property, and were issued, therefore, in conflict with paragraph 5, section 6, of article III of the constitution.

An act passed on March 2, 1875, recited that divers bonds of the. sbtte, which matured prior to the 1st tht:y of January, 1872, were then in circulation, and that i.t was believecl that they had n,ll l1een paid imcl that they had been illegally and fraudulently reissued a,nd negotiated, in an amount unknown to the general assembly. It provided for the registration of such bonds by the treasurer, and that non-registry on or before Angust 1, 1875, should be deemeclprimajaeie evidence of' the payment and illegal issue of the same.

The following amendment and additional clause to section 6, article 3 of the constitution was ado1)ted by the legislature of 1875* and 1877,t and was ratified by the people in J\'fay, 1877:

Neither the gcncml assembly nor any othor authority or officer of this state shall ever h!Lvo power to pay or recognize as legal, or in any sense valid or binding upon the state, any tlirect boncls, golcl bonds or currency bonds, or tlie state's alleged guarant.y or indorsement of any railroacl bonds, or any other bonds, guarantees, or iuclorsements heretofore clcclarecl to be illegnl, frauclnleut, or void by not or resolution of the legislature of the. state, or that may be cleclarecl illegal, fraudulent, or void by act. or resolution of the legislature originating t.his amemlmeut,t viz, the state gold bonds issued under the act of October 17, 1870, in aic1 of the Brunswick and Albany Railroacl Company; the omTenoybonds issuecl under the aot of August 27, 1870; the quarterly golcl bonds issued under the act of September 15, 1870, wl1ich are enumeratecl in the aot of August 23, 1872; the inclorsement of the state upon the bonds of the Bl'Uuswick au cl Albany Railroacl Company, made under the act of Maroh 18, 1869; the indorsement of the state upon the boncls of the Cartersville and Van "Wert Raih·oad Company, an cl of the Cherokee Railroad Company; the inclorsoment of the state upon the boucls of the Bainbric1ge, Cuthbert and Columbus Railroacl Company, ancl all other bonds, guarantees, or indorsomeuts declared illegal, fraudulent, or void as herein iirovidcd.

It absolutely forbade all future recognition of these claims, by legislature, in courts, or by citize~s. Under the various acts (declaring the invalidity of the indorsements) and in pursuance of this amendment, the

state admitted their liability only. on the following: Macon aml Brunswick railroad: •.••..•..•....•....•.........•••..•.•••.••••.........•.•......••....••. $1, 950,000 North and South railroacl •....•••.••••...••••.....••........ _. __ ... _. .• . .• . . . . . • . • • • •. . . . . .•• • •. .. • • • . 240, 000 Mum phis branch railroacL ....••••. __ .... ·- .••..•..•..•........•. ---- ...••....................•..•. -- . . 34, 000 South and Georgia ancl Florida railroad .••••.. _ .•..•...•••..••....••••..•...•....•.•••..... --- . - --- - . . . . 464, 000

This latter company. was paying the interest on its debt. By an act approved February 17, 1854, the issue. of $375,000 in six per cent. bonds, for the pUTpose. of

exchanging outstanding bonds of the Central Bank, was authorized. The old bonds were bearing seyen per cent. interest, and the change to six per cent. raised questions with the holders, and the new bonds, though executed,

~Acts 1875, p. 27. t Acts 1877, p. 24. +Legislature of 1875.

586 VALUATION, TAXA'TION, AND PUBLIC INDEBTEDNESS.

were not issued. They were taken from the treasury vault in 1864, by unauthorized persons, as it is statecl in an act passed on February 23, 1876, by which act the issue of February 17, 1854, was declared null ancl void. For the purpose of paying the interest past due and becoming due upon the recognized bonds of the Macon and Brunswick railroad, and upon the bonds of the North and South railroad, both of which were indorsecl by the state, au act approved February 25, 1876, authorized the issue of a sufficient amount of bonds to'be dated July 1, 1876, to mature in 20 years, ancl to bear seven per cent. interest, payable semi-annually, and to be of the denomination of $1,000 each. Under this act bonds to the amount of $542,000 we1;eissuecl and are yet outstanding.

On January 1, 1877, the debt (exclusive of allmitted railroad-bond liabilities) was $8,447,500. On the 19th <lay of February, 1877, an act was passed authorizing the issue of bonds to the amount of

$2,298,397, for the purpose of retiring, by exchange or paying off the recognized bonds of the Macon and Brunswick railroad to the amount of $1,9501000; of the North and South railroad, indorsecl by the state, to the amount of $240,000; also bonds of the Memphis branch raili-oad, indorsed by the state, to the amount of $34~000, with accrued interest on all of said issues to January 1, 1877, amounting to $74,397. The act provides that the bonds shall be sohl at not less than par, and the proceeds to be applied to the retirement at par of the above-described bonds, or that the new bonds may be exchanged at par: the new bonds to be of the denomination of $1,000 each, to be dated January 1, 1877, maturing in twelve years, and to bear interest from said date at six per cent. per annum payable semi-annually. '

By an act approved February 26, 1877, the treasurer was authorized and directed to pay ten cents on tho dollar for all "change bills" issued by the Western and Atlantic railroad during the war, which might be presented. Of these bills, $200,000 hacl been issued by this company by virtue of au act passed in 1863.

A constitutional convention was helcl in 1877, and seyeral i_)J;'Ovisions relating to tlle tlebt question were adopted. The constitution was ratified by the people on the 5th day of December, 1877.

These provisions are as follows : ARTICLE YII, SECTION 3. No debt shall be contracted by or on behalf of the state, except to supply casual cleficiencies of rovom1ei' to ro11el .

invasion, suppress insurrection, aud defencl the state in time of war, or to pay the existing public debt; but the ch1bt created to sup11ly deficiencies in revenue shall not exceed in the aggregate two hundred thousand dollars.

SEO. 4. All laws authorizing the borrowing of money by or on behalf of the state shall specify the purposo for which the money is to be used, an!l the money so obtained shall be used for the imrpose specified, and no other.

SEC. 5. The credit of the' state shall not be pleclged or loaned to any individual, company, corporation, or association, and the st!lte shall not become a joint owner or stockholder in any comp:my, association, or corporation.

SEO. 8. The state shall not assume the tlebt, nor auy part thereof, of any county, municipal corporation, or i101itical ill.vision of the 'state, unless such debt shall be contracted to enable the state to repel invasion, suppress insurrection, or clcfond itself in time of war; ·

SEO. 9. The general assembly shall have no authority to appropriate money, either directly or indirectly, to pay tho whole or any part of the principal or interest of the bonds or other obligations which have been pronounced illegal, null, aud void by the general assembly, and the constitutional amendments ratified by a vote of the people on the first day of May, eighteen hunclrod and sevonty­sevcn, nor shall the general assembly have authority to pay any of the obligations oreated,by the state uucler laws IHlssed during tho late war between the states, nor any of the bonds, notes, or obligations made and euterecl into during tho existence of saitl war, the time for the payment of which was fixetl after the ratification of a treaty of peace between the United St1Ltes and tho Confederate States; nor ·shall the general assembly pass any law, or the goveruor or other state official enter into any contract Ol' agreement, whoniby tho s~ate shall be made a party to any suit in any court of this state, or of the Unitecl States, instituted to test the validity of auy such )Joucls or ouligations.

it- * +f * if 1f * "If ""

SEO. 12. The bomlcd uebt of the state shall noyer be increased, except to repel invasion, s~1ppress iusurroction, 'or defend tho sto.te in time of war.

Section 13 provides for the application of the money received from the sale of railroads and any other property -0wned by the state toward extinguishment of the bonded debt. The new constitution also provides for a biennial session of the legislature instead of an annual. ·

Tho recognized public debt on January 1, 1878; was $101644,500, which was all for which the state admitted its liability, except the contingent liability on the bonds of the South Georgia and Florida railroad. ·

An issue of boncls to the amount of $5001000 was authorized by an act approved December 14, 1878, for the purpose of redeeming the instalments of bonds issued under the act of February 27, 1856, which fall due in 1870

1 1880, and 1881; the new bonds were to run six years and bear interest at the rate of four per cent. per annum; to be issued in sums not less than $5 nor more than $100 ; and to be sold at not less than par value. Under this authority $400,000 were issued, but of these $293,000 have been redeemed, ha-ving been paid in as part purchase· money of the l\Iacon and Brunswick raikoad.

The recognized clebt on October 1, 1879, was $10,344,500, which, during the subsequent year was reduced to ~19,951,500, as appears by the official report of the comptroller of October 1 1880. The inter~~t o~ the debt falling <lue in 1881 is $072,415. '

HISTORY OF STATE DEBTS-GEORGIA-FLORIDA. 587

The following is an analysis of the. debt, showing the date of issue, amount, date of maturity, and rate o~ interest, as taken from that document:

~ ,,; I Original !:I fJl amount of

'.~ .~ issue.

1861 $100, 000 -1860 100, 000 1800 34, 500 1806 150, 000 1860 15, 500

:iseo 2, 800, 000

1800 800, 000

'1870 2, 008, 000 1872 207, 000 187~ 100, 500 .1873 100, 000 '1873 100, 000 '1873 100, 000 1873 100, 000. 1873 100, 000 •873 100, 000 1870 542, 000

1877 2, 208, 000

1880 400, 000

Amount I outstand­

ing. Authority for issue. Purpose for which issued. Dateofma- ~"'..~

I

......... turity. ~l~

~~~~1~~~~~~~~~1~~~~~ ·~~~~~~--~~~~~~~~·~~~~-~~~-1·~~

$100, 000 100, 000

34, 500 150, 000

15, 500

2, 800, 000

800, !JOO

2, 007, 000 207, 000 100, GOO 100, 000 100, 000 100, 000 100, 000 100, 000 100, 000 542, 000

Act February 27, 1850 . • .• .. Iu aicl of tho Atlantic and Gulf railroad .••.•••••••.••••••.••••....•••••••..••••• J Feb., 1881

::::::~~: :::: :: :::::·:: ::: :::: ::::::~~ :::::::::: :::::::::::::::::::: ::::::::::::::: ::::::::::::: ::::::::::: ::::::1 ~:~:: ~:~ : ~:: ~~ : :~ :~> ~~::::::::::: ): : ;~,:;o~: o~~: ~~~ ~~~~~~~~~ ~; ~~~~~;~~: ~~~;;~;;~;i;~~ ~~~~~~!;~~~; ~~: ~~~:;~:~t~ :

1

1 :::: :: i 0

arc ., 1 6 • • • • •• • • · ern null Atlautlo railroad; $000,000 to pay to tho government of the United I l\fay, 1886

States tho land tax about to be levied, and $1,300,000 to redeem outstanuing i

..•••• do . • • • • • .. • • . . . • • . • • • • . bonds, and on March 13, loan of $200, 000 for purchase and distribution of : May, 1880 corn was authorized. ·

Act September 15, 1870 . . • • . To redeem outstanding bonds nn11for tho general fund* .......................... ) Oct., 1890 I Act January 18, 1872 .....••. ~ j

..•••. ilo ..•••...•.••.•••••••. S $700,000 authorized to redeem or refund bonds due in 18i2 • •. .•••• . ••..••..•..•

1

July, 1802

Act February 19, 1873 .••••.

1

1881 ..•••• do·-·········.......... , I( April, 1882

April, ··•• •. do ·••••• ........ • •· ·' • •· For tho payment of pnst-tlue interest, pnst-due bonds, and such bonds as ma.j April, 1S83 ·····.do ·•• • • · · • • · • •• • • • · · • - · turcd in three (3) years after passage of tho net. April, 1884 .••••. do ···-·········-·······1 Ap1·ll, 1885 ....•. do ................ ,.... April, 1886

Act February 25• rn7e ..... ·· To pay intcr·est due and to become due upon bonds of the :Macon and Brunswick J"uly, 1896 railroad aud North nod South rallrond, indorsed by tho state.

2, 298, 000 .Act February 19, 1877 ••••••. To redeem$1,050,000 of.thebomls of the Macon.and Brunswiokrailrondindorsed May, 1880 by thll state, $240,000 of the bonds of the NorthnndSouth railroad indorsed by the state, $34,000 of the bonds of the Memphis branch railroad intlorsed by the state, anu $74,397 to pay interest to January 1, 1877.

107, 000 .A.ct December 14, 1878...... To pity outstanding bonds 1lue in 1879-'80 and 1881 issued under the act of Feb· OT1m., 1886 r1ui1·y 27, 1856.

• Gold quarterly houds.

FLORIDA.

6 6 0

0

6

7

7

7

7

8 8 8

8 8 8 7

.6

Florida was ceded by Spain to the United States in 1819, and an act establishing a territorial govennment therein was passed by Congress March 30, 1822.

Several banks were chartered in 1833, and the territory issuecl her bonds in aicl of the enterprises in the sum ·Of about $•17000,000.

The banks were under the control of the territory, and made flattering reports from time to time to the •legislature. In the general crisis of 1837, howeYer, they suspended specie payment, and it was soon thereafter ascertained that they were hopelessly insolYent. The funds of the banks were loaned to the stockholders, and the only security given to the banks was the land to purchase and pay for which the money was borrowed.

There was issued to the Union Bank alone $3,000,000. In 184:0 the jucliciar;r committee of the council made an elaborate report on the liability of the territory to pay

these bonds, and concluded with the following resolutions, which were adopted:

1. Resolvecl, That the power of the governor ancl legislative council of the ten·itory of Florida delegated by Congress over 1111 rightful snbjects of legislation under tl1at clause in the constitution which invests Congress with authority "to make all needful rules and regulations respecting the territory ancl other pro11erty belonging to the Unltecl States'', does not extend to the creation of banks with ·exclnsive llrivileges !111(1 franchises, nor to the issuing of bonds and guaranties in aill of such institutions, pledging the faith and creclit of the people of l!,loric1 a.

2. Ilcsokeil, That such pledge of the faith and credit of the people of Florida is. null and void.

The other branch of the legislative council (senate) clid not coincide in the views tlius expressed, but in strong terms protested against them.

From this report it appears tha,t at times the banks had already procured bonds "purporting to be guaranteed 'by the territory" to the amount of $3,900,000; that they claimed a further issue under the same authority amounting to $5,600,000 more.

The population ·of Florida was estimated at 50,000 souls, which would make the per cavita debt about $200. The iute1·est on this debt the committee claimed could not be raised by taxation, but only by an abs'olute surrender ·of the property of the citizens.

The bank an(l debt question was the subject of investigation by numerous committees of the council. The

588 VALUATION, TAXATION, AND PlJBLIO INDEB'rEDNESS.

constitution adopted by the people of Flori~la prior to her admission as a state in 1845, provides that the faith and1 credit of the state shall not be pledgecl in aid of any corporation. At that elate the total debt of Florida was $4,850,000, the revenue $98,000, the expenditures $1001000. Soon after 1845 the state officials began to agitate schemes of internal improvement. The governor in 1852 called attention to the fact that the constitution declared that a liberal system of internal improvements was essential to the development of the resources of the country and made it "the duty of the· general assembly as soon as practicable to ascertain by law proper ohjects of improvement in relation to roads, canals, and navigable streams, and to provide for a suitable application of such funds as may be appropriated for such improvements". In commenting on this, the governor s~iid to the legislature :

How little this provision of the constitution bas been practically regardecl, your recent.journeys from your respective homes in every part· of the state must have iiainfnlly reminded you. It is a mela:µcholy reflection, that while the spirit of improvement is pervading every other state-011ening new sources of wealth and comfort, and stimulating human industry in all its varied departments-Florida alone, lilrn the slothful servant who buried his talents, seems well-nigh content with inaction anll re1)oso on this vit>Ll subject.

The subject of improvements being once thoroughly agitated, the legislature of Florida, January 10, 1855r passed an act to provide for and encourage a liberal system of internal improvements in that state, and issne<l. bonds to the extent of $10,000 per mile to certain railroad companies, the interest whereon was duly guaranteed by the trustees of the internal-improvement fund created by the act. Such bonds became a first lien or mortgage on the roads, their equipments, and the franchises of the companies. The system of roads to be ltided, under this provision, by a guarantee from the internal-improyement fund, to the extent of ten thousand dollars per mile for iron and equi11ment; embraced as the terminal points the bays of Pensacola ancl St. Andrew's in the western district, St. l\Iark's or Crooked river in the middle district, Fernandina and Jacksonville in the eastern district, and Tampa and Cedar Key in the s-outhern district, making in the aggregate little less than 700 miles of road.

At this time, if we may judge from the message of the governor, the finances of the state were not in the most flourishing condition. The state had not depended on resources from taxation, bnt had relied too much upon loans to supply deficiencies. This may be seen by reference to the following tabie:

. . . . ... --- -------------------· ... ________ ---===.====...;:;:-..=--

Years. Revenue col· Wnrmuts i~· lccted. sued.

------For the fiscal year ending October Bl, 184G ....................................................................... '" •••.•.•..•••.• • .••.••.. $27, 507 28 $50, 000 57

For tho fiscal year ending October 31, 1847. '······ .....•....••..•........••••..........•...•....•.... ; •.....•.....•.......•••.......••••. 45, 357 00 52, 787 46· For the fiscal year ending October 31, 1848 .............................................................................................. . 50, 832 72 54, !113 81

For the fiscal year ending October 31, 1840 ..•....•....•.......•.••.•.•••..•••••.•...•.....•.....•.•..•.••..••.•••••.•..............•.••• , 081 038 11 5V, SOi 79 For the fiscal year ending October 31, 1850 •••••••••..••.•••••..•..•.... · .••••..••...•..•••...•...........•........•.••...•••••...•.. _ •••. 46, 070 84 38, 550 tl3· For the fiscal ,ear cndiµg October 31, 18:>1. ....•...••••.•••••.•••.•.•••••..•.•.••..•••.•••••..••.••••.••••.••.••.•••..•.••••...•.....•••. 57, 14110 07, 187 73,

55, 010 03 55, 234 411' U?, 278 BO 108, 007 88 ;:; :e: ::~~ ~:: :~~!~; g~::~:: :~: ~:~: :::::: :::::: ::::::::::::~:::::::::::::::: ::::: :: :::::: :::::: :::::: ::::::::: :: :::: :::::: :: ::::::

For the fiscal year ending October 31, 1854 .........•....•••...•...•...•••.••.....•••••.•••..••••..••....••.••••.•.••....••...••.... _ .•••. 02, 801 51 53, ·117 13'

For the fiscal year ending October 31, 1855 . • • • • • . • • . . . • . . . • • • . • • • . . • . . . . . • . • . . . . . . . • • . • • • . • • . • • . • • . • • • . . . . . . • • . . . . . . . . . . • • • • • • . . • • • •••.• cs, 305 10 85, 300 10 ------Total. ••........•...................•...................•.....................................................•.....•.....•...••... 535, 711 34 027, 800 38

·----~-w

This shows a deficiency of revenue for the ten years of $92,179 04, equal to an average deficiency of over $9,000 per annum. To supply this, loans were resorted to by special acts, under the law authorizing the co11111tL·oller to invest the school, seminary, and internal-improvement funds in the stocks of Floricfa and other states. The total debt of the state in 1855 was $181,872 92, the greater part of which had been contracted for the iwotection of the frontier inhabitants against Indian depredations. About $160,000 of 'this amount was bearing interest, which added annually to the debt nearly $101000. The act granting $10,000 per mile to certain ra.ilroacls was subsequently amended by the legislature, and the governor was authorized to loan the companies bonds of the state to an amount equal to $16,000 per mile in exchange for an equal amount of first-mortgage bonds of the company; and in order to secure the principal and interest on the mortgage bonds, it was declared: ·

'l'hat the state of Florida shall by this act have a statutory lien, which shall be valicl to all intents ancl purposes as a first mortgage· cluly re~is~ered on the part of the road for which said bonds were cleliverecl, and on all the property of the company, real and personal, appertammg to that part of the line which it may now have, or may hereafter acquire, together with all the rights, franchises, and · powers thereto belonging; and in caso of failure by the company to pay either principal or interest of its bonds, or any parb thereof, for twelve months after the same shall become due, it shall be lawful for the governor to enter upon and take possession of saicl property ancl· franchises, and sell the same at public auction. '

Under this power state boncls to the amount of $4,000,000 were delivered to the companies in exchange for ~3,000,000 of the companies' bonds ancl $1,000,000 of the bonds of the Florida Central Railroad Company, and were. m who!e or part uisposecl of.

HIS'l'ORY OF STATE DEBTS-FLORIDA. 589

But little material has been found for constructing the history of the state llebt of Florida since the civil war. According to the report of the comptroller, submitted to the legislature in January, 1874, the bonded debt of

the state was then as follows:

Debt amlinterest, to be exchangecl for the bonds of 1873 .••••...•••....••...•..•.•...•....•... , ••••• Bonds of 1871. •••••.•.•...••••.••.•••.•. .- •••...•.... , .••.......•..•••..•.••• ~ .................... .. Bonds of 1873 sold and delivered ........................................... ~--··· .................. . Bonds of 1873 solcl, bnt not deliverec1, and hold to obtain funcls to pay for twenty-one hypothecatetl

bonds of 1808.... . . • . . . . . . . . . . . . . . . • . . . . . . . . . . • . . . . . . . . . • . • • . . . • . . . . • . • • • . . . . . . . . . . . . . ...•..... Bonds of 1873 exchanged for eighteen bonds of 1868, with accumulatocl interest .....•.••.........•... Bondecl debt clue school fund .... '··· ...•.....•.••.....•..........•................................. Boncled debt due seminary fnncl. .•................•..•...............•......•....•••...••..........

Deduct amount of bonds in sinking fund for payment of bonds of 1871. .••...•••••.....•.•...••.••....

Aud interest due January 1, 1874, to school and seminary funds .•........... !. ................ , ..... . Acld interest due Jan nary 1, 187 4, upon the bonds of 1871. ••..•....•••••.......••...•...•.••....•••. Acld interest clue January 1, 1874, upon the bonds of 1873 •••...•••••.•••.•••.••••• · ...••..••.........

$490,937•75 350,000 00 265, 000 00

15, 000 00 20, 000 00

190, 752 63 71,292 45

1, 402, 982 83 8, 700 00

1, 394, 282 83 9, 960 01

ll9,575 00 12,660 OG

Total bomled debt and interest due thereon to January 1, 1874.... .. ..•••. ...•.. ... ... . ..• ••. .. 1, 446, 477 84 Less money in treasury applicable to pay1!1ont of interest of 1871 ancl 1873 boncls.... . . . . . . . • . . . • . . . . . 16, 254 36

Total bomled tlebt am1 interest., less cash in treasury a.pplicable in payment of interest...... . . . l, ,130;223 48 ===

In this statement are ·not includecl the bonds, amounting to $4,000,000, issued to the Jacksonville, Pensacola, and Mobile Hailroad Oom1lany, which, by a recent decision of the supreme court of Florida, have been decided illegal and 1oic1.

The bonded and floating debt of Flocida, J au nary 1, 1880, was $1,371,803 55, viz:

BONDED DEBT.

Seven per cent. l>onds of 1871. •.••....•••••••••••.••••••••••••••••••.•••••••••••.••.••••••••••••••.•• Six per cent. bonds of 1873 .............••••••.•••.•••••..••....•.•••••..•••.••.•.•••••••••..•..•.... Eight per cent. convention boncls of 1868 ••••••.••••.•••••...•••..•.••.••••.••••••••••.•••••••••••••• Seven per cent .. hon els of 1857 .•.•...•••.••••• • ••••.•••••••••••••.•••••••••••••••••••.•..•••...•••••..

$350, 000 00 925,000 00

1, 500 00 4,000 00

Total ...........................•••.•.•••............••.....•.•••••..••••.•••••...•..... ; . . . . 1, 280, 500 00

== FLO.A.TING DEB'r,

Comptroller's warrants ancl juror and witness certificates outstanding January 1, 1880..... .•••• ••• ... . $86, 823 55 Interest on bondecl debt .•••.•...•.... ; ••...•....••.. · ....•.•.•.•• : . . . . . . . • . . • • • . • . • • • . • • • • • . . . . • . . . . . . 4, 480 00

Total .•.•...•.•.•.•••••........••.•...•••..•••..••.......•..•.....•••• .". • . • • . . •• • • •• • • . • • . . . . . 91, 30a 55 ===

SINKING FUND.

Bonds of 1871.... . • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • . • . . . . • • • . . • • • • • • • • • • • • •• • • • • • • • • • • • • • • • • • • . • • • • . • • . $50, 100 00 Bonds of 1873...... • • • • • • • • . • • • • • • • • • . • • • • • • . • • • • • • • • • • • • • • • • • • • • • • • • ••• • •• • • • • • •• • • • • • • • • • • •• • • • . . . . 100, 000 00

Total ..........•.........•........•.....••.•.••.••••... ·.••. . • • • . . • • • • . . • • • • . • • • • •• • • • • . . • • . . . . . . 150, 100 00

The bonded indebtedness of Florida is held as follows : Sinking fund .............•.••....•...••••..•••••.•.....•.•••...• ; .................................. . State school fund ......••••.•....• , ...........•• ; •••.. : ....•..•..•....•..••.•..•••.••.•.•••••.••. _. .. State seminary fun cl ......•••....•.••.•.............•.....•.•...•...•...•••..•....••••...•......•... .Agricultural College fund .......................................................................... . Private parties ...•.........•.....•.••••••..••••..••• · ..•...••.•••••••••.•••••..•...••••.•.••....••..

====

$150,100 00 246,900 00 85,000 00

121,600 00 . 676, 900 00

Total ...•••.••••••.••••.••••.••.••••••••.•••••••. , ............................................. 1,280,500 00 ==-===-

590 VALUArrION, TAXATION, AND PUBLIC INDEBTEDNESS.

ALABAMA.

The territoq of Mississippi was divided by act of Oongress March 1, 1817, and on the 3d of l\farch following· the territory of Alabama was created. On lVIarch 2, 1819, Congress l)assed an. act enabling the people of the· territ-0ry to form a state government, and, in pursuance of that authority, a constitution ·was framed and adopted by a convention -which met at Huntsville, Alabama, on July 5, 1819, and completed its labors on August 2, 18HI. .

The constitution thus adopted providetl that one state bank might be established, with such number of branches as the legislature might deem proper, providecl two-thirds of the members consented thereto, and not more than one· branch bank should be established at the same session of the legislature. These banks were to be established subject to the following rules : ·

1. At least two-fifths of the capital stock should be reserved for tlle state. 2. A proportion of power in the direction of the bank shoultl be likewise reservecJ, equal at least to the state's.

prqportion of stock. 3. The state and the im1iyitlual stockholders. shoultl be liable, respectfrely, for the debts of the bank, iu

pro110rtion to the stock lteld. 4. That there should be reciprocal remedy for collecting debts for and against the bank. 5. That no bank. should commence operations until half of tlle capital stock subscribed for be actually rmitl in.

gohl or silver, which amount should in no case be less than $100,-000. Remedies were also provideclin case of suspension of payment lly the bank or branches. Several llauks had been chartereu nncler the territorial government of Mississippi and Alabama as follows :.

at Huntsville, in 1810; at St. Step liens, in 1818; and at l\1obile in 181~. The constitution provitle(l that these several banks migllt be created l.lranches of the State Bank. · The State Bank was authorized to Ue established on December 21, 1820, and to be located at Oahawba, which.

became the seat of government in that year, with a capital stock of $2,000,000, divided into 20,000 shares of $10()", each, one-half of which was reser,·ed to the state, the remainder to be snbscribell throughout the state. The aut also resen·ed the right to the state to piucllase all the remaining stock, at the market rate, after the lapse of ten years. It was provided tltat there should be thirteen llirectors, six of whom, together with the president, were to bfr elected by the general assembly.

On June 18, 1s::n, an amendment was passed authorizing the several incorporated ba,nks to become branches: of the State Bank. .At alJont this time there was a great deal of financial distress, owing to the fact that the imblic lands hatl bceu :solll at extravagant prices at the sales at St. Stephens and Huntsville, in 1818 and 1819. Priem;. ranged as high as $60 and $70 per acre for unimproved lands, most of which was sold for one-fourth cash, and tlle remainder in three annual installments. 'About $12,000,000 were clue from these purchasers to the United States, which could not lJe paid. Tlle Jegislatme memorialized Congress, and that body granted relief by enacting tha,t the purchaser might relinquish any portion of the land, and that the amount paid should be" fl.pplied to the extinguisllment of the debt on tlte unrelinqnished portion. Temporary loa,ns were mnde by the state from time to time from the several hanks other than the State Bank ·aboYe-mentionecl, which, though autl10rizec1, had not been establislled. On December 20, 1823, another act was passetl to establish the I3ank of tho State of Alabama, "for the benefit of the state," and tlle faith ancl credit of the state were pledged for its support, and to supply any deficiency in the fonds specifically pledged. The capital stock of the bank was to consist in part of the mon(lys. receiv.etl from the sale or rent of lancl granted to the state by the United States for educa,tional purposes, not to· exceed $100,000, aml for any money thus invested state stock or certificates, bearing 6 per cent. interest, payable semi-annually, were to be issued to the trnstees of the University of Alabama, the interest to be forever applied to. the use of the semina.ry. ·

The capital stock of the bank was to consist, also, of the 3 per cent. fund granted l>y Congress out of tbe· net proceeds of lands sold in Alabama after September 1, 1819; of the proceeds of lands donated for a seat of' government; of eschcats in the state; and of all other public funds.

The governor and five commissioners were authorized to issue state stock to the amount of $100,000, to Le· redeemed after a term of years not exceeding 10, or, at the pleasure of the state, bearing G per cent. interestr payable semi-annually, tht;i proceeds of the stock to constitute part of the capital stock of the bank. The bonds. were issued, redeemable in 10 years. The btiuk was removed to Tuscaloosa in 1826. By an act passecl January 13, 1827, the trustees of the state university were directed ancl required to invest the money belonging to the· seminary fund then in tlle treasury in state stock in the same manner as "heretofore"-the money to be used as. part of the capital stock of tile bank. By an act of January 12, 1828, the further issue of $100,000 state stock was. authorized, to be redeemable in 20 ;years, and to bear 6 per cent. interest, pa;yablo semi-annually. The construction of a new state-house was begmi. iu 18~7, and that of a carntl in 1830, the fonds necessary to be used therefor to be· suppliell from the l)l'Oceeds of canal lands granted by Congress. Stock to the amount of $300 000, ·bearing 5 pe.r· . . ' cent. mterest and to mature in 20 years, was authorized by an act passecl January 21, 1832.

HISrroRY OF STATE DEBTS-ALABAMA. 591

On the 16th day of November an act was passed establishing a branch of the State Bank in the Tennessee valley, nnd the governor aml commissioners were authorized to issue state stock in the sum of <l>l 000 000 to

.., ' ' ' mature. in 30 years and to bear 5 per cent. interest, payable semi-annually. .A similar branch was established at Mobile on the ±th of December following, and similar stock to the amount of $2,000,000 was authorized to be issued, the :proceeds to constitute its capital stock, ·

On the 12th day of the same month the capital stock of the branch bank at Montgomery was authorized to be increased, and the issue of $500,000 in state stocks was authorized, upon the same terms as those issued for the aid of the Mobile and Tennessee valley branch. At this time the construction of railroads began, and this, together with the other public improYements, produced prosperity for the time being.

The stock rmthori~e<l to be issued by the act of 1823 was redeemed in 1834 by the State Bank, out of its ca1)ital stock, by direction of the legislature.'~ ' ·

.An act passed .Tammry 10, 1835, a~1thorized the issue of $1,000,000 state stock, the proceeds of one-half of which was to constitute the capital stock of a branch bank to be established at Huntsville, ancl the other half for the pm•pose of increasing the capital stock of the branch at Decatur ; it was to be redeemable .in not Jess tlum 30 years, and to bear 5 per cent. interest, payable semi-annually. ·

On the same day another act was passed authorizing the subscription, by the governor, to the capital stock of the Bank of Mobile, in the sum of $710,000, for whieh sta.te stock was issued, bearing fr per cent. interest and maturing on January 4, 1859, in the sum of $600,000. t

The cn,pital sto"ek of the parent bm1k was increased $400,000; that of the branch at Huntsville, $5001000; that of Montgomery, $500,000; and that of lVIoliile, $1,000,000, by an act passed January D, 1830. For these several sums state stocks, maturing in 30 years and beariug 5 per cent. interest (payable semi-annually), were issuell. Direct taxation was abolished (except on a few articles and on certain occupation:;;) by an act i)assed on the same day, arnl $100,000 of the earnings of the State Bank and its branches was appropriatetl to defray the expenses of goverlllllent ·annually, to be lmid by the respective banks in proportion to their capital.

Bank issues being thus plenty, times were necessarily ":flush"· Credit was easily obtained, and large investments continued to be made 11i1til the :financial convulsion of1837, when.business became·stagnant. Confidence in bank issues was almost entirely clestro;yed; a "run" was made on the banks, ancl in il'.Iay of that year all of them suspended specie pnymcnt, nnd tlle people were greatly distressed iu consequence .

.An extra session of the legislature was called, and several acts were passed to affonl relief. The · sm'plus revenue ftmcl receiyed from the United States was deposited in the State Brmkand its branches; the suspension of S])Ccie payments was legalized; the bills were made receivable for clues to the state ; and purchasers of the public lands wei'e granted an extension of time. Persons indebted to the State Bank or its branches were also granted extensions, the deferred payments to be made in three anmrnl iustalhnents, with 8 per cent. interest. Other measures of relief were adopted, llmong which was an act authorizing· the issue of $5,000,000 iii bonds, to bear u per­cent. interest, reclcemal>le at the pleasure of the state at any time after two, four, aml six years, in equal })roportions. These bonds were to be deposited as follows: $1,000,000 each in the Stf1te Bank at Tuscaloosa, ancl in the branches. at Huntsville, Decntur, :Mobile, nrnl Montgomery. The act required the sale of the bonds at not less than lni.r­for specie, or fnncls equal to specie, aml that the money should be loaned at 7 per cent. interest.

The suspension of specie pa.;yments by the Ba,nk of Mobile and by the Planters and J\feroha,nts' Bank of 1\Iobile was also legalized, and all the banks were requiretl to procure specie before January 1, 1839, equal to one-eighth of tho amount 0f their capital stock, and lleposit the same in their respective vaults, to be increased so as to have one­fl.fth on Jamrnry l, 1840, and one-fourth on January 1, 1841, and from time to time to keep such amounts on hand as nearly as possible.

At the regufar session in December, 1837, the bmnch at Mobile was authorize'd to increa-se its circulation for the purpose of aiding cotton shf11pers, the increase to be withdrawn in August following. Sterling bonds to the amount of $2,5001000 were anthoriied to be iss11ed by an a.ct approvecl December 23, 1837. The bonds were to matme in 20 years, and t:iear .5 per cent. interest, payable, semi-annually, and the proceeds in gold aml silver were to be 11laced iu the State Bank and branches in the following proportions: $500,000 in the parent bank, and a like sml1 in each of the branches at Mobile, Montgomery, Decatur, and Huntsville. The revenue fnncl was increased $40,000t to be paicl b~r the banks in like proportion as the sum theretofore appropriated, by au act passed on the same <fay, aml the banks were also required to pay the interest on the state clebt. A number of raih·oacl companies were incorporatec1, and work begun in 1838 and 1839. The act abolishing taxes remained in force until February 13, 1842, when an act was passed to pl'ovide state revenue. In the same year the bmnches of the State Bank at Mobile, :Montgomery, Huntsville, au cl Decatur were placed in liquidation, :which rocasme was supplemented in the following year by making a similar dis11osition of the parent bank. For 20 years the state had thus furnished the ca,pita,l for her Gitizens, yet the measure met with little dissent. The state was liable for the redemption of the bills. Many losses hac1 occm·recl, and the state was on the verge of :financial ruin, and repudiation was favorecl by a considernble minority. The charter of the Planters a.ncl Merchants' Bank of Mobile was declared forfejtecl by· an Mt of the assembly a1)provecl February 13, 1843, and that institution was also placed in liquidation. The interest on t4e stato

*Acts 1833-'34, page 40. t See acts 1~36, p. 23.

592 VALUATION, TAXA'l'IQN, AND PUBLIC INDEBTEDNE~S.

·debt was promptly met, though with llifficnlty; taxation was increased, and the fnuds of the ba.uk were used for the purpose. A })Ortion of the debt, amounting to $1,0131000, was reftmded under the provisions of an act imssed December 26

1 1843. The next permanent loan was made under an act approved January 16, 1850, which authorized

the> issue of bonds to extencl those issued in 1843 and maturing in June, 1850. The new bonds were to mature in April aml June, 1870, and bear Q per cent. interest. Under this authority bonds to the amonnt of $700,000 were issued.

By an act })assed February 9, 1852, an issue of bomls to extend those maturing in that year w11s authorizml, the new bonds to, mature in 20 years, and under this authority $190,000 wei·e issued. From this time no debt was made, except that incurred during the civil war. As this does not now constitute a vali<l liability of the state, .details are omitted.

The debt of the state before the war was $3144510001 and by the state convention held in September, 1865, this was declared the only valid debt. Of this amount $2,109,000 was payable in New York, ancl $1,336,000 in Lomlon.

No interest was J)aid on the debt payable in New York during the war, the last redemption of coupons having beeu made in Novelllber, 1861; the London interest was paid regularly up to ,January, 1865. A. proposition was made by tlle creditors in London, in 1865, to take bonds for the unpaid interest; the state authorities made a similar proposition to the New York creditors, and it was cheerfully accepted. The unpaid. interest ·on the London bonds up to January 1, 1867,.amounted to $160,740, and the unpaid interest on the New York bonds to November, 1866, was $527,250. ·

By an act passed December 15, 1865, the governor was authorized to issue bonds in the sum of $1,500,000, to mature in 20 years, to bear 8 per cent. per annum for such as may be dollar bonds and () per cent. for such as may be sterling bonds, for the purpose of meeting appropriations made and to be made by the general assembly.

OuJanuary 18, 1866, an act was passed authorizing the issue of bonds in lieu of those which matured in 1863 .and 1865, to mature ]\fay 1, 1883. On February 23 of the same year the governor was authorizell to issue and sell bonds in the sum of $500,0001 the proceeds to be used for the relief and aid of indigent aml needy people; they were to bear 6 per cent. interest, payable semicannually, and to· be redeemable at the pleasure of the state; but the governor was unaible to dispose of them, and in consequence the state was unable to extend all the needed relief, and the suffering was great. The general government, however, furnished 3, 789, 788 rations during· the eleven montlts ending September 1, 1866.

By·an act passed February 6, 1869, bonds were authorizell to be issued u.ud substituted for those which became .clue in London in July, 1866; they bear 5 per cent. interest, payable semi-annually, and mature in 1886. Provision was also made for the payment of interest on the public clebt. A. temporary loan to the amount of $5001000 was .authorized to be made by au act passed August 11, 1868. On the next day the governor was authorized to issue bonds to th11t amount ancl sell or hypotheeate them. On February 19, 1867, an act was passed granting aid to all railroad companies which should thereafter construct ancl finish 20 miles of road, by indorsing the llon<ls of the -company in the sum of $12,000 per mi.le for each section of 20 miles until the whole road was completed, the lougth ·Of' the road, however, to be not less than 30 miles. This act was amended on August 7 1868 to the effect that, .after the first 20 1~iles were completed,. the inclorsement should be at the rate of $12,000

1 per ~nile, and at tt like

rnte for each 5 llilles subsequently fimshed. On September 22, 1868, the am'Onnt was increased to $16 000 per m~. '

By au .act passed February 11, 1870, the governor was directed to issue to the Alabama and Ohattanooga, Railroacl Company state bonds to the amount of $2100010001 to bear 8 per cent. interest and })ayable in not less than 15 nor more than 30 years, in exchange for the first mortgage bonds of the company, to be properly secured :U}JOll the company's property.

The following shows the debt of Alabama in November, 18661 as appears from the governor's message at that date:* ·

Origina,l bonded debt iiartly e:s:teucled_: ••••• _.... . _ •••••• __ .......... __ ••..• _ ••..• _ •••. __ •• · ..•• __ . .A.mount of fundecl interest on the 5 a,nd 6 per cent. bonds._ ••• _ . __ .......... ____ . __ • _ •..••• _ ... ___ •. Eight per cent. bontts sold for supplies and transportation .• _ ••..•••. _ ..•••. __ •••..•••.•. ____ •••.•.•. Eight per cent. bonds adva,ncecl to insane hospita,L •••••••••••. __ •.•.•••...•••.....••••..••••.•• _ •••

Total bonded debt .•••...•• --· .• -··· .•• ·-· ·-. --· •••••..•• __ . _ •••••••••••.•••••.•..• _ ••. ··- -·· .A.mount of loan clue Winslow, Lanier & Co., including interest aucl commission .. _ •••.••••..••• _ .•..

Total ............ __ . ___ ····- ............................................... __ .••••••.. ·- ••••

$3,445,000 00 687, 990 00 48,500 00 5,000 00

4, 186, 490 00 363,572 22

4,550,062 22 ==

The reven:1es at thi~ time were insufficient to pay the expei;ises of the state government, but the laws were so . amended that it was believed. the amount needed could. be supplied. The expectation was not realized, however, the ~:xpenses f?r the year enclmg September 30, 1869, bemg $110321404 42, while the receipts were only $686,451 02, and it was agam necessary to resort to a loan.

The bonded indebtedness on November 16, 1869, was $512701400, and the annual interest ~as $307,354.

*Senate Jourua,l, 1866-;67, p. 10.

HISTORY OF STATE DEBTS-ALABAMA. 593

The amount ~f bonds indorsed by the state in 3!id of railroads under the act of February 19, 1867, and September 22, 1868, up to November 15, 1869, was as follows:

Alabama and Chattanooga railroad .................................................................. . $1, 800,000 480,000 320,000

Montgomery and Eufaula railroad .............. """"" .•••• ~ ••••••••••••••••••••••••••••••••.•••••••.•• Selma, Marion, and Memphis railroad ...••..•••••.•.•••.•••••••••••••••••.•••••.•.••••.•...•••••••••.•

Total. ........................................................................................ . 2,600,000

The governor, in his message to the legislature in 1869, strongly recommend~d the repeal of the law authorizing sucL indorsement, and an act was passed limiting the right. These several statements of the debt are ta.ken from the governor's messages; there seems to be quite a d.iscrepancy, howeyer, between the governor's figures and those furnished hr the auditor. On No\·ernber 21, 1871, the former stated the debt to be $5,442,300, while the latter stated it to be $8,761,017 37. Tile discrepancy arises from the fact that the auditor included the proceeds of the uniYersity land, which by the terms of the grant made by the general government were to constitute the permanent school fund, ~hile the governor claimed that that fund constituted no part of the public debt, and that the state was only liable for the interest, inasmuch as by the terms of the grant the interest only was appropriated for eclucational purposes and the fund itself could not be paid to the beneficiary.

li'rom the auditor's report, dated September 30, 1871, it appears that the contingent liability of the state, upon bonds indorsed for railroad companies, was $13,120,000, and that state bonds hacl been issued for railroad purposes aggregating $2,300,000, making a total of $15,420,000. This amount was increased dlll'ing the next two years, and on September 30, 1873, the total amount inclorsecl was $19,006,000, of whicll, however, $3,632,000 had been taken up by the railroad company for which they were indorsed.

From the auditor's report of ti.le same date it appears that-

The total bonded ilebt waa ........................................................................ · Educatioual fnncl inclebtecluesR ................................................................... . Outstancling state certific11tes ..................................... ·····: ···-~· .................... . Ontstancling auditor's warrants .•• : .. ··~·.··, ................................. ~ .................... .

Aggregate direct indBlitcdness ................ , ............................................ ..

$6, 543, 800 00 2,802,697 59

258, 650 00 353,688 48

D, 958, 836 °07 ===

Loans were made from time to time for tbc purpose of extending maturing- bonds. Tbere was no obstacle to prevent the extension, inasmuch as the right to do so was reserved to the state by the terms of nearly all the bonds theretofore issued.

An act entitled "An act to maintain the creclit ot' .Alabama" was passed De<'ember 21, 1872.* The preamble to this act declares that "the Yast natural wealth of .Alabama puts beyond doubt the ability of the state to satisfy every outstanding liability contracted by the sfatc ", ancl that it was "the unalterable purpose of the state to satisfy· every such liability at the earliest practicable period". '.!.'he act authorized the governor to issue and dispose of bonds of the state for an aggregate sum not exceeding $2,000,000, to mature not more than 20 years from date, with interest not exceeding· 8 per ceut. per annum, payable semi-annually, aud out of the }Jroceeds to satisfy every liability of the state which hacltben matured, or would mature thereaJtei:.

On the 25th clay of February, 1873, another act was passed bearing a similar title. It authorizecl the issue of $1,500,000 of bonds bearing 8 per cent. interm1t, payable semi-annually, the principal to be paid in not less t1ian 20 nor more than 30 years from date. The proceeds of these bonds were to be a.pplied to the liquidation of the state's indebtedness. The act further provided.that uo bonds should be thereafter issued other than those thereby authorized, an<l thosfl yet unsold of the issue nuthorizecl by the act of December 25, 1871, unless ordered by subsequent legislation. The indorsement by the state of tlrn bonds of the ra,ilroad companies having gradually increased to tile large sum above stated, the people became alarmed, and measures were taken to check this growing evil.

On the 21st of April, 1873, an act was approved providing for the substitution of state bonds to the amount of $4,000 per rnHe, instead of the state's indorsemeut of $16,000 per mile under the act of 1870. These bonds were to bear interest at the rate of 7 per cent. per annum, in golcl coin, payabl(? semi-annually, and to mature in 30 years. The act provided for the excha11ge of these bourls. upon the surrender of the indorsed bonds and tbe issue to railroad companies for roads thereafter constructed. For the purpose of securing the state it was provided that for the first 5 years after the issue of such bonds the company to whom the same were issued should pay into the state treasury three-fourths of 1 per cent. of the gross receipts of the road, and that thereafter they should pay annually 5 }Jer cent .

. of the gross earnings until the bonds issued under the act should be extinguished by snch payments; the bonds were not to be sold at less than !JO cents of their par value. The companies had acquirecl vested rights under the act of 18'/0, ancl it was of course optional with them to accept or reject the proposition, but many availed themselves of it. During that year the state settled with man;}· of the railroad companies who hacl become delinquent. The

38 W D T "Acts 1.872-'73, p. 43.

594 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

state credit snffered severely by reason of the non-payment, at maturity, of the interest on these indorsed bonds. Governor Lewis, in his message to the legislatnre of 1873-'7 4, says :

The embarrassment surrounding our pecuniary engagements, and the means of complying with them, though serious before, are of course enhanced by the crisis in money circles. We are still suffering the crisis, commencing over two yeiirs since, in our experiment of' constructing important lines of railroads, mainly by state credit. The theory thttt a railroad, while in progress of construction, could pay the interest on the bonds issued to build it, has been shown to be false; aucl this failure.of the railroads to pay interest on the bonds, indorsed by the state, devolves on the state a debt the means for paying which have not bee11 llroYidecl for in her assessment of taxes. rhe state has been in default in the payment of interest on some of these indorsed bonds since January, 1870. 1'he immediate effect, to the injury of the state, of this failure to pay the interest on these indorsell bonds was to impiiir the market value of all her securiticH, to render loans impracticable except at great sacrifice, and eventually to render her bonds unsalable at rates that coulcl he ente1'tained. It was hoped by this clepartment that the prompt payment of the interest on the bonds of the st!tte, negotiatetl for its own loans, wonlll keep that line of securities on a footing of recognized value, and afford the means of paying the past-due coupons on the indorsed bonds until a better day would dawn on the railroads themselves, ancl thus tide over our difficulties. But \Vall street refusecl to recognize a complfonco by the state with her financial obligations as long as any coupon of au indorsed bond of the state was not providecl for on maturity. 'l'ho whole of the last issue of state bonds could have been solrl for eighty-five cents on the dollar to parties interest.eel in tlie indorsecl bouds of the railroads, provided all past-due coupons were paid. But the state did not have a sufficiency of funds to clischa:rge all these coupons and pay the interest on the direct bonds of the state. If the act of the legislature entitled" An act to maintain the crec1it of Alttbama"1

approved February 25, 187:11 had authorized the issue of two millions of bonds, there would have berm a sufficilmcy of funds at tho command of this department to have paicl off all the interest past due and accruing on both the direct and iudorsed bonc1s of tho sfato during thri financial year just closed. But the legislature having authorized the issue of an amount inadequat.e to meet all the interest debt of the state, no sale could he made of the bonds authorized to be issued .. Thia department has be(lu unable to sell for money any of' the state bonds during the present administration, being forced to follow in the footsteps of its predecessor in raising money by tl10 hypothecation of the securities of the state as it best could.

On December 19, 1873, an act was passed authorizing the issue of "obligations" of the state to the amount of $1,000,000 m denominations of $10, $20, $50, and $100, for the purpose of fonding the domestic or floating cfoht, to bear 8 per cent. interest, payable semi-annually, redeemable in 10 years, and to be exempt from taxatiou.

An act approved December 17, 1874, provided for the appointment of commissioners to liquidate and adjust all claims against the state arising from bonds issued or indorsed in the name of the state. 'fhe commissioners wero appointed, and they made an elaborats report to the governor, who communicated the sa.m:e to the legishttnre on January 241 1876. In the meanwhile a constitutional convention was held, aud a new constitution was adopted mul rntified (in 1875), which, among other provisions, declared that the state should not engage in works of i11ternal improvement nor lend money or its credit in aid of them, nor be interested in any private or corpora.te enterprii;e, 01•

lend money or credit to any individual, association, or corporation; it further provided that the legislature should lrnvo no power to authorize any county, city, or town, or anJ' other subdivision of the state, to loan its credit or gmut pnbliG money to any individual, association, or corporation, or to become a stockholder in any corporation, assochttion, 011

company. The report of the commissioners above-mentioned contained a scheme or plan of settlement of the stato debt; it was approved by the legislature, which, on February 23, 1876, passed the" funding act". The governor was authorized to issue bonds, to be designated as "Class A", not exceeding, in the a,ggregate, $7 ,000,000, to be dnte<l July 1, 1876, to be payable 30 years after date in the city of New York, and to bear interest as follows: 2 per cent. pei• annum for the first 5 years; 3 per cent. per annum for the second 5 years; 4 per cent. per annum for the next succeeding 10 years, aud thereafter 5 per cent. per annum until their maturity, all payable semi-annually. '.J~ho bonds were to be renewable at the pleasure of the state, wit.h interest at the rate of 5 per cent. per almum. Bonds of this class were to be issued in exchange for the bonds issued under the following acts: February 9, 1852; December 15, 1865; January 18, 1866; February 13, 1866; Febrnary 6, 1867; August 12, 1868; February 17, 1870; December 15, 1871; February rn, 1872, and February 25, 1873; but the exchange and substitution was to be made. in such manner that the new bonds should be given only for the principal of the bonds issued under the sevel'lll acts mentioned, without allowing any interest. By a subsequent act (February 7, 1877) the exchange of $11,000 i11 bonds issued in May, l&l3, was authorized upon the same terms.

The bonds were to be nsed further in exchange for one hundred and thirty bonds of $1,000 each, issued under the act of March 8, 1871; for twenty-eight bonds of $1,000 each of the issue 1873; for one hundred and forty-three bonds of like denomination, used in payment for the Alabama and Chattanooga railroad, under a decree of court; for a balance due the New York Guarantee ancl Indemnity Company (about $671000); Duucan, Sherman & Co, (about $33,000), and the balance due the assignee in bankruptcy of the Alabama and Chattanooga Railroa{l Oompany; to Henry Olews & Co., not to exceed $310,000, upon the surrender of hypothecated bonds to the amount $650,000.

The second class of bonds, designated a..s "Class B ", amounting in the aggregate to $596,000, bear 5 per cent. interest, but in all other respects are like "Class A"; they were to be used in substitution of and exchange fol' the bonds issued under the act of April 21, 1873, which authorized tbe issue of bonds in the sum of' $4,000 per mile inlieu of the $16,000 per mile theretofore authorized to be indorsed for railroad companies, at the rate of' fiO cents on the dollar upon the principal of such bonds, and no allowance to be made for interest, but as a set-off to suck interest unpaid taxes due by railroad companies prior to October 111875, were to be flischarged and satisfied.

One thousancl bonds of $1,000 each, to be dated January 1, 1876, ware also authorized tG be issued and

11

·HISTORY OF STATE DEBTS-ALABAMA-MISSISSIPPI. 595

designated as "Olass 0 ", and bear interest for tbe :first 5 years at the rate of 2 per cent. per annum, and thereafter 4 per cent. per annum, payable semi-annually, to be l)ayable in 30 years, and, at the pleasure of the state, to be extended 30 years at 5 per cent. interest per annum, to be used only in retirement and· exchange of the :first­mortgage indorsed bonds of the Alabama and Ohattanooga Railroad Oompany, dated 1869, and to be in full discharge of such bonds.

As a full discharge of the state's lia.bility on account of the $2,000,000 in bonds issued. under the act of February 11, 1870, in aid of the Alabama and Chattanooga Railroad Oompany, and of all interest uue thereon, the state released to the bondholders all the lien and right of the state upon all the property of that company, the release to take effect and become operative only upon return of bonds ancl coupons, but the liability of the state by vhtue of the bonds to cease upon the execution of the deecl of conveyance for the property mentioned and certain other property mentioned in the act.

This funding scheme went; into effect, and the compromise offered was acceptecl by nearly all the holclers of the bonds during that and the subsequent year. In his report to the governor for the fiscal year ending September 30, 1877, the auditor estimatecl that when the entire debt was funded it would not exceed $91668,423, anu that debt could never be augmented beyond the sum of $100,000 (that being the limit fixed by the constitution of 18715) so long as the then existing organic and statutory laws remained in force, because the act of February 23, 1876, does not provicle for the recognition of tmy other claims against the state. From the same clocument it appears that under the adjustment above-mentioned the state lost the sum of $1,542,500 by aiding the railroads. The annual interest on the state debt was about $265,000.

A further issue of bonds, to the amount of $1,000,000, wa,s authorized by an act passed February 13, 1879, the proceeds to be appliecl to the redemption of the "obligations" of the state issued under the act of December 19, 1873,* to be payable in 20 years, or, at the pleasure of the state, after 10 years, with 6 per cent. interest, payable semi-annually, the coupons being receivable for taxes. Another act was passed on the same day authorizing the issue of "registered" bonds in exchange for the "coupon" bonds issued lmder th!:\ ftmding act of 1876.t The holders of the " obligations" above-mentionecl did not ha,sten to surrender them, as they were considered a goocl investment, and during the years 1878 and 1879 but few were in circulation for th1;tt reason.

From the auditor's report for the fiscal year ending September 30, 1879, it appears that the adjusted ancl funded debt at that date was as follows :

Two per cent. bonds, i' Cl ass A" nml "Class C" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . • . . • • . . . . . . • . . . . . . $1, 265, 000 Five per cent. 1.Jonds, "Class Il" .................................. ·---·- ---- ---·-- ...•...... ·---·--·--- 538,000 Eight i1er cent. "ol.Jligatiuus" ......... _ .............. ----. -.- .........• , ...........•• '· .••...••..•.. -- 1, 000, 000 Certificates not bearing interest .............................•.................... -.... -. - .. -...•. - .• • • 24, 690

Tut.al._ ... _ ..... _... . . . . . . .. .. .. ; .......••.••••..••.............•.... __ ......•.........••.• --- • 8, 827, 690 ===

This does not include the educational-fund indebtedness, which was assumed by the state and constitutes a part of the public cle"Dt, and which at thn,t date amounted to $2,517,5515 72, bearing an annual interest of $137,671 90. The total public debt, tllerefore, at that date was $1l,34151245 72. The interest paid on the ftmded debt during the yea11 1878-'79 was $25.11010.

From Governor Oobb's message to the legislature in. November, 1880, it appears that the adjustment of the state debt under the act of February 23, 1876, was at that time progressing satisfactorily; that the entire interest­bearing bonded debt of the state at tha,t time was $9,008,000,t with interest for the year 1880-'81 of $244,040, and for 1881-'82 of $319,130, owing to the increased rate on the bonds of classes "A" and" 0." The governor also reported the sale of $960,000 in 6 per cent. bonds issued under the act of February 13, 18791 at a net premillm of lz per cent., and the redemption with the proceeds of $960,000 of the 8 per cent. obligations.

MISSISSIPPI.

The ninth section of the seventh article of the origin1:1l constitutiou of Mississippi provides that-

No lo.ws shall ever be pasRed to raise a state loan for the payment of any debt lmless agreed to 1.Jy a majority of the members of each house and published three mo:µths previous to the n11xt regular election in three newspapers of the state, and unless a majority of each branch of the legislature so elected, after such publication, shall agree tu pass such law.

On the 15th of February, 1838, the legislatme passed an act, passed by a-former legislature and duly published, to incorporate the subscribers to the Mississippi Union Bank. To furnish funds for the bank so incorporated the act

"These were the $10, $20, $50, and $100 8 per cent. non-taxable obligations. t Act February 23, 1876. *Evidently exclusive of the educational-fund debt.

596 VALUATION, TAXATION,. AND PUBLIC INDEBTEDNESS.

provided for a loan of $15,500,000, indorsed by the state. The governor was required to issue 7 ,500. bonds upon the following conditions :

1. Books of subscription for the sum of $15,500,000 were to be opened. 2. The owners of real estate situated in the state of Mississippi should be the only persons entitled to subscribe. 3. Subscribers to give due mortgage security. 4. Stockholders to pay, in cash, the sum of $10 at call each. 5. When 5,000 shares should be subscribed, the governor to appoint provisionailly thirteen directors. 6. When $500,000 had been subscribed, said bank to go into operation. 7, The governor of the state, on organization, to execute to the said bank, from time to time, bonds in amount

proportionate to the amount subscribed. . The foregoing, with their minor details, were conditions-precedent to the issuance of any state bonds as provided.

The same legislature passed a supplementary act, the first section of which provides: I

On opening of the books for stock in the Mississippi Union Bank the governor shall subscribe in behalf of the state for fifty thousand shares of the stock, the same to be paid for out of the state bonds to be executed to the said bank, the profits to be for the benefit of internal improvement and the promotion of education.

Regarding the transactions based on these laws, the select committee of 1842, in their report, declare that the passage of the supplementary act invalidated the original act.

The original act authorizing a loan for the benefit of the Mississippi Union Bank, as has been shown, required a number of precedent conditions to be complied with before the governor was allowed to issue a single bond. The main question to be decided, and which at the time occasioned great discussion and engendered not a little bitter feeling, was: Were these conditions complied with~ The committee appointed to investigate the matter declared that not one was complied with, except the opening of the books and the election of the managers. And they furthermore said that not a dollar had been obtained by virtue of the law to which the people assented except in direct violation of that law; ·that the five-million loan was not obtained by the original charter, but "pursuant to the provisions of the supplemental charter", and as that, to all intents and purposes, was a distinct form of law from the original act of incorporation, obtaining a loan upon the credit of the state upon different principles rmd involving a different liability of the people, and without their consent or the action of a second legislature, as required by the constitution, those provisions of' the supplemental act were palpably unconstitutional, and therefore null aml void.

If [the committee said] in this conclusion we are correct, then all the acts carrying those unconstitutional provisions into e:ffect a.re equally unconstitutional and without authority, from which the ,conclusion is irresistible that the state was not bouncl to pay the bonds sold to Mr. Nicholas Biddle.

The committee further observed that the supplemental act was passed in direct violation of a rule of parliamentary law, the obligations of which were imperative, that a law passed at any session of the legislature shall not be i·epealecl at the same session; and yet, in the face of that rule, by the passage of the supplement, they repealed important detailed provisions.

In a letter to Messrs. Hope & Oo., of Amsterdam, Holland, dated July 4, 1842, Governor .A.. G. McNutt claims that $1,084, 781 30 was lost on the sale of these bonds by selling them on a credit and changing them from dollars, the currency of the United States, to pounds sterling of Great Britain; and he further claimed that they were to be sold at their par value.

The following resolution exhibits the conclusion at which the committee arrived:

.R1J11olved, theref01·e, 7>y the legi.Blatui·e of the state of Mississippi, That for the reasons set foi·th in the foregoing report this legislature denies tha.t the state of Mississippi is under any lega.l or moral obliga.tion to redeem the five millions of bonds sol cl by the commissioners of the Mississippi Union Bank to Nicholas Biddle on the 18th day of A.ugust, 1838.

The legislature invited the holders of these bonds to pursue the remedy afforded by the laws. against the Mississippi Union Bank, a~d against all persons who, by connection with said institution, had rendered themselves liable for the debts of said bank. ·

In commenting on the position taken by the state of Mississippi in regard to the Union Bank bonds in 1844 Judge Curtis thinks that the strongest position in favor of the state was the selling of the bonds below par, when the act authorizing their issuance plainly stated that this could not be done. On the 18th of August, 1838, the (lommissioners sold all the bonds to .Mr. Biddle for the sum of $5,000,000. The money was punctually paid to the banlr, which went into operation, and before January, 1841, lost all its capital. If this matter had rested here, the state of Mississippi would not be legally bound to pay this debt. The commissioners certainly did not conform to their authority in making the sale. They were, in terms, prohibited from selling the bonds under their par value. The par value of a bond is the amount due upon it, and this includes interest as well as principal. They made such a. sale as not to receive in cash an amount equal to the liability of the state on the bonds, and therefore they exceeded their authority. At that time . the state had the legal right to insist on this want of authority, even against the subsequent purchasers of these bonds, because any one who takes a title through an agent is bound by law to look

HISTORY OF ST.A.'rE DEBTS-MISSISSIPPI-LOUISIANA. 597

to the authority delegated to him and to see that he acts or has acted within its scope in making the ·title .. -But, on the other hand, Judge Ourtis claimed that the state made a mistake when its legislature met in 1839, for the first time after the sale of the bonds; tliat at the commencement of ·this session only one quarter of the purchase-money had been paid over to the bank, and the legislature, knowing the fact, resolved:

That the sale of the bonc1s was highly advantageous to the state and the bank, and, in accordance with the injunctions of the charter, • • " bringing timely aid to an embarrassed community. ·

The next legislature (1840) appointed a committee on the bank, but uttered nothing respecting the sale of the bonds. The state was wrong in waiting until 1842, when the Union Bank had failed, before it discovered the illegal acts of its agents, which acts hacl been virtually ratified by two successive legislatures. .

The state also issued to the Planters' Bank, by acts passed December 16, 1830, and February 5, 1833, the sw::u of $2,000,000. The laws issuing these amounts were passed according to the forms prescribed in the constitution, and no more objections seem to have been urged against their issuance. The railroad which was security for theni utterly failed, and the Planters' Bank went into bankruptcy. The borids went into default, and though not formally repudiated, as in the case of the Union Bank, were never received.

In a message from Governor Stone, read in the senate of Mississippi on the 9th of February, 1880, he says that shortly after the adjournment of the last legislature he received a communication from Edward Haslewood, esq., representing the holders of the Mississippi repudiated bonds in En gland, in closing copies of a memorial addressed to the governor, the senators, ancl the representatives of the state of Mississippi, submitting· a compromise proposition on behalf of saicl bondholders, embracing the following points:

1. Waiving all claim for the unpaid interest from the year 1840 to the last day of this year, say over $13,000,000. 2. The state to issue new bonds of $7,000,000, the original issue. 3. The new issue of bonds to bear graduated interest at 3 per cent. for the :first year and upward for later years. 4~ If deemed advantageous to the state, the said new issue of bonds to be received for any unoccupied land or

Ja.nds belonging to the etate at a certain rate. · A resolution was adopted in the senate providing for a joint committee, and containing the declaration tha~

By th!3 proviBions of tho present Clonstitntion the stat!3 is prohibited from ever legalizing these bonds, the cfause, which was aclopted in 1875 reading: "Nor shall the state assume, redeem, secure, or pay any indebtedness claimed to be clue by thi.- state of Mississippi to any person, association, or corporation whatsoever, cl~iming the same as owners, holders, or assignees of any bond or bonds known as tho Union Bank bonds or Planters' Bank bonds."

The debt of Mississippl. in 1880, exclusive of the Chickasaw school fond, amounting to $8151229 11, upon which the state pays 8 per cent. interest, and of the repudiated bonds, amounted to $379,485.

LOUISIANA.

There is little information obtainable of the early financial history of Louisiana. On the 11th day of March, 1861, the finance committee of the house of representatives of' Louisiana submitted a repo1't to that body, presenting a tabular statement of the public debt of the state for nearly every year from 1840 to 1861, inclusive. An analysis ·of these liabilities shows that the debt consisted of two classes: the debt proper, incurred for the uses of the state, and the debt due by the "property banks", the municipalities of New Orleans, and other objects of a similar character. The state executecl her bonds in aid of the corporations mentioned in the latter class of debt, and thus became liable for the payment thereof. The state debt proper consisted of bonds issued for railroad companies, trust funds, and various loans to the state.

The following is the statement referred to. It will be noticed that the debt was decreased from $23,309,246 in 1810 to $10,009,074 in 1861:

1840 -. -- .. - --. --- --- . --- .... -•..•. ---. ---- .. -•. ----.•• ---.•• -••• --.... --.••• -•..•• -•.. ---•••••• -•• 1844-----· ...... ·-··-· --·- ·----· .. ·--·-- -· ...... -···-· ··-- .••••. ··---· ··-··· .... ····-· - ··--·· •••• 1845 .. -·- .. -. --- ·- ---- . - -- -· -- --·· ·-. -·- ---- ·- ---· •••••. --·--· ·--. -··· ·--· .... - --·- ·-···· ...... --1846. -•. ---- .. -- -.••• --- . -.....• ---. -• -• '. -•• -• - -• -----.. -..... - • ----- ........... -... -•. -••••••• -1847 .• .- .. ·-·-·· ·----·-·-· -·······-· ---- ..... ··-··· .................. ---·--·· -··· ·--· ......... ·-·· 1848. ---••••• - -•• --.. ----. ---• --••.••• -.. - ---• -- .• -••• ---• -- .••••.• -...... ----• -. -• -............ . 1851-. -·. :•_ --· -- ·- --- - ...... -··· ·--· -··- ••.• ··--. - -· ·-·- ,_ ·-·- ~ .............. -··--· ............. . 1852 •.•. ···- ••• --· ••••.• -~---· •••• ·--··· ··--·· ·- ---- -- •• -. - ·-·· ---· ........ -··- ···-·· ............ . 1853 * ·- ---·- -- ·- --- .. ~ .... -- ---· •• -~- •.••••. ·- -•• -• ---• - ............. --....... -.•••. ·- ... •••••• .. 1854 .••• ·--- ---· ··-· ---- .............. ---· ·--· ..... ~ ........ ·----· -·-······· •••• ---·-····· .. ••••• 1855. --• ---.......... -. --.. ----• ··- .•••• ; ••• -• -• - ---••• -.......... --• --- -••• --•• --•• - • -.......... .. 1856 ••.... ---- ---- ---- -·---· •••••• -·-· --·- ··-··· -··· ·--· ·-·- -·-·-· -··- ........ "·-·· ............ .. 1857 ...• ·-···· ···- ···- .••• ---· .. : • .... ---· ·-·· ---- .... ··---· -··· ·-·· .••••. ·--· .... ··-··· ·-··· ~·- •• 1858 .•.••. ·--- -· ---- -- -- .. ··-· -· -· ........ -•• -· ·--- ·--· ··-- --· ·-· -··· .. -··· •. ---- .............. --1859 ••• -·· ---· -- .. ·-· .•.•• -·· ......... ·--· ··--·· •.•• ··-- ·- -- ........ -- ·- -· .... ·- •• - -· •...••••••.• 1861-. - ....................... -- ··-- -- ............ -· •. ·- .•.•• -··· •. ·--·· ••... -····· -· •.•• -·-· --- .

$23,309,246 43 21,433,523 03 18,940,046 76 16,660,022 70 15,287,013 87 14,874,021 40 11, 503, 609 12 11, 766, 407 44 9,841,937 41

12,'459, 340 93 12,768,736 35 10,703,142 05 10,600,779 93 10,701,641 75 10,023,903 58 10,09fl,074 32

*The cause of tho slight difference between the amount here shown and that exhibited on page 554 is not known.

,598 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

The debt of the state in 1861 ($10,099707 4 32) was composed of the following items: Liabilities for property banks .•• - _ •••• _ ••.••••••• __ ........ - ............................... , • • • • • • . $5, 398, 533 33 Liabilities for municipality No. 2 .................... --- ................... ·'- ......... ·--··· ••••• •. 198, 240 00 Dobtsproper,inbonds ............................................................................. 3,978,000 00 Amount due on boncls issued to the Clinton and Port Hudson Railroad Company....... . .. . .. .. .. .. . . 9, 000 00 Debts proper, in trust funds, payable on demand ...... ··--··............................... .... .... 515, 300 99

Total. ....................................................................................... 10, 099, 074 32 ----------The report of the auditor of public accounts for the year ending December 31, 1865, shows a slight increase of

the public debt during tbe interval from 1861to1866, mainly in the "debt proper", which at the above date stood at $51526,604. The other liabilities of the state amounted to $57655,773, making the total public debt $11,182,377, as follows:

· Liahilities for property banks ......................................... _ ............. _ •..• _ •••. _. _.. $5, :ms, 533 33 Liahilities for municipality No. 2 ..................... ·-·-·· ............................ : •• --· •• _ ... 108, 240 00 Amount due on bonds issued to Clinton antl Port Hndson Railroad Company ..... _ ......... _ •••.• _. •• 9, 000 00 Amount due Louisiana state bank ............................... __ ............ _ ••• _.. • .. • • • . • • • • • • • 50, 000 00 Debts proper in trust funds, payable on demand ............. --·· ................................. _.. 1, 495, 603 81 Debts proper in bonds maturing between the years 1867 and 1901 ............... ~....... •••• ...... •. 4, 031, 000 00

Total........ .. .. .. • .. . .. .. . .. . . .. .. . . .. • .. .. .. • .. • . . .. .. .. . • ... • . .. • .. . • • • • . . • • • • . • • • .. . • • • . 11, 182, 377 14 ===

In 1866 the legislature authorized the issuance of bonds to defray the expense of constructing levees, and for this purpose bonds were executed to the amount of $1,000,000. By an act of this legislature there were also issued bonds aggregating $997,300 for the purpose of paying certain bonds and coupons past dne. In 1867 there wero issued bonds in the sum of $4,000,000 for the further construction of levees, and in 1870 $6,0001000 more were issnecl for this purpose. In 1869 there were issued $500,000 in bonds for the state penitentiary and $474,000 in aid of the MississipP,i and Mexican Gulf ship-canal. The debt of the state on the 1st day of January, 187i, stoocl as follows ~

Liabilities for property banka .. .. .. .. .. . .. • .. .. .. .. • .. . . • • • • .. .. • .. . . . . • • •• • .. • • .. • • • • . • .. .. .. . • .. .. • • $4, 838, 933 Debts proper, in trust fnncls .......................................................... '.... ••• • .. . • . .. . . 868, 195 Debts proper, in lionds ................................................................... _.. .. . . .. . . . • Hl, 848, 685 Certificates of inclcbtedness ............................................................. _ .. _ . . . • .. . .. . 33, 815

Total debt ............................................................................. _ ........ 22, 589, 6~.8 =~=

During the year 1871 the debt proper was still further increased by the execution of bonds to the omount of $2,500,000, issued in aid of New Orleans, Mobile and Texas Railroad Company, and on the 1st day of Janu.1ry, 1872, according to the report of the auditor of public accounts, the total debt proper of the state amounted to $2il,188,800. In addition to this amount the state was liable for the payment of the bonds loaned to the various banks, which aggregated $6,579,683. The miscellaneous debts of the state amounted to $3,47612691 which, together with the amount of bonds issued under authority of acts of the general assembly prior to 1871 ($11,489,000), made the total liabilities of the state $41, 733, 752.

· On the 25th of May, 1872, the general assembly passed an act providing for the registration and payment of state warmnts and certificates of indebtedness, and creating a fond for the payment of the same ; also abolishing the "redemption of the state-debt fund" and the free-school fund, and making provisions for the state to meet its obligations to the last-named fund abolished.

This act provides that there shall be registered in the office of the state treasurer all unpaid warrants and certificates of indebtedness issued by the auditor of public accounts in accordance with law, and which are payable oat of the general fund, that were issued prior to the 1st day of January, 1872, or that may be issued at any subsequent date.

It is further enacted in section 2 of this act that the fund in the state treasury known as the " redemption of the state-debt fund" be abolished, and that all moneys, bonds, and other assets belonging to said fund at the time this act goes into effect shall be transferred by the state treasurer to the credit of a fund hereby created, and to. be known as a fund for the redemption of the :floating debt of the state due or created on or before December 31, 1871. Section 9 of this act provides that all warrants and certificates of indebtedness registered under this act and in accordance with its provisions, except such as may be exchanged for bonds, as provided elsewhere in the act, shal1 bear interest at the rate of 6 per cent. per annum from the date of their registry until paid.

The bonded debt proper of the state, January 1, 1873, amounted to $2118011800, classified as follows: Bonda bearing 8 per cent. interest ...................................................................... $8, 720, 000 Bonda bearing 7f<rper cent. interest ...... ....... ...... ...... •••••• ...... .... .... .. .... ...... .... •••••• 480, 000 Bonds bearing 7 per cent. interest ............................................................. __ •. .. .. 500, 000 Bonds bearing 6 per cent. interest ............................................................. : ....... 12, 062, 800 Bonds bearing 5 p.er cent. interest . • . • • • • • • • •• .. • • •• • • • • • • • • .. • • . • • ••• . • • .. • . .. • • .. .. .. .. .. .. . .. • .. • .. • 39, 000

Total ..................... ~ ••••••••••••• ~ •••.••••••••••••••.• .' ............................. 2l., 801, 800 ==

HISTORY OF STATE DEBTS-LOUISIANA. 599

The above amount was increased during the year 1873 by the issue of $701,000 in bonds, under authority of acts of the general assembly passed in 1869 and 1870. Bonus to the amoimt of $72,000 were redeemed during the ;year, leaving the bonded debt proper, January 1, 1874, at $22,430,800.

On the 24th day of January, 1874, an act was passed to provide for funding the obligations of the state by exchange for bonds, to provide for the principal and interest of said bonds, and to limit the indebtedness of the state. Section 1 of this act recited that for the purpose of consolidating· and reducing the bonded and floating debt of the state the governor, lieutenant-governor, auditor, treasurer, secretary of state, and speaker of the house of representatives were authorized to issue bonds, known as the "consolidated bonds of the state of Louisiana", to the amount of $15,ooo,ooo, or as much thereof as may be necessary, all payable 40 years from January 1, 1874, to bear interest at the rate of 7 per cent. When these bonds were all prepared and regularly signed, they were to be exchanged by the board or liquidation, composed of the persons above-mentioned, for all valid outstanding bonds of the state, and all valid warrants drawn previous to the passage of the act, at the rate of sixty cents in consolidated bonds for one dollar in outstanding bonds and a,U valid warrants. The act imposed a penalty upon any one using these consolidated bonds for any other purpose than that of exchange, as herein provided. The act also provided that the bonds and valid warrants outstanding at the time of passage of the act should, as fast as they were received in exchange for consolidated bonds, be canceled and destro;yed by the board of liquidation.

In section 13 it is enacted that, prior to the year 1914, the entire state debt shall never be increased, directly or indirectly, beyond the sum of $15,ooo,ooo, authorized to be issuecl under this act, it being the object and intent of this act to reduce and restrict the whole indebtedness of the state to a sum not exceeding $15,ooo,ooo, and to agree with the holders of the consolidated bonds to be iKsued under this act that said indebtedness shall not be increased be;yond said sum. ·

On this date (January 24, 1874) another act was passed proposing constitutional amendments, one of which was in relation to the consolidated bonds to be issued under the act above, declaring said bonds to be a valid contract between the state and the liolcler qf the bonds. It also provides that the state debt shall never be increased beyond $15,ooo,ooo. ·

There were old bonds funde(l in 18i4 amounting to $1,403, 700, for which there were issue(l ~ew consolidated boncls, under the f'imding bill, to the amount of $842,220. New bonds were also issued, amounting to $109,635, for $182,725 of old warrants. The bonded debt, old and new, January 1, 1875, was $21,978,9551 which amount was reduced during .the succeeding ye.a.r to $18,472,444 by tl!e exchange of old bonds, for the new consolidaterl bonds, under the act of' January 24, 1874.

The following tabli~ exhibits the amount and classes of bonds outstanding January 1, 1874, previous to the passage of the funding bill:

Relief of state treasury ...... _--·. __ . __ ·-·-- ....•...•.. ·--· ...... --- ...•... ---· .. - - .... --·· .• - ••. ··- ••. New Orleans, Jackson and Great Northel'Jl Railroad Com1)any •..... ~. ···--· ....... ·- ...... ---· -- . -·· - -· · Now Orleans ancl Nashville Railroad Com1)any. _ .. _ .... _ ...... -·· ··-- ....••.... ---· ... --· ..... - .... ···-New Orleans, Opelousas ancl Great.Western Railroad Company.-·-- ......•... --· .......... ·--·. - -···. · ·-Vicksburg, Shreveport and Texas Railroad Company ........ __ -·· .••... --·· ...... - --· ...... ·-. ·-· ·- · -- · Baton Rouge, Grosse 'l'llto aml Opelousas Railroad Company .•. ··-------·--·· .... ----·--···--·· - .... ---· Expenses of buildinglovees ...•.......••...•.. ·-·- .... ·-·-·· ···--· .••••. --·· .... --·- ······-·-· ·····---Expenses of building levees ...........•••. -··- .•.••. ·--···-·-· .••••. ·-·-·· .......... ·----·--·-···--··· Work on levees (spocial levee bonds)--- ......... ___ .. ·-- •.•.• _-·· .••••.. -·-·· .•.. ·--···-·· .... -- · ··- --· Purpose of i)aying certain debts ..•..•• ·-- ..•• -·. _ ..• __ .. -.. __ ....•. _. -· .. ---•...• --· .• -•... - · - · · ·- - -- · ( Purpose of paying certain debts ... __ ... _ .. _ ..••.•••• __ ••.. _ -- •••••.•• -...••....••. -· .. -- · · ·•• - · · · · --· · ~ Purpose of paying certain debts ....•.•...... --·· .••••. --···· ..••.. -··- •••••... ---· .••••. ·-·--········· Free school fnn~l ........ _. -- ... --·· -·- .... __ . ·-- ... - ..•••••.. ---- .••••. ·--· ··-- ·--· ··---· ·····- · ·-- --· Seminary fund .. _ •••.•. ______ •••..••• _ •.••• __ .• _ •••.• , ••.•...•. _ .•••.•..•....... - ---.... -.. · · ~ - ··- --- • Mississippi and Gulf Ship-Canal Company ... --·-·-·- ••• _ .. --- •.•.. ··-·-· .... ··-- -. ·--- ··-· ·--· ·-·· ·--· Louisiana state penit~ntiary ....•• _ . - __ -·. -.•.•. _ ---· --· •.•••.. -· .••... ---... --- · .. -• - · · -- -·• · · · · · • • · · North Louisiana and Texas Railroad Company ....... ·--·-··---·· .•.••........... ·-·······--·-·-····--· Relief of P. J. ICennedy ... ·--·-- ··- -- ... -· •. ···--· .••••. ··---· -··· ..• -·- ..•. -- ...... ·-- · -· · ·- · ····-· --Floating debt .. ,.·---···---. - --·· --· _ -·-- ·-·- ... _ .... ___ ... - •..•.•••.... ·-·- -··- .... --·· --·· .... --- -·-Boenf and Crocodile Navigation Company ... _ .... ---·---··--· ....••• --·.-·-.·-······--~-···· - --· ·· -· ·· New Orleans, Mobile and Chattanooga Railroad Company .••• - ·- -· - --- ......... ---· .... ·--- ··- ..••. ·· ·· New Orleans, Mobile and Texas Railroacl Company, act of 1869 ..••... --·· ·-·- ...• -··- - ....•• --·. --·· - -·­New Orleans, Moliile and Texas Railroad Company, act. of 1871- -• ---· •...•. -·-· - -· -··- -··- ·--· •••• --·· -· Mexican Gulf Railroad Company (past due)·--· ...••.• ---- ..•• ·--·-·---····--· .... ·--·-··· .••• •••· - ---· Redemption of certificates of indebtedness -· _ .•. _ •• -· •. -•.•••.••. -..•... -- ...... - ·-·. ··-· - ••• • --·- - • ·-

$750,000 884,000 441,000 650,000 298,000 mo, ooo

1,000,000 4, 000, 000 2,960,000

978, 800

529,000 13G, 000 480,000 500,000

l, 122, 000 134,000

2,950,000 80,000

750, 000 875,000

2, 500,000 3,000

250,000

Tor.al. ___ .•• , . _ ..• ___ . _ .••.• ____ ·_. _ .•• __ •••• __ . _ . _ ••••• _ • _ •.. _ •• __ .. _. __ . _ .. _ •.. __ .. _. _. _ .. - ..• --- 22, 430, 800

In addition to the above boµded dept, there were outstanding warrants a.t that date to the amount of $1,006,84.0. Of the bonded debt (~~~1~30,800) there had been funded in new consolidated bonds, up to .January 1, 1880, $18,034:,800. .. .... . . .

600 VALUATION, .TAXATION, AND PUBLIC INDEBTEDNESS. . . The new constitution, adopted in convention at New .Orleans July 23, 1879, contains the following ordinance

relati11g to the state debt: ARTICLE 1. Be it ordaineil by. the 11eople of the state of Louisiana in convention assembleil, That the interest to be paid on the consolidat~c;l

bonds of the state of Louisiana be, and is hereby, fixed at 2 per cent. per annum for five years from the first of January, eighteen hundred and eighty, 3 per cent. per annum for fifteen years, and 4 per cent. per annum th'ereafter, payable semi-annually; and there shall be levied an annual tax sufficient for the full payment of said interest, not exceeding three mills, the limit of all state tax being hereby fixecl at six: .mills: Providecl, The holders of consolidated bonds may, at their option, demand in exchange for the bonds held by them bo11ds of the denomination of five dollars, one hundred dollars, five hundred dollars, one thousand dollars, to be issued at the rate of sevent.y-:ll.ve cents on· the dollar of bonds held and to be surrendered by such holders, the said new issue to bear interest at the rate of 4 per cent. per annum, payable semi-annually.

ART. 2. The holders of the consolidated bonds may at any time present their bonds to the treasurer of the state or to an agent to be appointed by the governor-one in the city of New York and the other in tho city of London-and tho said tro11surer or agent, as tho case may be, shall indorse or stamp thereon the words "interest red.ucecl to 2 per cent. per !Lnnum for five years from Ja.uuii,ry first, eighteen hundred ii,nd eighty, 3 per cent. per annum for fifteen years, and 4 per cent. per annum thereafter" : 1'1·ovided, The holder or holders of said bonds may apply to the treasurer for an exchange of bonds, aH provided in the preceding article.

ART. 3. Be it f1wt71er ordained, That the coupon of said consolidated bonds falling clue the first of January, eighteen hundred and eighty, be, and the same is hereby, remitted, and auy interest taxes colleeted to ruect said coupon are hereby transforred to defray the expenses of the state government. -

Be it f11rt7ter ordainetl, anil it is lwreby ordaineil by this constitutional convention, That the foregoing provisions antl articles relative to tho consolidated debt shall not form a part of this constitution, except as hereinafter providell, as follows:

At the election held for the ratification or rejection of this constitution it shall be lawful for each voter to have written or printed on his ballot the words, "For ordinancerelative to state debt," or the words, "Against ordinance relative to state debt;" and in the event that a majority of the ballots so cast have indorsed on them the words, "For ordinance relative to state debt," thou the sahl forep;oing provisions and articles of this ordinance shall form a part of the constitution submitted if the same is ratified, and if a majority of the votes so cast shall have indorsed on them the worcls1 "Against ordinance relative to state debt," then saicl provisions and articles shall form no part of this constitution.

This ordinance was submitted to the people with the new constitution, antl was ratified by a large mnjol'i ~y.

TEXAS.

It is difficult to obtain a correct history of the debt of the republic and the state of Texas. In April, 1837, ac<;iording to the report of Henry Smith, i:;ecretary of the treasury, the debt of the republic of Texa::; wa::; $570, 163 44. In November, 1837, it bad increased to $1,090,986 45; September 30, 1838, to $1,187,525 32. In 1839 it ha1l re11checl $3,102,083 35; in 1840, $5,4851502 28; in 1841, $7, 704,328 17. Though a thorough search has been made, no other statement can be found from which to form a table of the public debt of a later date than September, 18411 until the report of the auditor of 1850-'51. Gouge, in his Fiscal History of Texas, says:

Probably both government and people had become tired of thinking about what they could not pay. Very little a.ppears to l11we been added to the capital of the debt after 1841, for the very good reason that the credit of 'fexaa was by tha.t time so cxltamitO!l that she could boITow no more. ·

The increase between that time and the final settlement, in 1851, was chiefly owing to increments of interest, and to the bringing in of old claims not before presented. On the 20th of March, 18481 an act was.passed by the legislature, entitled" An act to provide for ascertaining the· debt of the late republic of Texas"· The result of this inquiry divided the debt of the republic into three classes. In the auditor's report each of these classes of ch1ims was carefully examined, and after the vahfe received in each case by the state had been taken into consideration the value, or what the state would pay orr them, was estimated. The ostensible value of the first class of liabilities, including interest, up to 1850, was $81587,132 92; the value assigned them, $3,817,321 64. The ostensible amount of the claims of the second class was $962,445 12; the value assigned them,$892,767 63. The ostensible value of the third class of claims was $97,675 10, for which the full amount was allowed. The following is a recapitulation of the ostensible amounts of the three classes of Texas securities and the .value assigned to each:

Class.

.Amount of first class.--·····-··-·--·-·-··--··-----···--- .... __ ··--······--·-··· ...... -··--··---····-·· ... -.. ·-·······--···--·-·

.Amount of second class·----· .. ·-·-·---·-·-···-···---·----···-- .. ··--·····-···-·--··--·-········-·---··-·-·· ..... ·-·-·.·--· ••..

.Amount of third olaas. ···-- ··--- -_ -·. ·-·· __ . _ ..•. -·. ·-·. ·- .. _ -· ·-·· ..... --·· __ .. -•.•••• ···--. _ ·-·· -· ··--- ••. ·- _ ...•••••. -· .•••.

Ostensible amount. Value ";SBigncd .

$8, 587, 132 02 062, 445 12

97, 675 10

$3, 817,. 321 fl..I • 892, 707 63

07, 075 10

Total .••• --···----··---·--···---·-·-- .. ····--···-··---····-·····-·········---··-----········--·-·-·······--··-·-··········-·l---9-,64-7-,-25_3_1_4 ---4-,8-07-,7-64-U7

l!'roin the foregoing statement it will be perceived that the entire amoiint of claims filed, including interest on all liabilities !'ltipulated to bearinterest, ~mounted to $91647,253 14, to which was assigned the value of $4,807,764 37. The stat;e authorities justified this reduction.on the ground that the state had not received fall value for its securitieR. ·For example, to the engraved interest-notes there was assigned an average value of 40 cents on the dqllar. These notes were issued u~der the provisions of .the same act as the printeil bills, and took their place. About the time of the first issue of 'these notes (the spring of 1838) this species of the govemment paper commenced. de1)reciating, so that when the act of 19th of January, 1839, prohibiting their further is:sue, went into operation they mm~ worth

HISTO~Y OF STA'I1E DEBTS-TEX.AS. 601

out about 40 cents on the clollar. To the treasury notes not bearing interest, generally known as ."red· backs", was assigned an average value of 25 cents on the clollar. These notes superseded the engraved interest-notes above referrecl to, and the first issue of them was made during the spring of 1839, when they were worth .about 37j\- cents on the dollar. They continued depreciating, so that in 1841 the government was compelled to pay them out at fron1 12 to 15 cents on the dollar. The value assigned them was claimecl to be equitable, as an average, both to the government and the holders. In this way the various funds and stocks were examined and adjusted.

When Texas became a state of the Union the United. States possessed itself of a portion of the resources [customs J which hacl been pledged to give a credit to the securities of the republic of Texas, an(l hence it became necessary for the government of the United Stlttes to make equitable compensation for the diversion of tllese resources from the purposes to which they were so pledged. This view seems to have been taken by Congress in the passage of the Texas ''boundary bill". It was provided in that bill that, in consideration of certain concessions of Texas, the United States-

Shall pay to the state of Texas ten millions of dollars in a stock bearing 5 per cent. interest, and redeemable at the end of fourtec11 years, the interest payable half yearly at the treasury of the United States.

But it also provided that-No more than five millions of saicl stock sha,11 be issued until the crellitors of the state holding bonds and. other certificates of stock of

Texas, for which duties on imports were specially pleugcd, shall first file at the treasury of the United Stntes releMes of all claims against the United States for or on account of saicl bonds or certificates, in such form as shall be prescribed by the Secretary of the Treasury and approved by the President of the United States.

By the report of the comptroller, made on the 29th of August, 1850, it appears that the ostensible or face -value of the whole amount of the public.debt, principal and intei:est, was $12,~22,443 04; the assigned value, $6,818,798 40. This left to the state of the $10,000,000 to be received from the United States, after paying the entire debt, upward of $3,000,000. 'l'hat portion of the debt for which the reYenue aud customs were specially pledged mnouutecl ouly to $868,000 ostensible value, or $611, 784 50 assigned value. At the close of 1851 the whole amount of the prhwi1Jal of tho debt of Texas was $8, 700,305 11; unpaid interest, $3,735,677 37; total, $12,435,982 48, This debt was estimatecl by Texas in specie as follows:

Principal. •..•...•.•...••••...••........................••....•...........•................•.••.... $4, 9()5, 394 15 Interest ...........••...•••..... _ .. _ •• _ ........••• _ .... _ ....•••...... _.... . . . • • . . . • • . . . . • • . . . . . . • . . 1, 881, 928 08

Total........ . .•••• .. • ..• ... . .. . .. . ••.. ..• . . . . •.• .•.. •... .. ....... ... .•. . ... . ... . .. . .. . .. • ••. G, 847,.32;l 23 ===

At the close of 1856 the comptroller of the state of 'l'exas, in a report, gives the following picture of the finances of that state. He says:

The state is out of debt, with a surplus of over a million of dolla1·s in the treasury, a permanent 5 por cent. school fund of two millions of dollars, an unappropriated public domain estimatecl at 10010001000 of acres, which, if judiciously usecl, would subserYe all the purposes ofintcirnal improvements requirecl by the state, and a tax lighter than is imposecl on any other peo1Jle, and which is adequate to all nhe wants of the government. 'fhe aggregate amount of taxable property is very ncarll' $150100010001 being an increase of $22,uOO,OOO over tho preyious year.

According to the auditor's sta.tement for ,April 15, 1872, the total of the d.ebt of Texas was then $2,288,482. At the close of the next year, according to the governor'::; message, the total indebtedness of Texas was $11662,998 78-an amount which the governor said coulcl bo paid off by a tax for a single year at less than a half of 1 per cent. on the taxable value of the property in the state.

From Governor Coke's message to the legislature, dated February 10, 187 4, in closing a report from the comptroller, it appears that the audited state debt at that time was $1,668,131, of which $486,800 was :floating debt, $174,000 in bonds held for the Agricultural and Mechanical College, and $3~7,074 clue in New York, for which boncls of the state had been deposited as collateral. In addition to this, the school fund of the state held $537,008 in the bonds of the state'. There was further an 'unadjusted railroad claim for subsidy, not exceeding $3,000,000.

To the constitutional convention the comptroller reported that the state had l.oaned $1,816,500 to various railroacl companies, and that the interest on the loans which had accrued up to May 1, 1870, was f'nncled. On the whole amount the companies were paying 6 per cent. interest and 1 per cent. for a sinking fund. The amounts loaned, aucl those then owing, were as follows : ----···--···-··-··-·-·==========--======================;=====c"====

Railroads. Original loan. Now owing.

Ilonston_ nnd Texas Central ..•.. ~ ....................................... , • • • • • • . • • • • • • • • • • • . . • • • . . • • • • . . . • . . • . • . • • • • • • • . • • • • • • • • •• • . • • • • $450, 000 $504, 472 38 Wnshlngt<m County .... , •• • • • • . . • • • . .•. •• . .•• • .• .• • • . • . • . . • . .• • • . •. . • . . •.• • . • . .. • • . ••• •. • . • • •• • ••• • • •••• •• •••• •. •••. •• ••• . • • . • •• ••• • • • 66, 000 93, 010 !18 Galveston0 Harrlsburg.nnd Snn·.A.ntonio ............................................... , ........................... ,................... 420, 000 uSS, 025 47

Houston Tap andBrazoria.*...... ...................................................................................................... ~939010 ~00°0 1····· 5• 8• 8·,·~7· 1··;7• 1'exaa and New Orleans .•••••••••••••••••••••••••••••.•••••••••••••••••••..••••• ~ •••••••.••.••..••••••••• ••••••••··••••·•••••••••••••·· • " Southern Pa.olflo ...................................................................................................................... , i:;o, ooo 200, 885 90 , ______ _

'.l'otru. ..... ••• •• • • • . . •••• •• • •• • •• .... • • • •••••••• ••• • • •••• •• ••• ••• • • .. • • • . • •• • ••• • •• ••• • •. .•. . • • • • •. . • • • ........... •• • •• . ••• • • • • • . 1, 810, 500 I 2, ooo, 100 20

*This road defaulted in its pay111cnts 11nd_wu.a sold by tiie:ata.~.

602 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

The h1htl grants to vatious roads had been as follows:

San Antonio antl Mexican Gulf ....................................................................... . Houston and Texas Central. .................................................................. ~ .•••..•• Houston Tap and 13razorin, ..••..••.•.......•.•...•••••.•••••....• : ................................... . WMhington Count~· .................................................... 1 ••••••••••••••••••••••••••••••

Texas and New Orleans .............................................................................. . East Texas .........•.••........................................•• •• · ·• ••• · · · •••• · •• •· · · · · •• · •• • • · • · · • Memphis, El Paso und Pacific .......................................................................... . Southern Pacific ..................................................................................... . Texas and Pacific. . • . . • . . . . . • . . . . . . .. . . . . . . . • . • • . . . . . . . . • .. .. . . . . ................ ., ................. . Gn.1 veston, Houston and Henderson .................................................................... . Houston and Great Northern ......................................................................... . international ................... , .................................................................... . Waco and Northwestern ............................................................................. . ·Galveston, Harrisburg and San Antonio; Buffalo Bityou, Bmzos and Coloraclo ........• ; .•••••...••.•...•. Indianola ............................................................................................ . Rusk ......................................................................................... ~ ...... . CtJlumbils Tap ....................................................................................... . Gulf, Western Texas auc1 Pacific .................................................................... ..

.A.ores. 238,720.

4, 769, 280 512,000 24&, 120

1,228,800 287,720 321,280 368, 640

1, 763, 840 611,840

2, 311, 040 2, 572, 800

481,280 1,760,840

17!.J, 840 79,360 49,280

302,720

Total... • . . • . . . . . . . . . .. . • . . . . . . . . . . . . . . . . . . . . • . . • . . . . . . .. . . . . . . . .. . . . . . . . . • . . • .. . . . . . . . . . . . . . . .. 18, Ol:l4, 400

This statement includes all the land for which certificates have been issued from the state la.nd office. In 1876 the new constitution of Texas was adopted, and in it important p~~visi~nR were inserted respecting the future financial policy of Texas. Section 49 of ar.ticle 3 of tbe new constitution provides as follows:

No debt shall be create(l by or on behalf of the state, except to supply casual deficiencies in the revenue, repel invasion, suppress insurrection, defend the state in war, or pay existing debt; and the debt created to supply deficiencies in the revenue shi1ll never exceed in the aggreg~te; tit tiny one time, two hundred thousand dollars.

The constittltion also precludes the state from loaning or giving its credit to any corporatio~ or individual. Sections 50 and 51 provide:

The legislature sl1all have no power to give or to Jena, or to authorize the giving or lencling of the credit of the state in a.id of or to any p1wson; itssdciation, or corporation, whether municipal or other, or to pledge the credit of the state in any manner whatsoever for the payment of tlitl liabilities, present or prospective, of ltny individual, association of individuals, municipal or other corporation whatsoever.

SEC. 5i. The legislature shall have no power to make any grant, or authorize the making of nny grant of public money to any individtiiLl, association of individuals, municipal or other corporo.tion whatsoever: l'rovided, That this sliall not be so construecl as to prevent tlie gr:mt of aid in cnso of public calamity.

TM bdnded debt of the state, August 31, 1875, was $4,644,596; August 31, 1876, $57412,382; .August 31, 1878, $5,571,117.

The assm~sed value of property has increased from $208,000,000 in 1872 to $318,000,000 in 1880. The small debt of the state, and the promptness with which her annua.l interest is paid, have placed Texas

bonds in the front rank of state securities.

Botlcliid debt of Texas, August 31, 1880 . • • • . • • • • • • • • • • • . • • . • • • • • • • . • • • • • • • • • • . .. • • • • • .. • • • • • • • • .. • • • • • • $5, f\66, 928

Purposes : Refuncling old debt ....................................................................... . Funding floating (lebt .................................................................... . Schools tbonds issued to university and echool funcls) ...................................... .

Miscellaneous: Frontier defense bonds...... . • . • • • • .. • .. . . . • . . . . • • . . . . . • • . . . . . .. • • • . • • . . • .. • • . . .......... . Revenue deficiency bonds ................................................................. ,

$692, 000 500,000

2,1343,920 994, 000 537,008

Total ..................................................................................... .

1, 192, 000

5,566,928 ==

Rates of interest: 4 per cent. 1 $41620; 5 per cent., $1,3331941; 6 per cent., $210421367; 7 per cent., $2,1861000.

ISSUE.

1864 .................. •••••• ............. . 1866 ...................................... . 1870 ..................................... . 1871. ••••.• ••.• .......... ; ................. . 1874 ...................................... . 1876 ...................................... . 1879 .••••• ••·•••· ......................... .

Total .............................. .

$320,367 216,641 69'2,000 575,000 994,000

1,647,000 1; 121, 920 •

5,566,928

==

MATURITY.

1891. ...................................... . 1899 ...................................... . Subsequent to 1900 ....................... .. *Unspecified ............................. ..

Total ............ · ••••. : •••.••.••.•••

$575,000 4,620

4,450,300 537,006

5,566,928

== ·~~~~~~~~~~--''--~~~~~~~~~~~~~~~~~~~~~~~~~ -~~~-

.These bonds matured January 1, 1879, but have not yet been pa.id and canceled by the state.

HISTORY OF STATE DEBTS-ARKANSAS . 603

.ARK.ANS.AS.

Arkansas was admitted as a state into the Union in 1836. Though her territory was large, her population was amall and generally in indigent circumstances. There were but little over 50,000 inhabitants, possessing an aggregate wealth of not more than $15,000,000. In common with the other states, the land excitement had seized upon the inhabitants of Arkansas, and, in addition to this, the most valuable portion of the lands fell into the hands of non-resident speculators, precluding the purchase by actual settlers and retarding the development of the country . ..Almost immediately after the admission into the Union as a state two banks were chartered by the legislature, the Bank of the State of Arkansas and the Real Estate Bank. Iu order to procure a capital fnnd on which to base their operations bonds of the state to the amount of $2,827,000 were sold, for the redemption of which the faith of the ;State was pledged. Tims a heavy uebt, with accumulating interest, was fastened upon the state during the :first _year of its existence. The management of these institutions was unfortunate, and a few years afterward the banks were placed in liquidation by an act of tlle legislature. The surplus revenue which had been distributed to ..Arkansas by the United States was used as a portion of the capital fond of the State Bank, and subsequently to <defray the ordinary expenses of the state government. The seminary fund, together with the proceeds of 500

1000

.acres of land, given to the sti1te for jnternal improvement purposes, was divided among the counties. The tota.l amount of unredeemed stat~ bonds, with interest clue thereon, October 1, 1852, was as follows :

.A.mount issue(1 t.o Bn,nk of tho Stn,te of Arlrnnsus ....•.............. _ ........................... _.... $1, 55f), 62} 00 Ron,l Estate Bank boncls, :111<1 accruing internst .. _ .............................................. _.... 2, :381, 750 00 This institution n,Jso owed 011 500 hniothec:it.e(l bonds in tbo.1mmls of James Holford................. 122, 389 77 Am1 n,ccmiltl interest, amounting to .. - - -..... ~ ............. : .. _ ......................... -....... _... 88, 610 23

Totn,l. ... _ ...•. _ ........... --· ... - ...... ·-· - - ........ ·- .................... ---· ·-· ...•.... -·· 4, 151, 370 00

Frow this time on, unt.il the beginning of tlle war, but little can l>e said in relation to the state debt. Railroads ·were constractecl, and the state aided them by subscriptions to a small amount. On October 1, 1868, the amount •-Of unredeemed boncls issued to the State B~mk and the Real Estate Bank, including interest, was $4,993,503 19 ; and ·on April G, 1869, an act fonding the state debt was passetl by the legislature, by the terms of which new bonds were .to be issued, one-half to be da,tecl Jnl;y 1, 1869, and the other half January 1, 1870, payable 30 years after elate, ·with interest at 6 per cent. per annum. In passing this act the bonds hypothecated by the Real Estate Bank ·were included in the adjustment.

The history of this part of the debt is as follows : On September 7, 1840, the Real Estate Bank pledged $500,000 in bonds to the New York.Trust and Banking

•Company, expecting to receive thereon $250,000, bnt obtitiniug in reality only the sum of $121,336 59. This bank, ·being at the time deepl~· indebted and in failiug circmnstances, tmnsferrecl the bonds to one Holford, who received -them in payment of a debt of $350,000. It was contended on behalf of the state that inasmuch as the law provided that these bonds shoulu not be put upon the market at less than their par value, altllough they were in the hands of .an innocent third party, tlle state wat1 not bound to imy them.

In the same year acts were passed loaning the credit of the .state to the Little Rock and Fort Smith Railroad •Company aml t~ 'the .Arkansas Oentnil Railroad Company. The legislature also provided for the building of levees, .and to pay for the construction thereof issued bonds. Some of the bonds which were issued to the Real Estate and .State Banks were held by the United States government in trust for the Smithsonian Institution and for the •Chickasaw Indians, and when tlle banks of the state failed to pay the interest clue thereon the government retained -the 5 i)er cent. due the state on account of the land sales and applied it to the payment of interest.

The following statement of the state indebtedness is taken from the .message of Governor Hadley, delivered January 6, 1873:

Amount of funded debt 6 per cent. bonds .. ·-·--· ..• -· .......•......... -··· ............ ·- .. ··- -- - ..•• -· $3, 050, 000 Amount of old debt not funded·----··-·· .•• ·--· ... -·.·-.·-· .. _ .........•. ·--·-····-·····--···- - -· .. ---- 2, 365, 748 Amount of levee bonds, swamp-ln,ncl scrip, etc., ont~tanding .... ·-·-·· -~-- ........ ·-·-·· ·-··-· ---· ···--· 2, 146, 649 Amount of auditor's warrants and treasurei:'s certificates outstanding, about . _ ....• - - --•.•. - .... - •.. --• • 1; 100, 000

Total.. __ ... _·-. __ .... -·· ·-·· ··- -·· .......• __ .. -··· -··. -~-- ......... ·-- --· .... ·-·--· ·-· ·-· .... ·--- B, 662, 397 l3onds issuecl to railroads ....... -· .. -- ...... _ .. _ .... -· .... _ ........•....... ·-· ..... ··- ... -· ... - ••.... -- 4, 950, 000

On the 30th of September, 1878, the undisputed bonded debt for which the state was directly liable was fl3,193,500, and the accumulated interest $2,264,050; making a total of $5,457,550.

The amount of bi>ricls issued in aid of railroads, including interest, was $7,135,298 76; levee bonds, including interest, $2,8551488 98; and the 6 per cent. funding bonds of 1870, known as the Holford bonds, including interest, fl,787,120. The railroad aic11JoP.-c1ti m:i.c1 t4tl levee bonds wete, b~· the supreme co,ITt of the state, decided to have

604 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

been illegally issued, and therefore void. The decision was based upon a technicality. The constitution of the state provides that every act which creates liability or makes an appropriation shall be passed by a majority of two· thirds of eachhouse of the legislature, anrl the vote thereon shall be taken by yeas and nays and entered upon the journal. This formality seems to have been omitted, and upon that, and that alone, the decision was rendered. The equities of the bondholders were not taken into consideration. An amendment to the constitution was proposed and submitted to the people on the 6th day of September, 1880, which, in effect, would have been a repudiation of these bonds. The amendment is as follows:

ARTICLE XX. The general assembly shall have no power to levy any tax or make any appropriations to pay either t.ho principal or interest, or any part thereof, of any of the following bonds of the state, to wit: Bonds issued under an act of tho general n.ssembly of tho state of Arkansas, entitled "An act to provide for the ftmding of the public debt of the state'', approved April 6, A. D. 1869, and numbered from four hundred ancl ninety-one to eighteen hundrnd and sixty, inclusive, being the "funding bonds" delivered to F. W. Caper, and sometimes called "Holford bonds'', or bonds known as railroad aid bonds, issued umler au act of the general assembly of the stn.te of ATkansas, entitled "An act to aid in the constrnction of railroads", approved Jnly 21, A. D. 1868, or bonds callecl "lovoe bonds", being, bonds issued nuder an a,ct of the general assembly of the sta,te of Arkansas, entitled "An net provicling for the building n.nclrepairiugtho public levees of tho state, and for other purposes", approved March lG, A. D. 1869, and the act entitled "An act to amend an act entitletl 'An act prnviding for the building and repaufog of the public levees of this state'", approved Mapih23, A. D. 1871; and any faw providing for any such tax or appropriation shall be null and void.

The amendment failed to become a law, as it did not receive a major.ity of all the votes cast at the election. . The outstanding bonded debt of' the state, September 30, 1880, exclusive of railroad aid debt, was $2,813,500,:

as follows:

Six: per cent. bonds of 1838, issued to the State Bn.nk ....••.............•...............••....•••.•••••• Five per cent. bonds of 1837, issued to the State Bank ...•••....•....................•..............•••• Six per cent. bonds of 1838, lettered ''a", llisued to the Real Estate Dank . . . . . . . . . . . . . . . . ..•...••••.•••• Six per cent. bonds of 18381 lettered " c ", issued to the Real Estate Bank ...••....•••...............•••. Six per cent. funding bonds of 1869 .....................•......•••.......................•.••••••••••• Six per cent. funding bonds of1870 (exclusive of Holford bonds) .............•.••..•.•...••........••••. Ten per cent. ten-year bonds of 1874 (principal and interest) .................•...........•...••.•••••••• Six: per cent. bonds of 1874 (Longhborongh bonds, principal an cl interest) ..........•.•••..••.••••..•••••

$108,000 22,000

530,000 45,000

810,000 625,000 261, 500 412,000

Total. .••••...••.••.••..•.....•••• : , ......•••••..•••..•.•.•••••••• ·••• • • • • • . • • • • • . • • • • . • • • • • • • •• • 2, 813, 500 ==

TENNESSEE.

There is little to be said in regard to the debt of Tennessee prior to October, 1832, when the state subscribed1 $500,000 to the capital stock of the Union bank, and issued bonds therefor.

The Bank of the State of Tennessee was chartered in 1838, and under a provision of that charter $2,500,000 in bonds wer·e issued to form part of the capital stock of the bank. The bank was a ::;tate institution, having no• private stockholders. The state also, at different times, issued bonds to railroad and turnpike companies in aid of· the construction thereof, and for the purpose of securing the prompt payment of interest and the extinguishment of ~he debt first mortgages were executed to the state.

The state steadily pursued this policy, and the interest on the bonds was promptly paid until the war of the· Rebellion was in progress.

The total amount of bonds outstanding in 1861 was about $18,000,000. In that year the state also issued $3,000,000 of 8 per cent. bonds for the "defense of the state", which debt was declared void, as having beell! contracted in aid of the Rebellion.

Governor Brownlow, in his message to the legislature in April, 1865, stated the debt of Tennessee, exclusive· of $3,000,000 in 8 per cent. bonds for the defense of the state, at $3,894,666 66, bearing an annual interest of $212,388. 25. He further stated that in addition to· this the state had issued bonds for the purpose of' internal: improvements, and had largely indorsed the bonds of railroad companies, thus incurring an additional indebtedness. of something more than $16,000,000, and that in order to preserve the credit of the state unimpaired it was believed that thef!e bonds .and the annual interest of $i,185,048 25 must be provided for. A portion of the state debt proper­was already due, $66,666 66 having matured in 1861; $61,250, in 1862; $177, 750, in 1863; and $581500, in 1864.

The following statement is taken from the com1)troller's report made in October, 1865:

State bonds loaned to railroad companies .....................•..••.••••....................•••...•••• $14, 006, 000 Intorest clue ou same.................................................................................. 3, 769, 507 City of Memphis and 'railroacl company's bonds indorsed .by state .• , .•• .. • .. . ••.. .. . •.. .. . ••. •••••• •••• 2,,207, 000 Interest dueonsamo...... .... ...... .... •... •.•. ..••.. .... •... ..•.. ...••. ..•••. .•.• ..•. •••• •••• ••••.. 550, 680 State debt proper . . . . .. . • . . . . . • . • • . . . . . . • • . . • • . . . . . . . . . . . . . .. . . . . . . • • . . . . • . . . .. • • . • . . • • • • • • . • • . . • • • • 3, 894, 666 Interest due on same.................................... . . . .• . . . . • •.• .• • • . . .•• • •••• •• .• . • • • • • • • . • •••• 840,,553

Total state liability, aotua.l and contingent.............................. •• •• • • . • • • ••••••.. .. • • 25, 277, 406

==

HISTORY OF STATE DEBTS-TENNESSEE. 605

The item. of $2,207,000 is for bonds issued by the city of Memphis in aid of the Memphis and Little Rock Railroad Company, indorsed by the company and then by the state.

The revenues of the state at this time (1865) were small and insufficient to p~iy current expenses and the interest on the debt. .A. great portion of the railroad companies to whom bonds were issued did not pay the interest, and the state credit consequently suffered.

These delinquent roads were from time to time sold, and the proceeds applied to the payment of the bonds. An act was passed November 23, 1865, providing for the issue of 6 per cent. bonds, to be dated January 1,

18G6, and to mature on Jan nary 1, 1892, for the purpose of paying off all past-due bonds and interest, as well as those to· become and fall due January 1, 1866, and those to become due in the year 1867, issued or indorsed by the state prior to the so-called act of secession, passed May 6, 1861.

On February 16, 1866, an act was passed to wind up and settle the business of the Bank of Tennessee, and it was put in liquidation. The act provides for the collection of debts, and that the directors should studiously refuse to receive and exclude all issues of said bank made after Ma.y G, 1861; also, all issues signed by G. O. Torbett. The act declares all such· issues voicl. The officers of the bank bad taken all the ass13ts of the institution during the rebellion; but they were recaptured, and the specie was invested in 7-30 bonds, amounting to $618,250, and this amount was placed in the hands of the treasurer of the state, in trust for the school fnnd. The act above referred to provides that, out of the assets of the bank, the sum of $1,500,000 belonging to the school fund should .be first paid, and the remaining assets shouhl be divided pro rata.

On January 18, 1866, bonds to the amount of $3,408,000 were authorized to be issued to railroad companies, as follows:

Memphis and Ohio Railroad Complmy , •. --· .. - --- .•• --· ••• -·- --·· --·. --·· .••••. ·--·-- ------ ••••••.••••. Memphis, Clarksville and Louisville Railroad Company --- - .. --·--· .. -- ____ ---- .. ·--· ·--··· -'·· ••• _ •.•. _ Eclgefield and Kentucky Railroacl Company. __________ -- _ ·-- - .•. --·· _ ..• ·--· ·----- ·---·- --·- ___ .. ___ •. Manchester ancl McMinnville Railroad Company ---- -· •••• --· ·--. __ --- ·----· ----. ___ .. ---- ··---- •••• ___ _ Nashville and Northwestern Railroacl Company .•••••. -- ___ ---· ·----· .•. --· ---- .. _ --· ·-- __________ ••• __ _ Mississippi and Tennessee Railroacl Company •.• --- _ -- _ .. - --- •••• ·--. --- . ·-··-- ...•.. _ ••• --·· .•• _ •. -·- --· East Tennessee ancl Virginia Railroacl Company •••• ··---·-·-··--·-· ••.• ·-·--·------··---····--· •••• ·---Knoxville ancl Keutuoky Railroad Company .• _ •• ______ . ·- ••••. ____ -- _ --- _ ·- .•• _. __ ••••••• __ -·- __ . __ •••• Winchester au cl .Alabama Railroad Comp:my •• _ ••. -- _ •••• _ ·--,. - __ - - .• ___ .. -- . ____ -- .......... __ ••• __ •. East Tennessee n.nd Georgia Railro.acl Company. ---•..••••.•••• , •••• -... -- •..••••• -_ ••.•••• _. ___ • - _. __ •. Mississippi Central Railroad Company ..•• --· __ •••• ____ .• __ -- _ ~ -_. ____ ..•.•• , ·--- _ .•• --- -·- _. __ ••.••••• ~ Memphis and Charleston Railroacl Company_·--. -- ·--·-- __ -- .• ---·. ·---· ·- _ --· ·--·-- -·-· -·- ..• ____ •••.. Rogersville ancl Jefferson Railroflll Company . _ -- - ___ • ·--. ·- -_ -.· ·- .•• _ •••..••••. __________ --· _ •• _. _ ••••. Nashville ancl Chattanooga Railroad Company. ·-- -- ... -- .... ---· ... __ . ·- ---· .• ---- --·· ••• --· .•• __ . ·-- __

$300,000 400,000 115, 000 346,000 300,000 50,000

300,000 250,000 372,000 250,000 200,000 300,000 100,000 125,000

'rotaL .•••• __ ..•••• -----· -·-- .•• --- ••••.••••. _____ . ____ .......••••... __ ••. -· •.••••.. _. _ ..•...• __ 3, 408, 000 ==

'fhe boncli:i were to bc~tr tLtto J~innary 1, 18G6, and be payable ,fan tllll',Y 1, 1802, aucl the roads "\Vere to pay the interest and deposit with the state 4 per cent. annually as a sinking fund. Under similar provisions, the further sum of $2,550,000 was loaned to seYeral other companies by an act passed December 10, 1866.

For the purpose of providing for the payment of interest ·a.nd bonds due, and to become due within three years from the passage of the act, au act passed on March 13, 1868, authorized the board of :finance (govemor, secretary of state, comptroller, treasurer, and president of the state bank) to borrow money, at a mte of interest not to exceecl 9 per cent., by the sale or pledge of state bonds, the sale of bonds to be at not less than par. Two members of the board refused to act (secretar:rT of' the state and comptroller). GoYernor Brownlow, in his message to an extra session o.f the legislature held on July 27, 1868, stated that the want of harmony in the councils of the board, and certain cba,rges made by the retiring members, had caused a failure in negotiating the loan to meet the July interest, and had injured the credit of the st~ite. The :first act passed at that session was entitled "..A.n act to regulate the state :finances"·* Tbe act is prefaced by a long preamule, setting forth the causes of the debt and failure to pay, deprecating the failure to negotiate the loan to meet the July interest, and providing for the issujng of' coupon bonds, falling due on Ja.nuary 1, 1900, in payment of all bonds of the state falling due in 1868, 1869, and 1870.t The comptroller was authorized to borrow money at 6 per cent. to pay the interest now or hereafter to become due, and, if necessary, to pledge the bonds of the state. The faith and credit of the state was pledged for the repayment of money thus borrowed,+

In 1860 (July 1) the total amount of bonds issued and loaned to railroad companies or indorsed by the state, interest funded and interest due, was $34,127,524 07, and in addition to this the state assum13d the claims of the United States against the Edgefield and Kentucky railroad for $130,804 58, and against the Memphis, OlarksYi11e, and Louisville railroad for $380,756 24. The state debt proper was $3,473,159 66, and the unpaid interest thereon was $1,100,000; making a total of $4,573,159 66. The amount loaned to turnpike and other companies, including interest, was $647,060, and $37,200 to the agricultural bureau, making the total $391896,504 55.

* .A.ots special session, 18681 p. 15. t The act is silent as to interest. t The aot of March 13, 18681 was repealed.

606 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

.A.n act was pass~d in 1869, and amended in 1870, providing that railroad companies to whom bonds of the state had been loaned might cancel their obliga.tion to the state with bonds of any series or number, except the bonds issued to the "Mineral Home Railroad Company" and to "the insurance company of the valley of Virginia"· The state thus as stated by Governor Brown, in his message in 1871, made "an unmistakable declaration to the· world that a,ll'other bonds issued under tbe semblance of law are regarded as obligatory upon the state". Under this act over $8,000;000 of bonds were retired and canceled.

The governor estimated that after exhausting all other sources the balance of the bonded debt, including interest to January 1, 1872, was aboi1t $19,403,173 66. The floating debt at this time was $1,668,417 27, and the· current expenses of the state government about $600,000.

This estimate was based upon the following figures: Entire indebtedness of the state, including the ftoatiug debt and interest on the bontlcd debt, to Jan nary

1, 1872, after deducting the amount of indorseu bonus which are solvent, together with bonds ancl coupons 1iaid in, is ........•.................................••......•.........••...•......•..• $:l2, 152, 156 19

Deduct the indebtedness of solvent roads that pay interest, with interest added to January 1, 1872.. . • • • 5, 776, 533 76

Leaving a balance of . . . . . . . . . . • • . . . . . . . . . . • . • • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . • 26, 375,. 622 43 Deduct from this the balance U.ue from purchasers of delinquent roads...... . . . . . . . . . . . • . $4, 714, 032 And estimated value of unsold delinquent roads . . . . . . . . . . . . • • • . . . . . . . . . . . . . . . . . . . . . . . . . 500, 000

Making in all.... . . .. . . . . . . . . . . . . . . . . • . . . . . . . . . . . . • . . . • . . . . • . . . . . • . . • . • • . . . • . . . . . . . . . . . . • . . . • . . . . . 5, 214, 032 00

Leaving balance of debt . . . . . . . . .. . • • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • • • • . 21, 161, 500 43 Deduct :floating debt........................................................ ... . •.•. .. .. •. . . . . . . . . 1, G6S, 417 27

Total............ . . • . . . . . . . . . . . . .. . . . . . .. .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . 10, 41>3, 173 16

There had been issued up to that time in aid of twenty-six turnpike ron,ds bonds amounting to $1,317,356. 60 .. Only six of these roads were paying any dividend, and the other twenty, which had cost the sttLte $864,062 60, were· yielding no revenue.

The comptroller's report of the same year estimated the net debt on the 1st of January, 1872, to be $19,961,590 93. On March 17, 1873, an act was passed funding the state debt. It provided for the funding of all outstanding

legally issued bonds of the state of Tennessee due or to become due before January 1, 1874, as well as all past-dne coupons ami those maturing on said day, l:iy the issue of 6 per cent. coupon bonds, to be styled the "new series of funding bonds", redeemable, at the option of the state, after July 1, 1884, and clue and payttble on the 1st day of' July, 1914, bearing 6 per cent. interest, payable semi-annually in New York or in Nashville, at the 01}tion of the owners of the bonds to be funded.

The act further providell that no coupons of bonds now due should be paid other than those falliug due on t'Llld after July 1, 1874, except coupons of bonds held by educational institutions of the state. The faith, honor, n,ncl credit of the state were pledged for the redemption of the bonds, for provicling a sinking fund for that purpose, and' · for the prompt payment of interest. The act expressly prohibits the funding of any debt created between Ma,y 6,. 1861, and .April 3, 1865, or of any bonds known to have been stolen; it also provided that, at the option of the­state, bonds maturing between July 1, 187 4, and July 1, 1884, shall be fundable in like manner. It further provided. for the issue of a certificate of indebtedness to the school fund in the sum of $2,512,tiOO, bearing 6 per cent. interest, payable semi-annually. The act made it the duty of the treasurer to set apart so much of the revenues as: might be required to pay interest on the bonds, and to be used exclusively for that purpose; but this provision was: repealed by an act passed February 5, 1875.* '

On January 15, 1877, the following joint resolution was adopted by the legislature and approved on February. 12, 1877:

Resolved, 9·0., That the comptroller and treasurer of state are hereby instructed to suspend all further payments of interest on state· bonds until otherwise ordered (except that they will continue to pay as heretofore the interest on so many of said bonds as a:re ait this. time owned by the educational institutions within the state).t

On January 16, 1879, a joint resolution was adopted, which prov.ides that no compromise or adjustment of the state debt shall be made which provides that coupons be made receivable for taxes.

Under these several acts a considerable portion of the debt of the state was funded from time to time. On December 19, 1876, the debt of the state was as follows:

Ftmded and registered bonds - . . . . . . . . . .. . . . . . . . . . • . . . . . • . . . . . . . . . . . . . . . . • . . . . . . . . . . . • • . . . . . . . • . . • • • • • $22; 812, 400 .A.mount of boncls belonging to East Tennessee University . . . . . . . . . . . . . • . • . . • . . . . . . . . . . . . • • • • . • • • • • • • . . 396, 000 Liabilities of the state as indorser . . . . . . . • . . . . • • • . . . . . . . . . • • . . .. . . . . . . • . . . . . • • • . . • . • . . . . . . . . . • • • • . • • • • 1, 347, 000 Floating debt, including interest due and to become due January 1, 1877 -~·-·· .••••• ...••. •••• ••••• ••.• 2,217, 816

The assets a;nd resources were .................•.•......••...•••...•.•.•••••...••..••••..••••.••••••.•

• Acts 18751 chap. 1. t Acts 187, p. 240.

26,773,216 5,263,772

21,509,444

HISTORY OF STATE DEBTS-TE.NNESSEE. 607

No interest had been paid since July 1, 1875. The governor, in his message in 1877 st~wd tu~t the revenues oeing in~uffici~nt, and the st~te being unable to borrow, except upon very harsh terms, th~ interest demanded being

· so exorbitant, it was determrned by the executive officers to let the payment go by default, relying µpon the fntlll'e revenues of the state. No money had been borrowed since June, 1875. In December, 1876, a proposition wa.s made by some of the bondholders to appoint a commission for the purpose of adjusting the uebt "on a basis honorable to the state and equitable to the creditors". The commission was appointed, but no results were reached. The amendment of the constitution adopted in 1866, as well as several acts of the legislature since that time provided tllat the issue of the Bank of Tennessee made since May 6, 1861, was unconstitutional and void. The Sup;eme Oourt of the U nitecl States, however (in 1878), in the case of Keith vs. Olark (H7 U. S. S. O. report!'l, 454), decided otherwise unless it could be shown that they were issued for the purpose of aiding the Rebellion. This of course increased the debt and materially reduced the revenue, as tho "new issue", or Torbett hills, were maQ.e receivable for taxes,

On December 19, 1878, the total amount of outstanding bonds was --·- ...... ··-- ______ .•.••. --·--· --·--· $20, 221, 300 The amount of bonds indorsc(l by the state._ - __ ... - _ •. _ .. _ . _. _ .. ___ ... _. _ .. __ .... _. _ ... _ .. _ .... _.. . . • . i, 3Q8, 000 Interest past due and becoming <lnc Jan nary 1, lt)79. _ ... _ ..... _ .. _ .... _ •... _ ............ _. _ ..... , " .• ~. 4, 056, 802

Ontstanlling warl'auts. _ ... _ .•...•......••.... _ .......•....... _ ..•.... _ ....•..................•• , ....•

The assets and resources of tho Htato were: Due by purch11scrs of clolill!JUCut i·oitds .. _ .....•••..•. _ .......... _ •. _ ................•.••..... $164, 150 Uncolloctml t11:s:es 1878 . ___ •.•..•........ _ ..... __ . _ ...•• _ ...• ___ ...•••..... _. _ ...••.. _.. . . . . • 209, 926 Cash on ll11ud . __ ....... _. - ......••. _ ...• __ .. __ ........ _. ___ ...•••.. __ ..•....•. _. . • • • • • • . . . . . 4,78, 346

-.-... --

~,586,102

90,720

25,ll85,822

8G2,4~~

'.l'otal debt, actual all!l contingent ........•••...•••..•••.......... ·---·· ..••........ ···--· ...... 24,833, 400 ===

The funding act of 1873 was repealed on March 20, 1879. At that session of the legislu.ture an act was passed proposing that the following-described bonds, purporting to be the bonds of the state of 're1messee, with the accumulated interest thereon, be settled tlind fonded in the coupon bonds of the state at the rate of 50 cents on the dollar upon their face vahrn, bearing interest at the rate of 4 per cent. per annum until paid; said bonds to be in denominations as follows: One-t.hird at from $5 to $100, one-thircl at from $100 to $500, one-tllircl fLt $1,000, falling clne at the encl of 30 years, but redeemable and renewt•ble at the pleasure of the state, the interest on s1LiU bonds being (lue and payable on the 1st day of January of each ancl every yea,r at the capitol of the state, at Nashville, in the treasurer's office, the bonds referred to being kuown n,11(1 designated as follows:

Capitol bonds ........ , ........ _ .............................. __ .......................... , . .. . ••. ... . $493, 000 Hermitage bonds ....................... _ ...... -· .......••...... __ .................................... _ 3G, 000 Agriaul tural bonds .... _ ..................•...... _. _ ...... __ .... _ . _ ...... _ ..... _ ........ _ ......•• __ . • • . 18, 000 Union Bank bontls ..•..•........•....•........ ·--- ._ ............ ·-- ....... ··---· .••....••.... , . --· ,,. . l25, 000 Bank of Tennessee bonds .. __ .................. _ ..... · ..... _ ..... _ . _ .. _ .. .' .... _. _ ....... _ ...•...• _...... 214, DOO Bonds issued to the various turnpike companies .. __ - .... _ . __ ... _ ........... _ •..... -....... --.•.•••. -. . . 741, 000 !Iiawassee rnilroacl. ........................ _ .... _ .•....•.... _ .............................. _ .. _...... . 280, 000 East Tennessee and Gcorgfo Rn.ilro11cl Compm1y .................• _ ... __ ....... _ .......... - . -..• - . . . . . • • 144, 000 Memphfa and Lagru.ngo Rltilroacl Company ......... - _ ........... _ .......... _ ....... -.. -..... -·.. .• . . . . . \JS, 000 Aute-war railrortd lio]J(ls ................................................................. ., -··•- ..• .. .• 8, 583, 000 Post-war rttilroacl bonds ......... _...................... . •••.. •. .. . .. . ... . .. . .... . .... . . .... .. ••• . •.. • • 21638, 000 Funcled nuder act of 1866 ........•..•.. _ ...••...• _ ••..•••..•...•...•.••.....•... _ ... -........ 1 ..... ,, ••• 2, ~46, 000 Funded unller act of 1868 ......... _ ....... _ ....... _ .....•.... _ ....... : . ................. _...... •• . ..• . • 5011, ODO Fuuclell under net of 187:3 ... __ ...... _ .....•...................••.................... -· .. ·--·. - .••. -· -· 4, 8Ci7, 000

The act farther provided how effect should be giYen to the same, but -as the pro1Josition was never consummated it is deemed unnecessary to give the details. During the last session of the legislature au apt* was :passed providing

*A.N .A.CT to compromise nnd settle the bondod indebtedness of the state of Tennessee. Passed April 5, 1881. A.p:proved A:i.>rll ~. 1881.

SECTION 1. Be -it 11naote(l by tho general assembly of the state of Tennessee, That all the legally issued bp:nds pf thf3 state of Tennessee, except the bonds issued for the permanent school fund, and except the bonds held Ly the University of Tenniissee ~nd by eclucational and ch0iritable iustitlltious in this state evillence of the ownership of which was on file.in the comptroller's office on the 1st day of January, 1880, ancl all outstanding coupons thereon up to and including those falling due on the 1st day of July, 1881, bf3 c~pitalized and funded into coupon bonds of the st11te, to be styled "the compromise boncls of the state of Tennessee".

SEO. 2. Be it further enaotod, That for each ancl every legally issued bond of the stl1te of Tennessee, or cpupons, prcsentc!l to the funding board hereinafter providecl for under the provisions of this act, there shn.11 be issued a boncl or bonds for fill 11mount equal to tb.e pl'ineipal of said bond so presented, together with the past-due interest thereon. ·Said bonds 11uthorized to be ~ssued ~nil.er the pxovisio~a of this act shall be dated on the first day of July, eighteen hundred anil eighty-one, and shall be payaPl~ n1llf3ty~n1:µ.e years n.fter their date, bnt the same shall be redeemable by the strtte at any time a.fter t,he expiration of :five years from theu il;tte, 11>t t~p l)leasu:re of tb,e state; shall bear interest at the rate of three per cent. per annum, payable semi-annually, on the fust days of January and~ ul!, in th(l city of New York; sb.a,11 have coupons of interest attached to each of said bonds; anil for the punctual payment of tb.c pnnc1pal anq Interest of sairl bonds the faith, credit, and honor of the state is hereby solemnly pledged. . . . . · SEO. 3. Be it further enacted, '!'hat the coupons on said compromise ponds, on and after their m11tunty, sb.all be receivable m paym!ll\t

608 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

for the settlement, dollar for dollar, of the bonds and unpaid interest in new 3 per cents, with tax-receivable coupons, redeemable after :five years and payable in 1899. The following is a statement of the debt of Tennessee on . January 3, 1881:

Bonded debt of state ..••..••.•••••••••••••••••••.••••....•...•••...•••.....•••.••••..••••••••••••••• $20,991,700 ==

Issued for railroads ...••• .-...•...••.•.•....•.•..•.••...•••....•...•........•••••••••••••..•••.•••••• Issued for tnrnpikes ...•.....••....•••.......•....•••..•. • ••... , .•••••.••...•••••••..••••.•....•...... Issued for banks... . • . . . . . . • • • • . . . . . . . . . . . . . . . . • . • . • • . . . . • . . . . . . . . . .•................ __ ......•....•. Issued for Hermitage ...••......................•.••....•.........•...........••......••............. Issued for agricultural bureau .............•....••.•.•..•••..•.....................•................. Issued for Capitol. .•...•..................•.•....•......•.........•................•..••••.......... Issued for funding floating debt .......•............•...•.••....•............................•..•.•.. lJ nspeci:fied...... . . . . . . . . . . . . . • . . . . • . . . . . . • • • • . . • • • • . . . . . . . . . . . . • . . . . . . . • • . . ••.••••...••....•......

Total. .•.•....•••....••••••••.••.••..•.....••••....•.••••..•••••.••••.•..•.•.•.••...•••.....•.

$12,808,700 225,000 148, 000 :15,000 11, 000 ll4,000

7,101,000 569,000

20, 991, 700 ------------

Jlearing 6 per cent .••..•...•••..•...•.•...•..•••••..•.•..•.•...•...••••..•.•....•.•...•••...•••..... llearing 5:1- per cent ......................•••.•...•.......•......•.....•.......••...•...••• " ...•..... J3earing 5 per cent ..................•...•••.••••.........••••...•...••.•••.••••.••••.......•........

20,330,700 17,000

644,000

Total. - • -· --- ••••••.•••••...•••. ·-. . •• • • • . • • • • • •• •• • • . . • • • • . • • . . • . • •• • • • • • • • • • •• . • . • . . • . • • . 20, 991, 700

ISSUE.

· Previous to 1860. . • • . . . . . . . . . . . . . . . . • . . • •..

=-= MATURITY

0\"Cl'(llle •••••••••••••••••• -·.·· ••.••••••••••

1892 ........... · ....•.•....•. . : .......•..... 1898 ..•.••.•....••......••..•.............. 1900 .....................••••••••.•••••••• Subsequent to 1900., ..................... .

$6tl4,0CO 9,567,700 3,991,000 1,463,000 4,880,000

1860 ...•....•••..••.••••••...•....•.•...... 1861 ........•....•...••...•.•....••••..•.. 1866 ....••.••••••••••••.....•••..•....•... 1867 ...•...•..••...• ••···· ....•...••••..•. 1868 ..••••••..•••••.••..•..••.•.....•••... 1869 ••••....•.••••.....••..........•...••. 1870 ••.••••••••.••••••.••.•••....•.•.•••• 1873 •••••••• · •.••••••.••• ~ •..•..•••••••••.•

$8,271,700 1,501,UUO

582,000 3,605,000

756,000 1,269,000

110, 000 17,000

4,880,000

Unspecified ................•...... _. ....... . 94,000 ;312, 000 1890 .......••...••••••••... , ••..•..........

Total.......... . . . . . . . . • • • . . • • • • . • . . . 20, 991, 700 Total. ...........•.•.... ==

Floating debt of state .......•...•..•..•................••.••...•••••••••••.....•..•....•..•.••....•.. Indorseil railroad bonrls . . . . . . . . . . . . . . • . . . . • . . . . . . . . . . . . . . . . . . • . . . . . • • • . . . . . . • . . . . . . . . . . ............ .

20, 991, 700 =i::.=

G,448,731 1, l:l7,000

for all taxes and debts due the state, except for tnxes for the support of the common schools an<l for the payment of tho iuforest upon the common school fnud, and said coupons shall Hhow upon tlrnir face tliat thi•~T n,re so recoiYahln.

SEC. 4. Be it f11rthe1• enacted, That said ho1Jt18 shnll Le in denominations of fifty dollars, one lrnndred dollars, five lrnnclrecl dollo.rs, and one thousand dollars. Tlrnt is, there shall not lie Jess tlrnn five per cent. of the whole amom1t in boncls of the denomimitious of fifty do1lars; five per cent. of the denominat.ion of one hundred dollars; and ten per cent. of the denomination of five hundred dollars j the remainder to be of the clenomination of one thousand dolbrs (to be pro-rated by the funding boa.rd hcroinafter providecl), as to sa.icl board may seem just and equitable between those who may present their bonds and cou11ons to be funclecl under this act. Bnt the funding board may issue bonds of the smaller clenominations aforesaid, to any amount in excess of the &mounts herein before statecl, if the holders of the bonds and coupons who present them to be funded so desire.

SEC. 5. Be it furthm- enacted, That the secretary of state, comptroller, and state treasurer shall constitute a board to l.Je designated a funding board, any two of which shall constitute a quorum for the transaction of any and all business for which said board was created. Said board ma.y sit or 11old meetings for the transaction of the business created by this act, at such times and places as they may deem wise and proper, to enable holders of Tennessee bonds ancl coupons to fund the same nuder the proyisions of this act.

SEC. 6. Be it fui·ther enaoteil, 'l'hat when any of the legally issuecl bonds of the state, or coupons outstanding and unpaid, are presented to said funding board for funding under the provisions of this act, they shall examine and audit the same, and, if found to be genuine, 11hall prepare a compromise boncl or 1.tonds, as may lie necessary for the purpose, and when said bond or bonds have been signecl by the governor ancl countersiguecl by the secretary of state, and the great seal of the state of Tennessee is affixed thereto, ancl the original bond or bonds have lieen registered in the comptroller's office and a full memoranclum of the same made by the comptroller, and the same signed by the party receiving the compromise bond or bonds, said board shall deliver said compromise boncls to the party entitled to rccei ve them, taking full and ample receipts therefor from the party so receiving. But fa funding under the provisions of this act the state sha.11 not receive or account for any portion of a bond or coupon in excess of the bond demanded, and if the amount of the bonrl or coupons presented to be funded be less by a fractional part of a cou11on the party applying may iiay the same in currency. ,

SEC. 7. Be it furt11m- enacted, That as soon as practicablo after the passage of this act there shall be prepared, unc1or the direction of the governor and the funding board, a sufficient number of well eugravocl bonds to take up and fund all the unpaicl boncls ancl coupons of the state, and upon each coupon of the bonds so prepared the signatures of the treasurer and comptroller shall be eng-ravec11 and tho sairl coupona shall be numbered with the number of the boncl to which they are attached, ancl shall state on their face wheu they fall clue ancl the amount of interest due on each. 'fhe cost of engraving and preparing said boncls aud coupons shall be paid out of the treasury upon the wa1Tant of the comptroller, based upon the certificate of the governor. ·

SEC. 8. Be ii further enacteil, That the funding board is authorized to elem and and receive as compensation for their services in carrying out the provisions of this act the sum of two dollars for each boml of the denomination of one thousand dollars, one dollar aud fifty cents for each bond of the denomination of five hundred dollars, and one dollar for each of all other c1enominations1 to be paid by those receiving the compromise bonds, as provided by this act,

HISTORY OF STATE DEBTS-KENTUCKY.

KENTUCKY.

At the close of 1845 the state debt of Kentucky was as follows : Five per cent. bonds, payable 35 years after date .........•.....•...••. '····· ........................ .. Five per cent. bonc1s, payable 30 years after date ....•...• ~ ........................................... .. Six per cent. bonds, payable 30 years after date ....................................................... . Six per cent. bonc1s, payable 6 years after date ......................................................... . Six per cent. bonds, payable ...................................................... ..jlf ................. .. Money borrowe(1 from the Bank of Louisville ....................................................... ~ ..

•

$165,000 450,000

3,579,000 100,000 84,000 30,000

Total...... .. . .. . . .. • .. . • • • .. .. . • • . .. .. . . .. .. . .. . .. .. .. .. .. . . .. . • .. • • .. . . . • .. . .. .. .. . .. . .. . • .. .. 4, 408, 000 ------

Kentucky owned at this time $1,270,000 of the stocks of the several banks of the state.

609

Tbe interest on the state debt was paid regularly in the city of New York, and the receipts of the sinking foncl :progressed in a satisfactory manner. The chief sources of revenue were turnpike tolls and the Kentucky river, the former in 1845 yielding nearly $25,000, and the latter $17,244.

The debt seems to have changed but little in the next few years. At the close of 1851 the total debt was $5, 724,370 82; or, exclusive of 'the unredeemable bonds held by the

board of education, $3,811,092 81. Much the larger portion of this unredeemable school-fund debt bore 5 per cent. interest, only $67,500 being at 6 per cent. To pay the debt the state had the following resources, if they coultl be applied to that purpose:

Stock of the B11uk of Kentucky ............... ~ ................................................... . Stock of Northern Bank of Kentucky ............................................................ .. Stock of the Bank of Loui~villo .................................................................. .. Stock of the Southern Bank of Kentucky ........................................ -............... - - . Stock of the Lexington and Frankfort railroad .................................................... .. Bonds of the Louisville and Frankfort Railroitd Company· .......................................... .

$939,000 00 290, 000 00

40,600 00 150,000 00 150,000 00 76,420 25

l'Yiakinginall ............................................................................... 1,646,020 25 ------

The state had, in addition, $2,694,239 93 stock in turnpike roads, supposed to be worth 25 or 30 cents on the dolhtr, besides her investments in rivers, etc. .

By 1853 tile debt had been changed only slightly. .At the close of 1859, according· to Governor· Magoffin's :message to the legislature, Kentucky was in a highly prosperous condition. Its tnxable property was $493,4:09,363, an increase over the previous year of $28,480,550. The balance in the treasury in October was $136,463, nearly all .of which belonged to the sinking fund. This fund, devoted to the payment of the principal and interest of the state debt, amounted to $758,283. The debt itself at this date was $5,479,244, including the bonds held by tlrn board of education. To offset this the stocks in various works of internal improvement, and in banks owned by the statei together with the baiance in the treasury belonging to the sinking' fund, were estimated at $7,7517577. The banks of the state, the governor said, were well managed, and he deemed it a matter of just pride that in the .revulsion of 1857 none of them suspended specie payments.

In October, 1863, the debt, including a military loan of $1,130,000, was $5,815,234. Of this $3,303,402 was ·due to individuals, $1,381,832 to the board of education, and $1,130,000 to the board of Kentucky.

Tl!e following table shows the changes in the amount of the debt, by issues and redemptions yearly, from October 10, 1859, to October 10, 1865:

Amount outstamling October 10, 1859 .................................................................. $5, 479,244 Six per cent. military loan certi.ficates, 1861 , ................................................. $1, 795, 000 Six per cent. military loan certificates (act February 18, 1864) ...... .... ...... .... ........... 417, 000 Six per cent. loans from school fund, being unexpenc1ec1 county distributions.................. 219, 113

---- 2, 431, 113

Redeemec1 J?rior to October 10, 1861 ........................ _ ............................... . 750, 010 Redeemec1iu 1861, military loan ................................ _ .............. _... $310, 000 Uedeemed in 1861, original debt.... . .. .. .. ....... _ .................. ,. .. .. .. .. .. .. 9, 000

--- 310,000 Redeemed in 1863, military loan .. . . .. . .. .. . .. . .. .. .. .. .... .. .. .. .. . .. . .. .. .. . • .. .. 355, 000 Redeemed in 1863, original debt ......................... _.. .. .. .. .. .. . . .. .. .. . .. .. . 35, 000

Redeemed in 1864, military loan ..................... _ .................................... .. Rec1eemec1in 1865, original debt .................. _. _ ....................................... .

390,000 1, 130, 000

67, 000

7,910,357

----- 2, 656, 010

Total outstaucUug October 10, 1865...... .. .. .. .. .. .. .. • • .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . • .. . . • .. .. 5, 254, 347

39 W D !I' ==

610 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

The public debt of Kentncky at the close of the :fiscal year 1864-'65 amounted to $5,254,347, and is thus accounted for:

Date of- ~s Amount-

.Acts authorizing the several issues. Parties and institutions to which issued. ~~~~~~~~~~-;-~~~~~~·1 ~i

Issue. Maturity. M

.. Ya;ions .•••••••.•.•.••. Six years' bonds and interest improved railroad scrip, Various ............... ··••·•·•·••· Due .•. ·• ... •• .. •••

$609,500. February 28, 1835. •• • •• Bank of :Kentucky*................................... May 25, 1835 ...•...• • • • • • • • .. • • ·.. 1865 .•• · • • • • • · • • · · • February 28, 1835...... Prime, Ward & King • . • • • • • • • • • • • • • • . . • •• • • • • • • • • • . • • August 1, 1835 • • •..•• · •. • • • · • · .. • • · 1865 .. • • • • • • • · • · • • · February 29, 1836... ••• Northern Bank of :Kentucky*......................... April 25, 1836 .............. - • ·.... 1866 .• • • • • • .. · · • • • • February 29, 1836. •• ••• Bank of :Kentucky •••••...•••••••••••••• ·•••••.•.••••.. June 1, 1836.... .. . •• • • . . • . • .. • • • •• 1806 .••• • • · • • .... • • · February 23, 1837... ••. War Department............... • •• . ••••••...• .. . .. • . April 1, 1837 ............. · •· · • · • • · 1867 ·••• • • • • · • •• · • · March 8, 1843 .•.•••.••. John Tilden, agent to sell •.....••...•..••••.••••••.••. September 2, 1848 ...••.....••...•. 1~73 ....... • • · · · · .. February 16, 1838 . • . • .. American Life Insurance and Trust Company........ Jnly 1, 1838 .•••.....•••. ••• • • ·..... 186&. · ••• • · · · • • • · • · February 22, 1839 .•• '. •• Contractors on public works.......................... April 22, 1840, to February19, 1841. 1870-'71 • • • • • • • · • · · February21, 1840 ..•••. Northern Bank of Kentucky .......................... November4, 1840 ••••••••.•.....•. 1870 .••••••••••..•• Febrnary21, 1840 •••••• Bank of Kentucky .................................... November 4, 1840 •.•.••.••••.•.••. 1870 .•••••.••.•.•• ·

6

5

5 5 5 5 5

6 6 6

Issued.

...................

$100, 000 100, 000 100, 000 50, 000

165, 000 100, 000

1, 250, 000 33, 000

235, 000 180, 000

Outstancl­ing .

$402

14, 000 85, 000 95, 000

0, 000 165, 000 70, 000

990, 000 27, 000

188, 000 Wl, 000

February 21, 1840 .... ) February, 1841. •..... March 3, 1842 . . . .. • • • Contractors, and in exchange for six years' bonds..... April 3, 1841, to .A.pril 1, 1842...... 1871-'72 •••• - ..• • • · 6 1, 741, 000 1, 422, 000

March 11, 1843 ••••••• March 2, 1844 .•.•••.. March 1, 1844 ..••.••••. B:olders of Le:rlngton and Ohio railroad bonds ...••••. January 1, 1865. 1860 .•••••••• -·· •• • 6 150, 000 February 22, 1846.... •• Holders of six years' bonds and others................ October 7, 1846, to June 15, 1848... 1861-'0B. •• • • • . • • .. 6

1 __ 10_, o_o_o ·l----

1 T~:::~~-~~ ~~I-~~~:~.~ ~~~~~ -~~- ~-~ -~~~i~~--- . • . . . . . . . . . .. • • . . • . . . • . . • •....••• -..••.•.•..•...•...••.......

*Held by board of cduce.tion • • • • • . . . . . . • . . • • . • . •• . . . . . . • . • • . • • • . • • ••••••••••

f .August 9, 1840.................... 1870 .............. . January 0, 1840 ..•. .. ••.•••.. ..••. 1870 .............. . January 1, 1840 ..•••• •••••• •• ••• •• 1870 .••.••••• -····· January 18, 1840 • • • • • • •••••••. •• • . 1875 ..•.•••...••••• January 22, 1840 .•••••••••••.••••. 1875 .•••••..••••••• January 22, 1840 .•. • • • . ••• • • . • • • • . 1875 .............. . December 28, 1848. •• • • • • • • • • • • . • • . At pleasure .•••••

:Balance dneforinterestonstate bonds January 30, 1804, ... ... .•.•... .. . •••• .• July 5, 1850 ............................ do ........... . *For unexpended county distribution, and held by board of education .......... Jnly 1, 1863 .•.•....•.•.•.•.•••....•••.. do .•••••••••••

6 6 6

5 5 5 5 5 6

4, 274, 000 B, 234, 402 ==== 24, 000 24, 000

21, 500 21, 500 22, 000 22, 000

500, 000 600, 000 170, 000 170, 000 180, 000 180, 000 808, 268 308, 208 101, 002 101, 002 ·276, 175 276, 175

Total amount held by board of education ....................................................... ., ••••••••.••.••••••••••• , •• ~..... •• • • • • 1, 602, 945 1, 002, 045

Military law ................................................ ~.................. • • • • • • . • • • • • . . . • • • • • • • • • • • • • • • • • • • • . • • • • • • • • • • • • . • • • • • • • • • • • • . 11 795, 000 .•••...••.• Bonds issued under act of February 18, 1864 ••••••.. .... .. .... ... ••••••• ... .... .••.. .•• ..•... .••••. .•••.• ....•• .••. ..•• •• •.•• ••• • •• • ••• .•.••. 417, 000 417, 000

===-== Aggregate public debt .•• ••• ••. • .• •.•• •• •.••••. .. • • •• •• • • •• ••• • •• . • • .. . •• .•. • •• . ••••• ••• • • • •••• .• ••• ••• . ••• • • ••• • •• • • • • • •• • • • • •.• • ••• • • • 8, 088, 045 5, 254, 347

== The annual interest on the above· debt is ...................................... ., ................................................. ••••• · •••··• ·-···· 209, 108

:Marked thus(") indicates that the principal lllld.interest are payable in Kentucky; 9,ll others ~e payable in New York.

' Against the above debt the state owns property of various descriptions and other assets valued in the aggregate at $7,638,494, These are described as follows:

Stock in internal improvements -•......•• -...••.•........•.••.........•. - -.•••••..........•••••••••••• Stock in banks and railroads •••••...••..•• _ .• _ ..• _ .••••.....••..••.......•...•...••...• _ ..••• _ •••••••• Loan to revenue debt, $100,000, and interest, $9,000 ... _ ••........ _ ...••••.•••••.•••••..•• _ •.••••• _ •••••. Surplus in treasury October 10, 1865. _ ••.••••..•.•••...••••..•....••••.... _ •..•.•••••••• _ ••.• _ •••••••••. Five per cent. legal-tender notes on deposit in New York .............................................. .. Loan to military fund .•..•••• --·· ••••••.•.•.•...........•••....•••.•.. · ............................... . Deposit to credit of sinking fund October 10, 1865 .•....•.•••••••• ·-- ..••••••••••.••.•••••••••••• _ ..... .

$4,830,475 1,562,820

109,000 435,697 100,000 200,000 400,502

Total property and assets owned by the state .••••..•.••.....•.• __ • • • • . • • • . • • • • • • . • • • • • • • • • • • • • • • 7, 638, 494

-=

The above assets constitnted the sinking fund-a fnnd provided for the payment of interest on the state debt as it fell due ancl of the principal at maturity. The resources of this fund were as follows: (1) tax on bank stock, etc.; (2) dividends on bank' stock owned by the state; (3) dividends on state stocks in turnpike roads, and profits on works of internal improvement; (4) lease of penitentiary; (5) :fifte~n cents revenue tax; (6) tax on brokers' and insurance offices; (7) interest on loan to keeper of penitentiary; (8) proceeds of th(') Commonwealth Bank and stock in old Bank of Kentucky; (9) redemption of forfeited lands ancl escheats; (10) interest on ($74,579 50) L. & F. railroad bonds; (11) dividends on 2,178 shares L. & F. railroad stocks; (12) excess in treasury over $10,000; (13) tax on playing-cards; (14) tax on billiard tables; (15) tax on railroad stocks; (16) taxes on railroad and express

HISTORY OF STATE DEBTS-KENTUCKY. 611

}Ompanies; (17) tax of 6 per cent per annum upon dividends of turnpike roads; (18) tax on insurance companies .ncorporated by the state; and (19) tax on oil companies, etc., $100.

The total receipts by the sinking fond in 1864-'65 were ...................... : • .. .. • • • • . .. • . . .. . • . • • • . • • • $867, 300 Add balance in treasury Ootober,io, 1864 ............................ 7........ ...... ...... ........... •••• 20, 490

Total resources ........... ~.... .. . . . . . . .. . . . . • • • • . . . • . • .. . . .. • . .. . . . • . . • • • . • • • • • • .. .. ••••••••.•.. Warrants paid from October 11, 1864, to Octol)er 10, 1865 .......................... ~;·· ................... .

887,790 557,123

Balance in treasury October 10, 1865..... ...... ...... .......... .... ...... .... .... ....... ...... .... 330, 667 ==

The warrants drawn in 1864-'65 were for the following purposes: Bank of America (for coupons), in New York, $240,000; contingent expenses, $1,516; interest on school bonds, $81,465; interest on (home) state debt, $30,142; loan to military fund, $200,000, and reduction of state debt, $4,000; total, $557,123.

The following abstract from the report of the auditor for the fiscal year ending October 10, 1869, shows the extremely healthy :financial condition of this state:

The public tlebt of the commonwealth on the 10th of October, 1868, amounted to.... .. . • .. • .. . .. . . . . . .. $3, 626, 221 Acld increase of school bonds, being amount of surplus school money, July 11 1869 .. .. . . ... . .. . ... . . •••. 8, 956

Making .................................................... ·.................................... 3, 635, 177 During tho fiscal year en cling October 10, 1869, there were redeemetl by tho commissioners of the sinking

fund state bonds amounting to............. . . • . • . . • • • .. • • .. .. • . .. • • • . .. .. . . . .. . . . . . . .. . . . .. • .. • • • • 328, 000

Amount ofstate debt October 10, 1869 .......................................................... . Deduct tho amount of bonds dedicated to the school fund and not redeemable •••••..••........••.......

3,307,177 1,648,283

Leaving the amount of the redeemable state debt, upon the 10th of October, 1869 .. .. . . .. .. • .. . . • 1, 658, 894

This consists of-

Six per cent. bonds which have matured and are outstanding ......................................... . Five per cent. bonds clue and outstanding ........................................................... . Six IJer cent. bonds maturing in 1870 and 1872 ·----· ................................................. . Military bonds maturing in 1895 .. __ ... _ .... • ......................................................... . Five per cent. bonds maturing between 1871and1873 .............. .•.. : .... ........................ ..

Total. ........................ -·· •••••.•••• ;.················ .................. ···•·· .... •••·•·

$35, 394 10,000

1,137,500 316,000 160,000

1,658,894 ==

If, therefore, the loan made by the commissioners of the sinking fund to the revenue proper of $840,849 55 was returned, the balance in the treasury, of cash on hand, upon the 10th of October, 1869, would be $1,259,335 50, which sum, if applied to the extinguishment of the outstanding indebtecln,ess of the commonwealth, woulcl reduce th~ state debt, exclusive of the school bonds not redeem~ble, to $399,558 50.

To meet this indebtedness the commissioners of the sinking fund hold resources ..•...•..••..•.•.••... $1, 287, 853 46

Deducting redeemable state rlebt...... ........ •••. ..••.• •••.•• .... .••••. ..•. •..••. ...... ...... .••.. 399, 558 50

Excess of resources of sinking fund over the redeemable state debt • . . . . • • • • • . . . . .. .. .. . • • • • . . 888,294 96

The following table presents an analysis of the bonded debt of the state as it stood October 10> 1880:

Boncled debt of state .. ---· ............................................................................ $1, 858, 008

Issuecl for railroacl ................................ - ....................................... -......... .. Issuecl to Bank of Kentucky ..................................... -................................... - . Issuetl for war purposes ................... -•.. - ....................................................... . Issued for refunding .......... -........................................................ · · ~ ••••• · ... - · · . Issuecl for schools (held by board of education) ..................................................... •••

394 5,000

174,000 1,000

1,677,614

Tote,l. • • • • • .. . . .. . • • • .. . • • • • • . . . • • . • • . • • • • . . • • • . . . . • . • .. • • • • • • • • • • . • • • • • • • • • • • • • . . • • • • • • • • • • • • • . 1, 858, 008

Total....... . • • • .. . .• • . • • ••• •. • ••• • • • •• • ... •• • .•• •• • . • • •• • . ••• ••• • ..• • • •• • ••• • • • • . .. • • . . • • • • ••• • 1, E!J8, 00&

612 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

ISSUE.

Previous to 1860 .••••. ....... ...... ..••.. .... $6, 394 1864 .... •••••. ...... •.•. •.•. •.•• .••• •••• •.•. 174,000 1879 .••.••.•.•••.••••.•••••.•.••••..•••.•..• 1, 677, 614

Total . • • • • . • . • • • • •• . • • • • . • • • • • • • • • • . • . 1, 858, 00$

I Overdue ............... ~!~~~~~~~·...... . . . . . . $6, 394 1894 .............................. '·· ••• .•• . . 174, 000 Payable at l)leasure of legislature . • • • • . . . . • • . 1, 327, 000 Unspecified (bonds issued in 1879). (See section

91 article 11 chapter 18 of general statutes).. 350, 614

Total • • • • • • • • • • • • • • • • • • • • • • • • • • • • • . . . . 1, 858, 008 --------

The school bonds, as has been stated heretofore, are unredeemable; the fund is inviolate; and the 6 per cent. semi-annual interest due the school fund is provided for out of the revenue placed to the credit of the sinking fnncl annually.

The resources of tl;l.e sinking fund are as follows : Balance in the treasury OctoberlO, 1880 ............................................................... $87, 526 22 Four }mndred and six shares of stock in Bank of Louisville, worth, as per quotation.................... :m, 788 00 Stock in turnpike roads, estimated worth .............................................................. 500, 000 00

Total estimated resources ....................................................................... 627, 314 22 ===

WESTERN STATES.

The following table presents the fluctuations of state debt in the western states from 1839 to 1880. The :fi.gmes for 1839 were taken from an official document arlpendecl to the Congressional Globe of the Twenty,sixth Congress, first session. Those for 1841 are from the Cost Johnson report, heretofore mentioned, ancl give the bqnded and :floating debt, though it will be observed that the western states had no floating debt at .that period. The column for 1853 is mostly made up from the re1lorts of state auditors and governors; that of 1860 is taken from various state documents, ancl the figures for 1870and1880 represent, respectively, the census figures for those years. "When the fact of the increase of population and the general progress of these states is taken into consideration, it will be seen that the state debts of this section of the country bear very lightly compared with what they did forty years ago:

184:1. :lS~S. 1860. :18'10,

'Vcstern states. :1839. Funded. Other. Fnnrleil. Other. Fumletl. Other. Funded.

-------1-----1----1---il-----1---- -~------·--·---!----·----·-

Ohio .. . .. .. . . .. • .. ... a. $6, 101, 000 b $10, 924, 123 .......... c $15, 218, 129 d$16, 927, 834 dlO, 179, 207 Indiana.............. a.11, 890, 000

Illinois .. • .. • .. .. .. .. a. 11, 600, 000 b 12, 751, 000 b 13, 527' 202

MioMgau . .. .. . .. . . .. a 5, 3·10, 000 /J 5, 611, 000 1-- · ......

:~~o~-~i~::::::::::: :::::::::::::: ..... i.?~~·~~~. ::::~::::. Minnesota ........ . :Missouri. .. • .. .. • .. .. a 2, 500, 000 b842,261 ..........

a 1, 112, 880 d 17, ooo, 600 .. .. .. .. . a 10, 277, 161 .......... ..

c 2, 359, 551 .. .. .. .. .. d 2, 21<!, 235 I d $102, 093 dl00,000 ................................. ..

k 55, 000 Z 322, 2D5 m250,000

c 802, 000 . • • • .. .. .. n 25, 952, 000

a 20, os1 mos, 036

Kansas ................................................................................................... .. Nebraska......................... .............. .......... .............. .......... d4,000 d48,960

Colorarlo .. .. .. .. .. . .. .~.... .. . .. • . .. ....................................................... : .. ............. . Nevada ................................................................................................... .. Oregon .................................................................................................... .. Califomia .................................................. r2,997,488 1"269,812 1"3,824,000 .,,, ........ ..

e $9, 732, 078 /4, 107, 507 e 4, 800, 937 e 2, 385, 028

e 68, 200 l 534, 408

m850, 000 ?i 17, 866, 000

01, 341, 075 p 86, 300

...................... q500, 000 e 100, 583

8 3, 311, 500

Total .. .. .. .. .. .. 37, 431, 000 43, 855, 676 .. .. .. .. • . 46, 245, 048 269, 812 69, 950, 7921--2-49-, :-·!2_6_, ____ _ 45, 290, 606

I Other.

..................

.................

................

.................... j$2, 183, 857 ................... .................. ..................

a 251, 331 p 211, 000

................... q142, 804

...... ........... s 117, 527

2, 006, 609

:1880.

··------l~unded. Other.

$6, 476, 805 ............... u 4, 008, 178 ................

(Ii) ................ 005, 150 ................. 11, 000 j$2, ui, 057

l 370, 435 ................... ?IL 2, 505, 000 ................. nlO, 259, 000 ..................

1, 181, 075 ............ ... 400, 267 .................

...................... 212, 814 56, 400 18, 090

356, 508 15'!,868 8 3,403, 000 ................... 87, 082, 718 2, 627, 73,'i

a A.pp. Cong. Globe, 26th Cong., 1st sess., page 90. b House Rep. No. 206, 27th Cong., 3d sess. c Re11ort of state auclitor. d Governor. 6 Ninth Cen~us. f Ninth Census; inclusive of bonds to the amount of $3,734,268 held by educational funds. g Inclusive of bonds to the amount of $3,904,788 hold by educationrLl funds. h October 1, 1880, the bondeil de ht of lliinois was $281,059. In 1881 this was all paid e:<:eept $23,600 not presented. i This amount is estimated, ns the exact amount could not, at that time, bo determined by the local officials. j In 1870 $2,183,800, and in 1880 $2,241,000 of the floating debt were owod to tn1st funds. k Secretary of state. l In 1860 $122,296, in 1870 $234,498, and in 1880 $245,435 wore owed to trust funds. The amount of tho war and defense loan shown in the re11ort of tho state audit-Or for October 1, 1879, is $300,000, hut the amount'.here included as authorized by letter from the auc1itor is only $125,000. ?n The authority for 1860 is the governor; for 1870, the Ninth Census. In the yenrsiµimediatelyprecedingl860 bonds woreisauod in aid of rnilro11dstotheamouutof $2,275,000. Recognition of this indebtedness was refused by the state until 1881. The de ht shown for 1800 and for 1870 is not inclusive of this sum, but that shown for 1880 ls inclusive. n The authority for 1860 is the governor; for 1870, the Ninth Census. The ampunts shown for 1860, 1870, and 1880 are ~ot inclusive of the Hannibal nncl Saint, J"oseph railroad debt, amounting to $3,000,000, hut aro inclusive of $900,000 owed to the school fund, which is held iu trust by the state. o The authmity for 1870 is the Ninth Census ant\ the stMe nu<litor. In<Jlusive of state bonds h(Jlcl hy the sinking and educational funds, amounting· in 1870 to $468,375, 11uu iu 18a0 to about $700,000. p Ninth Census; the entire funded debt in 1870 was held by tho school funcl. q Ninth Census; the funded clebt ls inclusive of bonds to tho

' amount of $58,000 held by tho "irreducible school fund"· r Stato comptroller. a The authority for 1870 is tbe Ninth Census, Row much, if any, of tho bonclecl debt in 1853and1880 was IJ.eld by the several school funds is nnknown, but in 1870 $1,191,000, :rud in 1880 $2,690,000 was so hclcl.

·1

HISTORY OF srrATE DEBTS-OHIO. 613

OHIO.

The construction of public worln1 in Ohio commenced in 1825, in which year, on the 4th of July, the ceremony of breaking ground for the National road west of the Ohio took place at S'aint Olairsville. On the same day ground was broken at Licking Summit for the Ohio canal by Governor Olinton, of New York, and Governor Morrow, of Ohio. The face of the country, abounding as it dicl in lakes and extensive marshes, was well calculatetl to afford an ample supply of water, and was highly favorable to the construction of canals. The Ohio canal was projected

- to connect the Ohio river at Portsmouth with lake Erie, at a spot on which the city of Cleveland has grown up. This canal was :finished in 1832, at an expense of $4,244,539. The Miami canal commences on Main street, Oincinnati, ltncl runs 65 miles to Dayton, on Mad river. This canal was begun in 1820, and opened 44 miles to the Miami river in 1827, at a cost of $457,669. The remaining portion, to Dayton, was then put under contract, and :finished in 1829. At the session of 1828 Congress grantecl 500,000 acres of land in aid of the Ohio canals on the condition that they should be completecl in seven sears, and, in addition, an amount equal to one-half of five sections in width on each sitle of the Miami canal for the benefit of the Miami extension to lake Erie. These two grants were equal to nearly 800,000 acres. This was on condition that-the canal should be begun in five years and completed in· twenty years; otherwise, the state should be bound to pay the United States the price of the land. This condition was subsequently removed, and the state sold the land.

Having thus early started internal improvements, it was not surprising that the state of Ohio, at the close of the year 1835, found itself in debt $4:,500,000. It was fortunate, however, at this time in having two. canals, which had cost over $5,500,000, in operation. The debt continued to increase, until in July, 1849, it had reached nearly $19,000,000. The total number of miles of the Ohio canal ancl "branches was 334, and of the Miami branch · 66 miles. These canals were well constructed, aud up to this period, when the debt seems to have reached its maximum, had· been of vast service to the state, although they hacl never yielded a net revenue equal to 6 per

·cent. of thfl cost; At the session of 1832 no less than thirteen railroads were incorporated by this state, of which the chief was the. Mad River railroad, to commence at Dayton and reach to Sandusky, on lake Erie-a distance of 170 miles. The connection from Cincinnati to Sandusky had been completed ancl was in operation. The others were the Pennsylvania and Ohio, the Milan and Newark, the Milan and Oolnmbus, the Chillicothe and Lebanon, the Cincinnati and Indianapolis, the Indianapolis and Saint Louis, the Columbus and Sandusky, the Erie and Ohio, the Franklin and Wilmington, the Port Clinton and Lower Sandusky, and the Richmond and Miami.

In the summer of 1849 the following works were completed or in progress :

COMPLETED. Miles. Capital.

Little 1\:IiMili. ............................. ,..... •• • • • • . ••••• •• • • • • • •• • •••••• •• ••• • • • • ••• • • •••••• •••••• •••• •• • ••• • • •••••• .•• • • • ••••••••• •• ...... 84. 0 $1, 350, 000 Mn{l River ancl Lake Erie •.••.• _..................................... • •. ••• • •• •••• •• ... • • • • ••• •• ••••••• •• . .... • • • •• . •••• •• . • • . • ••. . • • . . •• . • ... 184. 0 2, 000, 000 Mansftel<l. •••••.•.••.•.••••••••••••••••.•••••••••••••••••••.••••••••••••••••••.•••.•••.•••••••••.•••••... _ .•••••••••••..•.••••••••••••••.••••. _ 56. 0 850, 000

Totnl .••.•••••..••••••••••••••••.••••••••••••••••••.••••••••••••••.•••••••••••••••••.••••••••••••.••••••••••••••.••..••.•••••••••.••..••. 274.0-4, 200, 000

IN l'llOGRESS.

Xenia and Columbus .............................................................. •••••••••• .. •••••••••••••••·••••••••••••••••••••••••···•••••· Cleveland nnd Cincinnati ••••••.•...•••••••••.••••••••••..••.••••••••••.••.•••.••••• - ••••••••••••••• • ... • • .. • • • • • ••• • • • • •• • • • · •• • • • • • •• • • • • • • • · Mansftel<l and Newark ............................................................................................ ·••••• ••••• : ...... ·•••••••••·

Hancock and Findlay •••••••••... -•••• : •••••••••••••••.•••••• •• • • . • • • • • • • • • • • • • • • • • • • • • • •• • • • : • • • • • • • • • • • • .. •• • • • · • • · • • • • •• • • • • • • • · • '. • • • • • · · • • · Iron railroad ..•...•••••.••..•••••... _ .•••.••••..•..•.•••...•••.....•.••.••..••..•••. · •.•• · • · .• • · • • • · • • · • • · · • · • • • • • • · · • • · • • · · · • · · • • · · · • · · · • · · • • • Dayton and Springfield ••••••••••••••••••••••••••••••.•••••..••••••.•. - •••• • •. -••• - • · • · • • • • - • · · • • • • · • · • • • • • • · • • • " • • " • • • • • • • • • • • • • • • • • • · • • • • • ·

==== 85.0 650, 000

134. 5 2, 250, 000 60. 0 800, 000 18.0 200, 000 26. 0 200, 000 24.0 350, 000

Greenville and Dayton ........................................................................................................................ _·------40. 0 600, 000

Total ••.•..••...•.•.••.•••••• : •••.••.••••••••••.••••• ,..................................................................................... 887. 5 5, 050, 00()

The creation of these charters in 1832, with many others, .stimulated the desire for government aid, and in the years of speculation, 1836-'37, the legislature passed a law to prosecute other undertakings; also to the effect that when one-half the stock of a turnpike or two-thirds of a canal or railroad should be taken by individuals, and the

. object of the work sl}oulcl be approved by the board of public works, the governor should be authorized, in the name of the state, to subscribe for the remainder. Under this ·law the state subscribed for the following works:

£14 VALUATION, TAXATIO;N, AND PUBLIC INDEB'I1EDNESS.

Statement of stocks held by the. state and by indiviauals in turnpike companies, and the stocks hela by the state in rctil­road and canal companies, and the dividenas paid to the state during the year ending on the 15th November, 1848.

Name of company. Stock hohl by Stook held by I Total rtmount Dividends pttld the sta.te. indivitluals. of stock. tlie state.

TUR:-TIKE STOCK AND DIVIDENDS.

Uatavla Turnpike and Mianii Bridge Company .................................. • .••••.•••.•..••.••• Cincinnati and Harrison Turnpike Company ...•.....................•..•••••.••••••.......•..•••••• mncinnati and Ramil ton Turnpike Company ....................................................... . Cincinnati, Columbus a.nil Wooster '.rurnplke Company ..••..••...••...•••••.••.••••••..•..••••...•. Cincinnati, Lebanon and Springfield Turnpike Company ....•.. - ...••••.•••••..••....•••••••.•.••••• Cincinnati, Montgomor,y, Hopkinsville, Rochester and Cfarksville Tnrnpike Comps.ny ..•......•.... Circlevilfo and Washington Turnpike Company ............................. , ...................... ..

$30, 250 00

86, 050 00

44, 850 00

75, 800 00

178, 650 00

52, 400 00

71, 905 00

$30, 750 00

86, 050 00

49, 502 91

75, 800 00

107, 042 26

60, 429 23 85, 385 00

$01, 000 00 172, 100 00

94, 352 91 15~, 000 00 375, 092 26

118, 829 23

157, 200 00

$1, 243 20

~. 581 50

a, 100 oo a, 573 oo

631 BO

Colerain, Oxford and Brookville Turnpike Company ................................................ . 85, 775 47 85, 46·.I 45 171, 239 92 7, 710 70

Dayton and Springfield Turnpike Company ......................................................... . ·55,450 00 55, 450 00 110, 900 00 831 75 Dayton and Covington Turnpike Company ......................................................... . Dayton, Centreville and Lebanon Turnpike Company ............•••••••.••••....••..••••.••••.•••••

31, 480 00 30, 137 04

49, 557 37 40, 557 37 !~:~~! ~! i··········~~~-~o ' Dayton Western Turnpike Company ... .' ........................................................... . aa. ooo oo I 58, 170 04 125, 076 04 ..•..•••••••••••

Great Miami Turnpike Company ...........•.•..•..•.....•.•...•......•.••.••.••..•..•••............ Goshen, Wilmington and Columbus Turnpike Company ............................................ . Ramilt-0n, Springfleid and Carthage Tnrnpike Company ........................... ; •••.•••.•.•...... :Hamilton, Rossville, Darrtown, Oxford and Fairhaven Turnpike Company ..••••...••..••......•.••. II1uui!ton, Rossville, Summerville, Newcomb and Eaton Turnpike Company .•••.•......••.••••..••• Marietta, and Newport Turnpike Company ......................................................... . Jliilford and Chillicothe Turnpike Company ......•......•......•.. ; •••••••.••..•.•••...••...•..••••• Ohio Turnpike Company .....•..•....................•..•....•...•..••.•...•...•••..•...•••••.•••.. Portsmoutn and Columbus Turnpike Company ..................................................... . Ri"[lley and IIillsborongh Turnpike Company ....................................................... . Steubenville, Cadiz and Cambridge Turnpike Company ............................................. . Urbana, Troy and Greenville Turnpike Company ................................................... . Zanesville and Maysville Turnpike Company ...........•...•••.•..••••••.•.....•.••.••.••.•.••..•••. Jefferson, South Charleston and Xenia Turnpike Company .••..•....•••.•.••.••••••.•..••..•.•...••.

82, 835 24

102, 725 00

33, 450 00

49, 742 20

49, 925 00

14,724 07

172, 000 00

55, 000 00

78, 369 87

50, 575 00

39, 694 20

28,416 30

292, 850 00

42, aoo oo

57, 199 89 140, 035 13 119, 050 00 221, 775 00

39, 350 00 72, 800 00

59, 94'1 22 109, 686 42

50, 100 00 100, 025 00

14, 857 05 29, 582 02

163, 000 oo SB5, 000 00

50, 200 · O·! 105, 260 04

85, 192 03 103, 501 00

50, 575 00 101, 150 00

48, 896 35 88, 590 55

12, 860 03 41, 285 33

303, 408 05 500, 258 1)5

44, 382 18 80, 682 18 1-~~~~-1-~~-~~~

Total. ..•••....................•....•..•.•...•.••.•.......•...•...••••.••••••••••.•••.•......•.. 1, 921, 075 71 1, 977, 820 04 I===='=

RAILROAD STOCKS.

:Mnd River and Lake Erie railroad ......•..•......... : ............................................................................... , Mansfield and Sandusky City railroad .....•......•..••.••••.•.••...•..•.•••••..•..••.•...•••••...•.......•....•........•.•.....•.••.

Little Miami rnilroad stock, originally issnedto the state ...•....•.••..••••••••••.•.•••••...•..•...•.. i ................. : ........... . .A:m0J1nt of dividends made in stock and scrip 1844, 1845, 1846, 1847, and 1848......................... 5

.A.monnt of railroad stocks held by state ....................................................................................... .

CANAL STOCKS AND DIVIDENDS.

a, 899, 505 65

203, 050 00

33, aas oo 155, 712 10

482, 095 10 ===

Cincinnati and Whitewater cnnal .................................... -. •. . • . . . .. . . • .••••.. .. . . . . . . . . . . . . . . . . .• • • . . . . . . . . . . • . .. . . . . . • . 150, 000 00

Pannsylvania and Ohio canal ............................................................................................. ~.......... 420, 000 00 1------1

Total .................••........... : .......••......••..............•..............••..•...• : .••.•.•.•..............••.• , • • • . • . . ~70, 000 00 I=====

Amount of turnpike, railroad, and canal stocks held by tho state, and dividends .•••••.• ., • • . • • . . • • . . . . . . . . . . . • • . • • . . . . • . . . • . . • . . . . . 2, 973, 770 81

-.......... ' ...... --. . ................. ....................

1, 602 15 .. ......................... ~ . .......................... . ........................ . ....................... . ................... . ...................... . ...................... . ................... ........................ .......................

22, 061 78

8, 400 OG

81, 861 78

The financial condition of Ohio at this time is thus presented by a writer in Hu1it's Merchants' Magazine,"* who says:

When Ohio, in. tho year 1825, commenced her system of improvements, she established a co-ordinate and coextensive system of taxation. The fifth section of the act of 1825 pledgecl for the payment of the interest and final redemption of the sums of money authol'ized to be borrowed by the act the net proceeds of the tolls collected on all the canals; second, the rents and l)l'Ofits of all worlcs and privileges connected with or appertaining to the canals; also $40,000 out of money then in the treasury and $30,000 out of the reveuues to be rafaod for 1825, and also the proceeds of a tax to be levied upon the assessed property of the state sufficient to meet the deficit, if an.y, between the amount of 'the funds mentioned aml the aggregate of the interest for the years 1826-'27, and that for the year 18'28 the taX'shoulcl bo sufficient to meet the interest and $10,000 in addition; for 1829, $20,000 in addition; for 1830, $30,000 in adclition; for 1831, $40,000 in addition; for the year 1832, and each succeeding year until three years after the completion of the canals, the tax should yield $40,000 annually a.bove tho sum of the interest, and for each year thereafter $25,000 per, annum excess over the interest, until the fund formed by these additional. sums should be sufficient to redeem the principal of the loans created as they matru:ed. It was macle the dllty of the state auditor to ascertain and levy each year the amount of tax necessary to prodlJ.lle the required sums, These provisions were extended to all subsequent loans, and the taxing power of the auditor repeatedly confirmed ancl prolonged.

Under this law Ohlo went on in hlgh credit, constructing her canals aucl obtaining premiums for her stocks, until the completion of the Ohio a.nd Miami canals, in 1836. The extended system of improvement then undertaken involved large expenditures, with very little prospect( of immediate returns. When, in the years 1839 and 1840, the suspension of the banks ancl difficulties in the general money market manifesfud themselves, Ohio, as well as many other states, including New York, were in the prosecution of schemes involving vast expenditures, while their stocks were sinking in crlldit under the increasing nrgency for money. Ohio had expended large sums on her canals, loaned her credit to turnpike and other companies, as well as subscribed for stocks in them, under the law of 1836-'37, and she

"Vol. 21, p. 398.

HISTORY OF STATE DEBTS-OHIO. 615

owecl large sums to contrnctors, while her ability to borrow wa.s daily lessening. To abandon the works would involve great loss and to disregard the claims of companies and the just demands of contractors was seemingly impossible. '

By an act of March, 1841, the legislature appropriated $2,301,625, the commissioners of the canal funrl to borrow the money. Of tllis, $981,000, to pay contractm:s ancl for the iirosecution of the Wabash canal, was to be borrowed at any rate of interest; the remainder, for ca.nals and subscriptions to stock, in a 6 per cent. stock, redeemable after 1860.

The commissioners found it impossible to borrow in New York, ancl equally so in London. In Ohio, however, were two banks, the Chillicothe Bank ancl the Franklin Bank of Columbus, whose charters were to expire January, 1843. These institutions naturally wished to avail ·themselves of the exigencies of. the state to procure a renewal or extension of their charters, an cl they agreed to lend the state the fil<t1t $581,000, the sum clue the contmctors, and the $500,000 wautecl for the Wabash canal. The banks were to pay these loans in their own paper, and to receive payment back in cash in New York, in installments secured by Ohio 6 per cent. stock, at a margin of 20 per cent., with power to sell it on the best terms, at the risk of the state, to reimburse themselves. In case, however, the charters of the banks shonlcl not lie renew ell or extenclecl, all the instalhnents then unpaid were to be dischargecl December, 1842. There was also borrowed of the Bank of Wooster $129,355 70 on pledge of stock, aucl further temporary loans were made to the extent of $275,000 jn New York, and of Baring Brothers $133,200.

In March, 1842, a law was passell with a view to meet these difficulties. The first section authorized the commissioners to sell in New York as much 6,per cent, foreign stock as would realize $500,000, to meet temporary loans, and pledged the faith of the state that no more

• fornign stock should be sold. The second section authorized the issue of $1,300,000 in 6 per cent. domestic. stock of not less than par, but that of this $300,000 should be receivable for Wabash and Erie canal lands and $200,000 for Miami extension lands-,these bonds to be issued in payment to contractors, at their option. Of the Miami land bonds $122,857 were issuecl, ancl of the Wabash land bonl'!s $83,0201

and of the· "faith" bonds, so callell, createll by the same law, $145,188 were issued to contractors, making $351,071. None of the 6 per cent .. domestic stock was, however, sold, and at an extra session of the legislature it was proposed to raise the interest to 10 per cent., and also to go again into the foreign 'market on the best practicable terms. This provision lost votes in the senate, as it was considered by many a violation of the state's faith pledgecl in the first section of the law of March, 1842. Under this provision the state sustained a great sacrifice, the amount of stock solcl in New York amounting to $1,540,800, for which the state received $1,026,735. 1t was ascertained at the session of 1843 that to complete the publio works and discharge the claims of .contractors, as well as those of the turnpike and other companies, woulcl require still $1,5001000.

A law was therefore passecl in Mitrch, 1843, authorizing the issue of a 7 per cent. stock for that amount, redeemable in 1851, not to be issued under par. For the redemption of this stock was pleclged the surplus revenue received from the Uuitecl States under the act of 1836, aml also all canal lancls not otherwise.provided. The same law closed up all means of increasing the state debt. The liability of the state to make indefinite loans of credit to railroads in 6 per cent. stock was compromised by releasing the stato liens upon the roads and converting the sums already loaned into stock. The subscriptions to turnpike companies were closed by a payment in domestic bonds of m1 u.mount equal to individual subscriptions actually made and to 'the actual expenditures upon the works.

All these payments wel·e comprehended in the amount for which the new 7 per cent. stock was offered. That stock was taken in Wall street by p11rties largely intereste<l in the Ohio stocks.

The following table shows the canals constructed, date of construction, and points connected: Ohio ca.nal and feeders .......................... 1825-1835 ................................ Clevelancl-Portamouth. Walhoncling branch............................. 1843 ................................ Rochester-Roscoe. Hocking canal .. . • • . . .. . • •• . . . . . . . • •. . .. . . . . . . .. 18'13 ................................ Carroll-Nelsonville. Miami and Erie canal, branch ancl feeders ....... 1005-1835 ................................ Cincinnati-Toledo. Mi.lskiugum improvement .......... •··· .. . ...... 1840 ................................ Zanesville-Marietta.

The recapitulation of the debt of. Ohto, as it stood in 1849, is as follows :

Dnte of Issue.

1825 - ................ - ... - ......................... ~ ........... - .. - .............. -- - ... - ........ - - . - -... ,. ... - .......... - . - . - . - ........... - ... - .. - -1837 ........................................................................................................... .

1820 to 1832 ................................................................................. • •• .. · • • •• · •• ... · • · · 183ll to 1840 ................................................. ~- .............. • • .... • .. • • .... ·' · ........ • .. • • · .. • .. 1838to1843 ..................... : .................................... · ......................... ••· ............ ••

1842 to 1843 ................................................ · • • · · · • .... • • .. · • • • • • • • • • .. • • • • • • • • • .. • • .. • • • • .. " • .. 1843 ............................................................................................................ .

Interest, Redeema.ble. Amount. per cent.

After 1850 .. 5 After 1856 .. 6 After 185G .. 6 After1856 •.

O After 1860 •. O .A.fter1870 ..

In 1850 ......

$400, 000 00 150, 000 00

4, 018, 658 76 3, 365, 779 24

6, 862, 781 00 667, 063 50

1, 500, 000 00

16, 964, 282 50

83, 300 00

16, 880, 982 50

.A.nnnal inter­est.

$20, 000 00

,7,50000

241, 119 53 201, 946 75

411, 766 86 40, 023 81

105, 000 00

1, 027' 856 95 4, 998 00 ----

1, 022, 358 95

The funds set apart in Ohio for the payment of the interest on this debt were the net revenues of the canals, the proceeds of the school lands, the dividends on turnpike and other stock ~eld by the state, ~nd the ~ax on assessed property of the state, which the auditor was by law authorized and reqmre.d to levy sufficiently high to meet. the deficit between the sum of the other revenues mentioned and the nmount of mterest paya?Ie. The proceeds of the several sources of revenue proving inadequate, a continually increased rate of' .taxation was r~so~tecl to.

Jn addition to the sums of money borrowed for the construction. of pubhc works, the smkmg fund of nearly $2,000,000, created by the law of 1825, appears to have been absorbed, as well as the proceeds of lands granted by Oongress, sold for cash, and also in redemption of lands, to the extent of. $2,000,000; ~lso the school fun~, •1 566 930 and a considerable sum realized for premium on loans. The canals, with the exception of the great Oh10 IJ' ) l 1 I

'\

616 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

canal, continued to increase in tolls, as will be seen by the following table, which shows the tolls on each canal from 1833 to 1848: ·

Yern:'.a. Ohio. Miami. Mhm~ exten· Wa,ba!\b and Muskingum. Walhonding Hocking. s10n. Erie. '

1833.......... .. . .. . . .. • . • • • • • • .. • • • .. . • .. • • • • • . • • . . $136, 555 70

1834 . .. . • . .. .. .. • • .. .. • .. • • • • • • • • • • .. • • • ... .. .. .. • .. 164, 488 98

1835 .................. ~............................. 185,684 48

$50, 471 00

50, 041 00

51, 917 00

51, 110 00

62, 933 00

77, 863 00

78, 601 00 72, 612 00

70, 718 00

58, 460 34

08, 040 09

77, 844 25

77, 243 78

93, 057 58

114, 796 52

.,, .. ____ ." ...................... --- ........... -. -..... -~···· ·-····· .................... . 1830 ................................... : .. • • • .. .. • .. 211, 823 32

1837............... •• .. • • •• • • • • .. • • • • • .. .. • .. • .. . .. . 203, 428 79 1838 ............................................... .

1839 .............................................. ..

382, 135 96

423, 599 84 452, 122 03 416, 202 03

387, 442 22

322, 754 82

343, 710 99

260, 369 33

336, 339 09

452, 530 76

418, 230 37

$2, 195 00 ................. ................... .................. ................ 0

1840 ..................... , ......................... . 3, 471 30 ·······-·-···· $4, 215 50 .................... $1, 898 14

18U ............. ,. ................................ .. 4, 024 35 $637 07 7, 683 50 ................ 3, 593 51

1842 .............................................. .. 4, 043 03 5, 866 13 15, 355 27 $587 55 3, 712 27

1843 ............................................... . 8, 291 42 35, 922 36 23, 107 01 010 17 4, 750 03

1844: ............................................. .. 12, 723 z2 48, 589 20 29, 384 64 1, 970 78 5, 286 44

1845 .............................................. .. 32, 081 71 70, 114 89 30, 661 34 1, 282 05 6, 502 41

1846 •••..•....••..•••.• c ••••••••••••••••••••••••••••

1847 ............................................... ..

1848 .............................................. .. 130, 380 51

20, 812 90 113, 414 04 35, 104 091 . 1, 190 71 5, 383 54

07, 093 60 109 540 92 50, 832 00 2, 328 77 7,290 14

120, 678 99 140, 912 27 29, 948 37 1, 9,9 11 8, 778 44

The following table shows the original cost of each canal and the date of its completion:

Name of canal. Year ftn-1 ished.

Ohio ......................... : ............................................................................................................. . 1835

Miami .................................................................................................................................... .. 1835

Miami Extension .......................................................................................................................... . 18'7 Wabash and Erie ......................................................................................................................... .. 1848

Muskingum ............................................................................................................................... , 184,9 Walhonding ......................................... : ..................................................................................... . 1843

Hockin~ ................................................................................................................................... . 1843

Tot.al.

$187, 020 70'

214, 520 98 237, 001' 48·

262, 933 82 356, 301 w 459, 008 96·

504, 30~ 84 534, 310 03 502, 859 OG

475, 40(! 81

404, 142 liO·•

510, 5I5 li2

483, 746 41

605, B03 15-805, Olll 73.

850, 878 06·

Cost.

$4, 695, 202'

1, 020, 000•

B, 108, 005

z, 055, 260 1, 028, 028:

607, 309 947, 1170

Totule-0st .................................................... ,., ................................................................................. \-15,022,00ii.

On the 1st of January, 1852, we find thatthe redeemable debt of Ohio (exclusive of school and other trust funds),. the rates of interest, and the dates of maturity of the several issues, were as followl:l:

Cbmwter of stock. .A.mount. lnterest •

Five per cents due 1857 ................................................................................................................. . $150, 000 00 $7, 500 OI)

l!'ive per cents due 18"6 ................................................................................................................. . 1, 025, 000 00 51, 250 o°' Six percents dnel857 .. ; ....... , ...................................................................................................... .. s, 365, 770 24 201, 040 75 Si:c per cents due 1861 .... , ............................................................................................................ .. 6, 812, 481 00 408, 748 86· Six per cents due 1871 .................................................................................................................. . 2, 188, 531 93 181, 011 92 Six per cents dua 1876 .................................................................................................................. . 1, 600, 000 00 96, 000 00•

Totnl foreign debts ...................................................................................... , .............................. . 15, 136, 792 17 896, 457 53

Domestic debts ........................................................................................................................ .. 448, 101 71 26, 886 10·

Total ............................................................................................................................ .. 15, 581, 803 88 923, 848 03·

On the 1st of January, 1854, the redeemable and irreducible debt st-0od as follows:

Foreign debt ..................................................................................... $14,917, 000 70

Domestic debt.................................................................................... 301, 128 70 Irreducible debt, school and other trust funds....... • • • • • • • • .. . • • • . . • • • . •• • • • • • • • . .. • • • • • • • • • . • • • • • 1, 947, 299 00

Total. .......................................................................... '. . . . . . . . . . . . 17, 165, 428 40

'l'he constitution of Ohio fixes the minimum a.mount by which the principal of the state debt must be reducecli , annually.

HISTORY OF STATE DEB'l1 S-OHIO. 617

The following is an extract from the state constitution showing the condition of the state debt January 1, 1859 : . SEC. 8. The following schedule, a statement of the funded debt of the state, exhibiting the amounts and the times when the various

portions thereof come payable by t.he state, to wit: Of the forei.gn <~e~t, the principal ancl_interest of which is payable in the city of New York:

ls~. Six m1ll10ns four hundred thirteen thousand three hundred twenty-five dollars twenty-sevPn cents bearing interest at the rate of 6 per cent. per annum, coming payable, at the pleasure of the state' after tJ;te,31st day of December, 1860 --·. _ ..•.... _ .. __ .•.................... _ ......•.. ··---· ... ! $6, 413, 325 27

2c1. One mill10n. and twenty-five thousand dollars, bearing interest at the rate of r; per cent. per annnm1 c::ommg payable, at .the pleasure of the state, after the :nst <lay of December, 1865......... 1, 025, 000 00

3d. Two nnll10~s o:i;ie hundrcl(l eighty-three thousand five hundred thirty-one dollars and ninety-three cents, bearmg mterest at the rate of 6 per cent. per annum, cominO' pavable, at the pleasure of the state, after the 31st day of December, 1870 .• _ ••...• __ ..... _ .. _. _ -~ .. .' .......•.... _ .. ·- _ ..... __ .. 2, 183, 531 93

4th. One million six hundred thousand dollars; bearing interest at the rate of 6 per cent. per annum coming ,P~yable, at the pleasure of the state, after the 31st day of December, 1875 ........•... __ .: 1, 600, 000 00

5th. Tw? m1lhon four hundred thousand dollars, be.aring interest at the rate of 6 per cent. per annum, counng payable, at tho pleasure of the state, after the 31st day of December, 1886 .• _ •..•.....• _.. 2, 400, 000 00

-----Amount of the foreign clebt .............................. ·-··-· ··--·- ..•... ·--··· .........•... 13, 621,857 20

6th. Two hundred seventy-five thousand three hundred ancl eighty-five dollars, being the amount of the domestic debt, the princi:pal and interest of which is payabie at the seat of government...... 275, 385 00

Total amount of the foreign aml domestic funded debt of the state on the lat day of January, 1859, thirteen millions eight hundrecl ninety-seven thousand two hundred forty-two dollars and twenty cents. - - - . - - - . - - ......•...•.... - ........ - - .•...•. -....••.... _ ...........••...••.••... _. _ ... ___ . 13, 897, 242 20

is hereby mac1e a guic1e and a direction obligatory upon the commissioners of the sinking func1, for the time being, in the discharge of their official duties, and is also hereby made a part ofth1s act, as explanatory thereof.

On the 8th of April, 1856, a new loan was authorized for the payment of the state debt of $2,423,349 79, pa,yable, at the pleasure .of the state, after January 15, 1857. Proposals for this new loan, fixed by the commissioners flt $2,400,000, were invited by advertisement in the leading joumals of Europe and America, and on Octobe1' 1, 1856, it was awarded to the highest bidder for the whole amount at a premium of 3~ per cent. In referring to the debt of $6,413,325, wllich was not payable until after 1860, the governor, in his message of 1857, said:

To raise the wholo amount by taxation during the four years which will intervene before it can be paid would impose too serious lmrcleus upon the people. I recommencl, therefore, the sale of such stocks and otherpropert~' of the state as can be ilisposed of for its rea.l va.lne, and t.lie appropriation of the proceeds of the sales, together with the proceeds of such a rate upon the grand list as will produce the neeclod snm, to the l)ayment of at least one-half the clobt, distributing the remainder over so many of the following years as will bring its payment within the reach of mollerate taxation. As every bond is payable at the pleasure of the state after 1860, the right to do this seems unquestionable.

From the report of the auditor of state, Francis M. Wright, w~·derive the facts in the following account of the condition of the foreign and domestic debilbf Ohio on January 1, 1857. The foreign debt was payable in New York, consisting of the following issues:

Clmrnctor of stock. Payable at

pleasure of state niter-

.A.mount of I Drincipal. Total. Annual in­

terest. Total.

Five per cent ..........•............ , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1856 1· $85, 350 00 $4, 267 50

Fivepercent ..•....•.•.•.••..•........•........•.••..•.•...•••••.•••.....•••...•.•.••... 1865 ~25,000~ $111035000~~~~ $55,51750

Sixpnrcnnt ...................................................... ,........................ 1856 I 2,423,359 79 ' ' 145,40150 Six ii er cent._ .................•....•........ _ ...................•••.•........ _ '.. .. . . . . . . . 1860 o, 413, 825 27 384, 799 52 Six per cent .•..•....•.••..... _........................................................... 1870 2, 183, 531 93 131, 011 01 Sixporoent.............................................................................. 1875 i 1,600,000 00 96,000 oo

12, 620, 216 90 757, 213 02

Total .............................. ·:········-· ..................................... ···········+··-············ 13, 780, 566 99 ••••.•.••. ·--··I 812, 780 52

·The domestic debt, payable at Columbus, amounted to $277,707 48, consisting mainly of two items, viz, faith and credit bonds, $204,800, and Miami extension land bonds, $70,585, both payable after 1863. Total amount of reducible foreign and domestic state debt, January 1, 1857, $14,008,274 47.

The message of Governor Chase at the close of 1859 showed that the entire debt of Ohio was thus constituted:

~~: ~°:!i!~i~~~t~~s~;::. ·:_·_- _-_· .".".".":: .-_-_-_-_-_-_-_-_-_-_-_- ."."."."."." :: _- :.": _-: :~ ."." _- _- _- _- _-_- _- _-_- _- _- _-_- _- _- _- _-_- _- _- _- _- _-:: _-_- _- _- _- _- $13, g;l;: ~~J gg Making the whole reducible debt ..••.....••......•.•.. ----·· ...........••..••• -·-·····-·----.

The irreducible debt .••... -•... _ ••... - . ·- ....•.... - - ... -- -· ..••••.•. • -· · .... ·· ·· .. · · · · · · ·•• ·-· • · -.And the temporary loan .••....•.••......••...•••• -······· ...... -··· .......... ·-················-·

Making a total of .. - - ...••..... - -..••••. -·-- .......••... -...... · · ·· · · ·· · · •·· · · · •• · • • - · · -· - -

13,897,242 20 2,534,076 95

700,000 00

17, 131, 319 Hi ====

On the subject of the state debt and of the operations of the sinking fund provided by the constitution, which ha.ve beep. fully described above, Governor Chase said that this plan, if persistently adhered to, would certainly extinguish the whole reducible debt, but that the operation would require thirty-one years, and many circumstances might occur to suspend or frustrate its results .

.At the close of the fiscal year ending November 15, 1862, the funded debt of the state amounted to $14,141,562 61. The amount redeemed during the year ending 1863 was $676, 752 68, leaving outstanding of foreign and domestic debt $13,4641809 93.

618 VALUA'I1ION, TAXATION, AND PUBLIC INDEB'I1EDNESS.

The debt of Ohio was steadily reduced during the ne:s:t eight years. December 1, 187'1, Governor Allen called attention to the fact that it was necessary for the general assembly at once to make provisi~n for the return of the transferred funds ($601,000) to the sinking fund, and to make further provision for the payment of the interest on and the principal of the state debt, which fell due in January and July, 1875, and in January, 1876. On the 1st of January, 1876, $1,494,865 of the state debt was clue, which, with the sum due in January and July, made a total of $2 694,865 of principal and interest. Proper provision for the payment of this amount was made.

lt the close of the fiscal year 1875 the debt was still further reduced: and stood at $ 7 ,081,689. Dming the year 1875 $1,465,414 was redeemed, and there was outstanding, November 15, 1876, $6,484,505. During the next two years the redemptions were not so large, leaving a balance outstanding, November 15, 1877. of $6,479,505, and November, 1878, of $6,476,805.

The following is an exhibit of the outstanding debt of' the st\.l'te, October 1, 1880 :*

Bornlecl tlebt .......... ···•·· ······ ...............•........ ····•· .••••......•.•..••••..•••• •••••· .....• $6, 476,805 -------

Loan payable July 1, 1868, not boaring intorest (not yet prese11-tetl for payment) . . •. . •• • • • . • • • •. • •. . . • •. . 2, 500 Loan payable after June 30, Ul81, lrnaring 6 per cent. interest...... . • • • . . . • • • . . • . . . . . . • • • •. . • . . . • . . . . • . 4, 072, 640 Loan pa:vable after December 31, 1886, bearing 6 per cent. interest .. ; ..........•......•...•.........•.•.. 2, 400, 000 Canal loan, not bearing interest.... • .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . • • . • • • • • . . . . . . 1, 665

Total...... . • • . . • . • • • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . . . . . . • . . • . . . . . • • • . . 6, 476, 805

' Of the loan payable in 1881 the sum of $1,272,640 was paid when due, and the balance, $2,800,000, was

refunded at 4 per cent. in bonds payaple in 1888.

IND I.ANA.

Soon after her admission into the Union (December 11, 1816) Indiana inaugunited an extensive system of internal improvements.

In 1806 the general government had passed a law to construct a national road from Oumberland, lVIaryland, westward, and some forty successive acts prolonged the road from Oumbedand, through PennE!ylvania, part of Virginia, Ohio; Indiana, and across Illinois, to Alton, on the Mississippi river. The expenclitures in Indiana com­menced in 1829 and continued annually 'to 1838, up to which time there had been expended within the state the snm of $1,135,000. The 5 per cent. of the amount of sales of public lands to be paid to the state, under act of Congress, amounted to $959,246 25 in 1848. Three per" cent., amounting to $575,547 75, had bee:i;l paid to the state, and 2 per cent., amounting to $383,698 50, was expended under the <frection of Congress, and formecl part of the amount expended on the National road. In addition to the original grants of lands for schools, seminaries, and seats of government, Congress had, from time to time, made grants of laud in aid of internal improvements.

Until the construction of the Erie canal, of New York, in 1827, there was no market for the products of Indiana outside the state itself, and for twenty years there was but little variation in the annual sales of lands. At a later date, however, the outlet for produce from the tidewater to the lakes afforded by the completion of the Erie canal, the construction of the National road in Indiana, and the expenditure of large sums of money by the general government within the state, combined to stimulate.immigration. Under the general influence of speculation, which then pervaded the Union to an unusual degree, there was a gradual increase of the sales of land until 1836, when the maximum was reached, 3,016,960 acres being solcl in that year. The sales diminished from that time, not because of a failure of demand, hut by reason of a change of policy by the general government, inaugurated for the purpose of reserving the lands for actual settlers. . In common with the other states, Indiana was seized with the passion for internal improvements. The .first work projected was the construction of the Wabash and Erie canal, to connect the waters of the lake with the Ohio river by running from the Ohio state line, in the valley of the Miami, to Lafayette, Indiana, and from thence to Terre Haute, a total distance of 228 miles. Forming a part ,of the same scheme was the removal of' all obstructions to navigation from the Wabash river. The cost of the entire work was estimated at $2,000,000, which amount hacl been expended up to the time when the state su~pended its payments, in 1841. In 1824: Oongress had· authorized the state to construct a canal through the public lands, to connect the waters of the Wabash and the '.Miami, and for that purpose granted 90 feet on each side of the canal to be constructed to aid in its construction, and in 1827 made a further grant of' one and one-half' sections in width on each side of' the canal, reserving to the United States each alternate section. To make these donations available, the legislature in 1832 passed a law authorizing the appointment of a commission to borrow money on the credit of the state and to prosecute the contemplated work, and in the following year a portion of the work was put under contract. From that time until the failure of the state's credit loans were occasionally made, and the total amount of bonds issued for that purpose was $1,727,000, which realized to the state $1,767,560, all those issued being sold at par or a premium, except the last loan of $400,000, which realized $396,000.

In 1832 the legislature incorporated eight joint stock companies for the pmpose of constructing railroads from the Ohio river to Indianapolis and to several places on the Wabash, with a capital aggregating $4,000,000. These several enterprises and speculations were deemed to_ require a bank. The constitution of the state contained a

*Report of Hon. John 1!'. Oglevee, auditor.

HISTORY OF STATE DEBTS-INDIANA. . 619

provision that there should be no institution for the issue of bills of credit or notes payable to bearer or order; provided, that this should not be construed to prevent the legislature from establishing a state bank with not more than one branch to three counties. '

In 1834: the State Bank of Indiana was incorporated, and it went into operation in November of that year with these branches, to wit: in Indianapolis, Evansville: Terre Haute, Lafayette, New .Albany, Vincennes, Richmond, Madison, Lawrenceburgh, and Bedford. In 1835 one was located at Fort Wayne, one at South Bend in 1838, and one at Miclligan City in 1839, making thirteen in all.

Each of the branches issued and redeemed its own notes and discounted by its own bo~rd of directors, three of wlwm were appointed bJ' the parent board, which controlled the branches and could suspend either of them. In t"ie event of failure, the stock owned by the state was to be paid in full before individuals were paid. The state subscribed to the capital stock qf the bank by issuing bonds and by turning over to that institution the fourth installment of the surplus revenue to be paid to the state by the general government, which, however, was never paid, though the state anticipated the same by the issuu and sale of bonds. The total amount of bonds issued on account of this bank by the state up to .April, 1839, was $2,412,000. Of this amount $1,000,000 was sold by the bank to the :Morris canal at a time when the latter was largely indubted to the state of Michigan, much embarrassed, and its stock selling at 56 per cent. The bonds were sold for $980,0001 or 2 per cunt. discount; and were to be paicl for in ten equal payments. Only $20,000 was realized. .Although, as above statell, $2

1412,000 of state bonds

were thus issued to the bank, the latter acknowledged and paid interest only on $1,390,000; the di:ff:'erence, $1,022,000, lost by the hank, was by some means turned over to the internal improvement fund. The writers of 1849 alleged that the bank was ciearly responsible for the loss, and claimucl that it should have been held accountable therefor, instead of burdening the state.

The large expenditure of money for the several internal improvements undertaken, the establishment of the bank, and the distribution of the surplus revemi.e fund to the several counties, naturally i)rocluced the desire for additional operations, and in 1836 the legislature authorized the borrowing of $10,ooo,ooo for a gigantic scheme or system of internal improvement. Under tlie law, three commissioners were appointed to borrow money. This scheme comprised the following works:

White Water canal ...................................................... , ............................ ·s1, 400, ooo White River canal.......................... . . . ... . . . . . . . • . . . . . . . •. . . . . . . .. . . . .. •. •• .. .. .. . . ... . . . . ... 3, 500, 000 Wabash ancl Erie extension........................................................................... 1, 300, 000 Wabash 1:iver improvements . . . . .. . . . . . . . . . . . . . . . . . . . . . . . •. . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 50, 000 Madison ancl Lafayette railroad ................................... :.~................................. 1, 300, 000 Tu.rn11iko from "Vincennes to New Albany................ . .. . . . . . ... ••. . . . . . .. . .. . . .. . .. . . . . . .. .. • .. . .. 1, i50, 000 Turnpike from New Albany to Crawfordsville ... .'................................................ ...... 1, 300, 000

Total. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . . . . . . . 10, 000, 000

These extensive improvements having been projected to benefit all localities in the state, work was commenced simultaneously on the whole, and the result was that vast sums of money were expended before any one improvement was completed.

To pay the principal and interest on the internal improvement deb.t the following funds were set apart : 1st, the tolls of the works; 2d, the tolls from the Wabash and Erie canal when the debt contracted for its construction

· should be imicl from the lands granted by Congress; 3d, the sums received from Congress under the act for the distribution of the surplus revenue, $860,254: 4:4; 4th, the bank stock owned by the state, when t~e profits accruing, on it should have repaid the loans contracted to purchase it.

The original plan of internal improvements was from time to time largely extended, and it soon became evident that $20,0001000 would not more than half suffice to complete the work, as it was found necessary, on account of sectional clamor, to carry on all the works of the state at the same time.' The state also lost heavily in the negotiation of the bonds.

The state being unable to continl}e borrowing, the public works were suspended in 1839, andin 184:0 the board of internal improvement was suspended, only one member being continued, at a salary of $1,000 per annum.

At this time the public debt aggregated $14,057 ,ooo, which had realized $12,303,988 72, and of this latter sum $3,559,791 34 had be'en. lost through the .Morris Canal Bank and other institutions, who purchased state bonds, agreeing to pay· for them in installments, and after having transferred the bonds failed to pay for them.

The revenue in 1839 from all sources WfliS estimated at $420,388, whiqh was ·$400,000 less than required to pay the interest and civil expenses, but the. estimate fell wide of the mark. In 1839 the tax was raised by adding a 75 cent poll-tax, but the sum collected was insufficient to meet. the ordinary expenses of the state.

There were assessed in that year 100,166 polls. :Most of the voters then occupying Indiana were small farmers, livjng in log huts, and depending upon sales of pork and grain to provide the necessaries of life. The expenditures on the National road stopped in 1838; the public works in 1839. The state being unable to pay the interest, offered 7 per cent. born,ls, to mature in 5 ·years, in payment, but. of these only $36,000 were accepted. . From 1840 until 18.47 no further efforts were made to pay interest on the debt. In 1840 and ~842 treasury notes were issued

620 - VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

to meet present needs of the state, which we1;e receivable for public dues, amounting to $2,222,640, wliich were canceled from time to time, so that in October, 1848, there were outstanding of these only the sum of $431,200. There was also issued in 1842 $100,000 in treasury notes to redeem an equal amount of $50 bonds and another description of scrip, amounting to $41!),355, which was gradually redeemed.

Thus, when the state suspended payment of interest, there was outstanding about $3,000,000 of paper issued in various forms due to domestic creditors, which, being receivable in payment of taxes, prevented the receipt of available money.

It was found necessary to make some settlement of the state debt. Among the schemes projected was one which im .. olvecl the sale of' the public works, but none of these were adopted. -

In 1845, however, a proposition was made by the leading bondholders to compromise the debt, based upon the Wabash canal. It was evident that the state could not pay her debts in full by taxation, and the state's creditors proposed that the state pay one-half' of' the debt by taxation and the other with the property and the tolls of the Wabash and Erie canal.

The following statement of bonds issued is taken from the report of the auditor of state to the legislature of 1846, submitted for the year ending November 1, 1845:

Internal improvement bonils. - .. __ •. _ ...•... _. ________ .......•.•• _ .... , ___ . __ •..• __ .....•.•. _ - -•..••• - . $8, DOO, 000 \Valmsh and Erie canal bonds •...•.. ____ .·---· .. _ ..•....... _ .......•.. ____ ....•..••... _._.............. 1, 727, 000 State Bank bonds ............ ---- ................... ____ ...••. ·-- ••............. ____ .. __ .... __ - - ·--. __ . _ 2, 41::!, 000 Surplus revenue bonds ...•...•..•.. _--·- .•.•.... _ ...... ·-- __ ··--_ ........•••...... ________ .. _·-- .. ____ 2(M, 000

l\Iailison ancl Irnlianapolisrailroad boncls __ --·-··-··· ...•• : .... ·--· ---· -·-· ·-·--· ·--· .•••...••. --·· •... 450,000 Seven per cent. bonds issued to pay interest .• :-·- ......••.. ·-·--- .••. --·· .•....••.•.... -----·--·- __ ·--- 1, 100, 000 Lawrenceburgh and Inclianapolis railroad bonds--·- .............. ---·--·· ____ ..•......•.. -- - ....... - - 221, 000

Total..·--· •....••....•...... , ...... ---· .........•.. ·----·--·-·--·-·.......................... 15, 111,000 ==

Of this amount, the $294,000 surplus revenue bonds had been redeemed; there was in the treasury $1,064,000 of the 7 per cent. bonds signed, but not issued; $189,000 of the bonds issued in aid of the Lawrenceburgh and Indianapolis railroad and $1,064,000 of miscellaneous bonds bad been redeemed and canceled; making a total redemption of $2,611,000, and leaving the amount ontstancling on November 1, 1845, $12,500,000 .. The agent of the state had 1·eceived, but not yet settled for, $20,000, leaving a net debt of $12,480,000. Of this amount the State Bm1k paid interest on $1,390,000, leaving the amount of $11,090,000 outstanding, for which provision was required.

The whole foreign debt*, according to that authority, was then as follows:

Bonds on which the state has to pay interest ..••.. _____ ..•.... _ ..••...••••• __ -·- ... ____ .•...•••..••••. $11, 090, 000 Bonds on which the bauk pays interest. _____ ......•....•••.. ··---- __ --· ....••..••.•...••...•••.• ___ . _ 1, 390, 000 Interest up to J anuacy 1, 1846, inclucling alTears .. _ .... _ ••... _ .•.... _. _. ______ .•• _.. . . . . . . • • • . . • . • • . . . 2, 777, 320

Total •••.....•••.. _ ••... _ .. _ ..•.........•. _ •••••••.•••••..•.....•.•..•.•••..•••.•••.•.•..•. _. _. 15, 257, 320

The amount of annual interest on the foreign debt was as follows:

On $100,000, at 6 per cent ..•.•.............. ·--·-· ...•....•...•....•.••..•.•...•••.....•..•...•...••• On $36,000, at 7 per cent •... ··-''-··--··· ........ ····-- •....••••..•••••...•...•.•••...•....••....•••.. On $1019541000, at 5 per cent .. ---· .......... __ . ___ .......••.•.. ____ ........•••••........ __ . _ ..... ___ .

Total. ••••...•... ·--···----·· .... -··-·---·· ..•••. -----···---·-··· ..••.••••.•••.••••.•••...••••.

There were also outstanding on that date treasury notes as follows: Six per cent. treasury notes _____ ....••..•.. ___ ••••..... _ •..........••.•• , •.. _ . __ .•..••••••••••..... __ . Interest on same (estimatec1) .•• _ ... ___ ... _ -.•..••••. ___ .•....••...••... _ .••..••••..••• ~ .• _ .••......••. Five per cent. treasury notes ...... _ ..•••....•. ___ .••.. _ .....•. ___ .. _ ...... _ ••.•.• __ ... _. _, •••.•. _. ___ . Interest on same ( estimatecl). __ ..... _ ...•.••.•.•.•..•••.... _ ...•.• _ ..... _ ..•.•. _ ...•••••.... __ .. __ . _ •. And loans from the bank .... __ --·· •......•....•........•••...•.. --· .•.•.••.•••.••••. ---· ...•••.... ___ .

$6,000 2,520

547,700

556,220

$491, 435 147,000 441, 325

69,000 56,000 ----

1, 204, 760

llfaking the total clebt ..•••... ___ ..••••.... _. _ .. __ . _ •••. ', ••••... _ ••.•......•.•.•..•••.•..•••..••... ~... 16, 462, 080

The interest payable annually on the treasury notes was as follows :

On bonds as a.bove ...•.............. ··--·· .•............•••••.... -·-- -··- .•••••... ~ •....••••••....••• On 6 per cent. treasury notes ...••. ______ --···· ..•.•. --·· ... --· .•••••.••.•... ; ••.•.•....•.•••.•... _ ••• On 5 per cent. treasury notes .•.... ---- .•.••..•.. -·---·.'. ..•..•••.. ·---·· .•••••.•.••..•••• .- ••....•••. _

Total.._ ...••.... _ .... __ . ___ ... _ .. - ... _ •• _ . _ •••.•••. _ •••...•...••••...•.... ___ ••...•.•....• _ •••

The total estimated revenue for 1846 was $392,000.

$556, 220 29,486 22,066

607,772

"The words foreign debt are used in this state to distinguish it from t.he debt owing by the state to certa.in funds held in trust by the state. . . · · ·

HI8TORY OF srrATE DEBTS-INDIANA. 621

On Japuary 19, 1846, an act for the funding of the debt was passed by the Indiana legislature,* which was supplemente(l by au act passed on January 27, 1847.t The main feattu·es of these enactments were that the outstanding bonds should be surrendered, and in lieu thereof certificates were to be issued for one-half of the principal, bear~ng 5 per cent. interest, 4 per cent. payable in cash and 1 per cent. to. be funded on January 1, ·1853, interest payable semi-annually; for one-half of the unpaid interest from January 1, 1841, to 1847, a certificate, to bear interest after Januar,y 1, 1853, at the rate of 2.g. per cent. per annum, ptt;yable semi-annually. These certificates of stock were to be redeemable at the pleasure of the state after twenty years. The 1 per cent. arrearagt1 interest on the principal, to be funded on January 1, 1853, should thereafter bear interest at the rate of 2~ per cent. per annum, or, at the option of the holder, be added to the certificate above mentioned as being issued for one-half of the arrearage interest.

These certificates of stock were to be paid out of the state revenues, and the faith of the state was pledged for the payment thereof. ·

For the remaining half a certificate of stock should be issued, bearing interest at the rate of 5 per cent. per annum from January 1, 1847, payable semi-annually, and for the remaining half of the back interest (fron;i 184:1to1847) a certificate of stock, bearing interest at the rate of 5 per cent. per annum after January 1, 1853, payable semi-annually. For the payment of these certificates the Wabash au{l Erie canal, and all tolls, lauds, and effects belonging thereto, from the Ohio state line to Evansville, and all the property of the state therein, were pledged.

The act provided further that the bonds should not be exchanged until the sum of $800,000. should be subscribed toward the completion of the canal from Lafayette to Evansville, the amounts to be repaid out of the tons of the canal, and the bondholders were authorized to subscribe pi·o rlltli; the certificates of stock to be issued in exchange for the bonds were to be of two classes-" preferred"~ being those to be issued the subscribers to the $800,000 loan, ancl "deferred", being those issued to non-subscribers. Three trustees were to be appointed to take charge, management, and control of the canal aud complete the same, two of them to be appointed by the subscribers, aud the other by the state.

For the purpose of proYiding for the payment of the interest, ancl for other purposes, a tax of 25 cents on the $100 was directed to be levied, and 75 cents on each poll (in addition to 3~ cents for certain specified purposes), and it was believed that that rate would be sufficient to meet the wants of the state.

The value of property steadily increased. The assessment for state purposes, which in 1844 was $304,657 17, had in 1848 increased to $488,627 44. The collections in 1848 exceeded the estimate by $40,000. The outstanding treasury notes were graclually canceled. ·

The total canal debt in 1849 was nearly $7,000,000, and was liable to be increase(l to nearly $8,000,000 by the· surrender of outstanding bonds. The state debt was about the same, and it was then estimated that the interest payable by the state in 1853 would be about $330,000, and that the domestic debt would be canceled. When the trustees took charge of' the canal, in July, 1847, there were 887,067 acres of land belonging to the same, which by act of 1848 was increased to 922,386 acres, estimated in all to be worth about $1,500,000. The tolls gradually increased from year to year, and the interest was promptly paid. In January, 1851, all but $1,1867000 of the old bonds had been converted into state and canal boncls, the state had passed her greatest financial difficulties, and thG ability to meet her liabilities in the future seemed assured.

As statecl above, the amount of bonds outstandh1g prior to surrender under the state debt arrangement with holders was $11,090,000, or, as accqunted for in the table below, $11,048,000.

From a_ l'eport of the auditor of state it appears that on August 5, 1850, there had been surrendered-

·wabash and Erie c(tlrnl bonds .................••...•........•....•.•.•....•..•.....••.......•......... $1,250, 000 Internal improvement bonds...... . . • •.... _. _ ..••••..• _ ..•.•.• _. _ .. _. _ •.•....•.... _ ........... _. _. _.. 6, 973, 000 Madison and Indianapolis milroad bonds ..••...••••..... _ ...••• _ ....•.••... _... . • • • • • . . • • • . . . . . . . . • • • • . 365, 000 Lawrence burgh and Indianapolis railroad bonds .. __ ...•..... _ ••.. __ .... __ ...•••.. ___ .•............ __ ... 80, 000 State bank bonds ......................•.......•..••• _ ..••••.•....••••. __ .. .. . . . . • •• . . .•• . . . . ••. . • • •• . 86f:i, 000 Seven per cent. bonds, to i1ay interest._ ••...•• --· ........................................... _ •...• __ ... 29, 000

Total. ...•..••.•.... _ •..••••..•.... _.... ••. . • . . •• • • ••• • . . . • . . . •• • . . ••.. ... •.. ••. .••••. . •• ••• . •• . . 9, 563,'000 '1'0L1tl outstam1ing August 5, 1850 •• _ •••. _ •••••••••••• _ ••••••••.. __ • _ .••••••.. _ •• _ .. _ ••••••••.•..• __ • • • • 1, 485, 000

Grauel total , ...•.. : ....•••.. _ ..... _: ..••••.• _ ...•••.•• _. _ .•....... _ ....•....•...•.... - . • . . • • • • • . 11, 048, 000

On October 31, 1851, the amount outstanding was $1,300,000. On that date there had been issued stock for which the state was liable to the amount of $6,657,720; stocks chargeable on the Wabash. and Erie canal, $6,325,262 50; total, $12,982,982 50.

At this time all of the treasury notes had been redeemed, and it appears that though only $70,000 were issued, yet $ 76,635 had been in circulati.on and had been redeemed. The auf-hors of the fraud were never discovered.

" Laws 1845-'46, p. 3. t Laws 1846-'47, p. 3.

622 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

In 1851 a new constitution was adopted, which went into effect on the 1st day of November of that year. Section II of Article X of that instrument provided that all the revenues derived from the sale of any public works belonging to the state, and. from the net annual income thereof, and any surplus that may at any time remain in the treastuy derived from taxation for general state purposes, after the payment of the ordinary expenses of the government and of the interest of bonds of the state, other than bank bonds, should be annually applied,, under direction of the general assembly, to the payment of the principal of the public debt.

The constitution further provided that no law should authorize a debt to be contracted on behalf of' the state except in the following cases: To meet casual deficits in the revenue; to pay interest on the state debt; to repel invasion, suppress insurrection, or, if hostilities be threatened, provide for the public defense. And it was further provided that no county shoulcl subscribe for stock in any incorporated company unless the same be paid for at the time of such subscription, nor should any county loan its credit to any incorporated company, nor borrow money for the purpose of taking stock in any such company, nor should the general assembl~~ ever, on be!Jalf o.f the state, assume the debt8 of any county, city, town, or township, nor of any corporation whatever. ,

The stii,te has ever since promptly paid the interest and has gradually redeemed the principal of the debt thus refunded, and froin time to time old state bonds were presented and exchanged for the 5 per cent. and 2j! per cent. state stocks, under the law of 1846 and 1847. · In common with other northern states, a large war debt was created; but the credit of the state suffered at no time, an:d her resources were ample to meet all her engagements promptly.

The following exhibit is taken from the auditor's report for the year ending October 31, 1872: Foreign c1ebt:

Five per cent. state stock" ..•..•.•.•.••....•...•.•...••....•........ , ....................•.•...•.•.. Two and a half per cent. state stock" ............................................................... . War loan bonds ....•....•..••..•.•..•.. ~ ..... , ............................... :····· ...••.••••....•.

$32,869 99 5,020 13

139, 000 00

Total foreign debt............................................................................ 176, 890 12

Domestic debt: Non-negotiable bonds held by the school fund .... .. .. .••• •••• .... .... .... .... .••. ...... ••.. .••• .••• 3, 729, 016 15

Total debt .......................................................... ,......................... 3, 905, 906 27

===

From 1847 to 1872 the state had paid as interest on the public debt the sum of $9,097,332 35. There were also outstanding 191 bonds of $1,000 each, issued prior to 1841, known as the internal-improvement bonds. The holders hacl declined to surrender these bonds under the acts of 1846and1847, or under the Butler bill, as it was callecl.t To enforce the payment of thes~ bonds .a suit was commenced in the circuit court of Carroll county against the Wabash and Erie canal. A special session of the legislatur,e was held, beginning on November 13, 1872. An act was passed at that session, ancl approved on December 12, 1872J, by which the redemption of the 191 bonds was authorized and directed, ancl a temporary loan of $200,000 was authorized. On the 10th of l\1arch, 1873§, a further tem1)orary loan was authorized. These bonds were from that time forward recleemecl as fast as presented, and on October 31, 1874, all but 94 had been redeemed, and on October 31, 1880, 'only 27 wern outstanding and unpaid.

An amendment to the constitution was ratified by the people on the 18th day of February, 1873, and it was declared part of the constitution by lH'oclamation of March 7, 1873. It provides that no law or resolution shall ever be passed by the general assembly that shall recognize a.ny liability of the state to pay or redeem any certificate or stocks issued in pursuance of an act entitled "An act to provide for the funded debt of the state of Indiana, and for the completion of the Wabash and Erie canal to Evansville, passed January 19, 1846", ancl the acts amendatory thereof II, which by provision of said acts, or either of them, shall be payable exclusively from the proceeds of the cana.l lancls and the tolls and revenues of the canal in the acts mentioned, and that no such certificates or stock should ever be paid by the state. ·

The canal has not been a successful enterprise. The canal debt was over $16,000,000 i.n November, 1874, when suit was begun by the bondholders in the circuit court o£ the United States for the district of Indiana to terminate the trust, and asking sale of' the canal property. The estimated value of the canal lands remaining was about $1,500,000. Afterward a decree of sale was entered, and the canal and all property belonging thereto has been sold by the receiver appointed 'by the court. The final settlement and distribntlon has as yet not beei1 made, and it cannot, therefore, be statecl how much will be realized by the bondholders.

According to Governor Wright, at the opening of 1857 the entire amount of the fundecl debt of Indiana . outstanding of the 5 )?er cent. stock was $5,156,560, and of the 2~ per cent. stock, $1,812 57. The exhibit of the common school fund, including the estimated value of the sinking fund in the State Bank at that date, amounted to $4,912,012 42. The governor recommended that the sinking fund commissioners should be directed

"Ceased to bear interest from September 1, 1870. tThe proposition to adjust the debt was macle by M:r. Charles F. Butler, the agent of the foreign bondholders, and hence the nn.mo. :I Laws 1872--'73, p. 11. §Laws 1873, p. 77. II Acts 1847, p. 3.

HIS'I10RY OF STATE DEBTS-INDIANA-ILLINOIS.

by law to invest the fund~ that accumulate in their hands in the stocks of the state. .According to Representative W. Hunter1 of the comrruttee on ways and means of the state legislature of Indiana, the state debt, at the close of 1850, amounted to $9,964,969 83.

On account of the refusal of the legislature of 1858, in extra session to levy a tax as recommended by Governor Willard, the debt slightly increased, and amounted to $10,286,855 51 in 1859. '

In 1862 the funded indebtedness of the state was reduced to the following three loans :

Five per cent .•...... ······•· ...•..........•....•.••........... :.- .................................. $5,322,500 00 Two and a half ller cent ••....•.•.•••.....•.••••.•.•.............•..................•.... _ ..... _.... 2, 054, 773 50 Six percent. warloan ..............•..•..•••....•........•............•...•.•...............•..•.•. 1,334,000 00

Total. ........•..•......•..••...........• , ..••.......... _ ....................••......•.. _ •... 8,711,273 50

The state,, in. May, 1861, had appropriated in aid of the federal government $2,000,000 by anissue of twenty­year 6 per cent. bonds. The debt remained almost stationary, though in 1865 a slight decrease is noticed. Between 1865 and 1866, as the following table shows1 a decrease of nearly $3,500,000 is noted, a large amount of the bonds becoming clue, which were paid by the sinking fund: •

1866. Decrease. Character of bonds. · • \. 1865.

Two und a hn.lf per cent. stock............................................................................................... $2, 070, 460 $1, 191, 092 $885, 308 Five per cent. atook ... .•. .. .. •• ... . • • .••. .• .•••.. ....•. ....•. ..•••• .•.••. •.•... ..•... ....••.•..•. .... .. .•...• ... •.•••. •.•... 5; 342, 500 B, 829, 936 1, 512, 564 War loan 6 per cont. b.onds . • . . . . . . . . . . . . . . . • . . . .• . . • . . . . • . . . . • . . . . . • . . . . . . . . . . . • . . . ••• • • . .. . •. . ... . . . ... . . . . . . . . . • .. . . ... . . . 1, 371, 780 309, 000 1, 062, 780

Vincennes Universityboncls: ................................................................................................ 1 __ o_a,_os_s I 60,5851 10()

'.l'etnl ...••• : •• . • . . . . . . . . .. . . . . . . . . . . . . . . . . .• • • . . . . . . . . •. • . . ... . . . . • . . . . . .. . . . . . . . . . . .. . . . . •. .. • . . ... . . . .. . .. .. . • . .. . . . . 8, 857, 425 ~ 618 1-s:4ao, 812

The c1ebt of this state, divided among the polls registered in 1865, was $44 67 per poll; divided among the polls of 1866 it was $23 58 per poll, being a proportionate reduction of the state debt to nearly one-haJf its amount. Compared with the taxable value of property, the debt of 1865 was 1.55 per cent.; but the debt of 1866 w::i.s only 0.92 per cent., and' it is evident from this showing that the financial condition of the state was improving at this elate.

The following is a statement of the debt of Indiana on the 31st day of October, 1880:

Five per cent. cert.ifi.entes, state stock ..•...........••....................•.................••........ Two ancl one-half per cent. certificates, state stock .................................................. . Six iier cent. war loan bonds .............••..•.••..•..................... ' .......................... . Five per cent. tempqraryloan bomls (clue Aprip, 1884) ...•.....................................•..... Five "Per cent. temporary loan bonds (clue December 1, 1884) ........ - ................. ~... . ••........ Five per cent. temporary loan bonds, held by Purclue University (due April 1, 1881) •........•..... . : .. Internal il)lprovement bonds ...•.....................................•........•......•.•.•••.•••.....

Six per cent.-

$14, 469 99 2,925 13

139, 000 00 510,000 00 200, 000 00 200, 000 00 27,000 00

School fnrnl bond, 1867.... . . . • . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • .. . . .• • • . . . . .. . . . . • •. . . . . . . . . . . . . . • • •. .. 709, 024 85 Sehool funcl boncl, 1867 ............... _ .....••....... _... . . . . . . . • . . . . . • . . . . . . . . . • . . . . . • . . • . . . . . • . . . . . 2, 6581 057 30 School fnnd boncl, 1868 . . . . . . . . . . . . . • . . • . • • • . • . . • . . . . . . . . . . • . . . . .. . . . . . . . . . . . • • • • . . • • • • . . . . . • . . . . • . . 184, 234 00 School fnnd boncl, 1871.... .•. • . • . • . . . • . . .•. . . . . . . . . . . . . . . . . . .• • • •. . .. . .• .. .. .. .• • •• . . . . . . . . . • .• . . . . . 177, 700 00 School fund boncl, 1873 .............................................. , . . . • • •. . . • . . . . . . • . . • • . . • • . . . . . . 175, 767 07

Totalstatedebt ...••..••.••....••..........•...................•......••.•....•....•.•.••...... 4,998,178 34

ILLINOIS.

The state of Illinois. very early commenced the system of public improvement by the aid of state loans. In 1824 the :New York and Erie canal was opened, giving a weighty impulse to the progress of the West~ The great success

1 of the Erie canal is thought by many writers to have afforded a tempting example to Illinois, because her situation iu relation to the lakes is not unlike New York. Illinois abuts on lake Michigan, as New York does on lake Erie, and her great river, the Illinois, holds the same relation to the state navigation as does the Hudson to that oi New York. .As early as 1823 the route had been explored .. The population. was too sparse to undertake it, however, until 1829, when Uongress made a grant of 290,914 acres in aid. The state then authorized a loan of $500,000 to carry on the work. .A special commission was appointed. The canal was to extend from Peru, on the Illinois rive:i.-, to the Chicago river, 5 miles from its mot1th-abont 100 mi~es. When the work was projected it was estimated that there were about 15,000 families in the whole state, and the expense of the work was estimated at $8,654,837. Yet this canal was but a part of an immense system of internal improvements for which. the act was passed in 1837. This act created a board of fund commissioners to ma!lage the fiscal concerns of the public works and a board of

•

024 VALUATION, TAXA'rION, AND PUBLIC INDEBrrEDNESS.

public works to determine routes and superintend the execution. This internal-improvement system embraced the works in the following tf!ible, showing the total length of each railroacl projected in the state and the aggrega,te length of all the railroads :

Estimated Name of rallro~.<1. Milos. cost per Total cost.

mile.

Central milroad ................................................................................................................. . 457. u $8, 326 $3, BOD, 145 Southem Cross railro:id ................................................................................... , ................ •..... 294. 0

1 8, 200 2, 410, 800

Northern Cross railroad.......................................................................................................... 234. 5 I s, 480 1, 088, 560 Shelhyvilleanc.1 Paris branch. Central railroad.................................................................................... 71. 5 19, 5881 1, 400, 542 Peoria and Warsaw railroad ................................................ ~..................................................... 116. 0 8, 351 DOB, 716 .Alton und Shelbyville railroad .................................................................................................. : . 71. 0 8, 295

1 588, 045

Eelleville and Lebanon railroad ............. : . .. . . . . . . .. . .. . . . .. . . . . . . . .. . . . . . .. . . . . . . . . . . . . . . . . . . . .. . . . . . •• . .. . . .. . ... . . . . . . . . . . 23. 5

1

. 7, 000 164, 500 Elootnington, Mack!n11w, Peoria aml Pekin railroad .......................................... '. ................................... --~ . 11, 736 030, 810

Total. ........................................................................................ : . .. .. .. • • .. .. . .. .. . . . . .. .. . .. 1, 321. 7 . . . . • . .. .. . . . 11, 962, 018 ·

In addition to the cost of these projected railroads (about $12,000,000), the estimated cost of the canal construction was $8,654,337. The state also held an interest in the State Bank of Illinois and the Bank of Illinois to the amount of $3,400,000.

In commenting on these projects started by the young state, Kettell, writing in 1852, says :

Thern were "then (1837) 70,000 log-cabin farmers in the state, and these loans were at the rate of about $300 to each family. For all the purposes mentioned stocks were issued. The work was commenced under this law, aml the effort to sell the bonds at a.moment when the financial horizon began to lower and all other states were desperately pressing the market produced ruinous losses.

The following is a recapitulation.of the state debt of Illinois in 1842:

Total bank stock...... . . . . . . . . . . .. . .. . . . . . . . . . . . . . .. .. . • ... .. . • • . . . . . . . • . . . . . . . • . . . . . . .. . .. • • . . . .. . . . .. $2, 665, 000 Total interualimprovernent debt...................................................................... 5, 614, 196 Total c11m1l debt .. . • .. . . . . . . . . .. . . . . . .. . . . . . . . . . . . .. . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . • . 4, 338, 907 Total state-house...... .. . . .. . . . ... . . • . • . . . . . . . . • • ••. . . . . . . . . . . . . . . .. .. . . . . . . . . . .. . . . . . . .. . . . . . . . . . . •• . . 116, 000 Total college, school, and seminary funds............ .. . .. . . . . . . .. . . . . .. . . .. . . .. . . . . .. . . . . .. . . . • . • . . . . . 808, 085 Total due state bank for warrants . . . • . . . . . . . . . . . . . . .. .. . . . • • • • . . . . . . . . . . . . . . • • . . . . • . . • . . . . . . . . . . . • . . . . 294, 190

Total delJt upon which interest accrues .......................................................... 13, 83G, 378

===

The. annual interest on this debt was $830,182. To meet its liabilities the state hael the following resources at the time unavailable:

"Value of lands remaining unsold of canal grants ......................................................... $238, 985 "Value of lands granted to the st11te uncler the provisions of 11n :wt entitled "An act to 3,1ipro1iriate the

iiroceeds of the sales ofthepnblic lamls and to grant pre-emption rights", approved Septornber 4, 1841.. "Value of lands imrchased by the state for internal improvement purposes ..••.....••..........• · .......... . Amount due ca.nal fund from salo of lands, town lots, stone, a.nd timber .................................. .

210, 132 40,332

201, 964

Total .............................................................................. : ...••.... ·'· 691, 413 ----

In 1842 it became impossible for Illinois to comply with its obligations, and the state found itself' on the verge of bankruptcy, with all these incomplete improvements on hand. Matters seem to have remained unchanged until 1843, when it was proposed to make the canal lands a, special pledge for the sum necessary to complete the canal. The amount necessary for this purpose was estimated at $1,600,0bo, and the legislature of Illinois passed ;ii law authorizing the governor to raise the funds necessary to complete the Illinois and Michigan canal and place as security for the lllOney the carntl and all the canal lands. The provisions of the act were that a loan should be negotiated 10olely oil the credit of tile canal f1Ild its lands of $1,600,000, to bear 6 per cent1 annual interest; that the canal and the canal property should be vested in three trustees, one tti be named by the governor an cl two by the subscribers to the loan; that at least $400,000 of this loan should be paid in during the course of the :first year after the execution of the trnst deeds; that the canal should be :fi.nishecl in three years from the commencement of the trust; that no sales of the canal lands should he made until three months after the completion of the canal, when the ·trustees were to ofl:'er them for sale; that all the proceeds of the canal and canal property should be :first applied to the repayment of the interest and principal of the proposed loan. The property assignetl to the trustees as security for the loan was as follows: The canal, that cost tile 1>tate $5,000,000; the lands, amounting to 230,467 acres, valued, after the completion of the canal, at $10 per acre, amounting to $2,304,670; lots in the various towns on the c>anal, valued at $1,U00,000 ; making a total of $9,204,670.

HISTORY OF STATE DEBTS-ILLINOIS. 625

The loan was effected, and the work pushed to completion. The. lands, on being sold, more than realized the estimated values on which the trust was based, and the revenues equaled expectations.

The other great work for which Illihois loaned its credit was the Illinois Central railroad. The original length of this road, as given in the table above, was to have been 457~ miles, and the cost was estimated at $8,909,145. The state actually expended upon it before its failure $1,016,905, mostly for a depot in Cairo, for clearing 0ut the track, and in grading and embankments. In 1850 life was infused into this undertaking by the Unitecl States government, when, in September of that year, Congress made a grant of lanrls in aid of it. This was the first land grant made by Congress directly for the construction of a railroad. The act of Oongress donating these lands Authorized grants of right of way through the public lauds 200 feet wide, with the privilege of taking materials for <lonstruction-earth, stone, ancl timber. It also grantecl every alternate section of land, twelve sections wide, the whole length of the i:oad antl of its branches. In case the lands there were occupied, an equivalent quantity was granted elsewhere, not over 15 miles from 'the roacl. The road was to be commenced simultaneously at both ends, and the lands to be sold only as the work progressed. The roacl was to remain a public highway for the use of the government of the United States, free from toll or other charges. If the road was not completed in ten years, the .state of Illinois should pay to the United States the proceeds of any land sold, and the remaining land should reve-rt to the United States. The l)assage of the act brought proposals to build the road. On the 22d of March, 1851, the act to incorpomte the Illinois Oentral railroad was a11proved by the company through its president, Hobert Schuyler, esq., and the same day the treasurer of the company, in accordance with the provisions of the act, deposited with the state treasurer $200,000 in specie. On the 24th the governor executeLl a deed of all the lands granted by the ,government of the United States to the state of Illinois; also of the lot of ground obtained by the state of Illinois in the city of Oairo for a depot; also of all the right of way, gracling, embankments, excavations, survey, work, materials, profiles, pla,tes, and papers in anywise appertaining to said railroad and branches, and the work was begun in earnest..

The subsequent history of this enterprise, anil the rapid liquidation of the debt of this state, is well known. The constitutional conyeution of 1848 had taken hold of the debt question with a fl.rm hand, and provided that there be .annually assessed and collected, in the same manner as other state revenues, a tax of two mms on each clollar's worth .of taxable property, in addition to all other taxes. The fond thus created was to be kept separate, and annually, on the 1st day of Jmmary, apportioned and paid oyer pro ?·ata upon all such state indebtedness, other than the canal .ancl school indebtedness, as might for that purpo:se be presented by the holders of the same, to be entered as credits upon, and to that extent in extinguishment of, the principal of said indebtedness. This provision created an objective l)Oint in the finances of the state, and from the date of its. enactment to that of its re1Jeal by the constitution pf 1870 the debt, so subsequent figures will show, gradually and steadily decreased.

In 1847 a part of the debt was fnncled, and, acconling to the message of Governor French, transmitted to the legislature in 1851, the debt stood as follows on tJie 7th of Januar.Y of that year:

Principal of debt furnloll under act of 1847 •.••••...••.........................•........................ $5, 590, 565 Interest on same to stuno tlnto ••• . .. • • • . • . . . . . . . . . . . . . . . . . . . . . . . . . • . . ... . . . . .•. .. . .. . . . . . . . . . . . . . . . . . . . . 1, 020, 278 Average interest,fuurlml ....................••...........••......•.................................... 1, 945,485 Unfnndell interest on improvement bonds au cl othe1· kiJl!ls of iullelJtedness ...........••..•........ ·....... 789, 941

Totiil. •.••••••••••............•.............•....•..........••••.........•••....•............... 9, 346,269 From this amount rleclnd interest i1aicl from mill-and-a-half tax: iind for sale of lands and other credits... 561, 788

Making tho debt (other than the canal delJt) ........... , .••.•.....••.•........•••........ · · ..... · 8, 784,481 The canal debt 011 the 1st of January, 1851, was, exclusive of the $1,600,000 loan ••••.•....... $7, 078, 117 To this shonlc11Je adcled the 1Jalance due on the canal loan, of.... .•• . . • . . . . . . . .. . .• • .. . . . . . . 1, 033, 000

Deduct for interest paid from mill-and-a-half tax:, bonds and scri11 redeemed, and interest·· •. 8, 111, 117

269, 088 ---- 7,842,029

MakinO' the a"'greO'ate state c1e1Jt at this date .•..•..........•..•••..•.••..•.. · . -.. -· ·. •. • • • • .. • • · · 16, 626, 510 b t:ic:. ==

In 1854 the debt had decreased and the principal ancl interest due, after deducting all payments, Jan nary 1, 1854, was $15,725,725 96. In Janu~r.Y, 1857, Governor Matteson gaye a very favorable account of ~he co~tinued liquidation of the state debt. During the last four years, he says, the amount of $4,564,800 had been paid, besides the payment of the entire interest on the priuci pal during that time. The whole accruing interest for the past six mon~hs ·On the debt of the state was paid on the 1st of Januar,y, 1857. There was now no doubt about .the state bemg prepared to pay interest on the whole debt as it matured. The net debt at this time (1857) was $12,834,144.

The total amount of taxable property, as shown in 1857, was about $407,500,000-an increase over t?e preceding year of over $57,500,000. The total receipts for taxes levied in 1857 amounted to $1,821,012. J?nrmg the years 1857 and 1858 the principal of the public debt had been reduced $1,050,324 13, the arrear~ of mterest i·educed .$116,552 61, and the state debt, principal and interest, reduced to $11,138,453. The public debt of the state,

40 W D T

626 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

including the canal. debt, on the 1st of December, 1860, hacl been reduced to $10,277,161 36. On ·the 1st of December, 1862, the debt had been increased by·the issue of war bonds to the amount of $2,050,000 ($50,000 was. for revenue), ancl the total aggregated $13,337,381 37. On the 30th of December, 1864, the debt had been reduced to $11121 564, and on t.he corresponding date in ,1865 it was $9,982,691-a decrease within a year of $1,138,873. The blennfal report of the state treasurer for the year ending December 1, 1866, gives the following recapitulation of the state debt:

Bank ancl internal improvement stock, pnya.ble after 18(i0 ........... -· ... - .. ·- - . -- ____ . _ '. __ ..• - • _. •••• .$31, 000 Iaternal im1lrovement stock; payv.blo after 1870 .... - . - ..... -...... - .......... - ....... -.•.....•.•.•.. - - - • . 42, 000 Refunde<lstock, payable 1860 to 1877 .......................................... -- .....•.....••....••.... 1, 261, 000 Normal University 1.Jonds, pa,yahle in 1879 ................................................... --· •••. - .•• • 64, 000 Thornton loan-bonus, payable in 187[) ... -· ................................. ----. -·. ·-- ............ ----· 143, 000 War bonus of 1861, payable in 1879 .................. - -............. -•....••.•..•.•••.....•••••••. _ • • • • • 945, 200 Illinois anu Michigan canal ( uollar) bonds, payable 1860 to 1870 .• - •••.••. - .... - . . • . . . . . . . . . • • • . . . . • . . • • • 852, OGO Illinois auu Michigim canal (sterling) 1.Jonds, rmyable in 1870...... • - •••••. - - .•..•..••••..•.......• : .. - • 1, 5:34, 888 Inscribccl stock ···--- -- ................................... --- .................. , ....................... 3, 722, 254 Scrip ancl unfnnclecl indebtedness ...... _ ................................... _ ..... _. _ .• . : ..• ___ .. _ .. _.... 42, 909

Aggregate debt December], 18uli ......... _., ......................................... _ .......... 8,G:l8,251

This statement shows a reduction during the five years ending in 1866 of $3,688,909. Tlle total indebtedness of tlle state, December 1, 187 4, was but $J J 730,972. It was then estimated that the

semi-annual receipts from the Illinois Central railroad, which are set apart by law for the payment of the public debt, woultl be sufficient to meet the interest and to pay the indebtedness as fast as it bMame due, and that 011

January 1, 1880, when all the outstanding· obligations of tlle state would become payable, there would be a surplus of the Illinois ·Central railroad fnn<l of over $500,000. October 1, 1880, the bonded debt of Illinois was $281,05D, viz:

Isaue. Purpose of issue. :Maturity. -'------/-------------- ---------- ------

18'7 ................ Internnlimprovement stock bornls .................................................. '. ....................... After 1877 •• _ ........ .

1859. •• .. .. • .. .. .. • • Refunded stock bonds .. .. .. .. .. .. . . . . . • .. . .. . . • . . ......... : .......... '. ........................... ~. . • . . .. . After 1877 .......... ..

Vnrions years ...... Int.ernnl improvement stock bonds, $10,600; · cunal bonus, $Ul,OOO ......... --- . . .. .. .. . . . . . . . . . . . . . .. . . . . . . Aftor 1877 .......... .

I

.A.moun~.

$154, 45U 103, 000

23, 000

281, 050•

All the above debt has been pai(l since October 1, 1880, except the last item of $23,600. The bonds composing: this item have been callecl for several years, and not having been presented for payment, it is supposed they bave­been destroyed.

l\1IOHIGAN.

Perhaps the cause of the early embarrassments of this state may be found in ~ clause in the constitution, adopted at her admission into the Union in 1836, which provided for the encouragement of internal improvetnents by the government of the state, and further, that ':it shall be the duty of the legislature, as sopn as may be, to make provision by law for ascertaining the proper objects of improvement in relation to roads, canals, and navigable waters". It sb.ould be borne in mind that l\1ichigan became a state and passed this constitution in times of unusual speculative excitement. The year the constitution was adopted the purchases of land on speculation in this territory· aggregatecl over four million acres, being nearly one-half of the gross sales made in that territory from 1818 to 1849. This speculative fever had called into life numerous banks, ancl, although the population of l\fichigan was but 31,639 in 1831, in 1833 it had twenty banks, and at the close of 1837 forty banks, with aggregate loans of nea.rly $4,000,000.

One of the first acts of the legislature, .on the a.clmission of the state into the Union, was to appoint a board of commissioners of 'internal improvements ancl authorize, March 21, 1837, the survey and construction .of 557 miles of railroads, 231 miles of canals, and the improvement of 321 miles of river navigation. A loan of $5,000,000 was authorized for these objects. According to Hunt's Magazine for 1850, the following are the 1tmounts appropriated and expended upon the system th11s proj~cted from the formatiou of the government of the state to Novembm·,, 1847:

HISTORY OF STATE DEBTS-MICHIGAN. 627

Intm·nal improvements of Jlfiohigan.

I .Appropriated. / Expended. ·~~~~~~~~~~· ~~~--~~~~~~~~~~~~~~~1~~~~~1~~~~

Centrnl milroatl ....................................................................................................................... . $1, 957, 833 57 $1, 954, 308 21! Sonthern railroad .............................................................. _......... . • • . . . . .. • • ................................ .. 948, 908 77 948, 234 20 Northern rallroacl. .................................................................................................................... . 150, 638 00 110, 5~0 71 HavroBrnnch railro11cl ................................... , .......................................................................... .. 20, 000 00 052 34 D~troit antl,Gruml River rnilroa!l .............................................. , ................................................... ; .. . 5, 000 00 4, 285 43 Northern turnpike ................................................................................................................... .. 30, 000 00 ·--····-······ Clinton and Kalamazoo canal ............................................................ ~ ........................................... .. 406, 152 37 405, 880 77 Saginaw turnpike .................................................................................................................... .. 5, 000 00 4, 975 01 Saginaw canal..... .. ................................................................................................................ .. 02, 000 00 42, 098 33

Grand River Rapids canal. ............................................................................................................. I Saint Mary's canal. .................................................................................................................. .. !mprovemout of Grnrnl uncl M!tplo rivers ............................................. ~ .............................................. ..

25, 000 00 225 30 50, 000 00 8, 050 80

30, 000 00 26, 498 01

::r,~:_:~~~§;::;~~>~-:-2/-·::~:s---:·-:-::: ::: __ -:-·:::~i: :::: :: : ·:-_:_-___ -::_::::j 8, 000 00 6, 572 05

0, 250 00 G, 249 31

32, 584 31 22, 625 30 -----

3, 737, 367 02 a, 541, 551 96

--·----

In commenting on this expenditure a financial writer in 1850 says :

Michigan has reitlized, pl'Obably, as much for the amount expended in the shape of intermLl improvements as any other state we8t of New York, ha.ving expen(lecl the bulk of the a.ppropriations for tho construction of rv.ilroads, which have been productive and have been soltl for nearly the total cost. Nevertheless her scheme was extravagant in tlie extreme. The populo.tion at the time the debt was produced dicl not exceed 100,000. The llOJmlar vote for President was only 11,439. If there were 15,000 voters, all :Lgricultural settlers on now lands, then in the state, tho proposecl debt was equal to $333 per head, in adclition to the support of the state. At the same ratio New York could bettel' affor(l a debt of $200, 000,000.- This strongly indicates the wildness of tho specula.tivo feeling then a.broad and the s,trength of tho clelusion under which the speculators laborecl. While this delusion lastecl the larger portion of the Michigan debt was create.cl, but the revulsion took place before the proceeds were realized, and tile subsequent issues were a consequence of that foot.

The following history of the part-paid debt of Michigan was prepared by the Hon. H. R. Pratt, deputy auditor general:

By an act approvecl March 21, 1837, a loan not exceeding $5,000,000 was authorized by the legislature, to be oxpencled for internal im11rovemeuts. Bomia to the full amount ·of the loan were prepared and executed, and a contract m11de wit11 the Morris Canal and Banking Company of New Jersey to place the loan on the market in instiLllments, the company to be paid a commission for their services. A portion of tho boncls wero disposed of under this coatract, and the proceeds paid over to. the state. A new contract was then made, by which sr0(l company became the purchasers from tho state of ·that portion of the bonds then remaining unsohl, payment to be made in fnstallments. · The United States Bank of Philadelphia bec11me surety for the fulfillment of this contract on the part of the Morris Canal ancl Banldug Company, aud tho bonds were delivered.

Under the two contracts the state received pay in full for $1,387,000 of bonds; for the remainder but a small portion of the amount wns paid to the state when the Morris Canal and B1111king Company failed. A further small sum was paid by the Unitecl States Bank of Philadelphia, as sureties, wheH· that bank also failed.

It was asccrt11incd that a largo amount; of the bonds for which only partial payment tci the state had been made had been tra.nsferred by the Mol'l'is Canal ancl Banldng Company to the lJnited States Bank of Philaclelphia, the latter necessarily having full knowledge of the fact that they hacl not been paid.for. .

As soon as the state beeame aware that it woulcl not receive full consicleratiou for the bonds, notice was given that it woulcl consider itself bound to repay only the money ac;tually received. This was done by act No. 60, ap1lrovocl Feb~uary 17, 1842, which required the governor to issue a proclamation, to be published injfow York aud Philac1elphia, requiring the holders of the part-paicl bonds to return them to the state ancl receive new bonds for the amount of money that had been paid to the state thereon. Such proclamatiou was issued 'in April, 1842.

A report made by tho state treasurer, December 6, 1842, states that these "part-paici" bonds were principally held by the United States Bank of Philaclelphia, ancl that they ha.cl been hypothecated to different houses in Europe. This hypothecation wa.s reportecl to the legislature to have been made uncler circumstances that. clicl not affect the equities of the state.

Such, in brief, is the history of the case. The state made strenuous efforts to secure something from the wreck of the two banks, but with small results; ·ancl upon beooining aware that it would not receive full consideration for the bonds, promptly gave notice that it would oonsicler itself bound to repay only the money it.had actually recei vecl, anu t·hi.s while the boncls were owned by a bank that had full knowledge of all the facts.

All but $21,000 of the "unrecognizecl" or ''part-paid" bonds have been surrendered, and new bonds for the amount received by the state, ancl interest thereon, taken in their stead.

The state of Michigan hM alwa7s been ready to recognize, and will recognize as a just debt and pay in full with interest, without abatement, eyery aollar of her bonds for which she received consideration, and this notwithstanding the fact that all the money that actually was receivecl on the bonds under consideration was squandered on works from which the state received no ben'efit or reimbursement, except what was realized on the sale of the Central ancl Southern railroads.

In early days the state also loaned its credit by issue of bonds to certaiu railroad companies, with the nuclei:standing that snch companies were to take care of both principal and interest. The companies failed, but the state paicl the bonds.

In 184.5, owing to the failure of the wheat crop of the preceding year, the severity of the taxation necessary to meet the interest upon the state debt. became manifest, and public attention was callee~ to the clesiraJJility of

628 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

reducing the debt by the sale of the public works. The only works of all those constructed by the state which had yielded any income were the Oentral ancl the Southern railroads. The total value of both these roads was estimated at $3,363,880. These the state was determined to sell and to secure pa;yment in cei'ti:ficates of the state indebtedness, namely, the full-paid bonds ancl those issued for the interest on them at par, and the part-pa.id bonds at a rate equal to what tlrn state had actually received, with the interest thereon. This was calculated at $431 302- for a boml of $1,000. .Accordingly a company, mostly of Boston gentlemen, applied for a charter to purchase the Oentral road, and March 5, 1846, a bill was passed which gave the company the right to purchase the Oentral railroad, with all its appurtenances of lands and right of m1y which the state at that time owned or had acquired, for the sun) of $2,000,000, $500,000 of which was to be paid to the state within six months after the passage of the act, aml the remaining $1,500,000 within one year thereafter. It further provided that the treasurer of the state should receive· in payment for said roads the bonds of the state specified in the first section of the act to liquidate the public debt, approved March 8, 1843, and to provide for the interest thereon in full-paid bonds.

The same legislature which passed the law for the sale of the Oentral railroa(l also passed an act for the sale of the Southern railroad and for the incorporation of the Michigan Southern railroad. The sale of the So~1thern railroad was, however, made contingent upon that of the Oentral, and the law ·for the charter of the latter comp1111y, by express provision, did not take effect and become in force until after the charter of the Central Railroad Company· The company, however, complied with the terms of the sale of' the railroad, and official notice was issued in September, 1846, to the effect that the company, in compliance with the terms of the act, " having paid into the state treasury, in money, an amount about sufficient to pay the interest due on the bonds for January and July, the necessity of' assessing and collecting a tax sufficient for the payment thereof did not now exist; also that the direction to assess a tax sufficient for the payment of the interest .which became due on the state bonds the 1st day of' January last was also countermanded ancl'annulled".

By the sale of this Oentral railroad $2,000,00b of debt was extinguished ancl the completion of the road to lake Michigan insured, improving the condition of the state. The engagements of the compm1ies having been promptly met, the Oentral railroad made its :final payment in September, 184 7. The payment on the Southern i'oad still fnrther reclucecl the debt.

Governor McCleland, in his message, describes the ,financial condition of Michigan at tl1e close of the year 1852 as healthy and encouraging, the debt having been rnduced from $2,568,268 in November, 1851, to $2,307,850 in 1852. The revenue in 1853 was $657,268, and the expen~itures for the same year $:396,450, leaving a considerable surplus on hand. The auditor, in his report for this year, says: ,

• All the state i;1~ebtedne.ss, exeept what are termed tho "part-paid" bonds, the reuemption of which can be compelled or payment

stoppe<l, was caller;, m last year, and, as our bonds are above par, none can be purchasecl under our imisent laws. '!'hero is therefom no farther opportunity of liquidating stn.te inclebteuness with the surplus on hand except by paying for what few "p11.l't-paid" bonds may be voluntarily surrendered.

The .legislature of 1855 passed an act requiring that the "part-paid" bonds be surrendered for adjustment or that ~he mterest should stop. From the following statement of the public clebt on November 30, 1858, it will be perceived that most of them were at that elate returned and new bonds, at the acljnstechmte, issued in their stead:

Penitentiary bonds, clue January!, 1859 ............................ -----.-- -·-- .••• •••• •• •••• .••••• •••• $20,000 Penitentiarybomls, due in 1860 ---- ____ .... ·--·-· ---·---- -·-- ------ ____ --·- .••••. ·--- ••••.. ---· ---· --·· 40,000 Internal im11rovement warrant bonds._._. , _. _ _ . _. __ .. _ . __ ............... ____ .... ______ . _. __ ..•. ___ . _. _ 50

Fnl~·paid $5,ooo;ooo loan bonds, due Januarr, i863 ·-·-·· -----· ··--·- -·---- ____ -----· ·--·-- ...... •• .••••. 177, 0.00 AclJ 11sted bonds -.......•••..•••. · ..• ~ _ .. _ ..... _ ... ___ ...• ___ .... __ . ___ . -4'- • ___ • _____ . _ ...... __ • __ • _ .• _ •• _ 1, 720, 085 Part-paid $5,000,000 loan bonds, when funded, will amount to .. _ ... ____ ...••. ______ . _. _ . _ .. _ .. _ •••... __ .. 104, 142 Outstanding internaUmprovcmentwarrants .... ·-- --· ____ ... · ........................ '.. •....... ___ . ... •.. 3, 752 New bonds issued in July last, clue 1878 ..•. ·---. ___ .....• ---·. ---·- .••••. ____ ... ___ ·--· .... __ .. __ .. _ .••. 266, 000

Total. ... __ .... ____ ..••. _ .... ---- .... __ .. --·_ .. ; ••.. _ ... _·--._ .. _ ... ___ --·- •.. __ ·-_--· ___ •... __ . 2,337,029 ------

The following year (1859) the debt had been slightly reduced, and, ,aside from $100,000 of canal bonds guaranteed by the state, amounted to $2,316,328. The debt was increased by a loan of $1,000,000, made May 10, 1861, to meet war expenses, and according to the treasurer's report the fnncled and fnndable debt stood November 30 1862 $2,981,038. The entire debt, which became clue in 1863' amountino' to nearly $2 000 000 ~as refunded by th~ t ill. l b . b ' ' ' wo m ~ion ?an onds, issued that year and re.cleemable, $250,000 in 1868, $50~,000 in 1873, $500,00.0 in 1878, and $700,000 111 1883. The next step was to refund the war loan, which became clue in 1864, for which bonds bearing

HISTORY OF STATE DEBTs-iv.hoHIGAN. 629

7 per cent. interest, and redeemable in 1886 and 1890, were issued. The state treasurer, in his report to the J e,gislature, makes the following exhibit of the state indebtedness at the close of 1.864: ====-=============================================================~o===========7'======================

In-terest. I Classes.

Renewal loan bom1s ........ --- ................................................................................................ . Two million loitn bontls ...................................................................................................... .

.Do .• ••••••••• ••••••• - . --- -- . - •. - -- --- -·-- -- ••••.• - -- ·------ .•••• - --- ••• ------ .••••••••••••• - ..••••••••.•••• •••••••• -·--·· Do .........•......•...•.•.•...•••...•.....••••......•.•.....•..••.......••..•.•.•••••..•......•... : •...••••••. : •••..••••. Do .................................................................................................................... .

Saint ~fnrle canal bontls .......... ---- --- ........................................................................ , ............ . ~nr loan bonds ............ : .................................................................................................. . War bounty loan bon<1s ....................................................................................................... .

6

6

6 6

7

7

Doe.

.;ran .• 1, 1878 Jan. 1, 1868 Jan. 1, 1873 Jan. 1, 1876 Jan. 1, 1883 Jan. 1, 1873 Jan. l, 1883 :r.ray l, 1800

Total fnndecl clebt ....................... '· ....................................................................... _, .........•..................... ·1 .A.djust~cl b.onds past duo ...................... '. ............................................................................... ·/····........ 4, 000 Fi.iIJ-paHl $0,000,000 Joan bonds, past tltto.... .... .. ....... .. ... .. ..... ..... .. . ... . ..... .. . .. .. .. .. .. ......... ....... ....... ... .. . .... .. ...... 12, 000

Wnr-lonn bonds ($100 and $50) callccl Jn........................................................................................ ............ 400

'Unrecognized $5,000,000 loan bon<ls, $140, 000 acljnstnble for ................... ·"................................................ • •.••. ..•.•. 80, 999

Amonnt.

!lillO, 000 250, 000

500, 000 GOO, 000

750, 000

100, 000 l, 122, 000

345, 000

a, 7ss,ooo

07, 300

Total funded and fnnclable clcbt ........................ -.......... -. .. .. ... ....•. .. .. . .....•....... ............ ....• ..... ...•. .. ... . . ...... .. . . .. . 3,880, 399 TRt:ST FUXD DEBT.

Primary school fuml. ..•......................... --·- .................................................................................... . Universityfnnd ................................................................................................................ ···········'

~:;:::<ls~~;~{;:~~.-.-.:·.-.-.-.-.-.-.-:.-.-:·.-.-.-.-.-.·.-.-.-.-.·.-.-.-.-.-.-.-.~·.·.-.-.·.-.-.·.-.-_·_-.-.-.·.-.·.·.-.-.-.-.-.-.-.-.-.-::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

1, 144, 239 264, 872

39, 204

2, 157

The liquidation of the clebt of Michigan continued without interruption during the years following.

1, 450, 472

5, 330, 871

The .financial cor;iditfon of the state, as shown by the annual report of the state treasurer for 1879, is as follows: Cash balance, Septem bcr 30, 1879.......... •. . • . • . • . • • • • . .. . . . • . . . . . . . . .• • •• . . . . . . . . • • • . • • . •• . . • . . . . . $60li, 267 63 Receipts for the year ..••..••••.••........•.•.••.••••••....••••..•.•. •.. • • • . . • • • • . . . . • . • • • • • . . • • • • •• . • 2, 793, :l21 90

------' Total resources .•.••....•••.•.••.•.••••.•.. - ...•.•..•• - .....•...••..••••.•••.••••••••••••..... 3, 399, 589 53

Payments cluring tho year ............................. ' .••••.•.•••.. ····~· ••••••••••••••••••.•••••••. 1, 820, 946 52

Cash balance, September 30, 1880 .....• -·-························· ..•••••••••••••••••..••••••• 1,578,6-ia 01 ==

There were clemancls against this balance, maturing on or before December 31, 1880, of $260,820 12. The indebtedness to trust funds at the close of the fiscal year, September 30, was:

To tho sinking fund ..•••....••........••••.•..•.•••....... ; ...•..•••.....•....•...•........••••••.• To tho canal fnncl .•.... : ... -..............•••••.••.•...............•...... .' .......•.•••.....••• - •••. To the lJrimary school interest fun cl ...••....•.••.•......•.•..••••.•...•.•••. : ••••.• ~ ••••••••••••.••.

$908, 895 27 48,664 75 94,331 33

Total. .............•......•..................................••• ····:• ....••••.•••••.••••..... 1,051,891 35

Add the latter amount to the maturing indebtedness stated above, and the total demands against the treasury aggregated $1,312, 711 4 7, leaving a net cash surplus of $265,931 54. ,

The trust debt of the state, the principal of which ueyer matures and cannot be 1mid, is as follows : To primary school fund .........•...•...•...............•......................•... - .. . . . . . . . . . . . . . $2, 554, 590 96" To 5 i)er cent. primary school f'nml...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326, 350 95 To university fnntl .••.•....• __ •.•• _ .• • . • • • • . . . . . . . • . • • . . • • . • . • . •• . • . • . • • • • . •• • ••. . • . •• . . . . . . . . • • .. . 465, 788 46 To agricultural college fund. . • • . • • • . • • • • • • • • • . • • • • • • • . • . • • • . • • • • . . . . • • . • . . . . . . . • • • • • . . • • • . . • • • • • • • • 153, 137 70 'ro normal scl10ol fnntl ...................... : ..••........•... · .................. ; . . • • . . • . . . . . . • •• . . . . 56, 635 32 To railroacl aml other cle1m·sits .•.•..•••••••..•••.•.•.••••••••••••..••••.•••..•..•••••.•.•...•. : • • . • • 8, 052 63

Total .................••.•....•.....••.....••••.......••••••••..•••...•.....•..••...•.••.... 3,564,556 02

On this debt the state pays 7 per cent. interest, except on the normal school fund, which draws 6 per cent. The interest paitl to-these several funds during the year was:

To primary school fnncl .......•.•....•••....•....•........ , ..•....•.•....••..•................••.••.. 'ro agricultural collego fund ............... ····-' •...•...•.••.•.........•.••••••.•••..•••••.....•.•...• To university fnncl. •.. - ....••...•••...••..•••••.•.••••••••••• ~ ..................................... - -To normal school fund .....•••.........•.• ., ........................................................ .

$190, 876 86 10, 2~0 28 32, 393 51. 3, 378 72

---­Tot11i. ....•.••••..••••..•••••..••••.•.•••.••••..••••••••••..••••..••••..••••..••••...•••.•.•• ' •. 236:889 a7

630 VALUNI'ION, TAXATION, AND PUBLIC INDEB'I'EDNESS.

liming the year the state received as interest on surplus funds $32, 763 05; on specific taxes overdue, $6,640 54; ()n Uuited States bonds, $13,500; total, $52,903 59; and paid a total interest on its bonded debt of $55,770. Of the bonded debt of tlle state $15,149 97 is overdue, draws no interest, and has a reserve for its payment. The debt to become due is $890,000. Tl.le sinking fund applicabie to its payment amounts to $1,208,895d37, leaving a surplus -0f $318,895 27. By a decision of the. supreme court, made since the date of the treasurer's report, the constitutional provision setting apart the specific taxes for the payment of the bonded debt of the state is held to be complied with by holding a sufficient ;reserve for that purpose, and the surplus on J;tand, with the future proceeds from specific taxes, is orderetl turned over to the.primary school fund.

T4e act of 1\-foy 10, 1861, entitled ''.An act authorizing a war loan", provided that for the purpose of organizing the Yolunteer militia, repelling invasion, suppressing insurrection, etc., the governor and state treasurer be authorized to negotiate loan or loans not to exceed $1,000,000 on the most favorable terms obtainable, redeeimible, at the pleasure of the state, withi)l or at the expiration of twenty-five years from January 1, 1861, with interest not to exceed ·7 per cent. per annum, payable semi-annually. The act further provides that foi' the purpose of i)aying the bonds there shall be levied annually one-sixteenth of one mill on the dollar of taxables in addition to . all other taxes.

Under thiB act bonds to tbe amount of $1,249,400 (termed "war bonds") were issued, all of which have been paid. The money realized on the bonds was used in arming and equipping troops.

Under act 24, laws of 1864, and acts 85 and 295, laws of 1865, bonds (ter.med "war bounty bonds") were issued to the amount of $1,306,000, and the proceeds used in paying bounties to volunteers. Of this loan $1,007,000 has been paid, leaving $299,000 outstanding, which become~ due in 1890.

' ' Bondecl debt of state, September 30, 1880 . __ •• _ ..... , .•• _ ••...•.•••. ___ ... _ ... __ •••• __ ••. _____ •.••••• ___ • $905, 150

• War bonds, $299,0001 at 6 per cent ...... ·----· ____ .-·-· .••••• ·----· ...... ----··--·· .... ----··---·-···;,·. 591, 000 "Tw-0-million loan" bonds, $591,0001 at 7 per cent--·- .. _ .•. _ ............... ---··--·'-- .... _ ........... _·:.. 299, 000 Canalloan bonds, $15,1501 not bearing interest .......... --·- .•.... ---· .... ·--· .... ____ ---· ••.. ----....... 15, 150

Total. .................... _ ............. __ ... _ .... ___ .•• __ •.••• __ ............................. _'_.. 905, 150 •,

Maturity: Past due a.net not presented for payment .. ---· ...... _ .... ___ .. _ ... __ . __ ....• ____ .... '. .... __ .. : ........ __ . 1883. ··-- .. ·-· ••. ·----- .•. -·· ···--· .... -----· ........... --· .... ---- ·--· ·---. - . - ... - - --- ........ - -· •..... 1800 ...... ···--· .......... ··---· ·----· .......................... --·· · ...... ---- ··--·· ·-·-·· .... ·-···· ... .

15,150 5lil, 000 299,'000

Total. ...................... : ..................................... ·--···.......................... HIJii, liiO ------

The state sinking fnncl rtmounts to $11208,895.

WISOONSIN.

The constitution of Wisconsin for 1848 provides that the credit of the state shall never be given or loaned in aid of any individual, association, or corporation, and that it shall neve~ contract any public debt, except to 19ay. cnrrent expenses of the government, not to exceed $100,000, and then a tax to pay the same must immediately be eyied and especially appropriated to pay the debt; a;n.d such appropriation shall not be repealed, nor the taxes postponed or diminishecl, until the whole debt is paid. The legislature may also borrow money to repel invasion, suppress insurrection, or defend the state in time of war.

The constitution also imposes the duty on the legislature to provide for the org·anization of cities and incorporated villages, and to restrict their power of taxation, assessments, borrowing money, contracting debts, and ~ loaning tlleir credits, so as to prevent abuses in assessments and taxation and in contracting debts by such municipal corporations.

Under these lH'OVi.~ions of the constitution the legislature, heing itself cut off from loaning the credit of the state in aicl of internal improvements, conferred very freely upon counties, towns, cities, and villages the power of contracting debts for such purposes, which power was used to a considerable extent. Twenty-four counties had, _!lccording to an article in Hunt's Magazine for 1858, contracted debts at that time and issued bonds to the extent of $11,489,000.

Beside this, there was authorized at that date an additio:aal indebtedness of $3,500,000, which, if incurred, carried the figures to $15,000,000. The governor about this time in his message strongly denounced this system as evasive of the intention of the constitution, and advised the immediate repeal of the laws authorizing towns, cotmties, and villages to loan their credit, and also recommended Lhat the cities be restrained from any further loans of a similar character, adding that the large debt was not ·Jess onerous because it js weighing upon the people locally than it would be if contracted by the i:;tate. ·

By aµ amendment" to the constitution, ratified in 187 41 there was added to the article imposing on the lcgisla ture the duty. of restricting the taxation and debt of cities one to t?e effect that no county, city, town, village, school.

HISTORY OF STA'l'E. DEBrrs-·wrsooNSIN. 631

district, or oth~r municipal corporation should be allowed to become indebted in any manner, or for any pm'.pose, to any amount, including existing indebtedness, in the aggregate exceeding 5 per cent. on the ,·alue of the taxable property therein, to be ascertained by the last assessment for state ancl county taxes previous to the incurring of such indebtedness. It was further provided that any municipal corporation creating a debt should levy an annual ta,x s1~fficient to i)ay the interest as it should fall due and the principal within twenty ytars.

As the ordinary state debt is expressly limited by constitutional provision to a sum not to exceed $100,0001

except in case of invasion or to suppress rebellion, this was the sum total of the state issues. Chapter 239, fawa 18Gl, as amended by ch11:pter 307, 1861, authorized the issue of $200,000 in bonds, and the.y were issued up to May, 18611 when the legislature (assembled in extra session) voted a war loan of $1,000,000, and at the regLtlar session of 1862 (chapter 226, la.ws 1862) authorized a loan of $501000 for enlargement of the capitol, and bonds were issued for a further loan of $200,000. In 1863 still another loan, or an issue of certificates of indebtedness not exceeding $3501000, was authorized, and also a loan of $50,000 for the purpose of clefraying extraordina r.r expenditures in the enlargement of the state capitol. Other laws were passed authorizing temporary loans from the trust funds, for which certificates were issued and deposited with the state treasurer. The fssues.for war purposes under these· several authorizations were as follows: In 1860-'61, bonds to the amount of $951,500; in 1861-'62, bonds to the amount of $473,100; in 1862-'63, __ bonds, $75,400, and certificates, $220,000-total, $295~400; iu 1863-'64, ,certificates, $385,000; and in 1864-'65, certificates, $623,000. These sums amount to an aggregate of $2, 728,000. Of this amount there have been redeemed, by retuming to the bank comptroller the circulation of discredited banks (authorized by chapter 282, laws of 1865), state bonds to the amount of $548,800, deducting which from t!Je above aggregate left the whole outstanding indebtedness of the state, on the 30th September, 1865, at $2,179,200, or, including interest receipts.($376,011) issued for discredited currency, at $2,555,211.

Of this indebtedness there were held at the date named the sums (as follows) b~' the-

Schoolfun1L .. e· --- ·----· --·· .... ________ .... ·--- ··-·-··-··- .................. ·--· .... --·· ............ $1,000, iOO University fund ........ -·-····-·· .......... ··'···---··----· .......... ·-···· ............ ·--··· .. -······ 53,000 Normal school funcl ___ ... -··· ·- - -- ..••. __ ....... , ·- .................................. ·...... .. .. . . . ..•. 278, 000

Amount clue trust fnncls ·-·--· ··---- ...... ···--· --~--- ...... -··· ........ ----·· ··-··· ···· 1·--·· -··· · Bank clepartment for state banks ... -- .. ·- ..........•• -- . -- ..•.. -- ..... - ... ·- .....•••..... -·· .••• -· ----Bank clepartmont for banks assignecl to the state .............•.... - -... - . -... -- --- -- - --. · ---- · · · - -- · · -· Insurance companies on cleposit. _____ . __ ... ___ .................... --- -· -- . -·- ...... - --· -·· · .... ·- - --- -· Corporations ancl inclivicluals .......... ··-··· .... ---- ------ .......••••. ·---·· ----·· -··- .... ··-··· ··-··· Currency interest-hearing receipts .. - _ -..•••.....•. -- . --....... -•.... : •.. - -- .. ---. · · ...... · • -· · -· · · · · · -

1,331, 700 77,200 57,500

366, 000 346,800 376, 011

.Aggregate debt ....•••••........•.•..•.••.• ·---···---·· ................................. --·· .... 2,555, 211

It was necessary to sell the great bulk of the bonds authorized during the war at a time of extraordinary depression in the stock markets. United States 6 per cent. bonds wctre selliug at 84i per cent.; Illinois 6 per cents. n,t 77, and Michigan 7 per cents. at 82. The state treasurer says t1u1t there was no option with the loan commissioners na to the time of selling the bonds. The necessities of the commonwealth compelled their sale for whate\Ter could be obtained. The law directed the loan .commissioners to negotiate and contract for a loan or loans on the most favorable terms which, in their judgment, could be obtained. Finding insurmountable obstacles in the way of raising tho money in New York, the bonds were finally sold to the Wi~()onsin ban1~s at what was calletl par, 70 per cent~ to be paid on the delivery of the bonds, and the remaining 30 per cent. in semi-annual installmeuts of 1 per cent. Ei o·ht hundred thousand dollars were disrwsed of on t:b.ese terms. The next sale was made ou similar terms, except b .

that 80 per cent. was paid on delivery. Subsequent .sales were ,all made at par, the. whole amount paid on the cleliver;}· of the bonds. It was never supposed thM the entire 30 per cent. left un1iaid in the first sale would in all cases be paid. By the terms of the bonds given by .the banks to secure the payment of this 30 per cent. the. bill-holders were first to be fnlly protected.

In quite a number of cases, in closing up banks, there htts not been enough realized to redeem the circulation and pay the 30 per cent. bonds in full; yet, notwithstanding these losses, the state realized in the aggregate on all bonds sold during the progress of the war 88 per cent.

The following is a statement of the bonded debt issued for war purposes, bearing 61)er cent. interest:

, MATUIUTY.

1880. ··•··· ··•·•· ••·•·· ·-···· ...••. ··--·· ..••.•. $9, 009 1886 •.••••. ·,_ .............. - . •. • . .. . . • • • . .•• . .. . 1, 000 188tL ... : .•.•...........••.•••......•••••.••••.. 1,000

ISSUE.

1861. ••••••.• - •••.• - • ., .•• - •... - - . . . . • • • • .. • • • • $10, 000 186.t .••• ~. : •••••...••• ··-,··· •••••· .••••• ....... 1,000

Total .•• _ ................ _ •..•••••. - . ~.. 11, 000 Total. ................. ···-·····-··...... 11, 000

In audition to this bonded debt of $11 000 the state has a :floating debt ~f $2,241,000, certificates of indebtedness to trust fnnds, and $57 outstanding curre~cy'certificates, making the aggregate debt of the state $3,'.!52,057 ..

632 VALUA'I'ION, TAXATION, AND PUBLIC INDEBTEDNESS.

IOWA.

The state of Iowa iuheritecl from the territory of that name a clebt of over $19,000. To pay the same and moot the pressing exigenci" of the new commonwealth a loan of $55,000 was negotiated in 1847, payable in ten. years, $30,000 of wllich bore 10 per cent. interest, ancl the remainder 8 per cent. l\fay 1, 1849, $16,442 05 was borrowed from the state sul.1001 fund, and September 15 following $G,OOO. For these loans 10 per cent. interest was also paid. ~farclt 17, 1850, a bond for $2,000, bearing 8 per cent. interest, was issued. In 1852, $2,:353 70 more was borrowetl from the scllool fond, and 10 per cent. interest paid thereon. In 1853 the $2,000 bond was paicl off. In 185G the debt to the scllool fnncl hacl increased to $61,442 05, and the whole debt in December of that .year was $128,009 69, including outstanding warrants of $11,567 64. The present state constitution limits the power to contract debts to supply casual deficits or failures in revenues, not to exceed $250,000, and losses to the permanent school or university funds, occasioned by uefalcation, mismanagement, or fraud of the agents or Qfficers controlling the same.

The state may, in addition to foe above, contract debts to repel invasion, suppress insurrection, or defend tl1e state in war. The credit of the state is not in a.ny manner to be given or loaned in aid of any indiYid 1 1111, association, or corporation.

In January, 1858, all fundecl debt had been paicl off except that to the school fund, now amounting to $122,295 75. During the year 1858 a loan of $200,000 was effectecl on bonds having ten ;rears to run, ancl bearing 7 per cent. interest. In 1861 the state issued bonds to the amount of $3-00,000 for purposes of war a,ml defense. These bore 7 per cent. interest, ancl are payable Jul.Y 1, 1881.

The debt at this time amounted to $622,295 75, at which figure itremainecl until 1868, when the $200,000 loan of 1858 became due. This loan was at that time paid off, to accomplish which, however, $112,202 26 wa1::1 borrowecl from the school fnncl, to bear 8 per cent. interest, ·and to be repaicl March 2, 1888. Tl.Ill. llebt, aggregating $534,498 01, has remained the same to the present time, .June 1, lSSO.

In addition to the foregoing, the state has issuecl in favor of its own school.fund two bonds, to the amount of $10,937 18, on account of losses to that fund, in accordance with section 3, article 7, of the state constitution. These bear 8 per cent. interest, ancl are irredeemable.

All the indebtedness to the school fund bore 10 per cent. interest up to November 12, 1864. Since that time it has borne 8 per cent.

l\1INNESOTA.

When Minnesota entered upon her existence as a state both the United States and Europe were suffering from the effects of the financial crisis of 1857. Credit was shaken, immigration checked, capitalists ceasecl to invest their money, operations in real estate were suspericlecl, and the settlement of the stl1te, which llacl so propitiously begun, was entirely stopped. To fully undetstand the circumstances which led to the creation of the debt of' Minnesota, it wm be necessaTy to recall the fact that on March 3, 1857, Congress passed au act entitle<f "A.n act making a gmut of land to the territory of Minnesota, in alternate sections, to aid in the construction r·f certain railroads iil said territory". On the 22c1 of J\Iay, 1857, the legi1::1lature of the territory of 1\finnesotfL passed an act to accept the grant and execute the trust created by an act of Oongre88 of March 3, 1857. The original act of Congress grantecl "every altermtte section of fand designated by odcl numbers, for six sections in width, on each side of eacll of (four) said roads and branches", with a grant ii1 lieu of such of the sections as might be sold or pre-emptecl before the lines should be located. The territorial act accepted the grant upon tlle terms, conditions, and instructions contained in the confening act, and assumed and undertook th_e trust creaitetl by the said act of Congress.

The constitution of the state of Minnesota, as originally framed and adopted by her people, restricted the public debt, except in case of invasion or iusurrection, to $250,000~ Subsequently it became evident that, to insure the speedy construction of the railroads for which the state had received from Congress the above grant of h1ml, the state must lend aid to the companies chartered by the territorial legislature, to which the lands had l1een transferred by the same authority for railroad purposes. The legislature of the state, at its first session, in accordance with the mode prescribed by the constitution for its own amendment, passed an act loaning the credit of the state to the four land­grant companies to the amount of $1,250,000 each, or $5,000,000 in the aggregate, upon certain conditions, and providing for the submission of the act to the vote of the ,people. The vote was taken on the 15th of April, 18u8, resulting in a majority of nearly 20,000 in favor of the act.

Soon after the adoption of what was called the "loan amendment" the railroad companies commenced work upon their respective lines. Upon application being made by the companies to tl;le governor of th0 state for state bonds for labor actually performed in compliance with the law, it appears that Governor Sibley made public what he deemecl to be the proper construction of the language of the amendment, and, in order to exact a strict compliance on the part of.the companies with the prescribed requirements before any of the obligations of the statP- should be issued, he prepared and pl~ced upon the executive journal, on the 4th of August, 1858, a memoranclmn of the conditions

HIS'I10RY OF STATE DEBTS-MINNESOTA. 633

upon which the state bonds woulcl be delivered, a copy of which was duly transmittetl to the companies. The memorandum of the governor was to the effect that the state must receive in return for the bonds the "exclusive first­mortgage bonds of these companies to an amount equal to the state bonds received by them, giving priority of lien · upon their entire lands, roads, aml franchises in favor of the state. The companies objected to this construction, and, upon the governor's refusal to issue the state bonds to them upon any other terms, a writ of mandamus was applied for to the supreme court of the state by the Minnesota Pacific Railroad Company to compel the governor to deliver to that company the bonds of the state without exacting the exclusive first-mortgage bonds of the company in return. The question was m;guetl before the snpreni(j court, and the majority of that tribunal decided that the rnling of the governor W[,tS errone9us, and that the state, by her own act, hacl placed herself on a like footing with other holders of the first-mortgage bonds of the companies under their deeds of trust, and could not, therefore, legally acquire an exclusive priority of lien upon the property of the companies. ·

Governor Sibley submitted to the writ, and directed tbe issue of the state bonds. The publicity of the· disagreement between the governor of the state and the railroad company by these proceedings was the first blow to the market value of the boucls, which, under the original construction, had been eagerly sought for at par. The· several companies received the state b()nds clue them and attempted to effect their negotiation, but without success. They then appealed to the g·overnor for aid in disposing of the bonds. Anxious that the progress of the work upon· the roads should not be interrupted, the governor spent several weeks in New York city, endeavoring to sell the bonds, but without result. That failure the governor, in his message of December s, 1859, attributes to the opposition of' citizens of the state, a,cting through the public prints and by private letters, to thwart his efforts.

Unable to negotiate the .bonds received from the state, and possessed of little or no means of their own, the· railroad companies became unable to raise money upon their own bonds except at ruinous rates. All labor on the· roads was suspended, and the companies founcl themselves without the means to meet their engagements, or at that time, with the single.exception of the Southern Minnesota Company, to pay the Deaember installment of the semi­annual interest on tlie state bonds they had received. Further issue of state railroad bonds was stopped, the issue amounting, at the close of 1859, as follows :

To tho Minnesota, aml Pacific Rn,ilron,cl Company .••...• _ •..............•.... _ .......•.... __ .... _ •.... _ •• To the Minneapolis n,ncl Cedar Vn,lley Company_ ......• --.... - ... - -- -.. - ..... __ ... ___ .· ... __ .... __ ...•••• To the Tr[l,llsit Company ••••.•••••••••••.• ·---·· .•••....•... ··---· ...••••. - ..•••.....•.••••.•...•..•••• To the Southern Minnesota. Company ... __ .......... _ .. -·-- ..•.... ---·: ••••.•••.... ---· .•••••.••••. ·---

$600,000 600,000 500,000 575,000

Making in n,U ..••••••.. _ --· .•....•...... _ .. -· -·-- .•••..••••••..•• --·. _, •...••••••••••••••••..•••• 2, 275, 000

At this date there had been completed of graded road for superstructure of the several companies as follows: On the line of the Minnesota and Pacific lfailroad Company, 62 miles and 3,213 feet. On the Minneapolis and Cedar Valley, 69;1; miles. On the Transit, 50 miles. On the Southern Minnesota, or main line of the Minnesota Valley, 372- miles. On the Root River braneh, 20 miles and. 1,004 feet. The Minneapolis and Cedar Valley Company filed in the executive office ii, full waiver of all its rights, under the

decision of the supreme court, accepting the original terms prescribed by the governor. The Southern Minnesota Company so changed and restricted its trust deed that, in lieu of $0,500,000 proposetl of

first-mortgage bonds in its original tmst deed, only $2,000,000 should be issued on its entire line of road, including $1,250,000 to the state. The Transit Company by its trust deed bonncl itself to issue only $1,860,000 of first.mortgage

. bonds, including those of the state, until 62 miles of its road shoultl be completed and the cars running thereon, and only $30,000 on ea,ch mile of its road as it should be graded and completed, in sections of ten miles, after the compl(jtion of the 62 miles as aforesaid. In ac'I.dition, these companies formally accepted the ruling of the ex:ecutive, by which only on(j-half of the state aitl was to be applied to the grading of their respective roads, the remainder to be delivered only as ench road was completed and the cars running thereon.

The companies last named also obligated themselves to secure the right of way on their respecpive lines as soon as possible.

The l\1imwsota and Pacific Company also assented substantially to the terms imposed on the Transit Company t but the instrument was not filed in the execi1tive office.

The history of these unfortunate enterprises was, in brief, that the work stopped, the comJ.Janies made default in payment of interest, and became insolvent. The state then proceeded to foreclose its s.ecmities. By these foreclos~re proceedings it acquired about 250 miles of gmdecl road, the franchises of the compames, the lands of the comvames; in fact, it acquired the title to all the securities which it had taken for its inclemnit.y, including nearly 5,ooo,ooo acres of land, as security for its liability for $2,275,000, bonds and interest. · .

In 1860 the state by an amendment to her constitution, repudiated the bonds a.\1d forbade the levymg of a tax to pay the interest.

1The lands, roacl-becl, and franchises, which the state held for' its indemnity, were afterward

granted by it to existing compltnies free and clear. . . This actioi:t of the state left the holders of the bonds unprovided for. One of the contractors, who hatl r(jcei.ved

payment in bonds, brought sn:jt in the United Stn.teR court n.gainst the Southern ::\Iinnesotti, Com1'>any, tllo Saint Paul

VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS.

and Sioux City Compap.y, and o~hers. The decision of the court was, that where land is conveyed to the state by a corporation as indemnity against losses on state bonds loaned to it the bondholders have no equity for the application "Of the land to the payment of the bonds which can be enforced against t.he state, and her granters take the property

. discharged of any claim of the bondholders. This was affirmed by the Supreme Court of' t~e United States. In his annual message of January, 1877, the governor advocated a recognition of the old repudiated bonds.

He says that the state has, by strong implications, uniformly affirmed the validity of the .. bonds, and cites numerous instances as proof, and refers to the decision of Judge Dillon and the Supreme Court.

The bonds in question were issued in 1858 and 1859 in aid of' railroads, bearing interest at 7 per cent., and redeemable in 1883. The amount of the issue was $2,275,000, on which the unpaid i~terest for seventeen years amounts to nearl,r $3,000,000 more, making the repudiated debt, principa.l and interest, over $5,000,000.

The same year the joint legislative committee reported a bill providing for an issue of 6 per cent. bonds, to be issued in lieu of the old bonds and their unpaid coupons, to the amount of $1,600 for each outstanding 7 per -cent. boncl or coupon, or $3,640,000 in lieu of the then outstanding indebtedness. This provision \Yas not to go into effect unless the people ratified an act devoting the proceeds of the 500,000 acres of internal-improvement land to the payment of the principal and interest. This proposition was submitted to the people for ratification on the 12th of June, but was rejected. •

On the assembling of the state legislature, January, 1881, the holders of the bonds again appeared and submitted another pro1)osition for settlement of the disputed bonds of "50 per cent. of the amount nominally due upon the bonds and coupons", which was duly considered and finally provided for by the passage of an act approved March 2, 1881. The act provided that the judges of the supreme court shoulcl act as a tribunal for the adjustment of the -debt.

The judges of the supreme court declined to act upon tke tribunal, as required by the act, and it was finally made up by the appointment of five district judges, and they convened as such tribunal on the 6th day of .August, when D . .A.. Secombe, a citizen and taxpayer of the state, appliecl to the supreme court for a writ of prnhibition against the said tribunal, on the ground that the act of adjustment was unconstitutional and void. The question being taken under advisement by the court, the tribunal adjourned for thirty days.

Ill their decree the supreme court decided that the constitutional amendment of 1860, declaring that no in·ovision should ever be made for the payment of the state railrnad bonds without a submission to the people, was invalid. This amendment, the court held, was in violation of section 10 of article 1 of the Constitution of the United States, in that it impaired the obligation of the state contract with the bondholders. The tribunal was also ·decided illegal. This decision, th~t full and final power ancl autho11ity to provide for the settlement of t.hese bonds was vested in the legislature, and the renewal of the bondholders' proposition for adjustment at fifty cents, resulted in Govemor Pillsbury calling a special session of the legislature September rn, 1881. The legislature met in response to the call of the governor and enacted a law providing for the cancellation of the Minnesota State railroad bonds and c~upons, and the issuance to their holders, in lieu and in full satisfaction thereof, of new bonds (in denominations ·Of $1,000 each), to be known as Minnesota State Ifailroad .Adjustment bonds, in amount aggregating 50 per cent. of the par value of the principal and interest of the aforesaid canceled bonds and coupons on the first (1) day of January, 188(. These nelV bonds, bearing date July 1, 1881, and (after January 1, 1884) drawing interest not exceeding 5 per cent. per annum, are made payable after 10 years and not more than 30 years from their date, at the option of the state, interest payable semi-annually, in January and July of each year, in the city of New York. .A. proviso reserved to the state the right to pay the bondholclers in cash, in case its new bonds could be negotiated at par at a less rate of interest than 5 per cent., ancl in that case the new bonds were to bear interest from Januar;y l, 1882. Under the terms of this proviso new bonds have been issued to the amount of $4,000,000, bearing interest at 4~ per cent. per: annum, and on January 14, 1882, all but 108 of the 2,275 Minuesota State Railroad bonds had been surrendered and canceled, their holders having been paid in new bonds or in cash.

The amounts receiyed by the holders of the old bonds under this adjustment is equivalent to the face value of the old bonus with interest thereon for 23 years, at the rate of 3k per cent. per allilum.

The following is an exhibit of the state debt as it stood in 1880: Recognized state debt ... _ .. _ .............. _. _ .... _ ................................. _..... . . • • • . . . . . • . • . $290, 000

== Loan of 1873-7 per cent. for publio buildings, clue in 1883 ..••...•.•••• _ ••. _. _ •..... _.. .. • . . . . • . . . . . . . . . 175, 000 Temporary loan, for puroha~e of seed-grain for sufferers by grasshoppers ••••.••••.••••...•......•....... __ u_s_, o_oo

Total.- ••• · ..••................•....•.•...• _ .................................................... · ~90, 000 =--===

Unrecognized state debt ; Bonds issued in 1858-for railroad aid, due in 1883-7 per cent ...•.....••..•.••..•...•.•....••••.•..•.... 2, 275, 000

MISSOURI.

The constitution of the state of Missouri, adopted in 1820, provided that there should be but one bank (with not exceeding five branches) in the state, with a capital of not more than $5,000,000, at least one-half of which might be subscribecl by the state, at its option. Early in the year 1837 the state authorized the emission of

HISTORY ·OF STATE DEBTS-MISSOURI. 635

$:3,500,000 of bonds as a subscription to the capital of the bank. It will be obs,erved that these bonds were authorized at the moment of the general crash of 1837~ Negotiation was almost impossible. The bank, however, struggled on against" the difficulties of the situation. According to Hunh llfcrchants' JY[agazine for 1858, the, Bank of :Missouri was the only institution started at the time of the first suspension of the banks in the United States, , South and West, that did not suspend at the second revulsion of 1839. In 1858 the capital of the bank amounted to $1,719,605; loans, $2,244,473; specie, $1,702,101; circulation, $2,301,106; deposits, $1,428,928. In1857 a general bank law had been enacted, and a number of banks were chartered, six of which went into operation in Saint Louis. The bonds which had been authorized as a subscription to the mipital stock of the bank had never been issued beyond a small amount.

The fifth section of the bank cha.rter had directed the governor to issue the bonds of the state to the bank in full payment of the state's subscription to the capital stock. These bonds were to bear 5~ per cent. internst, payable semi-annually in New York, but were not to cuJ.•ry interest until they were sold, ancl the bank could not discount or do business on these bonds unt.il the proceeds were actually in the bank. Uncler these provisions the bonds could not be sold. In: 1839 the legislature passed au amendment to the cB.arter, in which the governor was authorized to take up these bonds and issue others iu their place, which the bank was required to take in full payment of the state's stock. These bore 6 per cent. interest, payable semi-annually. The principal and interest might be made payable whenever deemed most desirable. Tlle act contained a section pledging the state to the punctual payment of the interest semi-annually, bnt no provision that the interest should not be paid until the bonds were sold.

Under this law new bonds were issued and doli\'ered to the bank, and by the bank sent to Europe, but were not negotiated, and were finally returned. The bank held, therefore, $2,000,000 of these bonds, bearing au interest of .Q per cent., when the legislature passed a resolution to have the bonds returned and canceled.

The whole amount of' the state debt outstanding January 11 1857, was as follows:

On whnt iiccount issued. bond. tereat. nble. issued. I Date of I Ruta of ia-1

1

When pay- Amount

~:~ :!~~~ :::::: ::: : :: : ::::: :·::::: :-:~~:~~:: :: :-~:~:::~:-:::: :: :: : ::::~::: :::·:: ::: ::-~~:-:.:: :: :::::::::::: :: : ::~~::~:: J ~::~ ) '~: I ~:~~ I io~·~~~ Bank stock ....... ·..... . . . . . • . . . . . . . .. .. .. .. .. . . . . . . . . . . . . .. . .. . . . . . . . . . . . • . . . . . . . . . • . . . . . . . . . . . . . . . . . . . .. . . . . .. . . .. . ' 1837 ( fi~ I 1803 , , 100, 000

. Bnnkstock ........................................................................................................... : 1837 o j 1sos I 99,000

Building of the capitol .............................................................................................. .' 1838 6 I 1863 1

40, 000

:Payment of state bonds falliug due 1851 ..... • . .. . . .. .. ... .. .. .. ... • .. ......... ......... .... .. ...... .... .. • ........... 185l 0 1856 i 200, 000'

Pe.yruont of st11tu lwmls fi\lling due 1853 .............................................................. i... . .. .. .. .. .. . 1853 1803 j_· _ 200, 000

Totul. .......... _ .. , ............. _ ............................................................................ "l' .............. :.:.:. ...... ........... ·I 802, 000

When the project of building a roacl to the Pacific was broached the interest of the state of Missouri therein was seen to be very direct aml immediate. In Murch, 1849, the Pacific milroo.d was incorporated by the state ni an act which was amended in March, 1851. In 1852 Oongress gr1wted the right of way and a portion of the public lands to the state of Missouri for the construction of certain roi1ds therein, now known as the Hannibal rind Saint Joseph and the Missouri Pacific ancl Southwest Brauch.

In January foll~wing the state of Missouri invested the Pacific railroad, to lead from Saint Louis to a point on the western boundary of the state, with the portion of lmuls so donated by Congress ancl applicable to the purpose, ;:mcl the state agreec1 to loan its bonds to certain railroads mentioned below.

The conclitions of these loans to the se,~eral roads were as follows: When the directors reported that $50,000 were subscribed bond .fide by individuals and expended, the state should issue its bonds for a similar amount, ancl for each similar subscription of $50,000; until the appropriation should be exhausted. To secure the state, the entire franchise of the roads, their lands, building, furniture, nu.cl equipment, were to be mortgaged to the state. The proceedings under this law to July, 1857, were as follows: ===============================~===-,~· - -·----·-··-··-·--.. ·----

Inter- '. Isane<l to S ld I T '· · ii I Track est. Author1zeil, July, 1857. o . I o ue iss1ie . laill.

I ---:Per ct. I limes.

l'acificrnilro11d .................................................... :.:..................... 6 $7,000,000 $6,380,000 I $4,0!7,000 I $620,000 139

Hnnnibnl ruid Saint.Joseph.............................................. ...... ...... ...... o 3, 000,000 I B, 000, 000 I l, 140, 000 1 .............. 1

6{ North Missouri. ........................................................... ,............... O 5,500,000

1

S,150,000 I 1,954,000 2,350,000 I 75

Sa.in¢ J,ouia and Iron Mountain .............. _...... . .. .. • . • • .. .. • . . .. .. . . .. .. .. .. • • • .. • • • o I 3, 600, 000 2, 600, 000

1

2, 145, 000 l, 000, 000 I 46 -Oairoani!Fulton ........ "........................................ ...... .................... o 650,000 I 180,000 100,000 470,000 · ....... .

Pln.tteConnty ................................. :....................... ...... .............. 6 700,000 ! .............. ,.............. 700,0001 ....... . ifout.hwestBrimchPacifib............................................... ............ ..•.•. 7 4,500,000 ................................................ ..

Total for railroads ............................. · .• _ ....... e. .......... : : •............... :~:.:._. _ 24, 050, o_o_~ _1~0.oooT10,256,ii00\--5, 140,000 ....... .

636 VALUATION, TAXArrroN, 'AND PUBLIC INDEBTEDNESS. ,

The $4 500,000 boncls of the Southwest branch were inclorsecl by the state and bore 7 per cent., but these diet not sell as ~ell as the 6 per cent. direct debt of the state. When the panic overtook the country, in the fall of 1857, the sales were as low as 69~ for Iron Moun~ain, 45 f"!r the Pacific, and 80 for Oairo aml Fulton. ·The bonds not sold were held as follows: ·

Rypothe· In agents' cated. ban-ds. Total.

l'acitlc railroa<l. ......................................... .. :... ............ ..... ...... ...... ...... ...... ........ ............ *$1, 117, 000 $340, 000 $1, 403, 000•

?.2~~~;~~,~~ .::--:·· . ..... ·: .. :··:. ·.:·: :·.·· . : :· . ·::::: .:. ·::· 1 ... ;., ·~ ti, SGO, 000 1, 8GO, 000,

140, 000 100, 000· 455, 000 4Gu, 000· so, ooo so, ooo·

Total ........................................................................................ c ......................... :-l, 107, 000 I 2, ss1, ooo I 4, 00·1, ooo

*$352,000 reporte(l sol1l at an average of 75~. tin ban1ls of fiscal agent, Boston, a portion of which had been sold.

The panie put a stop to the negotiation of the bonds, and made it necessary to suspend the works. l?or this' purpose a law was i)assed suspending the further issue of bonds, under the law of 1855, until March, 1850, except for the purpose of completing works at that time nearly clone: On the North l\iissonri railroad, $750,000; on tho· Iron Mountain railroad, $4 70,000; on the Pacific railroad (Kansas stem), $400,000; and the Pacific railroad (Southwest branch), $500,000; making a total of $2,120,000.

These l)oncls were not to be sold at less than 00 cents. Those of the Southwest branch were 6 per cent. bonds,. in place of the intlorsed bonds of the state, which bore 7 per cent. interest. The issue of this $2,12C1,000 of bonds. made the total debt of Missouri at that time $18,006,000, for the interest on which the state was responsible.

For the interest clue January, 1860, the state hacl to provide, the roads being unable to do so. Tbe amount of the interest due at that elate was $516,100. The state borrowed of the savings banks the money necessary fo pn.y the January interest at 8 per cent. per annum and 12- per cent. premium for exchange. 'I.'he money was borrowed; for sixty days. The balance of the bondH, amounting to $3,340,000, it was supposed at this time would be· immecliately issued to the raih·oads. This was all subseqnent!y loaned, with the exception of ~ll,150,000, to the North J'.Iissomi.

The debt continuetl to increase, and according to a statement of the auditor of public accounts, mac1,e at tho· close of 1862, it had reached $27,370,000, corn posed of the following items:

ilfiscellancous deuts ................................ --· ........... _ ................................... . Pacific railroad uonds (mnin) ........................ , ........ _ ..... --· .............................. . Pacific railroacl (southwest branch) .............. _ ........................ -··- ......... _ ..... __ ....... . Hannibal and Saint Joseph ........................................................................... . North Missouri. ............................... ··---· ................................ ·---·· ........... . Ironltfountain ..................... · ................. ··---· ____ ....................................... . Cairo aml Fulton .................................................................... .' ............. .' .. Platte County ...................................................................................... .. Revenue bonds ......................... : .............................................. ·---·· ........ . State defense warrants ................................. --··----· ... _ .......... ___ ............. ___ .... . Arrears of interest clue .......................... ··--·- .............................................. ..

'$602, 000 7,000,000 4,500, 000 ... :~, 000, 000 4,350,000 3,600,000

650,000 700, 000, 431, 000· 725,000

1, 812, 000·

Total .... , ........................... ~ .......................................................... 27,370,000•

===r= • We have already shown that all the railroad companies, except the North Missouri, received from· the state ·the·

full amount of the loan authorized. This company failed to pay interest before the total amount was drawn, and consequently further loans were withheld.

During the war Missouri suffered largely, not only from the destruction of its railroads, bu~ also in consequence of the suspension of industrial pursuits. No interest was paid on the railroad debt from January, 1861, to 1866, except by the Hannibal and Saint Joseph Railroad Company, which paid promptly. On the reorganization of the state one of the first acts of the convention was to restore the public credit. To this end an ordinance was passed April 8, 1865 (aml by a subsequent vote of the people made a part of the fi.mdamental law·of the state), which provided for the collection of a tax of one-quarter of 1 per cent. on all other real estate ancl property ancl its ar)plication to the pu,yment of the debt and accrued interest. The funding act passed by the legislature arrange<l. the terµis on which the debt was to be liquidated.

Its cJ;tief provision was the funding of the principal of the whole debt and the interest that would accrue up to January 1, 1868, into a consolidated thirty years' debt. The loan to the Hannibal and Saint J~scph Company, however, was excepted, for the reason that the legislature was satisfied with the company's ability to protect the sta~e from l~ss. The interest on these new bonds was 3 per cent. for. th~ fir~t four years, 4 per cent. for the second four- . years, a per cent. for the next four years, and G per cent. for the next six years, and increasing 1 per cent. evevy

HISTORY OF STATE DEBTS-MISSOURI. 637

four years after. Thi8 arrangement was based on the probable proceeds of the convention tax on an increasing valuation. The debt thos provided for, principal and interest, is as follows :

hiDcl1JM IDten.t to I ~~~~~~~~~~~~~·--Serlee~_o_r_boudl~-·~~~~~~~~~~~~~~of~de'6&.~-i-J-an.~1,-188&~11Totalmaomit. Paollo n11zmd ••••••.••••••••••••.•••...•••••••..••••••.••••••.••..••••.•••••••••.••••••••••••••••••••••••.••••.•...•••... ·I ~. 800, 000 *2. INO, 000 •• NO, 000 Soathwemtem Bn.Dch railroad ...................... : •••••••..••.•••..••.•••..• ' .••••••.•••••••••.••.••..••••••••.•••••..• ·' 4, liOI, 000 2, 030, 000 I, lllO, 000 l!forth io-uri ral1raed .................................................................................................... : 4,850,000 I 1,827,080 I, 177,000 Iron KomitalD n.llnNMl ..................................................................................................... ' a, 800, ooo 1 1, 470, ao 11, 070, ao Calzo aacl Fulton n11zm4 ................................................................ ,. ................................ ' 8158, 000 1· m. 000 r.!8, 000

• l'Jat&e Ccnmt.r mllNe4 . • • . . . • • . • . •• • • . . . • • . . . . . . . . . . . . . . . . . . . • • • . • • • . . . . . . . . • • . • • •• . . • . • • • . • • • • . • • . . • . . • .. • •• . . • . . . • . . . . . • . 78!1. 000 ~2116, 000 ' .... OOll BeTtmue 'bond8...... ... . . . . .. . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 481, 000 I • ll30 .... .

Total............................ .... .. . .. .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21, 281, 000 II, 087, OIO " ._, 211, OllO

•l'Jum thl8 teal thn la to be deducted t.he amoant palcl In coapou aud bcmc1a (about '300,000) 11.r t.he .aTenl at&te bub and 11.r the late o'll'D8n of t.he Pi.ta Ccnmt, nllrad, 111d llllo '6,000,000, the -t palcl to the atate for the Paolilc nlhoad, acid antler llOt ol lrllll'Ch 31, 1888.

In January, 1870, the debt was •20,866,000, of which, however, the state was only called upon to provide interest upon •11,866,000, the interest on the remaining •a,000,000 being promptly paid by the Hannibal and Saint Joseph railroad.

In December; 18il, the governor of the state, in his message to the legislature, recommended the registration of state bonds and payment of interest after January, 1872, in gold. The debt of the state he gives, as shown by the fund commissioners' report, at •11 ,869,000 (excluding the bonds issued to the Hannibal and Saint Joseph railroad); the assessed Taine of all property, as presented by the auditor, •575,ooo,ooo, the tax provided by ordinance to meet interest and retire bonds being one-quarter of 1 per cent. After showing the amount of debt falling due each year, the governor remarks" that the only bonds which mature in amounts likely to cause a11y difficulty are those of 1875 and 1876, and that a loan of •2,000,000 or •a,000,000 for ftve years will bridge the interval up to a time when the 81ll'Pl08 will be able to retire them. After that, the residue of our bonded debt can be anticipat.ed and bought in at pleasure". •

In April, 1874, the Missouri legislature passed a law authoriziag the ltOTernor to prepare one million refunding bonds, bearing 6 per cent. interest, and running 20 years, with which to take up the bonds which became due July and January, 1874. These refunding bonds were to be registered and to have coupons attached, and to be issued to the fund commissioners from time to time in such amounts as might be needed.

On the 1st day of January, 18W, the debt of Missouri was t17,839,000, and the annual interest on the entire debt was •1,07 4,590.

March 27, 1875, a bill to fond the bonds falling due in 1875 and 1876 passed both houses. The bill provided for the issuing of •5,000,000 of 5.20 bonds of gold or currency, at the option of the fund commissioners, the gold bonds bearing interest at 5 per cent., and the currency bonds interest not exceeding 6 per cent. Bonds to an amount necessary to take up the maturing obligations were duly issued.

The. semiannual report of the fund commissioners of the state contained the following 1WCOunt of the transactions of that commission up to and including June 30, 1876. The following table presents the condition of the bonded debt at that time, and the amount of bonds retired and still outstanding:

I Ontataad· I Retired In hued In Ont1tand-8criea of boncla. . tug Jana- . 1876 ad 18'15 ud ID« Jal.r 1, ! Br7 1. 1876. i 1878. lllTIL 1878:

~~~~~~~~~~~~--~ ...... ~~~~~~~~~~--~~- i PacUlc mllrlle4. •••••• •• • • • .• ... • ......... ... • • ... • • •••• •• . • .. •• . ••••• . •• • • • •• .... .... ... •• • • • • • • ... •• • •• • • • . •• • •• . • • . '3, 7311, ooo I '782. ooo . ... • • ••• •• • *2.1178, 000 a.bl& Loala aacl ~ Kcnmtll!D l'lllraed.. . . • • . . . • . .... • • . • • . . • . • • .. • • • • . . • • • ••• • .. ................ •• • • • • .•• • • . •• •• . . 2, 840. 080 t tea, 000 • • .. •• ... ... 1, 872, 000 8cat.hweat Bnmch Pac14c :ndlzaM. .•••. ••. •• ........................... , ••••••••• , ...... •• ................ • •••• • •• • • · 1. 4$11, 000 I m. 800 • :., • •, ... • • '184, 000 == :;'=::~:::~::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::: 2,:::: 1 •••• ~:~. :::::::::::: 2, ::: Cairo aacl J!'altoD ..................................................................................................... ' 39'J, 000 . • • • • • • • • • • • . ... 9 • • • .. . an, 000 Comiolldat.IGD boncla .................................................................................................. 1 2. rn, ooo . • • . . . . . . .. . •• • ... • .. . • . 2. m, ooo State debt proper .................................................................................................... ; 430, 000 .••••••••••.•••••••••••.

1 4811, 000

l!fort.hweetena Lamltto.AQlam · 280, 000 . ••••• •••••• •••••• ••• • • • llOO, 000

!:~=~-~~::::::::::::::::::·:::::::::::::::::::::::~::::::::::::::::::::::::::::::::::::::::::::! 1,::: --~--~- :::::::::::: ···--~~~ J'andlng boudl ....................................................................................................... i too, ooo • . • • • • • • • • . • '800. ooo 1, ooo, ooo llelmulbigbcmda ..................................................................................................... I 104,000 .••.•••••••• ............ 18',000 CertlAcat.ea of lndebtedll--hool ftmd.. • • . • • • • . . • • • • • • • • • • • • .. • • • • • • . . • • . • • • • • • • . . • • • • • . • .. • • • • • • • . • . . . . . •• • • • . . • . llOO, 000 • • .. • • • • .. • . . • • • • • • • • • • • 800, 008 lla7111rrs A Wllllplba 111d llaD-k, Jtoaoh A Co ........................................................................................ :. • • • 41, 000 41, 000 BtmeWlll faDd 'bcmdl ................................................................................................. •••••• •••••• ••• • •• • • • • • . .. 087, 000 .. 087, 008

ToW ..................................... ~····························· .. ••·•··••····•····•···· ............... 11,8811,000 6,087,ooo I .. 1211,000 17,480,000

638 VALUA'rION, rrAXA'rION,. AND PUBLIC INDEBTEDNESS.

Iu order· to meet the large amo~nt of bonds maturing during the yea.rs 187 5 and 187 6 ilhe fund commissionerEi, with the atl.vice and consent of the governor, issued and negotiated the following bonds of the ·denomination of $1,000 each:

When issued. Number of bondasold. Series. .A.mount real- Rnto per

izetl. cent.

1875.

March ................................................... .. Mayl. ................................................... .. Julyl. ...... .' ............................................. . December 1 ............................................... .

1876.

600 Funding bonds.................................................... $571, 075 00 260 Renewal funding be>nds ............................................

1

250, 109 00 540 Renewal fonding bomls...... ... . .. .. .. . .... .. . .. • . . . . . . . . . .. . . . . 534, 600 00

2, 287 Renewal funding bonds........................................... 2, 268, 001 00

05.17+ 00.65+ oo. 00 98. 70+

Julyl. ................................................... .. Decemberl .............................................. ..

200 I Renewal funding boncls .......................................... . 225 Renewal funding bonus .......................................... .

200, 006 00 104. 50 + 232, 949 31 l 03. 02+

From the foregoing it will be seen that during the ;years 1875 and 1876 there were issued 3, 728 bonds of $1,000 · each, the proceeds of which, except 41 bonds issued under the provisions of an act approved March 29, .1875, were applied to the payment of maturing bonds. ·

In addition to the above there were sold, in June, 1876, 200 bond:; of $1,000 each at a fraction over 1042 cents (or $1,045 03 each bond) on the dollar, which were delivered and paid for, but not includecl in the foregoing table, because the proceeds, in accordance with the terms of sale, were not paid into the treasury within the period of time embraced in the report of the fund commissioners. ·

The commissioners say that in the face of the stringency of the money market, making it almost impossible to collect ta;xes, they have not only met the accruing interest prom'ptly, but have paid off and retired $359,000 of bonds during the preceding eighteen months, which left the balance of $41,447 93, to meet and take up a like amount of outstanding bonds. They say that the state Fecurities have advanced from ·92t to 105t cents on the dollar. Owing to the reduction made in the bonded debt, and the funding of t.:he 7 per cent. with the 6 per cent. bonds, the annual interest decreased petween January 1, 1875, and June 30, 1876, $37,000.

The following tables present an analysis of the state debt as H stood December 31, 1880: Bonded l1ebt •••..••••.••.••. ·----· ·--·--- .•••••. ~,-- .......... ___ ·-- ........... ___ .... _ .•... _ ••..•• · ••• $16. 2511, 000

==

6,797,000 7,681, 000

201,000 200,000 439, 000 41, 000

900,000

Bearing 6 per cent. interest .......... _ ... _ •• _ •. _ .•••••.•.• _ ...• _ .••••.. _. __ .. __ • __ ... _ .. _ .. _.... 16, 259, 000

ISSUE,

Previous to 1860 ... - .................... _ .• ' $6, 712, 000 1~60 ·--··· ·- ....... -·· ...... --·· .. .... .. .. 242, 000 11:62 ....................... ··'-·· ...... ···- 17,000 1863 ... - - ... - - ... - - ..... - •...••••... - - • . . . 265, 000 1868 ..... ··--· ............... -· .. ·- .. . .••. . 2, 727, 000 1872 ...... --- -·· ...... ··- ·-· ·-. --· ---- ... . 401, 000 1874 .................. ···--····--· ······.. 504,000 1875 -· .•....• - ...• - - - . ·- - - - •. - - - - .. - - -- . .. :1, 228, 000 1516 •... ---- .. - ... ·- ---· .• ....... .. . .... .. 425, 000 1877 .•••.. -·. --· ......... - .. ··- -·. ·----· .. 838, 000 Unspecifiecl (school fund) ........... _ ... __ . 900, 000

•rotnl. ..•.•....................•. ·-·· Hl,25H,OOO

MATURITY.

1882 --·· •••. ··-· ·-··-· ·--- -··· .......... .. 1883 ·-·· ·--· ··-··· ·-·--· ·-·· ···- ......... . 1885 . - ••... - - •••. - - - - - ..••••... - - ....... - . 1886 ---· .... ··--·· .............. ···- .... ·-1887 ... -- . ··-··· ·- - ••... - ..... - - - ..• ·- -· .. 1888 ·--··· .•• ·-. ·-· ....... ·--"--· - ... ·-. -- • 1880 ···-·. ·-- ••. ·-. - ....... - ...... - . - .. -·. 18YO ................ - ....... ---· ... --· .. .. 1802 ·--- .... ·-···. ··--·· ........ ·- .... ---· 1894 ·-. --· ···-. ·-· ·- •• ·- -- -· ·- ..... - ..•••• 1895 .... ·-·.;. ·-. - .. ·--··· ·-. - - . - .. - .. - --· 189() . ----· .. - - -·. -- -- .................. ·-· 1897 .................... ·-·--· ·-- ... ·-·-·· Indefinite (school fund), ___ ••.••••.•.•••••.

--------$17,000 422,000

4,000 .1, 922, 000 3,242,000 3,251,000

863, 000 242,000 401,000 504,000

3,228, 000 425, 000 888, 000 900, 000

Total. •. - ........... _ ......... _.. • • • • 16, 259, 000

== This bonded debt ($16,259,000) does not include the $3,000,0QO of bonds issued to the Hannibal and Saint Joseph

Railroad Company. That company pays the interest on these bonds promptly, the state having a. statutory mortgage lien on the road to secure the pl)iyment of both prin~ipal and interest (audito1''s report, 1879-'80). The abo\"e amount ($3,000,000) was issued, and matures as follows:

ISSUE, MATURITY, 1857 . - .•.•••... - ... - - - ...... - - .... - - .•.• - - . $1, 501, 000 1874 ·--··. ---- •• ·-·· -- ............. --·. ·--· 500, 000 1875 ...... ~--· ...... ·-··-· ...... ........... 203,000 1876 .... ·--- ··-··· -·-· ·--··· ·-·-·· ·--·. •••• 779, 000 1877 ····-. -- ....................... -·-· --·. 17, 000

1886 ........................................ $500,000 1887 ·--· .. ·-·----------·----·-----·-···-·--· 1,000,000 1894 -.----- ---- ...... -· ···- ·--·-· ·-·--· ··---· 500, 000 1895 ·-·· .... ---· ··---· .. ·-·--· ·--··· ··-- •••• 203, 000 1896 ·-·· --·· •••••. -· -· .......... -----· ...... 779, 000 1897 ·----· ·----· --·· ·-·· ••.• ··-· ••.. ·--· ---· 17, 000 Over.due •••..••. ·---·-·----··-·-·· .•.••••••• ____ 1_, 000

Total. .. -. ...••••••.... ~···· ......•... 3,000,·000 Tota.1. ................................ 3, 000, QOO

HISTORY OF STATE· DEBTS-MISSOURI. 639

Staternm:t of the bonded debt of Missouri, exclusive of $3,000,000 in Hannibal and Saint Joseph railroad bonds:

Outstanding January 1, 1865 ---·-----··· .•.•••.•.••...•.•. ----·-·--····--··- ..••••.••••. -·--··-·· •.•. $21,734,000 Outstanding January 1, 1807 . _ .••.....•. ____ .••. _ .••.. __ .....•••••.•..•...• ___ ••••••.• ____ ....•• _ •••• 20, 147, 000 Outstanding January 1, 1869 . ________ .;. __ . __ .... _____ •. ··«··· ....... --·- ____ ---· ________ .. _ ... ---·· _ 18, 654, 000 Outstanding January 1, 1871 .... __ •. __ ..•. __ ..•.••• _ .• : •••••..••.••••...... ~- .. _ .•....•...•.• _ ••. ..• • 17, 866, 000 Outstanding January 1, rnn .... __ .. ___ ..... _ .. _ ...................................... ---· ......... __ 18, 748, 000 Ontstancling January 1, 1875 .... ____ •.•• _ .•. _ .• _______ ...•.•. _ .•... _ .. ______ . __ ....... ____ ...... _ ... _ 17, 839, 000 Outstanding .January 1, 1877 .•••••..•.. _____ ..•••.•....••. -·-- ______ .•...•....•..•.••..... --·--· .... _ 17, 248, 000 Outstanding .fouuary 1, 1879 ........•. ____ .... __ •••. __ .. _ ..••••• ____ . _ ---· .. __ .... ____ .•.. __ ..••.. _ .• 16, 758, 000 Outstancliug January 1, 1881 ••••.•.••. ___ . __ ....••. _ .......••. _ .................... _____ ••. •.• . . .. •••. 16, 2G9, 000 •

The debt was mainly created under the following acts g~ving aid to railroads; of the amount of state creclit loaned to the several railroad companies, the several acts under which state bonds were issued, and the amount. issued to each:

===========:=---=-=--=-===========--========================~-=====~======:============ -

N!lmo ofcompnny. Under whnt net of the general assembly issued.

---------!-------------------------------------------------Pn.clfto Rnilrond Com­

pnny.

''Act to expcditethoconstrnctionofthe Pacific and tholiannibaland Saint Joseph railroatls ", approvc1l Fobmary 22, 1851.

''Act to ncce1it a grnnt of land, mn<lo to tho state of Missouri by the Congress of the Unite1l States, to ai<l in the construction of certain milronrls in the state, and tonpply :t portion thoroofto t-hoPacillorailroatl ", approvedDecember25, 1852.

Snme act, to southwest branch of the Pacific rnilrond, by tho act subsequently moutlone1l, of Docombor 10, 1855, transferred to Kansas road.

.A.mount loaned each ~ompany.

$2, 000, 000

1, 000, 000

1, ooo, 000

Totnl nmonnt .A.monntof Total loaned each state bonds amount of

company. issued. sti!~!~~da

.... ·--· ........ $2, 000, 000

................ 1, 000, 000

-·-··--····-·· 1, 000, 000

j "Act to S{)Cnro tho completion of certain railroads in this state", which became a, 2, 000, 000 ---- ·-----· .. . 2, 000, 000 I. law December 10, 1855. I

Pncifio Rcllroud Com-pnny, southwest

' brnnch.

Rnnnibnl and Snlnt J oscph Railroncl Company.

Noi·th Missouri Rail­roiul Company.

S11;int Louis nnd Iron Monntnin Rnilron<l Compnny.

Cn.iro ruul Fulton ltail­roarl Company.

PlntteCounty Railroa1l Company.

''.A.at to amend an act to secure the completion of certain railroads in this st.'.lte, 1, 000, 000 .•....•....•.. , 1, 000, 000 I and for other purposes", npprovecl Mnrcl1 3, 1857. • l

----- JJl7, 000, 000 '-----! "Act to seouro the completion of certain railroads in tbis state", which became a 3, 000, 000 .............. , 3, 000, 000 i

law December 10, 1855 (construction or gu~rantee bonds). I Act to amend the net nboverecitecl, n.pprovecl Ma.rch a, 1857. ......... .............. 1, 500,000 -···-- ........ _ *800, 000 i Anactamendntoryof thonctofMaroh3, 1857, approvec1November19, 1857........ 700,000 .............. ! 700,000 j

------ 5, 200, 000 '-----"Act to expedite the construction of the Pncific nml the Jiannibnl and Saint Joseph 1, 500, 000 ...... __ ...... ! 1, 500, ooo !

milroacls "• npp1·ovc<l February 22, 1851. i I "Act to secure tho com1ilotion of certain railroads in this state", whioll became a 1, 500, 000 ...... - -- ... .. 1, 50.0, 000 I

law December 10, 1855. ---- a, ooo, ooo I "Act to expedite tho construct.ion of the North Missouri railroad", approved 2, OOQ, 000 ••••••• ....... 1, 950, 000 I

Deoom bor 23, 1852. j

"Act to seome tho completion of certain railroads in this state", which became a 2, ooo, 000 ....... ....... 2, 000, 000

litw Ducmn bcr 10, 1855. 1·

Act to nmcrnl tho nbovo act of December 10, 1855, npproved March 3, 1857.......... 1, 500,000 .............. 400,000, 5, 500, 000 ----,

"Act to oxpeclito tho construction of tl10 Imn Mountain branch of the Pacilio rail- 750, 000 ........ ...... 750, 000 i·ouil ", approvt~cl Deccmhot• 25, 1852, nnd "A)l act explanatory nnd nmondatory of I ' . ' snltl act", npprovocl February 23, 1853. I

"Act toail1 in tho conatrnotion of the Saint Louis an<l Iron Mountain railroad", 750, 000 ........ ...... 750, 000

approvorl Maroh 3, 1855. I'

"Act to socm·o tho completion of certain railroacls in this state", which became a 1, 500, 000 . . ... . . . ...... J, 500,-000

law December 10, 1855. • 1 I Act to amend tho above rtCt of December 10, 1855, approved March 3, 1857.......... 600, 000 - -••. - - •• - - . - . 276, 000 ".A.ct in relation to tho Saint Louis nnu!ronMonntn.in Railroad Company", npproved -- ... --- ......

1

•.••.•• - ..... • 225, 000 1

March 0, 1850.

"Act to oxp0dito tho oonstmotion of the Cairo and Fulton rnilroa<l of Missouri", which boonmo a lnw Decom bor 11, 1855.

"A.ot to ameml the 'Act to secure the completion of certain railroads in this state, uncl for other purposes'", npprove<l March 3, l857.

"Act to mrnmil 'An not to secure the completion of certain railroads in this state, a~!l fqr ot.horpnrposes' ", approve11Maroh3, 1857.

3, 000, 000 .250, 000 250, 000 ·--·---------·

' 400, 000 _400, 000

----- 650, 000 -----700, 000 .............. 700,000

700, 000 ----

Total ........ : .................................................... .' ............ --·····--···-· 25,650,000 ............ ..

$7, 000, 000

4, 500, cco

3, 000, 000

4, 350, 000

3, 501, 000

650, 000

100, DOD

23, 701, 000

*Of tho a~ount issued to the Southwest Branch I'ncifio milroad $8,800,000 were 7 per c~nt. gnnranteed and $2,580,000 were 6 per cent. direct; tot~l, $6,389,000. There waa exchanged $1,889,000 of the 7 per cents for a like amount ofthe6 per cents, which left $4,500,000 of aid granted.

All outstanding bonds bear interest at the rate of 6 per cent. per annum.

640 VALUATION, T.AX.ATION, .AND PUBLIC INDEBTEDNESS.

KANSAS.

'.l'he constitution of' 1859 of Kansas provides that no debt shall be contracted by the state except for the imrpose of defraying extraordinary expr1rnes ancl making public improYements, such debts not to exceed in the aggregate $1,000,000. Such debt must be authorized by law for a'specified purpose, and must be adopted by a majority of the ;members elected to each house, the ''ote to be taken by yeas and nays; and every such law must provide for levying .an annual tax' sufficient to pa;y the interest and the principal when the same may become clue. Other debts may be contracted by the state, provided the proposed law authorizing the same be first submitted to a direct vote of the electors of the state at a general election, and ratified by a majority of all the votes cast thereat.. lVIoney may

•. also be borrowed to repel invasion, suppress insurrection, and defend the state in war. The state cannot be a party i:c. carr_yiug on any work of internal improvement, or become a stockholder in any

J:>anking institutio11: Hon. P. E. Bonebrake, for several years auditor of state, has prepared for the Oensus Office, a tabular statement

;Bhowi11g the condition of the llonded debt of the state at eighteen annual periods, i. e., from 1801 to 1878. In connection with the table of IVIr. Bonebrake, herewith appended, it is to be noted that the sinking fund is

largely, but 11ot wholly, composed of Kansas state bonds, and that the amount of such bouds are included with· those owned b~· the several school funds in the next column, "State bonds owned by the state." The third column .shows the total of outstanding bonds, no deductions being made for the amounts held in the several funds.

The indebtedness remained the same in 1880.

. Year.

\ · 1 State bonds Sinking fund. owned by

state. Stale Jionded I Year. Sinking fund.

State bonds Stnt<• bonded owned by

·1861. .................... ~ ........................ •·•··•••·••·•••· 1802 ..................... ~ ............................. ~ .•.•.•.•••

1803 .............................. : •••••••••••.... ................

.1804 ..... ················--··-···· •••··••••• ••••••. ••••••·· •·•·••· 1865 ......................... : .................................. . 1806.............................. ................ $28, 650 00 1867 ............................................. . 1868 ............................................. . 1860.: ........................................... .

95, 425 00 161, 000 00 299, 800 00

sta.te.

$67, 359 56 $468, 375 00 100, 047 20 502, 12fi 00

144,474 54 638, 075 00

166, 424 06 647, 175 00

200, 004 04 703, 825 00

debt. /1----------1------1-----$150, ooo I 1810 ........................... .

150, 000 j 1871 ............................ . 265, 000 Ii 1872 ............................ . 4·- 27" 1

1 18'3 JO, iJ ii I • •• ···• •• •••• •• •••••• "•••••·

455,275 L 187(. .............. H .............. ~·-··

630,775 1 1875 ........ ,. .............. 4 .......... . 228, 700 83 769, 4:;0 00

122, 405 67 7'10, 200 00

130, 202 571 737, 000 00 122, 740 72 713, 000 00

840, 275 1876 ............................ . 1, 006, 275 1877 ............................ . 1, 342, 275 1878 ............................ .

!

Bonded debt ............... _ ...................................... · ......... _ ....••.••. _ ..•.•.••••.•••• $1, 181, H75 ===

Issued for-JPunuing floating debt ............ _ .............. _ .......•...•..•••.••••.........•..... , •..•...••.••... Public bnildiugs .......................... _ ..... , ............................ __ ....•...•......• _ •..... .Streets ................................................ _ ............................................. . Ex1ienses of militia ................................................................ __ .•••••.• _. _ ...•.. _Relief' of destitute peo1ile on the frontier .•••••••.•••• __ ................ ~ .............................. .

~u,tes of interest : .Six per cent ............................................. _.. . . • • • • . • .. • . • . • . • . • . . . • • • • • . • • • • • $101, 475 Seven iier cent ............................................................................... 1, 080, 500

137,H75 015, 500 70, ODO

3411, ODO 12,500

1, 181, 975

---- 1. 181, 975

ISSUE. 1803 ......... ---- ···-·· ···-·· ••••••.•.•• ··---· J864 .•••••.•••••••...•... ··-· .............. .. 1866 ............ --~·-·· ..................... . 1867 ............................... ··-· ..... . 1868 ............ : .................... -··· ... . 1869 ••.•......•..• ··-········· ....... -· ..... . 1874 ........................................ . is15 •••••..• _ ............................... .

$61, 800 189, 675 170,000 215,500 250,000 246,000 12,500 36,500

Total...... • • • • • • • . • • . • • . • • • . . . . . . • • • • 1, 181, 975

l\IA.TUillTY. 1883 ........................................ . 1884 .. - ................ - ...••••••.•• - •..••.•. 1886 ............................ ·----· ..•.... 1887 .............. --·· ................... -··· 1888 ............. -·· .• - ...... --·. - - - -· .•.•... 1889 .................. --·· .•.. ··--·· ·--· .... . 1894 ......................................... . 1895 .. - •••.... - ..•...•• - •.. - • -............. .. 1896 ............................... ·-·· ..... .

$01,800 189,675 100, ODO.

15,500 30,000

157,000 12,500 36,500 70, 000

1897 -......•.... - - .................. - ........ . 200,000 220,000

89,.000 1898 ........................................ . 1899. -......................... - • - ..•• -..... .

Total. • .'. . • . . • . . • . . .. . . . . . • • • . . . . . 1, 181, 975 ==-c='===::

11<lht.

$1, 341, 075

11 336, C75 1, nao, 015 1, 33S, 075

1, 3•10, 275 1, 385. 775 1, 235, 975 1, 285, 075 1, 181, 975

" HISTORY OF STATE DEBTS-NEBRASKA-COLORADO. 641

NEBRASKA.

The original constitution of Nebraska contains several provisions in regard to the incurring of debts. Section 32 of Article II provides that the legislature shall not authorize the borrowing of money or the issuance of state bonds for any sum exceeding in the aggregate $50,000 without submitting a proposition therefor to a vote of the people for their approval or rejection, except in case of war, to repel invasion, or suppress insurrection. Section 2 of the article of finance reads: "The crecqt of the state shall never be given or bound loaned in aid of any individual, association, or corporation."

Section 4 of the same article provides that the legislature may, for the purpose of defraying extraordinary expenses, contract public debts not to exceed $50,000, the law authorizing the same to be passed by a majority of the members elected to each house, and shall provide for the levy of an annual tax sufficient to pay the interest and to extinguish the principal in ten years.

Another section authorizes the borrowing of money to repel invasion or defend the state in war. The sixth section of the same article prohibits the state from. contracting debts for works of internal improvement or being a party in carrying on such works; but if grants be made to the state, dedicated to particular works of internal im­provement, then the state may carry on the same and devote the avails of such grants and pledge, or appropriate the revenues derived from such works, in aid of their completion.

A new constitution was adopted, and ratified October 12, 1875. The provision last mentioned is omitted, and the amount which a state may borrow is changed to $100,000.

'The section first above mentioned (section 32, Article II) is also omitted. On February 17, :1,875, an act was passed authorizing the issue of $501000 bonds, payable in ten years from

date, with 10 per cent. per annum interest, payable semi-annually. These bonds were issued for the purpose of purchasing seed-grain for distribution among the citizens of the state made destitute by the ravages of the grasshoppers in the year 1874. The act provides for the leVi of an annual tax of one.tenth mill on the dollar in • addition to all other taxes for the payment of interest and redemption of principal.

Section 8 of Article IX of the constitution of 1875 reads: "The legislature, at its first session, shall provide a law for the funding of all outstanding warrants and other indebtedness of the state at a rate of interest not exceeding 8 per cent. per annum." ·

In accordance with this provision, the legislature, at the ensuing session, on February 14, 1877, passed an act to fund the indebtedness of the state. The act states the debt to be $566,369 38, and bonds were issued to that .amount, payable twenty years after April 1, 1877, bearing 8 per cent. interest, payable semi-annually. These bonds were to be sold (giving the preference to the school fund of the state) on April 1, 1877, to the highest bidder, at not less than par, the bonds issued to the school fund to be taken at par. The act provides that all outstanding warrants not presented for payment before May 1, 1877, shoulc1 from that day cease to bear interest.

Under this act bonds were issued and disposed of as follows: For redemption of certificates of indebtedness issued by the state and hekl by the permanent school

fund._ •• _ •.•..•.....••.......• ·-·· .... ·-····-·· .•.. ·----· .............................. --·· ...• $342, 957 34 Sold to permanent school fund at par, for cash ..••••.... - .................................. --· . · •. - - . 83, 310 01 Sold to the highest bidde1· for cash, at 1.07 ··-- •••• ··-· •••••....•.• ··--·· ...•••.•.•.... ·-·· .••• ···-··. 123, 000 00

Total issued·-·· .............. -- .. ; ... ·-·· ·-·· •.•. ·--· •...••••..•..........•......... ··-· .... - 549, 267 35 Premium on $1231000, sol<l at 1.07 ·--- ·-·-·· ........... -·-· ............ --·· ·---·· •••. -··-·· •·•• • .. -·-· 8, 610 00

Total realizecl. ......• -••... _ ................ -..... -................. - · · · · · · · · · · · · · · · · · · · · • · • · 557 • 877 35

On January 1 1879 the. state had no indebtedness other than that represented by the following bonds: ' ' . Ten per cent. ten-year bonds, issued in 1875 for relief of grasshopper sufferers ...•. -.•.•.. - - · - · · · - · · · · - $50, 000 00 Eight per eent. funding bonds, issued in 1877 •• ··-· •.•••.•••••••••....•..•...•.•. -··--· ····-···--· ··•• 549, 267 35

Total. .... ·--·.-··· ••.. ···-··-·-· .............................. ··----··--·· ..•..••. ·--···-····- 599, 267 35 ----------On February 24 1879 an act was passed directing the immediate redemption of $100,000 of the funding bonds

held by the school fund, ~nd providing for the reinvestment of that amount by the board of educational funds, thus leaving the amount of the bonded debt of the state, November 30, 1880, at $499,267 35.

COLORADO.

Colorado was created a separate territory in 1861. Successive acts and presidential vetoes bring the ~dmission as a state to August 31, 1876

1 when, by proclamation, Oolorad~ was declared one ~f t~e states of t~e Union.

Profiting by the experience of the older states, Colorado, m and by her const1tut1on, ~as :restricted the power of the state to contract any debt, by loan in any form, except to provide for casual defim~nmes of revenue, .ere~t public buildings for the use of the state, to suppress insurrection and defend th~. state m war, and to assist m

41 W D T

642 VALUATION, TAXATION, AND PUBLIC INDEBTEDNESS

defending the United States, and the amount of debt contracted in any one year to provide for deficiencies of the revenue shall not exceed one-fourth of a mill on ea.oh dollar of taxable property, and the aggregate amount of such debt shall not at any time exceed three-fourths of a mill on the dollar on such valuation until the same shall equal $100,000,000

1 and thereafter such debt shall not exceed $100,000; and the debt incurred for erection of public

buildings shall not exceed a ,half mill on the dollar, nor ~t any time exceed $50,0001 except that if a law to that effect be ratified by a majority of all the voters voting thereon at a general election a debt not to exceed three mills on the dollar of such valuation may be incurred f9r the erection of public•buildings.

Under the constitution, neither the state, nor any county, city, township, or school district, can become a stockholder or joint owner in any corporation or company, nor can any such civil division lend or pledge the faith thereof to, or become responsible for, the debts of any person, company, or corporation, public or private, in or out of the state. These provisions do not apply, however, to debts incurred by any county or municipality during the territorial government. .

When Colorado became a state she assumed the debt of the territory, amounting to about $421000, The debt of the state on the 30th day of November, 1880, consisted of outstanding warrants and certificates of

indebtedness to the amount of $212,814. ·

NEY .A.DA.

On becoming a state Nevada assumed the territorial debt, which, on October 30, 1864, amounted to $264,110 47t maturing as follows:

Bonds, February 1, 18G5 .•••...•.•.. ' .••••••.••••...••• ~ .•.•••• : • • • • • . • • • • • . . • • • • . • . . . . . . . . . • • • • . • • • • • • • $5, 000 00 Bonds, March 1, 1865. . • • • •• . • • . . . • • • . . • . • • . . . . • • . •• • • • . • • • • • • . . . • • • . • . . • • • . • • • • • . • . • • • • . . . • . • . . . • • • • • • 20, 000 00 Bouds, February 1, 1866 •.•• ·,··· •••• .••• .. • . . . .•• •.• .••. •••• .•• • .••••• ••.• .• •••• .. ..• . .••••• •••• .• • • •• . 35, 0@0 00 Bonds, March 1, 1866 . . . . . • • • • • • • • • • . . • • • . • • • .. • • • • • • • • • . . • • • • • •• • • • . . . • • . • . • . • • . . • • • • • • . . •.• • • . . . . . . • •• 20, 000 00 Bonds, February 1, 1867 ............................ '!:... . . • • . . . . • . • . . . • . • . . • • . . • . . . . . • . . • . . • • . . . . • . . . . • 35, 000 00 Bonds, ~iarch 1, 1867 . • • • . • • • • . . • • • • • • • . . • . . • . . . • • . • • . • • • • • • • . . . • . . • . • • . . . • . • • • • • . • . • • • • . • • • • • . . . . • • • • • 20, 000 00 Bonds, February 1, 1868...... . • • • . • • • .. . • . • . • . • • • • . • • . • • . . • • • . • . . • . . • . • • • • • • . • . . . •.• . . . • . . . • • • • . • . • • . • • 40, 000 00 Bonds, February 1, 1869 ................................................... , • • . • . • • • • • . • • • • • • . • . . . • • . . . 50, 000 00

225, 000 00 Outstancling warrants...... . • . . . • . • . . • • • • . • • • • • . . • . • . • . . . . • • • • • • . • • . • . . • . . • . • • • • . . • • . • . . . . • • • . . . . . • • • • 39, 110 47

Total ...••.............•.....••••.•••.....•.••....................•.•••.••• .". . . . . . . . . . . . . . • • • • • 264, 110 47 ===

Of the bonded debt, $165,000 was bearing 10 per cent., and $60,000 was bearing 18 per cent. per annum, payable semi-annually.

These bonds were issued in 1862and1864, respectively, $165,000 being for current and existing indebtedness of the territory, and $60,000 being lmpaid balance of bonds issued for the erection of a state prison.

The issue and sale of $150,000 in bonds was authorized by the legislature by act passed January 4, 1865. The bonds were to be dated when issued, to mature after one year from date, to bear interest not exceeding 2 per cent, per month, and to be sold at not less than par value.

. On February 14, 1865, 10 per cent. interest-beari.:ril.g bonds, to mature on January 1, 1870, to the amount of $1101000, were authorized to be issued for the purpose of refunding the territorial prison bonds and the outstanding warrants of that government. This act was amended on March 10, 1865, so as to include other claims against the territory. ·

On December 31, 1865, there were outstanding-Territorial bonds •.••••.....••••.•...........• • 1 •• ••••••••••••••••• : ••••• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • $160, 000 State bonds for territorial indebtedness . . • . . . . • • . . • • . . • . • . . . • • • . • . . . . • . • • • • . • . • • • • • • • • • • . • • • • . . . • • • • . . • • • 116, 042 State bonc1s under act January 41 1865 •..• ···~·· .•.••. .... .• •..•.• .•.... ...••. ••.• •••• •. .••••. ••.. .•••••• 60, 000 Interest on bonded debt ..................... ., , •••..• , • • • . • • • . • • . . • • • • • • • • • • • • • • • • . • . • • • . • • • • • . • • • • • • • • • • 23, 780

359,822 Alld a floating debt of about.... . •• • • •• • • • • • • .. . • • . • • • • • • • . • • . • . • • • . • . . • • • • • • • • • • • • • • • . • • • • • • • • • • • • . . . • • . 90, 000

. On January 19, 1866, an act authorizing the issue of $200,000 bonds was passed for the purpose of defraying the , expenses of the government.

On December 31 of that year the bonds outstanding were as follows: Territorial bonds ....................................................................................... ~, $125, 000 State bonds for territorial indebtedness, act February 14, 18135.... . . . . • . . . • • • • . • • • • . . • • .. . . • . • . . . . • . . • • • . • 96, 156 State bonds, under act January 19, 1866, due February 1, 1867......... ••. . . . . .. . •. . .. .. . . . . • • . . .• . • . . .•• . . 000, 000

421,156

== The floating indebtedness and interest on the debt amounted to $164,000, and there was available in. the state

treasury about $90,000.

HISTORY OF STATE DEBTS-NEVADA-OREGON. 643

On February 6, 1867, a loan of $500,000 was authorized, and bonds to bear interest not exceeding 12 * per cent. per annum, payable in five years, were to be issued therefor. The act recites that the loan is made under the provisions of section 7, Article XVII, and of section. 3 Article IX.

The outstanding. territorial bonds were all redeem~d, and all the territorial indebtedness, as well as the $200,000 state bonds, were paid out of the proceeds of this loan.

There were outstanding on December 31, 1869, in addition to the above, bonds issued under the act of February 14 and March 10, 1865, amounting, with interest, to $80,575. ·

On February 27, 1871, an act authorizing the issue of $120 000 for redemption of bonds· is~ued for the extinguishment of territorial debt and $280,000 to defray expenses of the government was passed. The bonds were to bear 10 per cent. interest, and payable within ten years.

Under several intervening acts loans were made, and the following exhibits the debt of the state on December 31, 1872:

St,ate bonds issued April 1, 1871, redeemable in teu years .................................... ; ............. $1GO, 000 State bonds issued March 1, 1872, redeemable in ten years.... .. .. . .. .. . .. .. . . . . . .. .. . . . . .. .. • . . .. • . .. . • . .. 120, 000 State bonds issued March 1, 1872, redeemable in :fifteen years...... .. . . . .. . .. .. .. • .. . . .. • . . .. . . .. .. . . . . . . . . 380, ODO

660, 000 Floating debt and interest ................................ .'... .. .. .. . • .. .. .. .. .. .... .. .. • . .. . . . . . . . .. • .. . 70, 724

There was in the sinld11g fnncl belonging to school fund-730,724

Boncls amonntiug, with interest, to ........................................................ $107, 173 Cash in treasury ........................ ~. .. .. .. .. .... .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . .. • 240, 181·

347,354

Netclebt ....... L ••. ~ .......................... c ................................................... 383,370

== An act was passed in 1875, and amended by au act passed January 28, 1879, under which the entire state debt

was funded. The redeemable bonded debt of Nevada, December 31, 1880, amounted to $56,400. This amount comprises bonds issued in 1871 to refnml the old debt of the state. They bear 10 per cent. interest, and mature in 1881. fn addition to this, the state issue(l to the school fund in 1879 bonds to the amount of $380,000, bearing 5 per· cent. interest, which are irrecleemable. The sinking fund of the state at that date amounted to $312,372, composed of cash and California state bends.

OREGON.

The debt of the state of Oregon on April 1, 1880, consisted of two kinds, i. e., bonds b~aring 7" per cent. ancl warrants bearing 10 per cent. interest. Of the first the following· is a schedule:

Soldiers' boitnty bonds.-.A.uthorized by act of legislative assembly, approved October 24, 1864, ''granting bounties. to volunteers of this state enlistecl in the service of. the United States," due July 1, 1884; amount still outstanding, $26,000, for which there is on hand, applicable to their payment, $30,000; but as they are not i)ayable, at the option of the state, holders will not relinquish them.

Solcliers' relief bonds.-Authorizecl by act of legislative assembly, approvecl October 24, 1864, appropriating $100,000 for relief of discharged officers and soldiers from this state; due in twenty years; amount still outstanding-:­$761 10. The funds for the payment of both classes of these bonds were raised hy special levy of a. one-mm ta.x orn all real ancl .personal property in the state, which act wa~ repealed and approved by the governor Octobe.r 24, 1876,

Willamette Falla Canal and Loolc Company's bonds.-The payment of principal and interest of these is guaranteedl by the state, according to an act of the legislative as~embly approved October 21, 1870; payable out ?f moneys a.rismg; from the sale of "state lands" and the 5 per cent. United States land sale fund; amount still outstanding) $156,000. These bonds mature January 1, 1880. (~)

Modoo war bonds.-These bonds were issued in payment of the debt arising out of the Modoc war of 1872. ·The act creating them was approved October 22, 1874. The amount issued and still outstanding is $132,858 76, payable out of the genea:al fund by taxation. These bonds matmed July 1, 1880, but no prdvision having been made for their payment by the legislature of 1878, they are still in the hands of the original holders or their assigns.

Indian war bonds of 1878.-A.uthorized by act of the legislature, approved October 17, 1.878, for payment of the debt arising out of the war with the" Nez Perce", "Cayuse," and other tribes of Indians in 1877-'78. .A.mount issued and in course of being· audited (approximated), $42,000. These bonds are payable out of the general fund,. and mature January 1, 1890.

State warrants bearing ten per oent. interest.-These warrants were ai1thorized by acts of the legislature at different sessions to aid in the construction of "wagon roads" in different parts of the st~1te; were issued during the years 1873, 1874, and 1875; the amount still outstanding is $135,600, with interest from elate, payable out of

'•Increased to 15 per cent. by act of February 25, 1.867.

644 VALUATION, 'I1AXATION, AND PUBLIC INDEBTEDNESS.

the "s.wamp and overflowed", "tide", 5 per cent. United States land sale, and other state land funds. The law creating this class of liabilities was declared unconstitutional by one of the state. circuit courts, but that decisio.n was reversed by the supreme court of the state at its present session, commencing· January 1, 1880.

Other outstancling warrants.-Warrants payable out of s11ecial tax of three mills on all real and personal property in the state are being rapicUy paid. These now amount to about $28,000, with interest from June 1, 1874.

The following is a statement of the debt September 1, 1880:.

Bonds lJearing 7 per cent. interest: Soldiers' relief bonds, payable July 1, 1884.----- ·--··- ··-·-· ··-·-· ---- .................. ·-·· •••• ··-··· The soldiers' bounty bonds, payable January 1, 1875 ................................................. . Willamette :C'alls canal bonds, payable January 1, 1881. .••••.•• -..................................... . Modoc war bonds, payable January 1, 1880 .......................................... , •••..••••.•••••• Umatilla war bonds, payable January 11 1890 .••.•...•••. '··· ........................................ .

Outstanding warrants: . . Warrants rlrawing 10 per cent. interest, payable out of specific funds, such as swamp,

oYerilowed, tide, 5 per cent., and other land funds, exclusive of interest ................ $134, 530 00 Outstanding warrants, 1iayable from special tax, exclusiYe of interest ...••••••. - . • • • • . . . • • 20, 337 76

$761 10 25,850 00

151,500 00 132,921 78

45,475 51

356,508 39

---- 154, 867 76

Total state indebtedness ..•••••.••••. ·----· ...••• ...... .••••• .••••. •••• .••••• .••••• ........ •••••• 511, 376 15 ==-·

CALIFORNIA.

The history of the California state debt is a short one. Upon the admission of this state to the Union a · constitution was adopted which provided that the legislature should not in any manner create any debt or liability which should, singly or in the aggregate, with any previous debts and liabilities, exceed the sum of $300,000, except in case of war, to repel invasion, or to suppress insurrection, unless the issue was first submitted to the people after three months' notice. The state was also forbidden to engage with others in any internal improvement, -0r to subscribe to stock thereto, or lend its aid or credit to any corporation or institution. The cities in California. are also forbidden by the same instrument to incur a like liability.

On the 1st of February, 1850, an ~ct was passed authorizing the making of a temporary loan of $300,000, with which to set the treasury in operation.

On the 29th of April, 1851, an act was passed to fund the debt of the state,. for which purpose $700,000 in bonds were issued. On the 1st of May, 1852, an act was passed authorizing the issue of $600,000 in bonds, in order to pay all outstanding comptroller's warrants issued since April 29, 1851, and prior to December 31, 1852. Bonds were also issued by act of May 17, 1853, to meet the expenses of the government from December 31, 1852, to June 30, 1853. On the 16th of March, 1855, a loan was authorized, and bonds to the amount of $700,000 were issued to pay all outstanding comptroller's warrants drawn upon the state treasury between the 30th day of June, 1853, and the 1st day of July, 1855. On the 19th day of April, 1856, bonds to the amount of $1,500,000 were issued to pay :a.ll outstanding indebtedness occurring prior to January 1, 1857. An act was passed April 28, 1857, authorizing the treasurer to prepare and issue bon~s to the amount of $3,900,000 to fund the indebtedness of the state. The claims entitled to be funded were as follows :

First. Civil bonds issued under the acts passed in the years 1851, 1852, 1853, 1855, and 1856. Second. Comptroller's warrants, drawn under sanctionoflaw, for civil expenses incurred prior to January 1, 1857. Third. Just or legal claims against the state incurred prior to January, 1857, and which were allowed and

auclitecl by act of the legislature. On the 30th of April, 1860, $2001000 of bonds were authorized to pay these claims.

1. April 41 18631 soldiers' bounty bonds -· _ -·---··. __ ........... -··· .••••.•••••..••••.•••...••.•... __ ••• $2, 000, 000 2. April 27, 1863, soldiers' relief bonds ••••.••••..•. _ ... __ .... __ .• __ .•••••.•..•• _ .. _ .• _. _ .••• _ •• __ .• _ •• _ 600, 000 3. April 4, 18641 line officors' relief bonds ...••.•••••• ·---··----......................................... 65, 000

On the 4th of April,.1870, $250,000 in capitol bonds were issued for payment of work or labor done or material furnished in, on, or about the stat~ capitol and its surrounding grounds. On the 2d of April, 1870, an act was vassed authorizing the issue of $3,700,000 in bonds for the payment of the funded indebtedness of the state, a.s follows:

· First. Outstanding bonds issued under act of April 28, 1857. Second. Outstanding bonds issued under act of April 30, 1860. Third. Outstanding soldiers' relief bonds. Fourth. Outstanding solclierl:i' bonnty bonds.

' HISTORY OF STATE DEBTS--OALIFORNIA-THE TERRITORIES. 615

On the 28th of March, 1872, $250,000 state capitol bonds were issued for payment of work or labor done or material furnished in or about the state capitol and its surrounding grounds after the 1st day of June, 1872.

The total funded debt' of California on June 30, 1879, was $3,403,000, of which amount the state school fund holds $1,737,500, and the "consolidated perpetual endowment fund of the University of California" $952,500, making a total of $2,690,000, which, deductecl from the total indebtedness, leaves $713,000 in the hands of parties unknown. These bonds were issued:

Years. Amount. Date of act authorizing.

1857 .•••.. ······ •••••• •••••••••••••·•••• •••••• •••••••••••• ••••····•••••••••·•••···•··•••·· •••••••••••••••••• ••••.••••••.•••••••. 1800 ••••• ·•••·••••••••••••• •••••• •••••••••••••••••••••••·•··•••••·••••• ••••...•••••••••••.•••.•••••••.••••••••••••••.•••••••••.

1803 ••••.. •••••••••••• ······••••••••••••·•••••••••··••••···••· ••••••••.• ••••••·•·•·•••••••••••••••••·•••••·••··••••••·•••·•••••• 18i0 .•...••. ~-····. ····••• ••·••• ••·•·· ........................ : ................................................................ .

1872 ......................... ••••••••••···•••·•··•••••••••••·•••••••••• ··•·••••·• ••••••••.••••••••• ····••·••••••••••·••••••••••••

$5, 000 April 28, 1857.

1, 500 April 30, 1860. 95, 500 April 27, 1863.

250, 000 April 4, 187&.

250, 000 Mnrch 28, 187:t.

1873.. •• .••••• .•.• •• ...... .••. .• •••••• •••••• •••.•• .••••. •••.•• •••••. •••••• .•• . ••••..•.•••. .••••• •••••• •••••. .•••.• ••••.•.••. •••• 2, 801, 000 April 2, 1870.

Total ................................................................................................................... ·I 3, 403, 000

On that date there was a sinking fund for the redemption of bonds (besides the amount required to redeem the bonds issued in 1857 and 1860) amounting to $89,886 47, but, in the opinion of the treasurer of state, legislation was required to designate the bonds to be redeemed.* On the same date the :floating debt was $83,170 25, consisting of outstanding comptroller's warrants; but the money to pay the same was then in the treasury, the total amount of cash in the treasury being $1,498,450 55.

The following is a further analysis of the bonded debt: Boncled debt...... . . • • . . . . . . • • • • • • . . • • . . . • . . . • • • . • . • . • • . . . . . . • . • . • • . . . • • . . . . • • • • • • • • • . . • • . • • • • . . . • • •• . $3, 403, 000

Issued for-Public bui1dings .•...•......••••.••••........•...•.•....•....••••••.•••.••••••••••.•.••.•••.•••.. ' ..••. Refunding olcl debt •••••....••....•......•..•••••.••.•..••••.•.••••..•••...•••. -~ ...•••••••••••.••.•.. Unspeci:flecl. .•.•..•••••.....•••...•...•••.••••.•.••••••• - •• · • • • • · .• · •••....••••.••• • ...•.•••.•.. , · · • · . Soldiers' relief bonds .••••.•.••.....••••••••••..••••...••...••••..••••..•••••..•.•.••••..••••••••••.•..

=

500, 000 2,EOl,000

6,500 95,500

'rotal . . . . • • • • • . . . . • . • . . . • • • • • • • • • • • • • • • • • • • • • • • • • • • . • . . • • • • • • • • • • • • • • • • • • • . . . . . . • . • • . • • • . . • . . . . 3, 403, ooo ===

Rates of interest--Six: per cent • • • • • • • . •• • • • • • • • • • • •• • • • • • • • • • • • • • • . • . . . . • • • •• • • • . • . • ••• • • • • • • • • • . • . • • . . • . • . • • . • • • . . • •• • • 2, 801, 000 Seven per cent...... • • •• • . . . . • • • • • . • • •• • . . • • • . . . . . . • . . • • • • . • • • •• •• • • • • .• • • • • . • • • • • • • . • . . • • • . •• • . • • • •• . 602, 000

Total • . . . . . . . • • • . . • • • • . . . • • • ... . . . . . • . • • • • . • . . • • • • . . . • • . • • •• •• • • • • • . •• •• • • • • • • • • . • • • . . . • • . . . . • • • 3, 403, 000

Issue: Previous to 1860 ......................................... · • • • • · • • • • · .• • •• • • • • • • • • • • • • • • · • • • • • • · · · • • • - • ·

" 1870 ..••.• ' •••••••••••.•••••••••.••••....•.•••••••••••••••••••••••••••••••••••••••••••••••• " . 1872 .•••••••••••••••••••••••.••••.•..••.•••••••••••••••..••••••••.•••••••••••••••••••••••• " 1873 ..................................................................................... . " 1863 •••••••••••••••••.••.••••••••...••.••••.••.•••••••••••.••••••••••••••.....••••••.•••••

6,500. 250,000 250,000

2,801,000 95,500

Total. .••••..•• _.. • • . . . • • • • • • . • • • • . • • • • • . • . . . • • • • • • • • . . . . . . . . . • . . . • . • • • • . . . • • • . . . • . • • . . • • • . • • • • • 3, 403, 000

Maturity 1mspecifled: July 11

1885; July 1, 1887; July 21 1893; July 11 1883 .••.••.•••••••••••. .,.. •. · •• •• 3, 403, 000 ' . ==

THE TERRITORIES.

l\fost of the territories have no debt in their tenitorial capacity. The changes are so rapid in their new settlements that, with the power of municipal obligation of counties, towns, and school districts in some of them, it is not easy to be so exact as in older and more permaneµtly established communities in any statement of local municipal debt. The only territories having a .bonded territorial .debt in 1880 were Idaho, with $69,249, and Montana, with $70,000.

* Tr.easurer's Report, 1879, page 16.